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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1997
Commission file number 1-7643
WASHINGTON HOMES, INC
(Exact name of registrant as specified in its charter)
Maryland 52-0818872
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization)
Identification No.)
1802 Brightseat Road, Landover, MD 20785-4235
(Address of principal executive offices) (Zip Code)
(301) 772-8900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Common Stock (voting), $.01 par value New York Stock
Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
On October 15, 1997, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $18,244,528.
Number of shares of each of the registrant's classes of common stock
outstanding at September 30, 1997:
Class Number of Shares
Common Stock (voting), $.01 par value 7,914,433
Common Stock (non-voting), $.01 par value 28,330
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Annual Report to Shareholders for fiscal year ended July 31, 1997
(Part II).
Proxy statement to be filed pursuant to Regulation 14A for 1997 Annual
Meeting of Shareholders to be held November 20, 1997 (Part III).
WASHINGTON HOMES, INC.
FORM 10-K REPORT
TABLE OF CONTENTS
PART I. PAGE
Item 1. Business ............................................. 3
Item 2. Properties ........................................... 9
Item 3. Legal Proceedings .................................... 9
Item 4. Submission of Matters to a Vote of Security Holders .. 9
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .................................. 10
Item 6. Selected Financial Data .............................. 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................. 10
Item 8. Financial Statements and Supplementary Data .......... 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................. 11
PART III.
Item 10. Directors and Executive Officers of the Registrant .. 11
Item 11. Executive Compensation .............................. 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management ...................................... 12
Item 13. Certain Relationships and Related Transactions ...... 12
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K ................................ 13
SIGNATURES ......................................................... 15
EXHIBITS ...........................................................
Note: This report contains statements which may be construed as "forward-
looking statements" as defined in the Private Securities Litigation Reform
Act of 1995. Such statements may involve unstated risks, uncertainties, and
other factors that may cause actual results to differ materially. Such
risks, uncertainties and other factors include, but are not limited to,
changes in general economic conditions, fluctuations in interest rates,
increases in costs of materials, supplies and labor and general competitive
conditions.
Part I
Item 1. Business
General
Washington Homes, Inc. designs, builds and markets single-family
detached homes, townhomes and condominium homes primarily to first-time and
first move-up homebuyers in the metropolitan areas of Washington, D.C.-
Baltimore, Maryland; Greensboro, Raleigh and Charlotte, North Carolina;
Nashville, Tennessee; and Pittsburgh, Pennsylvania. The Company's largest
market is the Washington-Baltimore corridor. The Company commenced operations
in 1965 and entered the Raleigh and Greensboro, North Carolina markets
through an acquisition effective as of May 1, 1994. During fiscal 1996 the
Company began operating in Charlotte, North Carolina and Nashville, Tennessee
and expanded operations in Pittsburgh. The Company operates under the name
"Washington Homes" in Maryland, Virginia and Pennsylvania and as "Westminster
Homes" in North Carolina and Tennessee.
The Company focuses its marketing efforts on consumers whose top
priorities are price and value. During the five years ended July 31, 1997 the
Company delivered 5,520 homes and currently offers homes for sale in 62
communities at base sales prices ranging from $79,990 to $270,000. The
Company delivered 1,315 homes during the fiscal year ended July 31, 1997
generating homebuilding revenues of $206.5 million. The average sales price
of homes delivered by the Company during fiscal 1997 was approximately
$157,100. At July 31, 1997 there was a backlog of 591 homes under contract
with a sales value of $96.3 million.
Washington Homes, Inc. was incorporated in the State of Maryland in
1965. Unless the context otherwise requires, the terms "Company" and "WHI" as
used in this report refer to Washington Homes, Inc. and its subsidiaries. The
Company's principal executive offices are located at 1802 Brightseat Road,
Landover, Maryland 20785-4235, and its telephone number is (301) 772-8900.
Products
The Company builds homes designed by its own personnel with assistance
from outside architectural firms. It strives to create a diversity of
architectural styles in each residential community by providing exterior and
interior design options for homes with the same basic floor plans that are
intended to appeal to a broad range of potential buyers and respond to
changes in the market place.
Each residential community offers several home plans, with the
opportunity to select various exterior styles. The Company develops new
designs to replace or augment existing ones as part of its continuing efforts
to assure that its homes are responsive to current consumer preferences.
The range of base sales prices and home sizes for the Company's homes as
of July 31, 1997 was as follows:
Base Sales Range of Sizes
Prices
Single-family detached $97,000 - 1,100 to 3,000 sq.
homes $270,000 ft.
Townhomes $96,000 - 1,050 to 1,600 sq.
$157,000 ft.
Condominiums $79,900 - 600 to 1,400 sq.
$131,000 ft.
In all of WHl's communities, certain options including fireplaces, finished
basements, brick fronts, upgraded appliances, carpet and lot location are
available to the purchaser for an additional charge.
The following table sets forth a breakdown of the Company's deliveries
by housing type in each of the last three years:
Years Ended July 31,
1997 1996 1995
(Dollars in thousands)
Home % Amoun Home % Amount Homes % Amount
s t s
Single-family
detached 890 67.7 $152,1 668 61.5 $112,6 602 51.6% $102,27
homes... % 55 % 55 3
Townhomes...... 355 27.0 46,515 366 33.7 49,117 533 45.7% 70,689
... % %
Condominiums... 70 5.3% 7,906 53 4.8% 6,049 32 2.7% 3,647
...
1,31 100. $206,5 1,08 100. $167,8 1,167 100.0 $176,60
Total.......... 5 0% 76 7 0% 21 % 9
During fiscal 1997, the Company decided to phase out its condominium
operations.
Organization
The Company's homebuilding operations are organized into eight
geographically based homebuilding divisions. Division offices are maintained
in Landover, Maryland; Manassas, Virginia; Charlotte, Cary and Greensboro,
North Carolina; Nashville, Tennessee; and Pittsburgh, Pennsylvania.
Corporate headquarters are located in Landover, Maryland.
Each division is headed by a division manager who reports to the
President-Homebuilding Operations. Division managers have responsibility for
day-to-day operations, including implementation of community marketing
strategies, pricing of homes, managing subcontractors, delivering of finished
homes and providing attendant service work. Division managers are supported
by sales and production managers. The sales manager coordinates marketing and
advertising programs and oversees the sales representatives based at each
community. One production manager oversees field operations with managerial
responsibility for on-site production superintendents. A second production
manager is responsible for purchasing materials, procuring subcontractor
services, technical design and construction issues.
Sales and building activities are managed at each community by a sales
representative and a production superintendent. The sales representative is
responsible for implementing the Company's marketing programs and for
follow-through with customers, from contract signing and loan application
through delivery. The production superintendent coordinates the work of
subcontractors and is responsible for quality control and delivery of the
finished product in a timely manner.
Residential Developments
As of July 31, 1997, the Company was actively building homes in 62
communities and controlled over 6,900 homesites, as follows:
Communities in Lots Owned
Which
Homes Are Future Tota Finishe Lots Lots
Currently l d Under Under
Market Offered For Sale Communiti Lots Lots Developm Option
es ent
Washington, DC- 30 8 3,79 700 1,714 1,376
0
Baltimore,
MD
Greensboro, NC 9 1 778 158 386 234
Raleigh, NC 9 1 821 159 183 479
Charlotte, NC 5 4 586 52 -- 534
Nashville, TN 4 4 716 56 -- 660
Pittsburgh, PA 5 1 214 43 15 156
Combined Total 62 19 6,90 1,168 2,298 3,439
5
Operations
Land Acquisition and Development
The Company builds homes on building lots which it either acquires as
finished lots from developers or which it develops itself. At July 31, 1997,
the Company owned or held options for 6,905 building lots, providing over
five years of supply at the Company's current pace of home deliveries.
The Company's general strategy is to purchase, to the extent feasible,
finished building lots through land acquisition option contracts which
provide the maximum degree of flexibility for the timing of land purchases
and minimizes the Company's investment outlay. Through the utilization of
land acquisition option contracts, the Company purchases the right, but not
the obligation, to buy a large number of building lots from a land developer.
The options allow the Company to purchase building lots on a takedown
schedule commensurate with anticipated home deliveries. As a result, the
Company generally does not purchase the building lot or pay the purchase
price until the building lot can be utilized in its construction schedule.
The purchase agreements generally limit the Company's financial exposure to
amounts placed with property sellers as deposits. Although option contracts
may contain predetermined lot takedown schedules and price escalation
provisions, the Company believes use of such contracts significantly reduces
risk since the Company is able to minimize its investment in land and limit
its exposure to debt financing. At July 31, 1997, the Company owned 1,168
homebuilding lots and held options for 3,439 homebuilding lots for which it
had posted deposits of approximately $3.6 million in the form of cash,
letters of credit and promissory notes.
The Company also develops land for its own residential operations, and
618 or 47.0% of the homes delivered in fiscal 1997 were built on land
developed by the Company. As of July 31, 1997, the Company owned 2,298
residential lots in 25 communities which were in the process of land
development. All communities have obtained the required zoning and public
approvals and, with two exceptions, have physical construction underway. The
Company does not buy land for the purpose of speculation.
The Company from time to time experiences difficulties in obtaining
building lots. The Company has experienced delays in acquiring lots from land
developers, primarily due to the difficulty experienced by developers in
obtaining financing. In certain instances, the Company acquired the land from
the developer and completed the development process itself. The imposition of
sewer moratoria, zoning changes and other governmental actions also can
affect the availability and use of land.
In its land development operations, the Company employs experienced
supervisory personnel who deal directly with independent engineers and
consultants for land and site planning, obtaining governmental and
environmental approvals, and constructing on and off-site improvements where
necessary (such as roads, water, sewers, storm drainage and other public
facilities and amenities). Actual development work is performed by
independent contractors, utility companies and/or local governmental water
and sewer agencies.
Marketing
A sales office is located in each community which is staffed by a
Company sales representative. In addition, a significant portion of sales are
derived from the introduction of customers to the Company's communities by
local independent real estate brokers. The Company maintains an extensive
broker co-op program which includes a progressive commission schedule based
on incremental sales generated. The Company's sales personnel are compensated
with salary and incentive compensation and are trained by the Company. They
attend weekly meetings to be updated on financing availability, construction
schedules, new land acquisitions, marketing and advertising plans. The
concentration of the Company's communities allows the Company to employ
salespersons on a long-term, rather than a single community basis, which
management believes results in reduced training costs and a more motivated
sales force with extensive knowledge of the Company's operating policies and
housing products.
The Company utilizes model home presentations (generally one per
community) as an integral part of the Company's marketing program. In
addition, the Company advertises extensively in newspapers, local and
regional publications, on radio, as well as utilizing billboards and roadside
signage.
The Company utilizes standard sales contracts which require the customer
to make an earnest money deposit which is generally in the range of $500 to
$3,000. Upon execution of the contract and receipt of the deposit, the home
sale is included in backlog. The sales contract is generally cancelable
without forfeiture of deposit if the customer is unable to sell an existing
home or obtain permanent financing. The sales contract sets forth details of
the home being purchased, location, options ordered, details of financing
sought and closing requirements.
In addition to relying on management's extensive experience, the Company
determines the prices for its homes through a Company-designed competitive
analysis program that compares a WHI home with homes offered by other
builders in the relevant marketing area. The Company accomplishes this by
evaluating differences in product features, amenities and location and
updates such analyses periodically.
Building
In its construction of homes, the Company acts as a general contractor
with independent contractors performing all home construction and site
improvement work generally under fixed-price contracts. Construction is
performed under the direction of production superintendents employed by the
Company. The Company enforces its commitment to quality by providing its
construction superintendents with incentive compensation arrangements based
on the homebuyer's satisfactory responses to pre-closing and post-closing
checklists.
Operating Controls
The Company attempts to limit exposure resulting from speculative
building. Generally, construction of single-family homes is commenced only
after a sales contract has been executed and the customer has received
preliminary loan approval. Construction of multi-family buildings is
generally commenced after sales contracts have been executed for a majority
of the homes in a particular building. The Company may begin construction of
detached homes prior to obtaining sales contracts in order to maintain a
limited inventory, in anticipation of winter weather conditions or to conform
to local market requirements.
When possible, the Company contracts on a fixed-price basis for
materials, such as appliances, lumber and carpeting, in an effort to minimize
the effects of changes in costs and to take advantage of bulk purchase
discounts. The Company focuses on the gross profit margins of each home sold
in each community and the monitoring of selling, general and administrative
expenses. Every home and every community is considered a profit center for
budgeting and cost control purposes.
Financing for Customers
The Company builds, markets and prices its homes under the guidelines
and specifications of the Federal Housing Administration ("FHA") and the
Veterans Administration ("VA"), in order to afford its prospective purchasers
the added benefits of FHA insured and VA guaranteed mortgages. The majority
of the Company's home deliveries are financed through these agencies. In some
areas, the Company has obtained lower than market interest rate financing for
purchasers of its homes through state or county bond programs. The Company
also assists its homebuyers in obtaining conventional mortgage financing.
In fiscal 1993, the Company established Homebuyer's Mortgage, Inc.
("Homebuyer's") as a subsidiary to provide residential mortgage services to
the Company's customers and others. Homebuyer's initially has been processing
mortgage applications with underwriting and funding provided by independent
wholesale lenders. In fiscal 1997, Homebuyer's closed 580 loans totaling
$82.2 million in permanent residential financing compared to 360 loans
totaling $50.3 million the previous year.
During fiscal 1997 the homebuilding industry experienced a
continuation of relatively low home mortgage interest rates. There can be no
assurance that a favorable interest rate environment or government programs
providing assistance for homebuyers will continue in the future.
Regulation
The Company is subject to a variety of federal, state and local
statutes, ordinances, rules and regulations concerning protection of health,
safety and the environment. The particular environmental laws which apply to
any given community vary greatly according to the community site, the site's
environmental condition and the present and former uses of the site. These
environmental laws may result in delays, cause the Company to incur
compliance and other costs and prohibit or restrict development in certain
environmentally sensitive regions or areas. Prior to consummating the
purchase of land, the Company engages independent environmental engineers to
evaluate such land for the presence of wetlands and hazardous or toxic
materials, wastes or substances. The Company has not been materially affected
to date by the presence or potential presence of such conditions.
To varying degrees, site development and building permits and approvals
are required to complete the residential developments currently being planned
by the Company. The timing and ability of the Company to obtain necessary
approvals and permits for these communities is often beyond the Company's
control. The length of time necessary to obtain permits and approvals
increases the carrying costs of unimproved property acquired for the purpose
of development and construction. In addition, the continued effectiveness of
permits already granted may be subject to factors such as changes in
policies, rules and regulations and their interpretation and application.
When developing land, the Company must obtain the approval of numerous
government authorities regulating such matters as permitted land uses and
levels of density, the installation of utility services such as water and
waste disposal and the dedication of acreage for open space, parks, schools
and other community purposes. To date, the governmental approval process and
restrictive zoning and moratoria have not had a material adverse effect on
the Company's development activities nor does the Company currently have any
lots that cannot be developed due to local or federal regulatory
restrictions. There is no assurance, however, that these or other
restrictions will not adversely affect the Company in the future.
Competition and Market Factors
The metropolitan housing markets serviced by the Company are highly
competitive. In its marketing efforts, the Company encounters competition
from other homebuilders and apartment and condominium developers, as well as
from sellers of existing homes. In the locations where the Company builds,
there is intense competition among numerous large and small homebuilders.
Competition in the homebuilding industry is intense in part because of the
historic ease with which large national homebuilders, many of which may have
greater financial resources than the Company, can expand their operations.
The Company competes on the basis of price, location, mortgage financing
terms, design and the Company's reputation for quality. Based upon the
experience of its management, the Company believes that it compares favorably
with its principal competitors in terms of its knowledge, expertise and its
ability to obtain building lots at prices and locations which allow it to
offer a well-priced, quality product and to obtain financing for its
customers.
The Company also competes with other builders for the acquisition of
building lots. This competition is based primarily on a builder's reputation,
and perceived abilities to market homes and price.
The housing industry is cyclical and affected by consumer confidence
levels, prevailing economic conditions generally and particularly by interest
rate levels. A variety of other factors affect the housing industry and
demand for new homes, including the availability of labor and materials and
increases in the costs thereof, changes in costs associated with home
ownership, such as increases in property taxes and energy costs, changes in
consumer preferences, demographic trends and the availability of and changes
in mortgage financing programs.
Bonds, Warranties and Other Obligations
The Company is frequently required, in connection with the development
of its communities, to obtain performance or maintenance bonds (or letters of
credit in lieu thereof) to ensure completion of the Company's development
obligations. The amount of such obligations outstanding at any time varies in
accordance with the Company's pending development activities. To date, the
Company has fulfilled its development obligations. Should the Company fail to
build required improvements and the bonds backing such obligations were
called, the Company would be obligated to reimburse the issuing surety
company or bank. The Company's financial exposure in this regard is reduced
as improvements are completed and bonds released. At July 31, 1997, the
Company had approximately $19.1 million in letters of credit and surety bonds
outstanding for the previously enumerated purposes.
All homes delivered by the Company are sold with the benefit of the
Company's two-year limited warranty as to workmanship supplemented by a
limited ten-year warranty as to structural integrity under the Residential
Warranty Corporation program, a privately insured program. To assist the
Company in meeting its warranty obligations to customers, the Company
requires subcontractors to provide warranties of their workmanship to the
Company.
Employees
At July 31, 1997, the Company employed 347 full time personnel of whom
64 were sales and marketing personnel, 151 were executive, administrative and
clerical personnel and 132 were involved in construction. Although none of
the Company's employees are covered by collective bargaining agreements,
certain of the independent contractors which the Company engages employ
personnel who may be represented by labor unions or may be subject to
collective bargaining agreements. The Company believes that its relations
with its employees and independent contractors are good.
Joint Ventures
The Company participates in two joint ventures formed to develop
residential land into finished building lots for sale to the Company and
other homebuilders utilizing non-recourse acquisition and development loans.
In forming one of the joint ventures in April 1995, the Company contributed
land with a book value of $9.6 million and the Company has received cash
proceeds to date of $7.4 million which was used to reduce outstanding amounts
under revolving credit facilities. The Company's interest in the joint
ventures' operating results has not been significant to date.
Item 2. Properties
The Company leases over 24,000 square feet of office space from Citadel
Land, Inc. for its corporate headquarters and offices for certain of its
divisions and subsidiaries in a six story office building located in
Landover, Maryland pursuant to a lease expiring in October 2000.
During the fiscal year ended July 31, 1997, the Company paid Citadel
Land, Inc. approximately $443,000 in rentals. Citadel Land is a company
beneficially owned by the family of Geaton A. DeCesaris, Sr., Chairman of the
Board of the Company.
The Company also leases office space for division offices in Manassas,
Virginia; Charlotte, Cary and Greensboro, North Carolina; Nashville,
Tennessee; and Pittsburgh, Pennsylvania.
Item 3. Legal Proceedings
The Company is involved in various claims and proceedings arising out of
the normal course of business involving customers, contractors and others.
The Company believes that it is not a party to any pending or threatened
litigation or administrative proceeding which is expected to have a material
adverse impact on the Company's financial position or operating results.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
Company's fiscal quarter ended July 31, 1997.
Executive Officers
Information on executive officers is set forth in Item 10.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
(a) Market Information.
The Company's Common Stock (voting) trades on the New York Stock
Exchange under the symbol WHI.
The high and low sale prices for the Company's Common Stock for each
quarterly period within the last two fiscal years have been as follows:
Fiscal 1997 High Low
August 1 to October 31, 1996 $ 4.13 $ 3.38
November 1, 1996 to January 31, 4.75 3.63
1997
February 1 to April 30, 1997 5.00 3.88
May 1 to July 31, 1997 4.13 3.63
Fiscal 1996 High Low
August 1 to October 31, 1995 $ 5.63 $4.25
November 1, 1995 to January 31, 6.38 4.88
1996
February 1 to April 30, 1996 5.75 4.50
May 1 to July 31, 1996 4.75 3.75
(b) Holders
On October 16, 1997, there were approximately 211 holders of record of
the Company's Common Stock (voting) and one holder of record of the Common
Stock (non-voting).
During July and August 1997 holders of 914,433 shares of non-voting
Common Stock converted their shares to shares of voting Common Stock on a
share for share basis.
(c) Dividends
During fiscal 1997 and 1996, the Company did not pay any dividends on
its Common Stock.
The payment of cash dividends is at the discretion of the Board of
Directors of the Company and will depend upon, among other things, future
earnings, results of operations, capital requirements and the Company's
financial condition. The Company's lending agreements limit the amount of
annual cash dividends that the Company may pay to its shareholders. The most
restrictive of these limits dividends to no more than 25 percent of net
income in any four fiscal quarters.
Item 6. Selected Financial Data
The information required by this item is incorporated herein by
reference from "Washington Homes, Inc. Selected Financial Data" on page 1 of
the Company's Annual Report to Shareholders for the fiscal year ended July
31, 1997.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item is incorporated herein by
reference from pages 9 to 11 of the Company's Annual Report to Shareholders
for the fiscal year ended July 31, 1997.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by
reference from pages 12 to 20 of the Company's Annual Report to Shareholders
for the fiscal year ended July 31, 1997.
Item 9. Changes in or Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with accountants during
the two fiscal years ended July 31, 1997.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item with respect to Directors of the
Company is incorporated herein by reference to the registrant's Proxy
Statement relating to the 1997 Annual Meeting of Shareholders.
The executive officers of the Company are as follows:
Name Ag Position with Company
e
Geaton A. 66 Chairman of the Board of Directors
DeCesaris,Sr.....
Geaton A. 42 President, Chief Executive Officer and
DeCesaris,Jr..... Director
Thomas J. Pellerito 50 President-Homebuilding Operations and Chief
........ Operating Officer
Christopher Spendley 38 Senior Vice President, Chief Financial Officer
....... and Secretary
Clayton W. Miller 47 Senior Vice President, Chief Accounting Officer
and Assistant Secretary
Paul C. Sukalo 46 Senior Vice President - Construction and
............. Director
William Wilder 52 Senior Vice President - Land Operations
.............
A. Hugo DeCesaris 38 Vice President in charge of Northwest Division
..........
Timothy Bates 36 Vice President in charge of Virginia Division
..............
Dorothy Minich 49 Vice President in charge of Patuxent Division
.............
Marco A. DeCesaris 46 Vice President in charge of Chesapeake
......... Division
Lawrence M. Breneman 40 Vice President in charge of Pittsburgh
....... Division
Geaton A. DeCesaris, Sr. has served as Chairman of the Board of the
Company since August 1988. Prior thereto from June 1985 to August 1988, Mr.
DeCesaris served as Senior General Partner of Sonny DeCesaris and Sons
Development Group, a real estate development and construction firm; from 1973
to June 1985, he was founder and President of Sonny DeCesaris and Sons
Builders, Inc. and from 1960 to 1973 President of Procopio and DeCesaris
Construction Company. Mr. DeCesaris is the father of Geaton A. DeCesaris,
Jr., A. Hugo DeCesaris and Marco A. DeCesaris and is the father-in-law of
Paul C. Sukalo.
Geaton A. DeCesaris, Jr. has served as President, Chief Executive
Officer and a Director of the Company from August 1988 to the present. Prior
thereto, Mr. DeCesaris was Managing General Partner of Sonny DeCesaris and
Sons Development Group from June 1985 to August 1988 and Vice President of
Sonny DeCesaris and Sons Builders, Inc. from 1973 to June 1985. Mr. DeCesaris
is the son of Geaton A. DeCesaris, Sr.
Thomas J. Pellerito has served as President-Homebuilding Operations and
Chief Operating Officer since August 1997. Prior thereto from 1985 to July
1997 he was President of Richmond American Homes, a major regional
homebuilder based in northern Virginia. Mr. Pellerito has over 18 years
experience in residential construction and related services.
Christopher Spendley has served as Senior Vice President and Chief
Financial Officer since September 1996 and Secretary since September 1997.
Prior thereto Mr. Spendley was with Ryland Homes, Inc., a subsidiary of
Ryland Group, Inc. for 14 years where he served most recently as President of
the Baltimore Division from February 1994 to August 1996 and Controller from
1989 to 1994. He has over 15 years of experience in real estate and finance.
Clayton W. Miller has served as Senior Vice President since November
1989 and Chief Accounting Officer since September 1994. From November 1989 to
September 1994, he served as Chief Financial Officer of the Company. Mr.
Miller has over 19 years experience in finance and real estate development.
Paul C. Sukalo has served as Senior Vice President and a Director of the
Company from August 1988 to the present. Prior thereto, he was a general
partner of Sonny DeCesaris and Sons Development Group from June 1985 to
August 1988. He has over 18 years of related construction experience,
principally in residential construction and related services. Mr. Sukalo is
the son-in-law of Geaton A. DeCesaris, Sr.
William Wilder has served as Senior Vice President - Land Operations
since September 1994. Prior thereto, he held the position of Vice President
of the Company's Land Department from April 1990 to August 1994. Mr. Wilder
has over 19 years of real estate experience in both the public and private
sectors.
A. Hugo DeCesaris has served as Vice President in charge of the
Company's Northwest Division since February 1997 and has held an executive
position in the Company's Land Department since 1991. He is the son of
Geaton A. DeCesaris, Sr.
Timothy Bates has served as Vice President in charge of the Company's
Virginia Division since January 1994. Prior thereto, he served as division
manager for the Company's Virginia Division from 1988 through 1990 and
division sales manager from 1990 through 1993. Mr. Bates has over 13 years
experience in new home construction and marketing in the Washington,
D.C.-Baltimore marketplace.
Dorothy Minich has served as Vice President of the Company since August
1993 and is currently in charge of the Company's Patuxent Division. Prior
thereto, Ms. Minich was a division sales manager from January 1989 to August
1993. From May 1983 to January 1989 she was a community sales representative
at various Washington Homes' communities and has over 13 years experience in
sales and marketing for the Company.
Marco A. DeCesaris has been Vice President in charge of the Chesapeake
Division since February 1997. Prior thereto since 1990 he has served with
the Company in various executive positions overseeing the Company's
architectural department and Design Center. He is the son of Geaton A.
DeCesaris, Sr.
Lawrence M. Breneman has been a Vice President in charge of the
Pittsburgh Division since October 1996. Prior thereto from 1991 to October
1996 he was the Division Manager of the Pittsburgh Division. Mr. Breneman
joined the Company in 1987.
Officers are appointed by the Board of Directors to serve at the
pleasure of the Board. There are no arrangements or understandings with
respect to the selection of executive officers.
Item 11. Executive Compensation
The information required by this item is incorporated herein by
reference to the registrant's Proxy Statement relating to the 1997 Annual
Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by
reference to the registrant's Proxy Statement relating to the 1997 Annual
Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated herein by
reference to the registrant's Proxy Statement relating to the 1997 Annual
Meeting of Shareholders.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Financial Statements
The following consolidated financial statements of Washington
Homes, Inc. and subsidiaries have been incorporated herein by
reference as set forth in Item 8:
Independent Auditors' Report
Consolidated Balance Sheets at July 31, 1997 and 1996
Consolidated Statements of Operations for each of the years in the
three year period ended July 31, 1997
Consolidated Statements of Shareholders' Equity for each of the
years in the three year period ended July 31, 1997
Consolidated Statements of Cash Flows for each of the years in the
three year period ended July 31, 1997
Notes to Consolidated Financial Statements for each of the years in
the three year period ended July 31, 1997
(b) Reports on Form 8-K
During the period from May 1, 1997 to July 31, 1997, there were no
reports on Form 8-K filed by the registrant.
(c) Exhibits
There are included in this report or incorporated herein by
reference the following exhibits:
Exhibit No. Description of Exhibit
3(a) Articles of Incorporation of registrant, as amended
(Filed as Exhibit 3(a) to Registration No. 33-52648)*
3(a)(1 Articles of Merger merging WH Holdings, Inc. into
) registrant (Filed as Exhibit 3(a)(1) to Registration
No. 33-52648)*
3(a)(2 Articles of Restatement of Charter of registrant (Filed
) as Exhibit 3(a)(2) to Registration No. 33-52648)*
3(a)(3 Articles Supplementary to the Charter of registrant
) (Filed as Exhibit 3(a)(3) to Registration No.
33-52648)*
3(b) By-Laws of registrant, as amended
4(a) Specimen Common Stock Certificate (Filed as Exhibit
4(a) to Registration No. 33-52648)*
10(a) Office Lease Agreements between Citadel Land, Inc. and
the Company dated as of August 1, 1994. (Filed as
Exhibit 10(a) to 10-K Report for year ended July 31,
1994)*
10(b) Amendment to Office Lease Agreements between Citadel
Land, Inc. and the Company dated as of August 1, 1995
(Filed as Exhibit 10(b) to 10-K Report for year ended
July 31, 1995)*
10(c) Note Agreement dated as of April 15, 1994 with respect
to $43,000,000 Senior Notes due October 2000 (Filed as
Exhibit 19 to 10-Q Report for quarter ended April 30,
1994 - File No. 1-7643).*
10(d) $70,000,000 Revolving Acquisition and Development Loan
and Term Loan, Consolidated Amended and Restated Loan
Agreement dated as of July 31, 1997 with First Union
National Bank of Maryland.
10(e) Washington Homes, Inc. 401(k) Plan (filed as Exhibit
10(i) to 10-K Report for year ended July 31, 1996)*
10(f) Washington Homes, Inc. Employee Stock Option Plan
(Filed as Exhibit 10(f) to Registration No. 33-52648)*
10(g) Amendment to Employee Stock Option Plan (Filed as
Exhibit 10(f)(1) to Registration No. 33-52648)*
10(h) Form of non-compete agreements with officers (Filed as
Exhibit 10(g) to Registration No. 33-52648)*
10(i) Noncompete agreements with Geaton A. DeCesaris, Sr. and
Geaton A. DeCesaris, Jr. (Filed as Exhibit 10(g)(1) to
Registration No. 33-52648)*
10(j) Washington Homes Inc. Non-Employee Directors' Stock
Option Plan (Filed as Exhibit A to Definitive Proxy
Statement for meeting held December 9, 1994)*
13 1997 Annual Report to Shareholders (except for the
portions incorporated herein by reference, this Exhibit
is filed for informational purposes only)
21 Subsidiaries of registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedule
* Incorporated herein by reference.
d) Financial Statement Schedules
All schedules are omitted because the information is not applicable or
is presented in the financial statements or related notes.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf on the 28th of October, 1997, by the undersigned, thereunto
duly authorized.
WASHINGTON HOMES, INC.
(Registrant)
By: /s/ GEATON A. DECESARIS, JR.
Geaton A. DeCesaris, Jr., President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Position Date
/s/ GEATON A. DECESARIS, JR. President, Principal October 28,
1997
Geaton A. DeCesaris, Jr. Executive Officer
and Director
GEATON A. DECESARIS, SR.* Director October 28,
1997
Geaton A. DeCesaris, Sr.
THOMAS CONNELLY* Director October 28,
1997
Thomas Connelly
PAUL C. SUKALO* Director October 28,
1997
Paul C. Sukalo
Director October ,
1997
Ronald M. Shapiro
RICHARD S. FRARY* Director October 28,
1997
Richard S. Frary
RICHARD B. TALKIN* Director October 28,
1997
Richard B. Talkin
/s/ CHRISTOPHER SPENDLEY Principal Financial October 28,
1997
Christopher Spendley Officer
/s/ CLAYTON W. MILLER Principal Accounting October 28,
1997
Clayton W. Miller Officer
*By: /s/ GEATON A. DECESARIS, JR.
Geaton A. DeCesaris, Jr.
Attorney-in-fact