Technical Olympic USA, Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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(Mark One) |
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2005 |
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OR |
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period
from to |
COMMISSION FILE NUMBER: 001-32322
TECHNICAL OLYMPIC USA, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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76-0460831 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
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4000 Hollywood Blvd., Suite 500 N
Hollywood, Florida
(Address of principal executive offices) |
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33021
(ZIP code) |
(Registrants telephone number, including area code)
(954) 364-4000
(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 þ No o
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange
Act). Yes þ No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest
practicable date: 56,093,602 shares of common stock as of
July 29, 2005.
TECHNICAL OLYMPIC USA, INC.
INDEX
2
PART I. FINANCIAL INFORMATION
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ITEM 1. |
FINANCIAL STATEMENTS |
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in millions, except shares and par value)
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June 30, | |
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December 31, | |
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2005 | |
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2004 | |
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(Unaudited) | |
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ASSETS |
HOMEBUILDING:
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Cash and cash equivalents:
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Unrestricted
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$ |
73.3 |
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$ |
217.6 |
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Restricted
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2.9 |
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8.0 |
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Inventory:
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Deposits
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186.1 |
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132.8 |
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Homesites and land under development
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492.2 |
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341.2 |
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Residences completed and under construction
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736.4 |
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671.0 |
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Inventory not owned
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103.6 |
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136.2 |
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1,518.3 |
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1,281.2 |
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Property and equipment, net
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25.9 |
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26.7 |
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Investments in unconsolidated joint ventures
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82.4 |
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66.6 |
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Advances to unconsolidated joint ventures
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15.4 |
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Other assets
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87.0 |
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71.1 |
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Goodwill
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110.7 |
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110.7 |
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1,915.9 |
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1,781.9 |
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FINANCIAL SERVICES:
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Cash and cash equivalents:
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Unrestricted
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4.2 |
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50.9 |
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Restricted
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70.0 |
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69.1 |
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Mortgage loans held for sale
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60.9 |
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75.8 |
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Other assets
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12.6 |
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9.8 |
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147.7 |
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205.6 |
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Total assets
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$ |
2,063.6 |
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$ |
1,987.5 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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HOMEBUILDING:
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Accounts payable and other liabilities
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$ |
200.3 |
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$ |
188.9 |
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Customer deposits
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90.8 |
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69.1 |
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Obligations for inventory not owned
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103.6 |
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136.2 |
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Notes payable
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811.5 |
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811.4 |
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1,206.2 |
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1,205.6 |
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FINANCIAL SERVICES:
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Accounts payable and other liabilities
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71.7 |
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70.2 |
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Bank borrowings
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49.4 |
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49.0 |
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121.1 |
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119.2 |
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Total liabilities
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1,327.3 |
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1,324.8 |
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Stockholders equity:
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Preferred stock $0.01 par value;
3,000,000 shares authorized; none issued or outstanding
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Common stock $0.01 par value;
97,000,000 shares authorized and 56,093,602 and
56,070,510 shares issued and outstanding at June 30,
2005, and December 31, 2004, respectively
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0.6 |
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0.6 |
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Additional paid-in capital
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393.3 |
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388.3 |
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Unearned compensation
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(11.0 |
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(9.0 |
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Retained earnings
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353.4 |
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282.8 |
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Total stockholders equity
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736.3 |
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662.7 |
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Total liabilities and stockholders equity
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$ |
2,063.6 |
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$ |
1,987.5 |
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See accompanying notes to consolidated financial statements.
3
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except share and per share amounts)
(Unaudited)
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Three Months Ended | |
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Six Months Ended | |
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June 30, | |
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June 30, | |
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2005 | |
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2004 | |
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2005 | |
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2004 | |
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HOMEBUILDING:
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Revenues:
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Home sales
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$ |
582.1 |
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$ |
462.5 |
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$ |
1,094.5 |
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$ |
869.3 |
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Land sales
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33.7 |
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35.8 |
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54.9 |
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53.9 |
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615.8 |
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498.3 |
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1,149.4 |
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923.2 |
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Cost of sales:
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Home sales
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448.2 |
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374.0 |
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849.2 |
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705.6 |
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Land sales
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29.9 |
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28.5 |
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46.7 |
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41.2 |
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478.1 |
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402.5 |
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895.9 |
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746.8 |
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Gross profit
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137.7 |
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95.8 |
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253.5 |
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176.4 |
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Selling, general and administrative expenses
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77.1 |
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59.4 |
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156.5 |
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115.7 |
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(Income) from joint ventures, net
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(8.1 |
) |
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(10.7 |
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Other (income) expense, net
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(2.3 |
) |
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0.7 |
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(4.2 |
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(0.5 |
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Homebuilding pretax income
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71.0 |
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35.7 |
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111.9 |
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61.2 |
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FINANCIAL SERVICES:
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Revenues
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11.4 |
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9.4 |
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21.4 |
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18.2 |
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Expenses
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9.0 |
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6.9 |
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17.7 |
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12.5 |
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Financial Services pretax income
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2.4 |
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2.5 |
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3.7 |
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5.7 |
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Income before provision for income taxes
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73.4 |
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38.2 |
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115.6 |
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66.9 |
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Provision for income taxes
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27.7 |
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14.1 |
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43.5 |
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24.7 |
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Net income
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$ |
45.7 |
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$ |
24.1 |
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$ |
72.1 |
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$ |
42.2 |
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EARNINGS PER COMMON SHARE:
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Basic
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$ |
0.82 |
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$ |
0.43 |
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$ |
1.29 |
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$ |
0.75 |
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Diluted
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$ |
0.79 |
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$ |
0.42 |
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$ |
1.24 |
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$ |
0.74 |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
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Basic
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56,083,450 |
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56,060,228 |
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56,078,578 |
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56,053,078 |
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Diluted
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58,189,548 |
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57,195,224 |
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58,157,052 |
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57,053,943 |
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CASH DIVIDENDS PER SHARE
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$ |
0.015 |
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$ |
0.012 |
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$ |
0.027 |
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$ |
0.012 |
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See accompanying notes to consolidated financial statements.
4
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
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Six Months Ended | |
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June 30, | |
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2005 | |
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2004 | |
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$ |
72.1 |
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$ |
42.2 |
|
Adjustments to reconcile net income to net cash used in
operating activities:
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Depreciation and amortization
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6.3 |
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6.4 |
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Non-cash compensation expense
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4.8 |
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1.7 |
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Equity in earnings from unconsolidated subsidiaries
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3.8 |
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Changes in operating assets and liabilities:
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Restricted cash
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4.2 |
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0.2 |
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Inventory
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(269.6 |
) |
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(74.9 |
) |
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Other assets
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(33.3 |
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(43.4 |
) |
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Accounts payable and other liabilities
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11.0 |
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(32.0 |
) |
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Customer deposits
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21.6 |
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21.7 |
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Mortgage loans held for sale
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14.9 |
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14.4 |
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Net cash used in operating activities
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(164.2 |
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(63.7 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES:
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Net additions to property and equipment
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(6.0 |
) |
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(9.2 |
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Investments in unconsolidated joint ventures
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(19.6 |
) |
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(13.9 |
) |
Earn out consideration paid for acquisitions
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(6.6 |
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Net cash used in investing activities
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(25.6 |
) |
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(29.7 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES:
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Net repayments on revolving credit facilities
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(10.0 |
) |
Proceeds from notes offerings
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125.0 |
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Proceeds from Homebuilding bank borrowings
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1.6 |
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Net payments on obligations for inventory not owned
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(5.2 |
) |
Net proceeds from (repayments on) Financial Services bank
borrowings
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|
0.4 |
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|
(9.3 |
) |
Payments for deferred financing costs
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(0.3 |
) |
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(2.0 |
) |
Dividends paid
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(1.5 |
) |
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|
(0.7 |
) |
Other
|
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|
0.2 |
|
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|
(0.6 |
) |
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Net cash (used in) provided by financing activities
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(1.2 |
) |
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|
98.8 |
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(Decrease) increase in cash and cash equivalents
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|
|
(191.0 |
) |
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|
5.4 |
|
Cash and cash equivalents at beginning of period
|
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|
268.5 |
|
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|
76.8 |
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Cash and cash equivalents at end of period
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|
$ |
77.5 |
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$ |
82.2 |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITY
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Decrease in obligations for inventory not owned and
corresponding decrease in inventory
|
|
$ |
(32.6 |
) |
|
$ |
(34.1 |
) |
|
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|
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|
See accompanying notes to consolidated financial statements.
5
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
|
|
1. |
Business and Organization |
Technical Olympic USA, Inc. is a homebuilder with a
geographically diversified national presence. We operate in 16
metropolitan markets located in four major geographic regions:
Florida, the Mid-Atlantic, Texas, and the West. We design,
build, and market detached single-family residences, townhomes
and condominiums. We also provide title and mortgage brokerage
services to our homebuyers and others. Generally, we do not
retain or service the mortgages that we originate but, rather,
sell the mortgages and related servicing rights to investors.
Technical Olympic S.A. owns approximately 73% of our outstanding
common stock. Technical Olympic S.A. is a publicly-traded Greek
company whose shares are traded on the Athens Stock Exchange.
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2. |
Summary of Significant Accounting Policies |
The consolidated financial statements include our accounts and
those of our subsidiaries. Our accounting and reporting policies
conform to accounting principles generally accepted in the
United States and general practices within the homebuilding
industry. These accounting principles require management to make
estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
Due to our normal operating cycle being in excess of one year,
we present unclassified consolidated statements of financial
condition.
We have two operating segments which are segregated in the
accompanying consolidated financial statements under
Homebuilding and Financial Services.
Certain prior period amounts have been reclassified to conform
to the current periods presentation.
The accompanying unaudited consolidated financial statements
reflect all adjustments, consisting primarily of normal
recurring items that, in the opinion of management, are
considered necessary for a fair presentation of the financial
position, results from operations, and cash flows for the
periods presented. Results of operations achieved through
June 30, 2005 are not necessarily indicative of those that
may be achieved for the year ending December 31, 2005.
Certain information and footnote disclosures normally included
in financial statements presented in accordance with accounting
principles generally accepted in the United States have been
omitted from the accompanying financial statements. The
financial statements included as part of this Form 10-Q
should be read in conjunction with the financial statements and
notes thereto included in our December 31, 2004 Annual
Report on Form 10-K.
For the three months ended June 30, 2005 and 2004, we have
eliminated inter-segment Financial Services revenues of
$2.1 million and $1.8 million, respectively. For the
six months ended June 30, 2005 and 2004, we have eliminated
inter-segment Financial Services revenues of $3.8 million
and $3.6 million, respectively.
6
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Basic earnings per share is computed by dividing income
available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted earnings
per share is computed based on the weighted average number of
shares of common stock and dilutive securities outstanding
during the period. Dilutive securities are options or other
common stock equivalents that are freely exercisable into common
stock at less than market exercise prices. Dilutive securities
are not included in the weighted average number of shares when
inclusion would increase the earnings per share or decrease the
loss per share.
The following table represents a reconciliation of weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended | |
|
Six Months Ended | |
|
|
June 30, | |
|
June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
Basic weighted average shares outstanding
|
|
|
56,083,450 |
|
|
|
56,060,228 |
|
|
|
56,078,578 |
|
|
|
56,053,078 |
|
Net effect of stock options assumed to be exercised
|
|
|
2,106,098 |
|
|
|
1,134,996 |
|
|
|
2,078,474 |
|
|
|
1,000,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
58,189,548 |
|
|
|
57,195,224 |
|
|
|
58,157,052 |
|
|
|
57,053,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The shares issued and outstanding and the earnings per share
amounts in the consolidated financial statements have been
adjusted to reflect a five-for-four stock split effected in the
form of a 25% stock dividend paid on March 31, 2005.
We account for our stock option plan in accordance with the
provisions of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees,
and related interpretations. As such, compensation expense is
recorded on the date of grant only if the current market price
of the underlying stock exceeds the exercise price. We have
adopted the disclosure-only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation
(SFAS No. 123). Accordingly, no compensation cost
has been recognized as all stock options granted under our stock
option plan have exercise prices at or greater than the market
value of our stock on the grant date. If the methodologies of
SFAS No. 123 were applied to determine compensation
expense for our stock options based on the fair value of our
common stock at the grant dates for awards under our option
plan, our net income and earnings per share for the three and
six months ended June 30, 2005 and
7
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
2004, would have been adjusted to the pro forma amounts
indicated below (dollars in millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
Six Months | |
|
|
Ended | |
|
Ended | |
|
|
June 30, | |
|
June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
Net income as reported
|
|
$ |
45.7 |
|
|
$ |
24.1 |
|
|
$ |
72.1 |
|
|
$ |
42.2 |
|
Add: Stock-based employee compensation included in reported net
income, net of tax
|
|
|
(0.3 |
) |
|
|
0.4 |
|
|
|
2.8 |
|
|
|
1.0 |
|
Deduct: Stock-based employee compensation expense determined
under the fair value method, net of tax
|
|
|
(0.6 |
) |
|
|
(0.6 |
) |
|
|
(1.9 |
) |
|
|
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income
|
|
$ |
44.8 |
|
|
$ |
23.9 |
|
|
$ |
73.0 |
|
|
$ |
42.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.82 |
|
|
$ |
0.43 |
|
|
$ |
1.29 |
|
|
$ |
0.75 |
|
|
Diluted
|
|
$ |
0.79 |
|
|
$ |
0.42 |
|
|
$ |
1.24 |
|
|
$ |
0.74 |
|
Pro forma earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.80 |
|
|
$ |
0.43 |
|
|
$ |
1.30 |
|
|
$ |
0.75 |
|
|
Diluted
|
|
$ |
0.77 |
|
|
$ |
0.42 |
|
|
$ |
1.26 |
|
|
$ |
0.74 |
|
The fair values of options granted were estimated on the date of
their grant using the Black-Scholes option pricing model based
on the following assumptions:
|
|
|
Expected life
|
|
4-10 years |
Risk-free interest rate
|
|
1.47%-4.02% |
Expected volatility
|
|
0.42%-0.48% |
Expected dividend yield
|
|
0.0% |
A summary of Homebuilding interest capitalized in inventory is
(dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months | |
|
Six Months | |
|
|
Ended | |
|
Ended | |
|
|
June 30, | |
|
June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
Interest capitalized, beginning of period
|
|
$ |
40.2 |
|
|
$ |
32.0 |
|
|
$ |
36.8 |
|
|
$ |
29.7 |
|
Interest incurred
|
|
|
19.6 |
|
|
|
16.7 |
|
|
|
38.7 |
|
|
|
31.6 |
|
Less interest included in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(17.7 |
) |
|
|
(12.8 |
) |
|
|
(32.4 |
) |
|
|
(23.5 |
) |
|
Other
|
|
|
1.0 |
|
|
|
(0.2 |
) |
|
|
|
|
|
|
(2.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest capitalized, end of period
|
|
$ |
43.1 |
|
|
$ |
35.7 |
|
|
$ |
43.1 |
|
|
$ |
35.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the ordinary course of business, we enter into contracts to
purchase homesites and land held for development. At
June 30, 2005 and December 31, 2004, we had refundable
and nonrefundable deposits aggregating $186.1 million and
$132.8 million, respectively, included in inventory in the
accompanying consolidated statements of financial condition. Our
liability for nonperformance under such contracts is generally
limited to forfeiture of the related deposits.
8
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In January 2003, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities
(Interpretation No. 46). Interpretation No. 46
addresses consolidation by business enterprises of variable
interest entities (VIEs) in which an entity absorbs a majority
of the expected losses, receives a majority of the entitys
expected residual returns, or both, as a result of ownership,
contractual or other financial interests in the entity.
Generally, homebuilders will enter into option contracts for the
purchase of land or homesites with land sellers and third-party
financial entities, some of which may qualify as VIEs. In
applying Interpretation No. 46 to our homesite option
contracts and other transactions with VIEs, we make estimates
regarding cash flows and other assumptions. We believe that our
critical assumptions underlying these estimates are reasonable
based on historical evidence and industry practice. Based on our
analysis of transactions entered into with VIEs, we determined
that we are the primary beneficiary of certain of these homesite
option contracts. Consequently, Interpretation No. 46
requires us to consolidate the assets (homesites) at their
fair value, although (1) we have no legal title to the
assets, (2) our maximum exposure to loss is limited to the
deposits or letters of credits placed with these entities, and
(3) creditors, if any, of these entities have no recourse
against us. The effect of Interpretation No. 46 at
June 30, 2005 was to increase inventory by
$73.6 million, excluding deposits of $9.9 million,
which had been previously recorded, with a corresponding
increase to obligations for inventory not owned in
the accompanying consolidated statement of financial condition.
We have also entered into arrangements with VIEs to acquire
homesites in which our variable interest is insignificant and,
therefore, we have determined that we are not the primary
beneficiary and are not required to consolidate the assets of
such VIEs.
From time to time we transfer title to certain parcels of land
to unrelated third parties and enter into options with the
purchasers to acquire fully developed homesites. In accordance
with SFAS No. 66, Accounting for the Sales of
Real Estate, we have accounted for these transactions as
financing arrangements because we have retained a continuing
involvement in these properties. As of June 30, 2005,
$30.0 million of inventory not owned and obligations for
inventory not owned relates to sales with continuing involvement.
|
|
4. |
Investments in Unconsolidated Joint Ventures |
Summarized condensed combined financial information of
unconsolidated entities in which we have investments that are
accounted for by the equity method is (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2005 | |
|
|
| |
|
|
Land | |
|
Home | |
|
|
|
|
Development | |
|
Construction | |
|
Total | |
|
|
| |
|
| |
|
| |
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
13.2 |
|
|
$ |
27.5 |
|
|
$ |
40.7 |
|
Inventories
|
|
|
196.3 |
|
|
|
243.3 |
|
|
|
439.6 |
|
Other assets
|
|
|
3.7 |
|
|
|
10.3 |
|
|
|
14.0 |
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
213.2 |
|
|
$ |
281.1 |
|
|
$ |
494.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity: |
Accounts payable and other liabilities
|
|
$ |
10.7 |
|
|
$ |
30.8 |
|
|
$ |
41.5 |
|
Notes payable
|
|
|
140.9 |
|
|
|
113.4 |
|
|
|
254.3 |
|
Equity of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical Olympic USA, Inc.
|
|
|
29.4 |
|
|
|
53.0 |
|
|
|
82.4 |
|
|
Others
|
|
|
32.2 |
|
|
|
83.9 |
|
|
|
116.1 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$ |
213.2 |
|
|
$ |
281.1 |
|
|
$ |
494.3 |
|
|
|
|
|
|
|
|
|
|
|
9
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2004 | |
|
|
| |
|
|
Land | |
|
Home | |
|
|
|
|
Development | |
|
Construction | |
|
Total | |
|
|
| |
|
| |
|
| |
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
1.4 |
|
|
$ |
14.8 |
|
|
$ |
16.2 |
|
Inventories
|
|
|
74.0 |
|
|
|
196.8 |
|
|
|
270.8 |
|
Other assets
|
|
|
1.4 |
|
|
|
8.4 |
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
76.8 |
|
|
$ |
220.0 |
|
|
$ |
296.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity: |
Accounts payable and other liabilities
|
|
$ |
11.0 |
|
|
$ |
10.0 |
|
|
$ |
21.0 |
|
Notes payable
|
|
|
32.0 |
|
|
|
81.8 |
|
|
|
113.8 |
|
Equity of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical Olympic USA, Inc.
|
|
|
15.6 |
|
|
|
51.0 |
|
|
|
66.6 |
|
|
Others
|
|
|
18.2 |
|
|
|
77.2 |
|
|
|
95.4 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$ |
76.8 |
|
|
$ |
220.0 |
|
|
$ |
296.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2005 | |
|
Six Months Ended June 30, 2005 | |
|
|
| |
|
| |
|
|
Land | |
|
Home | |
|
|
|
Land | |
|
Home | |
|
|
|
|
Development | |
|
Construction | |
|
Total | |
|
Development | |
|
Construction | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Revenues
|
|
$ |
3.5 |
|
|
$ |
65.1 |
|
|
$ |
68.6 |
|
|
$ |
10.2 |
|
|
$ |
103.4 |
|
|
$ |
113.6 |
|
Cost and expenses
|
|
|
4.2 |
|
|
|
57.9 |
|
|
|
62.1 |
|
|
|
11.8 |
|
|
|
92.9 |
|
|
|
104.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (losses) of unconsolidated entities
|
|
$ |
(0.7 |
) |
|
$ |
7.2 |
|
|
$ |
6.5 |
|
|
$ |
(1.6 |
) |
|
$ |
10.5 |
|
|
$ |
8.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our share of net earnings (losses)
|
|
$ |
(0.5 |
) |
|
$ |
3.0 |
|
|
$ |
2.5 |
|
|
$ |
(0.8 |
) |
|
$ |
4.6 |
|
|
$ |
3.8 |
|
Management fees earned
|
|
|
0.8 |
|
|
|
4.8 |
|
|
|
5.6 |
|
|
|
1.6 |
|
|
|
5.3 |
|
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from joint ventures
|
|
$ |
0.3 |
|
|
$ |
7.8 |
|
|
$ |
8.1 |
|
|
$ |
0.8 |
|
|
$ |
9.9 |
|
|
$ |
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We enter into strategic joint ventures to acquire, to develop
and to sell land and/or homesites, as well as to construct and
sell homes, in which we have a voting ownership interest of 50%
or less and do not have a controlling interest. Our partners
generally are unrelated homebuilders, land sellers, financial
partners or other real estate entities. At June 30, 2005,
we had made short term advances of $15.4 million to these
joint ventures. As indicated above, we have segregated joint
venture activity between joint ventures involved only in land
development and those involved in both home construction and
land development.
In many instances, we are appointed as the day-to-day manager of
the unconsolidated entities and receive management fees for
performing this function. We received management fees from the
unconsolidated entities approximating $5.6 million and
$6.9 million for the three and six months ended
June 30, 2005, respectively. These fees are included in
income from joint ventures in the accompanying consolidated
statements of income. No such fees were received during the
three and six months ended June 30, 2004 as our
unconsolidated joint venture operations during these periods
were insignificant. In the aggregate, these ventures delivered
203 and 344 homes for the three and six months ended
June 30, 2005, respectively.
10
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The change in goodwill for the six months ended June 30,
2005 and 2004 is as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
Six Months | |
|
|
Ended | |
|
|
June 30, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Balance at January 1
|
|
$ |
110.7 |
|
|
$ |
100.1 |
|
Earn out consideration paid or accrued on acquisitions
|
|
|
|
|
|
|
6.6 |
|
|
|
|
|
|
|
|
Balance at June 30
|
|
$ |
110.7 |
|
|
$ |
106.7 |
|
|
|
|
|
|
|
|
Our revolving credit facility permits us to borrow to the lesser
of (i) $600.0 million or (ii) our borrowing base
(calculated in accordance with the revolving credit facility
agreement) minus our outstanding senior debt. The facility has a
letter of credit subfacility of $300.0 million. In
addition, we have the right to increase the size of the facility
to provide up to an additional $150.0 million of revolving
loans, provided we satisfy certain conditions. Loans outstanding
under the facility may be base rate loans or Eurodollar loans,
at our election. Our obligations under the revolving credit
facility are guaranteed by our material direct and indirect
subsidiaries, other than our mortgage and title subsidiaries
(unrestricted subsidiaries). The revolving credit facility
expires on October 26, 2008. As of June 30, 2005, we
had no borrowings under the revolving credit facility and had
issued letters of credit totaling $140.0 million. We had
$460.0 million remaining in availability, all of which we
could have borrowed without violating any of our debt covenants.
Our mortgage subsidiary has the ability to borrow up to
$120.0 million under two revolving warehouse lines of
credit to fund the origination of residential mortgage loans.
One of these warehouse lines can be increased to provide up to
an additional $50.0 million of availability, subject to
meeting certain requirements. One of the lines of credit bears
interest at the 30 day LIBOR rate plus a margin of 1.25% to
3.0%, determined based upon the type of mortgage loans being
financed, and the other bears interest at the 30 day
Eurodollar rate plus a margin of 1.125%. Both warehouse lines of
credit are secured by funded mortgages, which are pledged as
collateral, and require our mortgage subsidiary to maintain
certain financial ratios and minimums. As of June 30, 2005,
we had $49.4 million in borrowings under our warehouse
lines of credit.
|
|
7. |
Commitments and Contingencies |
We are involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a
material adverse effect on our consolidated financial condition
or results of operations. In addition, a member of our
management group has asserted certain claims against us. A
lawsuit has not been filed. This matter is subject to further
discovery and uncertainties. We do not anticipate that the
resolution of this matter will be material to our consolidated
financial condition or our results of operations.
We provide homebuyers with a one-year or two-year limited
warranty of workmanship and materials, and an eight-year or
ten-year limited warranty covering major structural defects. We
generally have recourse against our subcontractors for claims
relating to workmanship and materials. We also have a
homebuilder protective policy which covers warranty claims for
structure and design defects related to homes sold by us during
the policy period, subject to a significant self-insured
retention per occurrence. Estimated warranty costs are recorded
at the time of sale based on historical experience and current
factors.
11
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the six months ended June 30, 2005 and 2004, changes
in our warranty accrual consisted of (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
Six Months | |
|
|
Ended | |
|
|
June 30, | |
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Accrued warranty costs at January 1
|
|
$ |
6.4 |
|
|
$ |
5.2 |
|
Liability recorded for warranties issued during the period
|
|
|
6.0 |
|
|
|
4.6 |
|
Warranty work performed
|
|
|
(4.1 |
) |
|
|
(3.9 |
) |
Adjustments
|
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
Accrued warranty costs at June 30
|
|
$ |
7.7 |
|
|
$ |
5.9 |
|
|
|
|
|
|
|
|
|
|
8. |
Stockholders Equity and Stock-Based Compensation |
During 2001, we adopted the Technical Olympic USA, Inc. Annual
and Long-Term Incentive Plan (the Plan) pursuant to
which our employees, consultants and directors, and those of our
subsidiaries and affiliated entities, are eligible to receive
shares of restricted common stock and/or options to purchase
shares of common stock. Under the Plan, subject to adjustment as
defined, the maximum number of shares with respect to which
awards may be granted is 7,500,000. At June 30, 2005,
6,749,360 options and 43,703 shares of restricted stock had
been granted. Of the stock options granted, 1,567,072 contain
accelerated vesting criteria or other features that are being
accounted for under the variable accounting method as provided
by APB Opinion No. 25. Additionally, certain stock purchase
rights have been granted to our chief executive officer that are
subject to the variable accounting method. During the three and
six months ended June 30, 2005, we recognized income of
$0.5 million and expense of $4.5 million,
respectively, related to these accelerated vesting options and
stock purchase rights, as compared to expense of
$0.7 million and $1.7 million, respectively, during
the three and six months ended June 30, 2004.
On August 1, 2005, through a joint venture, we completed
the acquisition of the homebuilding assets and operations of
Transeastern Properties, Inc. (Transeastern)
headquartered in Coral Springs, Florida. Our joint venture
partner is an entity controlled by the former majority owners of
Transeastern. The joint venture acquired Transeasterns
homebuilding assets, including work in process, finished lots
and certain land option rights, for approximately
$826.2 million (which includes the assumption of
$112.0 million of liabilities). An earnout of up to an
additional $75.0 million will be paid, to the sellers, if
certain conditions are met. In addition to the net assets
acquired in the transaction, the joint venture will have a right
of first offer on land developed by a related entity of our
joint venture partner for a period of five years. We are the
managing member of the joint venture and hold a 50% voting
interest. The joint venture is funded with $675.0 million
of third party debt capacity (of which $560.0 million was
drawn), a $20.0 million subordinated bridge loan from us
and $165.0 million of equity, of which $90.0 million
was contributed by us. The third party debt is secured by the
joint ventures assets and ownership interests and is
non-recourse to us. We will account for this joint venture under
the equity method of accounting.
|
|
10. |
Summarized Financial Information |
Our outstanding senior notes and senior subordinated notes are
fully and unconditionally guaranteed, on a joint and several
basis, by the Guarantor Subsidiaries, which are all of our
material direct and indirect subsidiaries, other than our
mortgage and title operations subsidiaries (the Non-guarantor
Subsidiaries). Each of the Guarantor Subsidiaries is directly or
indirectly 100% owned by us. In lieu of providing separate
audited financial statements for the Guarantor Subsidiaries,
consolidated condensed financial statements are presented below.
Separate financial statements and other disclosures concerning
the Guarantor Subsidiaries are not presented because management
has determined that they are not material to investors.
12
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Financial Condition
June 30, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
31.6 |
|
|
$ |
44.6 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
76.2 |
|
Inventory
|
|
|
|
|
|
|
1,518.3 |
|
|
|
|
|
|
|
|
|
|
|
1,518.3 |
|
Property and equipment, net
|
|
|
7.1 |
|
|
|
18.8 |
|
|
|
|
|
|
|
|
|
|
|
25.9 |
|
Investments in unconsolidated joint ventures
|
|
|
|
|
|
|
82.4 |
|
|
|
|
|
|
|
|
|
|
|
82.4 |
|
Advances to unconsolidated joint ventures
|
|
|
|
|
|
|
15.4 |
|
|
|
|
|
|
|
|
|
|
|
15.4 |
|
Investments in/Advances to consolidated subsidiaries
|
|
|
1,516.4 |
|
|
|
(147.5 |
) |
|
|
(7.1 |
) |
|
|
(1,361.8 |
) |
|
|
|
|
Other assets and advances
|
|
|
53.3 |
|
|
|
33.7 |
|
|
|
|
|
|
|
|
|
|
|
87.0 |
|
Goodwill
|
|
|
|
|
|
|
110.7 |
|
|
|
|
|
|
|
|
|
|
|
110.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,608.4 |
|
|
|
1,676.4 |
|
|
|
(7.1 |
) |
|
|
(1,361.8 |
) |
|
|
1,915.9 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
74.2 |
|
|
|
|
|
|
|
74.2 |
|
Mortgage loans held for sale
|
|
|
|
|
|
|
|
|
|
|
60.9 |
|
|
|
|
|
|
|
60.9 |
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
12.6 |
|
|
|
|
|
|
|
12.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
147.7 |
|
|
|
|
|
|
|
147.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$ |
1,608.4 |
|
|
$ |
1,676.4 |
|
|
$ |
140.6 |
|
|
$ |
(1,361.8 |
) |
|
$ |
2,063.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other liabilities
|
|
$ |
60.6 |
|
|
$ |
139.7 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
200.3 |
|
Customer deposits
|
|
|
|
|
|
|
90.8 |
|
|
|
|
|
|
|
|
|
|
|
90.8 |
|
Obligations for inventory not owned
|
|
|
|
|
|
|
103.6 |
|
|
|
|
|
|
|
|
|
|
|
103.6 |
|
Notes payable
|
|
|
811.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
811.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
872.1 |
|
|
|
334.1 |
|
|
|
|
|
|
|
|
|
|
|
1,206.2 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other liabilities
|
|
|
|
|
|
|
|
|
|
|
71.7 |
|
|
|
|
|
|
|
71.7 |
|
Bank borrowings
|
|
|
|
|
|
|
|
|
|
|
49.4 |
|
|
|
|
|
|
|
49.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121.1 |
|
|
|
|
|
|
|
121.1 |
|
Total liabilities
|
|
|
872.1 |
|
|
|
334.1 |
|
|
|
121.1 |
|
|
|
|
|
|
|
1,327.3 |
|
Stockholders equity
|
|
|
736.3 |
|
|
|
1,342.3 |
|
|
|
19.5 |
|
|
|
(1,361.8 |
) |
|
|
736.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
1,608.4 |
|
|
$ |
1,676.4 |
|
|
$ |
140.6 |
|
|
$ |
(1,361.8 |
) |
|
$ |
2,063.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Financial Condition
December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
159.3 |
|
|
$ |
66.3 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
225.6 |
|
Inventory
|
|
|
|
|
|
|
1,281.2 |
|
|
|
|
|
|
|
|
|
|
|
1,281.2 |
|
Property and equipment, net
|
|
|
6.8 |
|
|
|
19.9 |
|
|
|
|
|
|
|
|
|
|
|
26.7 |
|
Investments in unconsolidated joint ventures
|
|
|
|
|
|
|
66.6 |
|
|
|
|
|
|
|
|
|
|
|
66.6 |
|
Advances to/ investments in subsidiaries
|
|
|
1,349.9 |
|
|
|
24.0 |
|
|
|
(62.8 |
) |
|
|
(1,311.1 |
) |
|
|
|
|
Other assets and advances
|
|
|
22.4 |
|
|
|
48.7 |
|
|
|
|
|
|
|
|
|
|
|
71.1 |
|
Goodwill
|
|
|
|
|
|
|
110.7 |
|
|
|
|
|
|
|
|
|
|
|
110.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,538.4 |
|
|
|
1,617.4 |
|
|
|
(62.8 |
) |
|
|
(1,311.1 |
) |
|
|
1,781.9 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
120.0 |
|
|
|
|
|
|
|
120.0 |
|
Mortgage loans held for sale
|
|
|
|
|
|
|
|
|
|
|
75.8 |
|
|
|
|
|
|
|
75.8 |
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
9.8 |
|
|
|
|
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205.6 |
|
|
|
|
|
|
|
205.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
1,538.4 |
|
|
$ |
1,617.4 |
|
|
$ |
142.8 |
|
|
$ |
(1,311.1 |
) |
|
$ |
1,987.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other liabilities
|
|
$ |
64.3 |
|
|
$ |
124.6 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
188.9 |
|
Customer deposits
|
|
|
|
|
|
|
69.1 |
|
|
|
|
|
|
|
|
|
|
|
69.1 |
|
Obligations for inventory not owned
|
|
|
|
|
|
|
136.2 |
|
|
|
|
|
|
|
|
|
|
|
136.2 |
|
Notes payable
|
|
|
811.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
811.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
875.7 |
|
|
|
329.9 |
|
|
|
|
|
|
|
|
|
|
|
1,205.6 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other liabilities
|
|
|
|
|
|
|
|
|
|
|
70.2 |
|
|
|
|
|
|
|
70.2 |
|
Bank borrowings
|
|
|
|
|
|
|
|
|
|
|
49.0 |
|
|
|
|
|
|
|
49.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119.2 |
|
|
|
|
|
|
|
119.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
875.7 |
|
|
|
329.9 |
|
|
|
119.2 |
|
|
|
|
|
|
|
1,324.8 |
|
Stockholders equity
|
|
|
662.7 |
|
|
|
1,287.5 |
|
|
|
23.6 |
|
|
|
(1,311.1 |
) |
|
|
662.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$ |
1,538.4 |
|
|
$ |
1,617.4 |
|
|
$ |
142.8 |
|
|
$ |
(1,311.1 |
) |
|
$ |
1,987.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Income
Three Months Ended June 30, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
|
|
|
$ |
615.8 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
615.8 |
|
Cost of sales
|
|
|
|
|
|
|
478.1 |
|
|
|
|
|
|
|
|
|
|
|
478.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
137.7 |
|
|
|
|
|
|
|
|
|
|
|
137.7 |
|
Selling, general and administrative expenses
|
|
|
15.0 |
|
|
|
64.2 |
|
|
|
|
|
|
|
(2.1 |
) |
|
|
77.1 |
|
(Income) from joint ventures, net
|
|
|
|
|
|
|
(8.1 |
) |
|
|
|
|
|
|
|
|
|
|
(8.1 |
) |
Other (income) expense, net
|
|
|
(68.1 |
) |
|
|
1.5 |
|
|
|
|
|
|
|
64.3 |
|
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding pretax income
|
|
|
53.1 |
|
|
|
80.1 |
|
|
|
|
|
|
|
(62.2 |
) |
|
|
71.0 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
13.5 |
|
|
|
(2.1 |
) |
|
|
11.4 |
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
10.5 |
|
|
|
(1.5 |
) |
|
|
9.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services pretax income
|
|
|
|
|
|
|
|
|
|
|
3.0 |
|
|
|
(0.6 |
) |
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
|
53.1 |
|
|
|
80.1 |
|
|
|
3.0 |
|
|
|
(62.8 |
) |
|
|
73.4 |
|
Provision (benefit) for income taxes
|
|
|
(0.6 |
) |
|
|
27.2 |
|
|
|
1.1 |
|
|
|
|
|
|
|
27.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
53.7 |
|
|
$ |
52.9 |
|
|
$ |
1.9 |
|
|
$ |
(62.8 |
) |
|
$ |
45.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of Income
Three Months Ended June 30, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
|
|
|
$ |
498.3 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
498.3 |
|
Cost of sales
|
|
|
|
|
|
|
402.5 |
|
|
|
|
|
|
|
|
|
|
|
402.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
95.8 |
|
|
|
|
|
|
|
|
|
|
|
95.8 |
|
Selling, general and administrative expenses
|
|
|
10.2 |
|
|
|
51.0 |
|
|
|
|
|
|
|
(1.8 |
) |
|
|
59.4 |
|
Other (income) expense, net
|
|
|
(29.4 |
) |
|
|
(0.9 |
) |
|
|
|
|
|
|
31.0 |
|
|
|
0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding pretax income
|
|
|
19.2 |
|
|
|
45.7 |
|
|
|
|
|
|
|
(29.2 |
) |
|
|
35.7 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
11.2 |
|
|
|
(1.8 |
) |
|
|
9.4 |
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
8.4 |
|
|
|
(1.5 |
) |
|
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services pretax income
|
|
|
|
|
|
|
|
|
|
|
2.8 |
|
|
|
(0.3 |
) |
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision (benefit) for income taxes
|
|
|
19.2 |
|
|
|
45.7 |
|
|
|
2.8 |
|
|
|
(29.5 |
) |
|
|
38.2 |
|
Provision (benefit) for income taxes
|
|
|
(4.9 |
) |
|
|
16.9 |
|
|
|
2.1 |
|
|
|
|
|
|
|
14.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
24.1 |
|
|
$ |
28.8 |
|
|
$ |
0.7 |
|
|
$ |
(29.5 |
) |
|
$ |
24.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Income
Six Months Ended June 30, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
|
|
|
$ |
1,149.4 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,149.4 |
|
Cost of sales
|
|
|
|
|
|
|
895.9 |
|
|
|
|
|
|
|
|
|
|
|
895.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
253.5 |
|
|
|
|
|
|
|
|
|
|
|
253.5 |
|
Selling, general and administrative expenses
|
|
|
36.5 |
|
|
|
123.8 |
|
|
|
|
|
|
|
(3.8 |
) |
|
|
156.5 |
|
(Income) from joint ventures, net
|
|
|
|
|
|
|
(10.7 |
) |
|
|
|
|
|
|
|
|
|
|
(10.7 |
) |
Other (income) expense, net
|
|
|
(107.4 |
) |
|
|
17.2 |
|
|
|
|
|
|
|
86.0 |
|
|
|
(4.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding pretax income
|
|
|
70.9 |
|
|
|
123.2 |
|
|
|
|
|
|
|
(82.2 |
) |
|
|
111.9 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
25.2 |
|
|
|
(3.8 |
) |
|
|
21.4 |
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
20.1 |
|
|
|
(2.4 |
) |
|
|
17.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services pretax income
|
|
|
|
|
|
|
|
|
|
|
5.1 |
|
|
|
(1.4 |
) |
|
|
3.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
|
70.9 |
|
|
|
123.2 |
|
|
|
5.1 |
|
|
|
(83.6 |
) |
|
|
115.6 |
|
Provision (benefit) for income taxes
|
|
|
(1.2 |
) |
|
|
43.4 |
|
|
|
1.3 |
|
|
|
|
|
|
|
43.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
72.1 |
|
|
$ |
79.8 |
|
|
$ |
3.8 |
|
|
$ |
(83.6 |
) |
|
$ |
72.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Statement of Income
Six Months Ended June 30, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
HOMEBUILDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
|
|
|
$ |
923.2 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
923.2 |
|
Cost of sales
|
|
|
|
|
|
|
746.8 |
|
|
|
|
|
|
|
|
|
|
|
746.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
176.4 |
|
|
|
|
|
|
|
|
|
|
|
176.4 |
|
Selling, general and administrative expenses
|
|
|
20.8 |
|
|
|
98.5 |
|
|
|
|
|
|
|
(3.6 |
) |
|
|
115.7 |
|
Other (income) expense, net
|
|
|
(54.2 |
) |
|
|
(2.6 |
) |
|
|
|
|
|
|
56.3 |
|
|
|
(0.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding pretax income
|
|
|
33.4 |
|
|
|
80.5 |
|
|
|
|
|
|
|
(52.7 |
) |
|
|
61.2 |
|
FINANCIAL SERVICES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
21.8 |
|
|
|
(3.6 |
) |
|
|
18.2 |
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
15.2 |
|
|
|
(2.7 |
) |
|
|
12.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services pretax income
|
|
|
|
|
|
|
|
|
|
|
6.6 |
|
|
|
(0.9 |
) |
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision (benefit) for income taxes
|
|
|
33.4 |
|
|
|
80.5 |
|
|
|
6.6 |
|
|
|
(53.6 |
) |
|
|
66.9 |
|
Provision (benefit) for income taxes
|
|
|
(8.8 |
) |
|
|
29.8 |
|
|
|
3.7 |
|
|
|
|
|
|
|
24.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
42.2 |
|
|
$ |
50.7 |
|
|
$ |
2.9 |
|
|
$ |
(53.6 |
) |
|
$ |
42.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Cash Flows
Six Months Ended June 30, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
72.1 |
|
|
$ |
79.8 |
|
|
$ |
3.8 |
|
|
$ |
(83.6 |
) |
|
$ |
72.1 |
|
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1.8 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
6.3 |
|
|
Non-cash compensation expense
|
|
|
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.8 |
|
|
Equity in earnings from unconsolidated subsidiaries
|
|
|
|
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
3.8 |
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
(1.2 |
) |
|
|
6.3 |
|
|
|
(0.9 |
) |
|
|
|
|
|
|
4.2 |
|
|
|
Inventory
|
|
|
|
|
|
|
(269.6 |
) |
|
|
|
|
|
|
|
|
|
|
(269.6 |
) |
|
|
Other assets
|
|
|
(30.6 |
) |
|
|
|
|
|
|
(2.7 |
) |
|
|
|
|
|
|
(33.3 |
) |
|
|
Accounts payable and other liabilities
|
|
|
(5.6 |
) |
|
|
15.0 |
|
|
|
1.6 |
|
|
|
|
|
|
|
11.0 |
|
|
|
Customer deposits
|
|
|
|
|
|
|
21.6 |
|
|
|
|
|
|
|
|
|
|
|
21.6 |
|
|
|
Mortgage loans held for sale
|
|
|
|
|
|
|
|
|
|
|
14.9 |
|
|
|
|
|
|
|
14.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
41.3 |
|
|
|
(138.6 |
) |
|
|
16.7 |
|
|
|
(83.6 |
) |
|
|
(164.2 |
) |
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net additions to property and equipment
|
|
|
(2.1 |
) |
|
|
(3.9 |
) |
|
|
|
|
|
|
|
|
|
|
(6.0 |
) |
Investments in unconsolidated joint ventures
|
|
|
|
|
|
|
(19.6 |
) |
|
|
|
|
|
|
|
|
|
|
(19.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(2.1 |
) |
|
|
(23.5 |
) |
|
|
|
|
|
|
|
|
|
|
(25.6 |
) |
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from Financial Services bank borrowings
|
|
|
|
|
|
|
|
|
|
|
0.4 |
|
|
|
|
|
|
|
0.4 |
|
Payments for deferred financing costs
|
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3 |
) |
Dividends paid
|
|
|
(1.5 |
) |
|
|
|
|
|
|
(8.0 |
) |
|
|
8.0 |
|
|
|
(1.5 |
) |
Increase (decrease) in intercompany transactions
|
|
|
(166.6 |
) |
|
|
146.8 |
|
|
|
(55.8 |
) |
|
|
75.6 |
|
|
|
|
|
Other
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(168.2 |
) |
|
|
146.8 |
|
|
|
(63.4 |
) |
|
|
83.6 |
|
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
(129.0 |
) |
|
|
(15.3 |
) |
|
|
(46.7 |
) |
|
|
|
|
|
|
(191.0 |
) |
Cash and cash equivalents at beginning of period
|
|
|
159.3 |
|
|
|
58.3 |
|
|
|
50.9 |
|
|
|
|
|
|
|
268.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
30.3 |
|
|
$ |
43.0 |
|
|
$ |
4.2 |
|
|
|
|
|
|
$ |
77.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
TECHNICAL OLYMPIC USA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Consolidating Statement of Cash Flows
Six Months Ended June 30, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical | |
|
|
|
Non- | |
|
|
|
|
|
|
Olympic | |
|
Guarantor | |
|
Guarantor | |
|
Intercompany | |
|
|
|
|
USA, Inc. | |
|
Subsidiaries | |
|
Subsidiaries | |
|
Eliminations | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(Dollars in millions) | |
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
42.2 |
|
|
$ |
50.7 |
|
|
$ |
2.9 |
|
|
$ |
(53.6 |
) |
|
$ |
42.2 |
|
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1.6 |
|
|
|
4.8 |
|
|
|
|
|
|
|
|
|
|
|
6.4 |
|
|
Non-cash compensation expense
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.7 |
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
1.5 |
|
|
|
(5.6 |
) |
|
|
4.3 |
|
|
|
|
|
|
|
0.2 |
|
|
|
Inventory
|
|
|
0.3 |
|
|
|
(75.2 |
) |
|
|
|
|
|
|
|
|
|
|
(74.9 |
) |
|
|
Other assets
|
|
|
(11.7 |
) |
|
|
(32.2 |
) |
|
|
(1.9 |
) |
|
|
2.4 |
|
|
|
(43.4 |
) |
|
|
Accounts payable and other liabilities
|
|
|
(4.4 |
) |
|
|
(20.1 |
) |
|
|
(5.1 |
) |
|
|
(2.4 |
) |
|
|
(32.0 |
) |
|
|
Customer deposits
|
|
|
|
|
|
|
21.7 |
|
|
|
|
|
|
|
|
|
|
|
21.7 |
|
|
|
Mortgage loans held for sale
|
|
|
|
|
|
|
|
|
|
|
14.4 |
|
|
|
|
|
|
|
14.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
31.2 |
|
|
|
(55.9 |
) |
|
|
14.6 |
|
|
|
(53.6 |
) |
|
|
(63.7 |
) |
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net additions to property and equipment
|
|
|
(0.9 |
) |
|
|
(8.3 |
) |
|
|
|
|
|
|
|
|
|
|
(9.2 |
) |
Investments in unconsolidated joint ventures
|
|
|
|
|
|
|
(13.9 |
) |
|
|
|
|
|
|
|
|
|
|
(13.9 |
) |
Earn out consideration paid for acquisitions
|
|
|
|
|
|
|
(6.6 |
) |
|
|
|
|
|
|
|
|
|
|
(6.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(0.9 |
) |
|
|
(28.8 |
) |
|
|
|
|
|
|
|
|
|
|
(29.7 |
) |
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments on revolving credit facilities
|
|
|
(10.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.0 |
) |
Proceeds from notes offering
|
|
|
125.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125.0 |
|
Proceeds from Homebuilding bank borrowings
|
|
|
|
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
1.6 |
|
Net payments on obligations for inventory not owned
|
|
|
|
|
|
|
(5.2 |
) |
|
|
|
|
|
|
|
|
|
|
(5.2 |
) |
Net repayments on Financial Services bank borrowings
|
|
|
|
|
|
|
|
|
|
|
(9.3 |
) |
|
|
|
|
|
|
(9.3 |
) |
Payments for deferred financing costs
|
|
|
(2.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
Dividends paid
|
|
|
(0.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.7 |
) |
Increase (decrease) in intercompany transactions
|
|
|
(159.9 |
) |
|
|
109.8 |
|
|
|
(3.5 |
) |
|
|
53.6 |
|
|
|
|
|
Other
|
|
|
0.2 |
|
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(47.4 |
) |
|
|
105.4 |
|
|
|
(12.8 |
) |
|
|
53.6 |
|
|
|
98.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(17.1 |
) |
|
|
20.7 |
|
|
|
1.8 |
|
|
|
|
|
|
|
5.4 |
|
Cash and cash equivalents at beginning of period
|
|
|
46.0 |
|
|
|
27.7 |
|
|
|
3.1 |
|
|
|
|
|
|
|
76.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$ |
28.9 |
|
|
$ |
48.4 |
|
|
$ |
4.9 |
|
|
|
|
|
|
$ |
82.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
ITEM 2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS |
Executive Summary
We generate revenues from our homebuilding operations
(Homebuilding) and financial services operations
(Financial Services), which comprise our operating
segments. Through our Homebuilding operations we design, build
and market high-quality detached single-family residences, town
homes and condominiums in 16 metropolitan markets located in
four major geographic regions: Florida, the Mid-Atlantic, Texas
and the West.
|
|
|
|
|
|
|
Florida |
|
Mid-Atlantic |
|
Texas |
|
West |
|
|
|
|
|
|
|
Jacksonville
|
|
Baltimore /Southern Pennsylvania |
|
Austin |
|
Central Colorado |
Orlando
|
|
Delaware |
|
Dallas/Ft. Worth |
|
Las Vegas |
Southeast Florida
|
|
Nashville |
|
Houston |
|
Phoenix |
Southwest Florida
|
|
Northern Virginia |
|
San Antonio |
|
|
Tampa/ St. Petersburg
|
|
|
|
|
|
|
We build homes for inventory and on a pre-sold basis. At
June 30, 2005, we had 5,138 homes completed or under
construction (including unconsolidated joint ventures), of which
approximately 15% were unsold. At June 30, 2005, we had 128
completed unsold homes in our inventory (including
unconsolidated joint ventures), of which approximately 19% had
been completed for more than 90 days. Our completed unsold
homes have decreased by 37% from 203 at December 31, 2004;
however, they are up slightly from 106 at March 31, 2005.
At June 30, 2005, our completed unsold homes in inventory
represent under 3% of the total homes completed or under
construction (and average less than one per active community) as
compared to 5% at December 31, 2004. We are actively
working to reduce our finished speculative home inventory to
reduce carrying costs and to increase our available capital.
Once a sales contract with a buyer has been approved, we
classify the transaction as a new sales order and
include the home in backlog. Such sales orders are
usually subject to certain contingencies such as the
buyers ability to qualify for financing. At closing, title
passes to the buyer and a home is considered to be
delivered and is removed from backlog. Revenue and
cost of sales are recognized upon the delivery of the home, land
or homesite when title is transferred to the buyer. We estimate
that the average period between the execution of a sales
contract for a home and closing is approximately six to twelve
months for presold homes; however, this varies by market. The
principal expenses of our Homebuilding operations are
(i) cost of sales and (ii) selling, general and
administrative (SG&A) expenses. Costs of home
sales include land and land development costs, home construction
costs, previously capitalized indirect costs, capitalized
interest and estimated warranty costs. SG&A expenses for our
Homebuilding operations include administrative costs,
advertising expenses, on-site marketing expenses, sales
commission costs, and closing costs. Sales commissions are
included in selling, general and administrative costs when the
related revenue is recognized. As used herein,
Homebuilding includes results of home and land
sales. Home sales includes results related only to
the sale of homes.
We were actively selling homes in 228 communities (including 20
through our unconsolidated joint ventures) and 253 communities
at June 30, 2005 and 2004, respectively. The decline in
active communities is due to delays associated with bringing new
communities on line and the completion of sales activities in
other communities. For the three months ended June 30,
2005, total revenues increased 24%, net income increased 90%,
net sales orders (including unconsolidated joint ventures)
increased 14% and home deliveries (including unconsolidated
joint ventures) increased 32% as compared to the same period in
the prior year. For the six months ended June 30, 2005,
total revenues increased 24%, net income increased 71%, net
sales orders (including unconsolidated joint ventures) increased
6% and home deliveries (including unconsolidated joint ventures)
increased 32% as compared to the same period in the prior year.
Sales value in backlog at June 30, 2005 as compared to
June 30, 2004 increased by 37% to $2.1 billion. Our
joint ventures had an additional $0.4 billion in sales
backlog at June 30, 2005. Our home cancellation rate was
approximately 14% for both the three and six months ended
June 30, 2005. Our
19
percentage of converting backlog units at the beginning of the
quarter to deliveries during the quarter was 34%, which is
consistent with the first quarter of 2005. We anticipate that
this conversion rate will begin to improve in the last half of
the year as a result of our efforts to reduce our sales to
delivery timeline. We continue to be impacted by labor and
supply shortages and increases in the cost of materials caused
by the Florida hurricanes in 2004 and 2005 and expect them to
continue for some time.
We have entered into, and expect to expand our use of, joint
ventures that acquire and develop land for our Homebuilding
operations and/or joint ventures that additionally build and
market homes. The majority of these joint ventures are not
consolidated. At June 30, 2005, our investment in these
unconsolidated joint ventures was $82.4 million, and we had
made short term advances of $15.4 million to these joint
ventures. In addition, we seek to use option contracts to
acquire land whenever feasible. Option contracts allow us to
control significant homesite positions with minimal capital
investment and substantially reduce the risks associated with
land ownership and development. At June 30, 2005, we
controlled approximately 74,000 homesites (including
unconsolidated joint ventures) of which 81% were controlled
through various option arrangements.
To provide homebuyers with a seamless home purchasing
experience, we have a complementary financial services business
where we provide mortgage financing and closing services and
offer title, homeowners and other insurance products to
our homebuyers and others. Our mortgage financing operation
derives most of its revenues from buyers of our homes, although
it also offers its services to existing homeowners refinancing
their mortgages. Our closing services and our insurance agency
operations are used by our homebuyers and a broad range of other
clients purchasing or refinancing residential or commercial real
estate. Our mortgage financing operations revenues consist
primarily of origination and premium fee income, interest
income, and the gain on the sale of the mortgages. Our title
operations revenues consist primarily of title insurance
and closing services. The principal expenses of our Financial
Services operations are SG&A expenses, which consist
primarily of compensation and interest expense on our warehouse
lines of credit.
Critical Accounting Policies
There have been no significant changes to our critical
accounting policies during the six months ended June 30,
2005, as compared to those we disclosed in Managements
Discussion and Analysis of Financial Condition and Results of
Operations in our Annual Report on Form 10-K for the year
ended December 31, 2004.
Recent Developments
On August 1, 2005, through a joint venture, we completed
the acquisition of the homebuilding assets and operations of
Transeastern Properties, Inc. (Transeastern)
headquartered in Coral Springs, Florida. Our joint venture
partner is an entity controlled by the former majority owners of
Transeastern. The joint venture acquired Transeasterns
homebuilding assets, including work in process, finished lots
and certain land option rights, for approximately
$826.2 million (which includes the assumption of
$112.0 million of liabilities). An earnout of up to an
additional $75.0 million will be paid, to the sellers, if
certain conditions are met. In addition to the net assets
acquired in the transaction, the joint venture will have a right
of first offer on land developed by a related entity of our
joint venture partner for a period of five years. We are the
managing member of the joint venture and hold a 50% voting
interest. The joint venture is funded with $675.0 million
of third party debt capacity (of which $560.0 million was
drawn), a $20.0 million subordinated bridge loan from us
and $165.0 million of equity, of which $90.0 million
was contributed by us. The third party debt is secured by the
joint ventures assets and ownership interests and is
non-recourse to us. We will account for this joint venture under
the equity method of accounting.
20
Results of Operations Consolidated
|
|
|
Three Months Ended June 30, 2005 Compared to Three
Months Ended June 30, 2004 |
Total revenues increased 24% to $627.2 million for the
three months ended June 30, 2005, from $507.7 million
for the three months ended June 30, 2004. This increase is
attributable to an increase in Homebuilding revenues of 24%, and
an increase in Financial Services revenues of 21%.
Income before provision for income taxes increased by 92% to
$73.4 million for the three months ended June 30,
2005, from $38.2 million for the comparable period in 2004.
This increase is attributable to an increase in Homebuilding
pretax income to $71.0 million for the three months ended
June 30, 2005, from $35.7 million for the three months
ended June 30, 2004.
Our effective tax rate was 37.8% and 37.0% for the three months
ended June 30, 2005 and 2004, respectively. This increase
was due to increases in income in states with higher tax rates.
As a result of the above, net income increased to
$45.7 million (or $0.79 per diluted share) for the
three months ended June 30, 2005 from $24.1 million
(or $0.42 per diluted share) for the three months ended
June 30, 2004.
|
|
|
Six Months Ended June 30, 2005 Compared to Six Months
Ended June 30, 2004 |
Total revenues increased 24% to $1,170.8 million for the
six months ended June 30, 2005, from $941.4 million
for the six months ended June 30, 2004. This increase is
attributable to an increase in Homebuilding revenues of 25%, and
an increase in Financial Services revenues of 18%.
Income before provision for income taxes increased by 73% to
$115.6 million for the six months ended June 30, 2005,
from $66.9 million for the comparable period in 2004. This
increase is attributable to an increase in Homebuilding pretax
income to $111.9 million for the six months ended
June 30, 2005, from $61.2 million for the six months
ended June 30, 2004. This was partially offset by a decline
in Financial Services pretax income to $3.7 million for the
six months ended June 30, 2005 from $5.7 million for
the six months ended June 30, 2004.
Our effective tax rate was 37.7% and 37.0% for the six months
ended June 30, 2005 and 2004, respectively. This increase
was due to increases in income in states with higher tax rates.
As a result of the above, net income increased to
$72.1 million (or $1.24 per diluted share) for the six
months ended June 30, 2005 from $42.2 million (or
$0.74 per diluted share) for the six months ended
June 30, 2004.
21
Results of Operations
The following tables set forth certain operating and financial
data for our homebuilding operations in our four major
geographic regions, Florida, the Mid-Atlantic, Texas and the
West (dollars in millions, except average price in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, | |
|
Six Months Ended June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Deliveries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
|
760 |
|
|
$ |
223.3 |
|
|
|
556 |
|
|
$ |
147.2 |
|
|
|
1,517 |
|
|
$ |
436.2 |
|
|
|
1,100 |
|
|
$ |
288.7 |
|
Mid-Atlantic
|
|
|
155 |
|
|
|
64.3 |
|
|
|
115 |
|
|
|
43.4 |
|
|
|
277 |
|
|
|
111.3 |
|
|
|
235 |
|
|
|
88.6 |
|
Texas
|
|
|
454 |
|
|
|
110.2 |
|
|
|
470 |
|
|
|
120.1 |
|
|
|
847 |
|
|
|
204.3 |
|
|
|
889 |
|
|
|
221.2 |
|
West
|
|
|
643 |
|
|
|
184.3 |
|
|
|
541 |
|
|
|
151.8 |
|
|
|
1,238 |
|
|
|
342.7 |
|
|
|
975 |
|
|
|
270.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total
|
|
|
2,012 |
|
|
|
582.1 |
|
|
|
1,682 |
|
|
|
462.5 |
|
|
|
3,879 |
|
|
|
1,094.5 |
|
|
|
3,199 |
|
|
|
869.3 |
|
From unconsolidated joint ventures
|
|
|
203 |
|
|
|
65.1 |
|
|
|
2 |
|
|
|
0.6 |
|
|
|
344 |
|
|
|
103.4 |
|
|
|
2 |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,215 |
|
|
$ |
647.2 |
|
|
|
1,684 |
|
|
$ |
463.1 |
|
|
|
4,223 |
|
|
$ |
1,197.9 |
|
|
|
3,201 |
|
|
$ |
869.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, | |
|
Six Months Ended June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
Homes | |
|
$ | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Net Sales Orders(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
|
776 |
|
|
$ |
261.3 |
|
|
|
971 |
|
|
$ |
289.1 |
|
|
|
1,482 |
|
|
$ |
514.9 |
|
|
|
2,056 |
|
|
$ |
589.1 |
|
Mid-Atlantic
|
|
|
205 |
|
|
|
89.5 |
|
|
|
250 |
|
|
|
110.3 |
|
|
|
396 |
|
|
|
173.4 |
|
|
|
512 |
|
|
|
220.9 |
|
Texas
|
|
|
735 |
|
|
|
190.7 |
|
|
|
453 |
|
|
|
116.3 |
|
|
|
1,424 |
|
|
|
356.5 |
|
|
|
988 |
|
|
|
253.5 |
|
West
|
|
|
983 |
|
|
|
310.0 |
|
|
|
971 |
|
|
|
267.2 |
|
|
|
1,818 |
|
|
|
584.6 |
|
|
|
1,818 |
|
|
|
454.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total
|
|
|
2,699 |
|
|
|
851.5 |
|
|
|
2,645 |
|
|
|
782.9 |
|
|
|
5,120 |
|
|
|
1,629.4 |
|
|
|
5,374 |
|
|
|
1,517.5 |
|
From unconsolidated joint ventures
|
|
|
486 |
|
|
|
179.4 |
|
|
|
138 |
|
|
|
42.7 |
|
|
|
800 |
|
|
|
282.1 |
|
|
|
230 |
|
|
|
70.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,185 |
|
|
$ |
1,030.9 |
|
|
|
2,783 |
|
|
$ |
825.6 |
|
|
|
5,920 |
|
|
$ |
1,911.5 |
|
|
|
5,604 |
|
|
$ |
1,587.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2005 | |
|
June 30, 2004 | |
|
|
| |
|
| |
|
|
|
|
Average | |
|
|
|
Average | |
|
|
Homes | |
|
$ | |
|
Price | |
|
Homes | |
|
$ | |
|
Price | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Sales Backlog:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
|
2,861 |
|
|
$ |
977.5 |
|
|
$ |
342 |
|
|
|
2,502 |
|
|
$ |
724.2 |
|
|
$ |
290 |
|
Mid-Atlantic
|
|
|
465 |
|
|
|
204.0 |
|
|
$ |
439 |
|
|
|
501 |
|
|
|
220.0 |
|
|
$ |
439 |
|
Texas
|
|
|
1,120 |
|
|
|
289.6 |
|
|
$ |
259 |
|
|
|
593 |
|
|
|
155.6 |
|
|
$ |
262 |
|
West
|
|
|
1,889 |
|
|
|
630.8 |
|
|
$ |
334 |
|
|
|
1,707 |
|
|
|
438.0 |
|
|
$ |
257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total
|
|
|
6,335 |
|
|
|
2,101.9 |
|
|
$ |
332 |
|
|
|
5,303 |
|
|
|
1,537.8 |
|
|
$ |
290 |
|
From unconsolidated joint ventures
|
|
|
1,125 |
|
|
|
389.1 |
|
|
$ |
346 |
|
|
|
228 |
|
|
|
69.6 |
|
|
$ |
305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,460 |
|
|
$ |
2,491.0 |
|
|
$ |
334 |
|
|
|
5,531 |
|
|
$ |
1,607.4 |
|
|
$ |
291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, | |
|
Six Months Ended June 30, | |
|
|
| |
|
| |
|
|
2005 | |
|
2004 | |
|
2005 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
|
Sales | |
|
|
|
Sales | |
|
|
|
Sales | |
|
|
|
Sales | |
|
|
Deliveries | |
|
Orders | |
|
Deliveries | |
|
Orders | |
|
Deliveries | |
|
Orders | |
|
Deliveries | |
|
Orders | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Average Price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
$ |
294 |
|
|
$ |
337 |
|
|
$ |
265 |
|
|
$ |
298 |
|
|
$ |
288 |
|
|
$ |
347 |
|
|
$ |
262 |
|
|
$ |
287 |
|
Mid-Atlantic
|
|
$ |
415 |
|
|
$ |
437 |
|
|
$ |
378 |
|
|
$ |
441 |
|
|
$ |
402 |
|
|
$ |
438 |
|
|
$ |
377 |
|
|
$ |
432 |
|
Texas
|
|
$ |
243 |
|
|
$ |
259 |
|
|
$ |
256 |
|
|
$ |
257 |
|
|
$ |
241 |
|
|
$ |
250 |
|
|
$ |
249 |
|
|
$ |
257 |
|
West
|
|
$ |
287 |
|
|
$ |
315 |
|
|
$ |
281 |
|
|
$ |
275 |
|
|
$ |
277 |
|
|
$ |
322 |
|
|
$ |
278 |
|
|
$ |
250 |
|
Consolidated total
|
|
$ |
289 |
|
|
$ |
316 |
|
|
$ |
275 |
|
|
$ |
296 |
|
|
$ |
282 |
|
|
$ |
318 |
|
|
$ |
272 |
|
|
$ |
282 |
|
From unconsolidated joint ventures
|
|
$ |
321 |
|
|
$ |
369 |
|
|
$ |
309 |
|
|
$ |
309 |
|
|
$ |
301 |
|
|
$ |
353 |
|
|
$ |
309 |
|
|
$ |
305 |
|
Total
|
|
$ |
292 |
|
|
$ |
324 |
|
|
$ |
275 |
|
|
$ |
297 |
|
|
$ |
284 |
|
|
$ |
323 |
|
|
$ |
272 |
|
|
$ |
283 |
|
|
|
|
Three Months Ended June 30, 2005 Compared to Three
Months Ended June 30, 2004 |
Homebuilding revenues increased 24% to $615.8 million for
the three months ended June 30, 2005, from
$498.3 million for the three months ended June 30,
2004. This increase is due primarily to an increase in revenues
from home sales to $582.1 million for the three months
ended June 30, 2005, from $462.5 million for the
comparable period in 2004. The 26% increase in revenue from home
sales was due to (1) a 20% increase in home deliveries to
2,012 from 1,682 for the three months ended June 30, 2005
and 2004, respectively, and (2) a 5% increase in the
average selling price on homes delivered to $289,000 from
$275,000 in the comparable period of the prior year. A
significant component of this increase was the 52% increase in
revenues from home sales in our Florida region for the three
months ended June 30, 2005, as compared to the same period
in 2004. This increase was due to a 37% increase in home
deliveries and an 11% increase in the average selling price of
such homes. In addition to revenue from home sales, we generated
$33.7 million in revenue from land sales for the three
months ended June 30, 2005, as compared to
$35.8 million for the three months ended June 30,
2004. As part of our land inventory management strategy, we
regularly review our land portfolio. As a result of these
reviews, we will seek to sell land when we have changed our
strategy for a certain property and/or we have determined that
the potential profit realizable from a sale of a property
outweighs the economics of developing a community. Land sales
are incidental to our residential homebuilding operations and
are expected to continue in the future, but may fluctuate
significantly from period to period.
Our Homebuilding gross profit increased 44% to
$137.7 million for the three months ended June 30,
2005, from $95.8 million for the three months ended
June 30, 2004. This increase is primarily due to an
increase in revenue from home sales and an improved gross margin
on home sales. Our gross margin on home sales increased to 23.0%
for the three months ended June 30, 2005, from 19.1% for
the three months ended June 30, 2004. This increase from
period to period is primarily due to the phasing of sales to
maximize revenues and improve margins and improved control over
costs, such as the re-engineering of existing products to reduce
costs of construction, and the reduction of carrying costs on
inventory through improved control over the number of unsold
homes completed or under construction, particularly in our Texas
and West regions. For the three months ended June 30, 2005,
we generated gross profit on land sales of $3.8 million, as
compared to $7.3 million for the comparable period in 2004.
SG&A expenses increased to $77.1 million for the three
months ended June 30, 2005, from $59.4 million for the
three months ended June 30, 2004. SG&A expenses as a
percentage of revenues from home sales for the three months
ended June 30, 2005 increased to 13.2%, as compared to
12.8% for the three months ended June 30, 2004.
The 40 basis point increase in SG&A expenses as a
percentage of home sales revenues is partially due to an
increase in compensation expense resulting from increased head
count to support our joint venture activities. For the three
months ended June 30, 2005, the income associated with
these activities is $8.1 million, including management fees
of $5.6 million, which is shown separately as income from
joint
23
ventures in our consolidated statement of income. This increase
was partially offset by a decrease of $1.2 million in stock
based compensation expense. For the three months ended
June 30, 2005 and 2004, we recognized income of
$0.5 million and expense of $0.7 million,
respectively, due to the variable accounting treatment of
certain stock-based awards which include performance-based
accelerated vesting criteria and certain other common stock
purchase rights.
Our net profit margin is calculated by dividing net income by
home sales revenues. Our net profit margin increased to 7.9%
from 5.2% due to improved gross margins and joint venture
revenues.
|
|
|
Net Sales Orders and Backlog Units (including joint
ventures) |
For the three months ended June 30, 2005, net sales orders
increased by 14% as compared to the same period in 2004, due to
an increase in sales in our Texas and West Regions, which were
partially offset by decreases in our Florida and Mid-Atlantic
regions from the deliberate phasing of sales to improve gross
margins. For the three months ended June 30, 2005, the
sales value of these new orders increased by 25% over the three
months ended June 30, 2004, due to an increase in the
average net sales price to $324,000 from $297,000 over these
same periods.
We had 7,460 homes in backlog, as of June 30, 2005, as
compared to 5,531 homes in backlog as of June 30, 2004.
|
|
|
Backlog Sales Value (excluding joint ventures) |
The sales value of backlog increased 37% to $2.1 billion at
June 30, 2005, from $1.5 billion at June 30,
2004, while the average selling price of homes in backlog
increased to $332,000 from $290,000 from period to period. The
increase in the average selling price of homes in backlog was
primarily due to our ability to increase prices in markets with
strong housing demand as well as our continued efforts to phase
sales, especially in our Florida and Mid-Atlantic regions, to
maximize gross margins.
Financial Services revenues increased to $11.4 million for
the three months ended June 30, 2005, from
$9.4 million for the three months ended June 30, 2004.
This 21% increase is due primarily to an increase in the number
of closings at our title and mortgage operations offset by
reduced gains in selling mortgages in the secondary market
caused by a shift toward more adjustable rate mortgage loans and
market reductions in the interest rate margin. For the three
months ended June 30, 2005, our mix of mortgage
originations was 41% adjustable rate mortgages (of which
approximately 77% were interest only) and 59% fixed rate
mortgages, which is a shift from the comparable period in the
prior year of 35% adjustable rate mortgages and 65% fixed rate
mortgages. The average FICO score of our homebuyers during the
three months ended June 30, 2005 was 729, and the average
loan to value ratio on first mortgages was 77%. For the three
months ended June 30, 2005, approximately 11% of our
homebuyers paid in cash as compared to 12% during the three
months ended June 30, 2004. Our mortgage operations capture
ratio for non-cash homebuyers increased to 61% for the three
months ended June 30, 2005 from 58% for the three months
ended June 30, 2004. The number of closings at our mortgage
operations increased to 1,204 for the three months ended
June 30, 2005, from 1,141 for the three months ended
June 30, 2004. Our title operations capture ratio decreased
to 87% of our homebuyers for the three months ended
June 30, 2005, from 98% for the comparable period in 2004
due to an organizational change in our Phoenix operations
causing a loss of closings for the period. However, the number
of closings at our title operations increased to 5,938 for the
three months ended June 30, 2005, from 5,339 for the same
period in 2004. Non-affiliated customers accounted for
approximately 75% of our title company revenues for the three
months ended June 30, 2005.
Financial Services expenses increased to $9.0 million for
the three months ended June 30, 2005, from
$6.9 million for the three months ended June 30, 2004.
This 30% increase is a result of higher staff levels to support
anticipated increased loan activity.
24
|
|
|
Six Months Ended June 30, 2005 Compared to Six Months
Ended June 30, 2004 |
Homebuilding revenues increased 25% to $1,149.4 million for
the six months ended June 30, 2005, from
$923.2 million for the six months ended June 30, 2004.
This increase is due primarily to an increase in revenues from
home sales to $1,094.5 million for the six months ended
June 30, 2005, from $869.3 million for the comparable
period in 2004. The 26% increase in revenue from home sales was
due to (1) a 21% increase in home deliveries to 3,879 from
3,199 for the six months ended June 30, 2005 and 2004,
respectively, and (2) a 4% increase in the average selling
price on homes delivered to $282,000 from $272,000 in the
comparable period of the prior year. A significant component of
this increase was the 51% increase in revenues from home sales
in our Florida region for the six months ended June 30,
2005 as compared to the same period in 2004. This increase was
due to a 38% increase in home deliveries and a 10% increase in
the average selling price of such homes. In addition to revenue
from home sales, we generated revenue from land sales of
$54.9 million for the six months ended June 30, 2005,
as compared to $53.9 million for the six months ended
June 30, 2004. As discussed above, our land sales were a
result of our regular review of our land portfolio.
Our Homebuilding gross profit increased 44% to
$253.5 million for the six months ended June 30, 2005,
from $176.4 million for the six months ended June 30,
2004. This increase is primarily due to an increase in revenue
from home sales and an improved gross margin on home sales. Our
gross margin on home sales increased to 22.4% for the six months
ended June 30, 2005, from 18.8% for the six months ended
June 30, 2004. This increase from period to period is
primarily due to the phasing of sales to maximize revenues and
improve margins and improved control over costs, such as the
re-engineering of existing products to reduce costs of
construction; and the reduction of carrying costs on inventory
through improved control over the number of unsold homes
completed or under construction, particularly in our Texas and
West regions. For the six months ended June 30, 2005, we
generated gross profit on land sales of $8.2 million, as
compared to $12.7 million for the comparable period in 2004.
SG&A expenses increased to $156.5 million for the six
months ended June 30, 2005, from $115.7 million for
the six months ended June 30, 2004. SG&A expenses as a
percentage of revenues from home sales for the six months ended
June 30, 2005 increased to 14.3%, as compared to 13.3% for
the six months ended June 30, 2004.
The 100 basis point increase in SG&A expenses as a
percentage of home sales revenues is partially due to an
increase in compensation expense resulting from increased head
count to support our joint venture activities. For the six
months ended June 30, 2005, the income associated with
these activities is $10.7 million, including management
fees of $6.9 million, which is shown separately as income
from joint ventures in the consolidated statement of income.
Also contributing to the increase in SG&A expenses is an
increase of $2.8 million in stock based compensation
expense. For the six months ended June 30, 2005 and 2004,
we recognized a compensation charge of $4.5 million and
$1.7 million, respectively, due to the variable accounting
treatment of certain stock-based awards which include
performance-based accelerated vesting criteria and certain other
common stock purchase rights.
Our net profit margin is calculated by dividing net income by
home sales revenues. Our net profit margin increased to 6.6%
from 4.9% due to improved gross margins and joint venture
revenues.
|
|
|
Net Sales Orders (including joint ventures) |
For the six months ended June 30, 2005, net sales orders
increased by 6% as compared to the same period in 2004, due to
an increase in sales in our Texas and West Regions, which were
partially offset by decreases in our Florida and Mid-Atlantic
regions from the deliberate phasing of sales to improve gross
margins. For the six months ended June 30, 2005, the sales
value of these new orders increased by 20% over the six months
ended June 30, 2004, due to an increase in the average net
sales price to $323,000 from $283,000 over these same periods.
25
Financial Services revenues increased to $21.4 million for
the six months ended June 30, 2005, from $18.2 million
for the six months ended June 30, 2004. This 18% increase
is due primarily to an increase in the number of closings at our
title and mortgage operations offset by reduced gains in selling
mortgages in the secondary market caused by a shift toward more
adjustable rate mortgage loans and market reductions in the
interest rate margin. For the six months ended June 30,
2005, our mix of mortgage originations was 41% adjustable rate
mortgages (of which approximately 73% were interest only) and
59% fixed rate mortgages, which is a shift from the comparable
period in the prior year of 33% adjustable rate mortgages and
67% fixed rate mortgages. The average FICO score of our
homebuyers during the six months ended June 30, 2005 was
730, and the average loan to value ratio on first mortgages was
77%. For the six months ended June 30, 2005, approximately
10% of our homebuyers paid in cash as compared to 13% during the
six months ended June 30, 2004. Our mortgage operations
capture ratio for non-cash homebuyers remained stable at 61% for
the six months ended June 30, 2005 and 2004. The number of
closings at our mortgage operations increased to 2,294 for the
six months ended June 30, 2005, from 2,190 for the six
months ended June 30, 2004. Our title operations capture
ratio decreased to 84% of our homebuyers for the six months
ended June 30, 2005, from 95% for the comparable period in
2004, due to an organizational change in our Phoenix operations
causing a loss of closings for the period. However, the number
of closings at our title operations increased to 10,538 for the
six months ended June 30, 2005, from 9,712 for the same
period in 2004. Non-affiliated customers accounted for
approximately 76% of our title company revenues for the six
months ended June 30, 2005.
Financial Services expenses increased to $17.7 million for
the six months ended June 30, 2005, from $12.5 million
for the six months ended June 30, 2004. This 42% increase
is a result of higher staff levels to support anticipated
increased loan activity.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our Homebuilding operations primary uses of cash have been
for land acquisitions, construction and development
expenditures, joint venture investments, and SG&A
expenditures. Our sources of cash to finance these uses have
been primarily cash generated from operations and cash from our
financing activities.
Our Financial Services operations primarily use cash to fund
mortgages, prior to their sale, and SG&A expenditures. We
rely primarily on internally generated funds, which include the
proceeds generated from the sale of mortgages, and from the
mortgage operations warehouse lines of credit to fund
these operations.
At June 30, 2005, we had unrestricted cash and cash
equivalents of $77.5 million as compared to
$268.5 million at December 31, 2004.
Cash used in operating activities was $164.2 million during
the six months ended June 30, 2005, as compared to
$63.7 million during the six months ended June 30,
2004. The increase in the use of cash in operating activities
primarily is due to an increase of $269.6 million in
additional inventory, consistent with our strategy to increase
the number of active communities and our land positions. At
June 30, 2005 compared to June 30, 2004, our
controlled homesites increased to approximately 74,000 from
46,000 and our homes completed or under construction increased
to 5,138 from 3,448. Our homes completed or under construction
increased due to our 35% increase in homes in backlog. These
expenditures have been financed by retaining earnings and with
the issuance of senior subordinated notes. Because of our rapid
growth in recent periods, our operations have generally used
more cash than they have generated. We expect this trend to
continue as long as we are experiencing similar growth.
Cash used in investing activities was $25.6 million during
the six months ended June 30, 2005, as compared to
$29.7 million during the six months ended June 30,
2004. The decrease in the use of cash in investing activities
primarily is due to additional consideration of
$6.6 million paid during the six months
26
ended June 30, 2004 with respect to prior acquisitions,
offset by an increase in investments in unconsolidated joint
ventures of $5.7 million.
Our consolidated borrowings at June 30, 2005 were
$860.9 million, up slightly from $860.4 million at
December 31, 2004. At June 30, 2005, our Homebuilding
borrowings of $811.5 million included $300.0 million
in 9% senior notes due 2010, $185.0 million of
103/8% senior
subordinated notes due 2012, $125.0 million of
71/2% senior
subordinated notes due 2011, and $200.0 million of
71/2% senior
subordinated notes due 2015. Our weighted average debt to
maturity is 6.7 years, while our average inventory turnover
is 1.5 times per year.
Our outstanding senior notes are guaranteed, on a joint and
several basis, by the Guarantor Subsidiaries, which are all of
our material direct and indirect subsidiaries, other than our
mortgage and title operations subsidiaries (the Non-guarantor
Subsidiaries). Our outstanding senior subordinated notes are
guaranteed on a senior subordinated basis by all of the
Guarantor Subsidiaries. The senior notes rank pari passu
in right of payment with all of our existing and future
unsecured senior debt and senior in right of payment to the
senior subordinated notes and any future subordinated debt. The
senior subordinated notes rank pari passu in right of
payment with all of our existing and future unsecured senior
subordinated debt. The indentures governing the senior notes and
senior subordinated notes require us to maintain a minimum net
worth and place certain restrictions on our ability, among other
things, to incur additional debt (other than under our revolving
credit facility), pay or make dividends or other distributions,
sell assets, enter into transactions with affiliates, invest in
joint ventures above specified amounts, and merge or consolidate
with other entities. Interest on our outstanding senior notes
and senior subordinated notes is payable semi-annually each year.
Our financial leverage, as measured by the ratio of Homebuilding
net debt to capital, increased to 50.1% at June 30, 2005
from 47.3% at December 31, 2004, due primarily to the use
of cash in our operations. As noted above, we have made
significant investments in inventory consistent with our growth
strategy which we have financed through debt and internally
generated cash, resulting in an increase in our financial
leverage. We believe that our financial leverage is appropriate
given our industry, size and current growth strategy.
|
|
|
|
|
|
|
|
|
|
|
Homebuilding | |
|
|
Net Debt to Capital | |
|
|
| |
|
|
June 30, | |
|
December 31, | |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Notes payable
|
|
$ |
811.5 |
|
|
$ |
811.4 |
|
Bank borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding borrowings(1)
|
|
$ |
811.5 |
|
|
$ |
811.4 |
|
Less: unrestricted cash
|
|
|
73.3 |
|
|
|
217.6 |
|
|
|
|
|
|
|
|
Homebuilding net debt
|
|
$ |
738.2 |
|
|
$ |
593.8 |
|
Stockholders equity
|
|
|
736.3 |
|
|
|
662.7 |
|
|
|
|
|
|
|
|
Total capital(2)
|
|
$ |
1,474.5 |
|
|
$ |
1,256.5 |
|
|
|
|
|
|
|
|
Ratio
|
|
|
50.1 |
% |
|
|
47.3 |
% |
|
|
(1) |
Does not include obligations for inventory not owned of
$103.6 million at June 30, 2005 and
$136.2 million at December 31, 2004, all of which are
non-recourse to us. |
|
(2) |
Does not include Financial Services bank borrowings of
$49.4 million at June 30, 2005 and $49.0 million
at December 31, 2004. |
Homebuilding net debt to capital is not a financial measure
required by generally accepted accounting principles
(GAAP) and other companies may calculate it differently. We
have included this information
27
as we believe that the ratio of Homebuilding net debt to capital
provides comparability among other publicly-traded homebuilders.
In addition, management uses this information in measuring the
financial leverage of our homebuilding operations, which is our
primary business. Homebuilding net debt to capital has
limitations as a measure of financial leverage because it
excludes Financial Services bank borrowings and it reduces our
Homebuilding debt by the amount of our unrestricted cash.
Management compensates for these limitations by using
Homebuilding net debt to capital as only one of several
comparative tools, together with GAAP measurements, to assist in
the evaluation of our financial leverage. It should not be
construed as an indication of our operating performance or as a
measure of our liquidity.
Our revolving credit facility permits us to borrow to the lesser
of (i) $600.0 million or (ii) our borrowing base
(calculated in accordance with the revolving credit facility
agreement) minus our outstanding senior debt. The facility has a
letter of credit subfacility of $300.0 million. In
addition, we have the right to increase the size of the facility
to provide up to an additional $150.0 million of revolving
loans, provided we satisfy certain conditions. Loans outstanding
under the facility may be base rate loans or Eurodollar loans,
at our election. Our obligations under the revolving credit
facility are guaranteed by our material direct and indirect
subsidiaries, other than our mortgage and title subsidiaries
(unrestricted subsidiaries). The revolving credit facility
expires on October 26, 2008. As of June 30, 2005, we
had no borrowings under the revolving credit facility and had
issued letters of credit totaling $140.0 million. We had
$460.0 million remaining in availability, all of which we
could have borrowed without violating any of our debt covenants.
Our mortgage subsidiary has the ability to borrow up to
$120.0 million under two revolving warehouse lines of
credit to fund the origination of residential mortgage loans.
One of these warehouse lines can be increased to provide up to
an additional $50.0 million of availability, subject to
meeting certain requirements. One of the lines of credit bears
interest at the 30 day LIBOR rate plus a margin of 1.25% to
3.0%, determined based upon the type of mortgage loans being
financed, and the other bears interest at the 30 day
Eurodollar rate plus a margin of 1.125%. Both warehouse lines of
credit are secured by funded mortgages, which are pledged as
collateral, and require our mortgage subsidiary to maintain
certain financial ratios and minimums. As of June 30, 2005,
we had $49.4 million in borrowings under our warehouse
lines of credit.
We believe that we have adequate financial resources, including
unrestricted cash, availability under our current revolving
credit facility and the warehouse lines of credit, and
relationships with financial partners to meet our current and
anticipated working capital, land acquisition and development
needs and our estimated consolidated annual debt service
payments of $72.8 million (at June 30, 2005, based on
the outstanding balances and interest rates as of such date).
However, there can be no assurance that the amounts available
from such sources will be sufficient. If we identify new
acquisition opportunities, or if our operations do not generate
sufficient cash from operations at levels currently anticipated,
we may seek additional debt or equity financing to operate or
expand our business.
At June 30, 2005, the amount of our annual debt service
payments was $72.8 million. This amount included annual
debt service payments on the senior and senior subordinated
notes of $70.6 million and interest payments on the
revolving credit facility, the warehouse lines of credit, and
other notes of $2.2 million based on the balances
outstanding as of June 30, 2005. The amount of our annual
debt service payments on the revolving credit facility
fluctuates based on the principal outstanding under the facility
and the interest rate. An increase or decrease of 1% in interest
rates will change our annual debt service payment by
$0.5 million per year.
|
|
|
Off Balance Sheet Arrangements |
|
|
|
Land and Homesite Option Contracts |
We enter into land and homesite option contracts to procure land
or homesites for the construction of homes. Option contracts
generally require the payment of cash or the posting of a letter
of credit for the right to acquire land or homesites during a
specified period of time at a certain price. These option
contracts are either with land sellers or financial investors
who have acquired the land to enter into option
28
contracts with us. Option contracts allow us to control
significant homesite positions with a minimal capital investment
(generally 15%) and substantially reduce the risk associated
with land ownership and development. At June 30, 2005, we
had refundable and non-refundable deposits of
$186.1 million and had issued letters of credit of
approximately $111.2 million associated with our option
contracts. The financial exposure for nonperformance on our part
in these transactions is generally limited to our deposits
and/or letters of credit.
Additionally, at June 30, 2005, we had outstanding
performance/ surety bonds outstanding of approximately
$224.9 million and letters of credit of approximately
$28.8 million primarily related to land development
activities.
|
|
|
Investments in Unconsolidated Joint Ventures |
We have entered into, and expect to expand our use of, joint
ventures that acquire and develop land for our Homebuilding
operations and/or that also build and market homes for sale to
third parties. In addition, we have, on a selective basis,
entered into joint ventures that acquire and develop land for
sale to unrelated third parties. Through joint ventures, we
reduce and share our risk associated with land ownership and
development and extend our capital resources. Our partners in
these joint ventures generally are unrelated homebuilders, land
sellers, financial investors or other real estate entities. In
joint ventures where the assets are being financed with debt,
the borrowings are non-recourse to us. At June 30, 2005, we
had investments in unconsolidated joint ventures of
$82.4 million. We account for these investments under the
equity method of accounting. These unconsolidated joint ventures
are limited liability companies or limited partnerships in which
we have a limited partnership interest and a minority interest
in the general partner. At June 30, 2005, we had made
short-term advances of $15.4 million to these joint
ventures.
We believe that the use of these off-balance sheet arrangements
enables us to acquire attractive land positions, which we may
not have otherwise been able to acquire at favorable terms,
mitigate and share risk associated with land ownership and
development, increase our return on assets and extend our
capital resources. As a result, we view the use of these
off-balance sheet arrangements as beneficial to our Homebuilding
activities as they increase our return on our investment.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. Discussions containing forward-looking statements may
be found throughout this Quarterly Report and specifically in
the material set forth in the section, Managements
Discussion and Analysis of Financial Condition and Results of
Operations and Quantitative and Qualitative
Disclosures about Market Risk. These statements concern
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning
matters that are not historical facts and typically include the
words anticipate, believe,
expect, estimate, project,
and future. Specifically, this Quarterly Report
contains forward-looking statements regarding:
|
|
|
|
|
our expectations regarding our continued use of option
contracts, investments in unconsolidated joint ventures and
other off-balance sheet arrangements to control homesites and
manage our business and their effect on our business; |
|
|
|
our expectations regarding the labor and supply shortages in
Florida resulting from the recent hurricanes; |
|
|
|
our expectations regarding our use of cash in operations; |
|
|
|
our expectations regarding future land sales; |
|
|
|
our expectation that our rate of converting sales backlog units
to deliveries will improve in the last half of 2005; |
29
|
|
|
|
|
our estimate that we have adequate financial resources to meet
our current and anticipated working capital, including our
annual debt service payments, and land acquisition and
development needs; and |
|
|
|
our expectations regarding the impact on our business and
profits of phasing sales in some of our high demand markets. |
These forward-looking statements reflect our current views about
future events and are subject to risks, uncertainties and
assumptions. As a result, actual results may differ materially
from the results discussed in and anticipated by the
forward-looking statements. The most important factors that
could cause the assumptions underlying forward-looking
statements and actual results to differ materially from those
expressed in or implied by those forward-looking statements
include, but are not limited to, the following:
|
|
|
|
|
our significant level of debt and the impact of the restrictions
imposed on us by the terms of this debt; |
|
|
|
our ability to borrow or otherwise finance our business in the
future; |
|
|
|
our ability to identify and acquire, at anticipated prices,
additional homebuilding opportunities and/or to effect our
growth strategies; |
|
|
|
our relationship with Technical Olympic, S.A. and its control
over our business activities; |
|
|
|
economic or other business conditions that affect the desire or
ability of our customers to purchase new homes in markets in
which we conduct our business, such as increases in interest or
unemployment rates or decline in consumer confidence or the
demand for, or the prices of, housing; |
|
|
|
events which would impede our ability to open new communities
and/or deliver homes within anticipated timeframes and/or within
anticipated budgets; |
|
|
|
an increase in interest rates; |
|
|
|
an increase in the cost, or shortages in the availability of,
labor and materials; |
|
|
|
our ability to compete in our existing and future markets; |
|
|
|
our ability to successfully utilize and recognize the
anticipated benefits of joint venture and option contracts; |
|
|
|
the impact of hurricanes, tornadoes or other natural disasters
or weather conditions on our business, including the potential
for shortages and increased costs of materials and qualified
labor and the potential for delays in construction and obtaining
government approvals; and |
|
|
|
an increase or change in governmental regulations, or in the
interpretation and/or enforcement of existing governmental
regulations. |
|
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK |
At June 30, 2005, $810.0 million of our outstanding
borrowings are based on fixed interest rates. We are exposed to
market risk primarily related to potential adverse changes in
interest rates on our existing construction loans, warehouse
lines of credit and revolving credit facility. The interest
rates relative to these borrowings fluctuate with the prime,
Federal Funds, LIBOR, and Eurodollar lending rates. We have not
entered into derivative financial instruments for trading or
speculative purposes. As of June 30, 2005, we had an
aggregate of approximately $49.4 million drawn under our
bank loan arrangements that were subject to changes in interest
rates. Consequently, an increase or decrease of 1% in interest
rates will change our annual debt service payments by
$0.5 million per year as a result of our bank loan
arrangements that are subject to changes in interest rates.
Our operations are interest rate sensitive. Overall housing
demand is adversely affected by increases in interest rates. If
mortgage interest rates increase significantly, this may
negatively affect the ability of
30
homebuyers to secure adequate financing. Higher interest rates
will adversely affect our revenues, gross margins, and net
income. Higher interest rates also increase our borrowing costs
because, as indicated above, our bank loans will fluctuate with
the prime, Federal Funds, LIBOR and Eurodollar lending rates.
Our Annual Report on Form 10-K for the year ended
December 31, 2004 contains further information regarding
our market risk. There have been no material changes in our
market risk since December 31, 2004.
|
|
ITEM 4. |
CONTROLS AND PROCEDURES |
To ensure that the information we must disclose in our filings
with the Securities and Exchange Commission is recorded,
processed, summarized, and reported on a timely basis, we
maintain disclosure controls and procedures. Our principal
executive officer and principal financial officer have reviewed
and evaluated the effectiveness of our disclosure controls and
procedures, as of June 30, 2005. Based on such evaluation,
such officers have concluded that, as of June 30, 2005, our
disclosure controls and procedures were effective. There has
been no change in our internal control over financial reporting
during the quarter ended June 30, 2005 that has materially
affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART II. OTHER INFORMATION
|
|
ITEM 4. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS. |
On May 10, 2005, Technical Olympic USA, Inc. (the
Company) held its annual meeting of stockholders
(the 2005 Annual Meeting). At the meeting,
stockholders voted on the election of ten directors to serve for
a term of one year. The voting results were as follows:
Election of Directors
|
|
|
|
|
|
|
|
|
Name of Nominee |
|
For | |
|
Withheld | |
|
|
| |
|
| |
Konstantinos Stengos
|
|
|
46,902,708 |
|
|
|
6,025,232 |
|
Antonio B. Mon
|
|
|
46,917,277 |
|
|
|
6,010,663 |
|
Andreas Stengos
|
|
|
46,891,382 |
|
|
|
6,036,558 |
|
George Stengos
|
|
|
46,894,916 |
|
|
|
6,033,024 |
|
Marianna Stengou
|
|
|
46,891,757 |
|
|
|
6,036,183 |
|
Larry D. Horner
|
|
|
52,793,715 |
|
|
|
134,225 |
|
William A. Hasler
|
|
|
47,149,315 |
|
|
|
5,778,625 |
|
Michael J. Poulos
|
|
|
52,609,548 |
|
|
|
318,392 |
|
Susan B. Parks
|
|
|
52,809,990 |
|
|
|
117,950 |
|
Bryan J. Whitworth
|
|
|
52,800,280 |
|
|
|
127,660 |
|
|
|
ITEM 5. |
OTHER INFORMATION |
|
|
|
Amendment to Credit Facility |
Effective July 28, 2005, the Company entered into Amendment
No. 1 to its revolving credit facility (i) to provide
that unmatured surety or performance bonds will not constitute
Indebtedness for purposes of the revolving credit
facility, and (ii) to increase the amount of the
Companys permitted aggregate investment in joint ventures
and unrestricted subsidiaries that are not directly or
indirectly wholly-owned by the Company.
31
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
10 |
.31 |
|
Asset Purchase Agreement, dated as of June 6, 2005, among
EH/Transeastern, LLC, Transeastern Properties, Inc. and the
other sellers identified therein, Arthur J. Falcone and Edward
W. Falcone. |
|
|
10 |
.32 |
|
Amendment No. 1, dated as of July 28, 2005, to the
Credit Agreement dated as of October 26, 2004 among
Technical Olympic USA, Inc., Citicorp North America, Inc., as
administrative agent and the Lenders party thereto. |
|
|
31 |
.1 |
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
31 |
.2 |
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
32 |
.1 |
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
32 |
.2 |
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
32
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.
|
|
|
Technical Olympic USA, Inc. |
|
|
|
|
Title: |
Senior Vice President, |
|
|
|
Chief Financial Officer and Treasurer |
Date: August 2, 2005
|
|
|
|
Title: |
Vice President-Chief Accounting Officer |
Date: August 2, 2005
33