EXHIBIT 99.1
TECHNICAL OLYMPIC USA REPORTS EARNINGS FROM CONTINUING
OPERATIONS BEFORE MERGER AND UNUSUAL CHARGES OF $21.5 MILLION
FOR THE SECOND QUARTER
FOR IMMEDIATE RELEASE: August 13, 2002
Hollywood, Florida - Technical Olympic USA, Inc. (Nasdaq: TOUS) today reported
second quarter earnings from continuing operations before merger and unusual
charges of $21.5 million, or $0.77 per share. That compared to $24.3 million or
$0.87 per share for the corresponding quarter of the prior year. The Company
recorded severance and merger related charges of $6.5 million (after tax)
related to the merger on June 25, 2002 of Engle Holdings Corp. and Newmark Homes
Corp. In addition, the Company recorded a loss on early extinguishment of debt
of $3.4 million (after tax), associated with its repayment of the majority of
its prior borrowings from the proceeds generated from the Company's previously
announced high yield notes offering which was also completed on June 25, 2002.
As a result, income from continuing operations for the quarter ended June 30,
2002 was $11.6 million, or $0.41 per share, compared to $23.1 million, or $0.83
per share for the corresponding quarter in 2001.
For the six months ended June 30, 2002, earnings from continuing operations
before merger and unusual charges totaled $39.4 million, or $1.41 per share,
compared to $42.3 million, or $1.52 per share for the six months ended June 30,
2001.
Technical Olympic USA, Inc. was formed on June 25, 2002 via the merger of Engle
Holdings Corp. and Newmark Homes Corp. (Nasdaq: NHCH). This merger was accounted
for in a manner similar to a pooling of interests due to both entities being
under the common control of Technical Olympic, Inc. (TOI). As a result of the
merger, TOI increased its ownership interest in Technical Olympic USA to 91.75%.
In accordance with generally accepted accounting principles, historical
comparisons represent pooled results of the two former companies.
HOMEBUILDING
For the three months ended June 30, 2002, the Company generated Homebuilding
revenues of $354.1 million as compared to $359.2 million for the three months
ended June 30, 2001. For the six months ended June 30, 2002, the Company
generated Homebuilding revenues of $657.4 million as compared to $669.4 million
for the six months ended June 30, 2001. The decline in revenues of $5.1 million,
or 1.4% for the three months ended June 30, 2002 and $12.0 million, or 1.8% for
the six months ended June 30, 2002 is primarily attributable to the decrease in
sales of land during the 2002 periods as compared to the corresponding periods
during 2001. During the three months and six months ended June 30, 2002, sales
of land decreased to $2.0 million and $3.3 million, respectively as compared to
$9.7 million and $11.0 million during the three and six months ended June 30,
2001.
For the three months ended June 30, 2002, revenue from the sale of homes
increased to $352.1 million from $349.5 million. This increase was primarily
attributable to the increase in the Company's average selling price to $268,000
during the three months ended June 30, 2002 from $260,000 during the three
months ended June 30, 2001. This increase in average selling price was primarily
attributable to a change in product mix and the change in mix of homes closed in
the Company's regions. The increase in average selling price was offset by the
decline in the number of homes closed during the three months ended June 30,
2002 as compared to the corresponding period in the prior year. During the three
months ended June 30, 2002, the Company closed 1,315 homes as compared to 1,342
home closings for the three months ended June 30, 2001. This decline in closings
is primarily a result of the decline in the number of communities that the
Company was actively marketing. At June 30, 2002, the Company was actively
marketing in 127 communities as compared to 150 at June 30, 2001.
As a result of the decline in revenue from home sales during the first quarter
of 2002 as compared to the prior year, revenue from home sales for the six
months ended June 30, 2002 declined to $654.1 million from $658.3 million for
the corresponding period in 2001. This decrease is attributable to the decline
in the number of homes closed to 2,461 for the six months ended June 30, 2002 as
compared to 2,568 for the corresponding period in 2001. This decline in closings
was offset by an increase in average selling price to $266,000 for the six
months ended June 30, 2002 from $256,000 for the six months ended June 30, 2001.
Homebuilding cost of sales decreased to $282.1 million and $523.8 million,
during the three and six months ended June 30, 2002 from $285.2 million and
$534.7 million during the three and six months ended June 30, 2001. This
decrease is primarily attributable to the decline in the sale of land.
For the three and six months ended June 30, 2002, gross margin on revenue from
home sales was 20.4%, which is consistent with the 20.9% and 20.3% gross margins
generated for the three and six months ended June 30, 2001.
Selling, general & administrative ("SG&A") expenses increased to $41.9 million
and $79.6 million for the three and six months ended June 30, 2002 from $37.9
and $72.8 million for the three and six months ended June 30, 2001. As a
percentage of revenues from home sales, SG&A increased to 11.9% and 12.2% for
the three and six months ended June 30, 2002 from 10.8% and 11.1% for the three
and six months ended June 30, 2001. The increase in comparing 2002 periods to
2001 periods is primarily attributable to increases in compensation, information
technology, insurance and legal expenses.
FINANCIAL SERVICES
Our Financial Services businesses generally provide mortgage financing, title
insurance and closing services for both our homebuyers and others. During the
three and six months ended June 30, 2002, Financial Services generated pretax
income of $4.4 million and $8.1 million as compared to $3.6 million and $6.0
million for the three and six months ended June 30, 2001. This increase is
primarily attributable to the increase in the capture ratio of closings and an
improvement in the margin. During the three months ended June 30, 2002,
Financial Services pretax income as a percent of Financial Services revenue
increased to 46.6% from 45.5% for the three months ended June 30, 2001. For the
six months ended June 30, 2002, the margin improved to 45.2% from 42.0% during
the corresponding period in the prior year.
* * * * *
Technical Olympic USA, Inc. designs, builds, and markets single-family
residences, town-homes, patio homes and condominiums in eleven metropolitan
markets located in four geographic regions: Florida, Texas, the West and the
Mid-Atlantic. As of June 30, 2002, Technical Olympic USA was actively marketing
in 127 communities and had 2,394 homes under contract in backlog. Technical
Olympic USA is also engaged in residential land acquisition and lot development
and at June 30, 2002, Technical Olympic owned, or had under option contracts,
15,985 lots available for future home building.
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of known and unknown
risks and uncertainties including, but not limited to: increases in interest
rates; business conditions; growth in the home-building industry; investment
real estate; the economy in general; competitive factors; the cost of building
materials; and the risk factors detailed in the Company's Registration Statement
on Form S-1 (SEC File No. 333-4221), and all other factors set forth in the
Company's most recent Form 10-K.
TECHNICAL OLYMPIC USA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
<Table>
<Caption>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
2002 2001 2002 2001
-------------- -------------- -------------- --------------
HOMEBUILDING:
Revenues:
Homes sales $ 654,086 $ 658,328 $ 352,107 $ 349,522
Land/lot sales 3,342 11,035 2,033 9,672
-------------- -------------- -------------- --------------
657,428 669,363 354,140 359,194
Cost of sales:
Home sales 520,728 524,967 280,228 276,539
Land/lot sales 3,045 9,756 1,861 8,685
-------------- -------------- -------------- --------------
523,773 534,723 282,089 285,224
-------------- -------------- -------------- --------------
Gross profit 133,655 134,640 72,051 73,970
Selling, general and administrative expenses 79,612 72,834 41,897 37,909
Depreciation and amortization 3,241 4,415 1,609 2,132
Severance and merger related expenses 24,467 1,864 10,639 1,864
Loss on early extinguishment of debt 5,411 -- 5,411 --
Other income, net (3,332) (3,051) (1,790) (580)
-------------- -------------- -------------- --------------
Homebuilding pretax income 24,256 58,578 14,285 32,645
FINANCIAL SERVICES:
Revenues 17,947 14,217 9,423 7,822
Expenses 9,837 8,249 5,035 4,263
-------------- -------------- -------------- --------------
Financial Services pretax income 8,110 5,968 4,388 3,559
-------------- -------------- -------------- --------------
Income from continuing operations before income
taxes 32,366 64,546 18,673 36,204
Income tax expense 11,877 23,451 7,110 13,137
-------------- -------------- -------------- --------------
Income from continuing operations 20,489 41,095 11,563 23,067
Discontinued operations:
Income from discontinued operations 7,922 2,302 6,895 392
Income tax expense (benefit) 2,959 526 2,572 (205)
-------------- -------------- -------------- --------------
Income from discontinued operations, net of
taxes 4,963 1,776 4,323 597
-------------- -------------- -------------- --------------
Net income $ 25,452 $ 42,871 $ 15,886 $ 23,664
============== ============== ============== ==============
EARNINGS PER COMMON SHARE (BASIC AND DILUTED):
From continuing operations $ 0.73 $ 1.47 $ 0.41 $ 0.83
From discontinued operations 0.18 0.06 0.16 0.02
-------------- -------------- -------------- --------------
Net income $ 0.91 $ 1.53 $ 0.57 $ 0.85
============== ============== ============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic and diluted 27,878,787 27,878,787 27,878,787 27,878,787
============== ============== ============== ==============
SELECTED FINANCIAL AND OPERATING DATA:
Earnings before interest, taxes, depreciation and
amortization (EBITDA) $ 50,435 $ 86,807 $ 27,642 $ 47,423
Gross margin on home sales 20.4% 20.3% 20.4% 20.9%
Ratio of SG&A expenses to revenues from home sales 12.2% 11.1% 11.9% 10.8%
Ratio of Homebuilding pretax income to revenues
from home sales 3.7% 8.9% 4.1% 9.3%
Total active communities at period end 127 150 -- --
Homes closed 2,461 2,568 1,315 1,342
Average sales price per home closed $ 266 $ 256 $ 268 $ 260
SELECTED FINANCIAL DATA BEFORE MERGER AND
UNUSUAL CHARGES:
EBITDA $ 80,313 $ 88,671 $ 43,692 $ 49,287
Homebuilding pretax income $ 54,134 $ 60,442 $ 30,335 $ 34,509
Ratio of Homebuilding pretax income to
revenues from home sales 8.3% 9.2% 8.6% 9.9%
</Table>
TECHNICAL OLYMPIC USA, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2002 2001
------------ ------------
ASSETS
HOMEBUILDING:
Cash and cash equivalents:
Unrestricted $ 79,312 $ 67,206
Restricted 40,020 7,738
Inventory 654,381 645,986
Property and equipment, net 13,578 10,694
Other assets 35,569 10,897
Goodwill, net 57,726 57,726
Westbrooke assets held for sale -- 117,160
------------ ------------
880,586 917,407
FINANCIAL SERVICES:
Cash and cash equivalents:
Unrestricted 4,416 7,930
Restricted 17,166 19,605
Mortgage loans held for sale 32,034 50,933
Other assets 3,380 3,295
------------ ------------
56,996 81,763
------------ ------------
Total assets $ 937,582 $ 999,170
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
HOMEBUILDING:
Accounts payable and other liabilities $ 88,478 $ 56,295
Customer deposits 25,268 25,674
Consolidated land bank obligations 30,066 30,022
Homebuilding borrowings 367,405 308,697
Westbrooke liabilities associated with assets held for sale -- 71,800
------------ ------------
511,217 492,488
FINANCIAL SERVICES:
Accounts payable and other liabilities 15,856 18,828
Financial services borrowings 26,371 38,689
------------ ------------
42,227 57,517
------------ ------------
Total liabilities 553,444 550,005
Minority interest 25,542 35,795
Commitments and contingencies -- --
Stockholders' equity:
Common stock -- $.01 par value; 67,000,000 shares
authorized and 27,878,787 shares issued and outstanding 279 279
Additional paid-in capital 322,400 322,400
Retained earnings 35,917 90,691
------------ ------------
Total stockholders' equity 358,596 413,370
------------ ------------
Total liabilities and stockholders' equity $ 937,582 $ 999,170
============ ============
</Table>