##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to
  TOUSA, INC.
  Delaware
    
    76-0460831(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 4000 Hollywood Blvd., Suite 500 NHollywood, Florida
    
    33021(Address of principal executive offices)
    
    (ZIP code)
 
 
 X
  o x o
 o x
 APPLICABLE ONLY TO CORPORATE ISSUERS:




---



##### Table of Contents



TOUSA, INC. AND SUBSIDIARIES
 INDEX
 PAGEPART I.
    
    Financial Information
    
    
    3ITEM 1.
    
    Financial Statements (Unaudited)
    
    
    3Consolidated Statements of Financial Condition
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    57ITEM 4.
    
    Controls and Procedures
    
    
    57PART II.
    
    Other Information
    
    
    58ITEM 1.
    
    Legal Proceedings
    
    
    58ITEM 1A.
    
    Risk Factors
    
    
    58ITEM 6.
    
    Exhibits
    
    
    59Signatures
    
    
    60EX-3.5 Certificate of AmendmentEX-3.6 Certificate of Designation, Powers, Preferences And RightsEX-4.14 IndentureEX-4.15 Form of Senior Subordinated PIK Election NoteEX-4.16 Stock Purchase WarrantEX-4.17 Registration Rights AgreementEX-4.18 Registration Rights AgreementEX-4.19 Registration Rights AgreementEX-10.43 Settlement and Release AgreementEX-10.44 Mutual Release and Consent AgreementEX-10.45 Settlement and Release Agreement (Senior)EX-10.46 Settlement and Release Agreement (Junior)EX-10.47 Amendment Agreement dated as of July 31, 2007EX-10.48 First Lien Term Loan Credit AgreementEX-10.49 Second Lien Term Loan Credit AgreementEx-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEOEx-32.2 Section 906 Certification of CFO
 2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TOUSA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in millions, except par value)
 June 30, 2007
    
    
    December 31, 2006(Unaudited)ASSETSHOMEBUILDING:Cash and cash equivalents:Unrestricted
    
    $
    20.9
    
    
    $
    47.4Restricted
    
    
    3.3
    
    
    
    3.8Inventory:Deposits
    
    
    240.9
    
    
    
    216.6Homesites and land under development
    
    
    822.0
    
    
    
    725.6Residences completed and under construction
    
    
    660.3
    
    
    
    835.7Inventory not owned
    
    
    221.1
    
    
    
    300.61,944.3
    
    
    
    2,078.5Property and equipment, net
    
    
    28.9
    
    
    
    28.5Investments in unconsolidated joint ventures
    
    
    132.7
    
    
    
    129.0Receivables from unconsolidated joint ventures, net of allowance of $55.1 million and
$54.8 million at June 30, 2007 and December 31, 2006, respectively
    
    
    41.2
    
    
    
    27.2Other assets
    
    
    334.1
    
    
    
    236.6Goodwill
    
    
    62.7
    
    
    
    100.9Assets held for sale
    
    
    14.1
    
    
    
    124.82,582.2
    
    
    
    2,776.7FINANCIAL SERVICES:Cash and cash equivalents:Unrestricted
    
    
    7.0
    
    
    
    6.8Restricted
    
    
    4.0
    
    
    
    4.2Mortgage loans held for sale
    
    
    36.2
    
    
    
    41.9Other assets
    
    
    12.0
    
    
    
    12.659.2
    
    
    
    65.5Total assets
    
    $
    2,641.4
    
    
    $
    2,842.2LIABILITIES AND STOCKHOLDERS EQUITYHOMEBUILDING:Accounts payable and other liabilities
    
    $
    633.9
    
    
    $
    554.2Customer deposits
    
    
    54.9
    
    
    
    62.6Obligations for inventory not owned
    
    
    227.1
    
    
    
    300.6Notes payable
    
    
    1,060.9
    
    
    
    1,060.7Bank borrowings
    
    
    50.0
    
    
    
    Liabilities associated with assets held for sale
    
    
    2.4
    
    
    
    47.82,029.2
    
    
    
    2,025.9FINANCIAL SERVICES:Accounts payable and other liabilities
    
    
    5.9
    
    
    
    6.0Bank borrowings
    
    
    28.6
    
    
    
    35.434.5
    
    
    
    41.4Total liabilities
    
    
    2,063.7
    
    
    
    2,067.3Commitments and contingenciesStockholders equity:Preferred stock  $0.01 par value; 3,000,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock  $0.01 par value; 97,000,000 shares authorized and 59,604,169 and
59,590,519 shares issued and outstanding at June 30, 2007, and December 31, 2006,
respectively
    
    
    0.6
    
    
    
    0.6Additional paid-in capital
    
    
    483.3
    
    
    
    481.2Retained earnings
    
    
    93.8
    
    
    
    293.1Total stockholders equity
    
    
    577.7
    
    
    
    774.9Total liabilities and stockholders equity
    
    $
    2,641.4
    
    
    $
    2,842.2
  3




---



##### Table of Contents



TOUSA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006HOMEBUILDING:Revenues:Home sales
    
    $
    535.3
    
    
    $
    605.3
    
    
    $
    1,092.7
    
    
    $
    1,161.8Land sales
    
    
    30.4
    
    
    
    16.1
    
    
    
    33.7
    
    
    
    43.0565.7
    
    
    
    621.4
    
    
    
    1,126.4
    
    
    
    1,204.8Cost of sales:Home sales
    
    
    437.9
    
    
    
    451.1
    
    
    
    879.9
    
    
    
    859.8Land sales
    
    
    26.8
    
    
    
    11.4
    
    
    
    29.1
    
    
    
    37.9Inventory impairments and abandonment costs
    
    
    84.8
    
    
    
    1.8
    
    
    
    123.9
    
    
    
    7.6Other
    
    
    (1.6
    )
    
    
    (2.1
    )
    
    
    (4.2
    )
    
    
    (5.5
    )547.9
    
    
    
    462.2
    
    
    
    1,028.7
    
    
    
    899.8Gross profit
    
    
    17.8
    
    
    
    159.2
    
    
    
    97.7
    
    
    
    305.0Selling, general and administrative expenses
    
    
    85.0
    
    
    
    99.9
    
    
    
    176.4
    
    
    
    193.3(Income) loss from unconsolidated joint ventures, net
    
    
    1.5
    
    
    
    (37.9
    )
    
    
    5.1
    
    
    
    (65.7
    )Provision for settlement of loss contingency
    
    
    32.0
    
    
    
    
    
    
    
    110.9
    
    
    
    Goodwill impairments
    
    
    38.2
    
    
    
    
    
    
    
    38.2
    
    
    
    Other (income) expense, net
    
    
    (1.3
    )
    
    
    (2.4
    )
    
    
    (1.9
    )
    
    
    (4.4
    )Homebuilding pretax income (loss)
    
    
    (137.6
    )
    
    
    99.6
    
    
    
    (231.0
    )
    
    
    181.8FINANCIAL SERVICES:Revenues
    
    
    11.0
    
    
    
    17.4
    
    
    
    23.0
    
    
    
    32.6Expenses
    
    
    8.7
    
    
    
    11.0
    
    
    
    18.0
    
    
    
    21.7Financial Services pretax income
    
    
    2.3
    
    
    
    6.4
    
    
    
    5.0
    
    
    
    10.9Income (loss) from continuing operations before income
taxes
    
    
    (135.3
    )
    
    
    106.0
    
    
    
    (226.0
    )
    
    
    192.7Provision (benefit) for income taxes
    
    
    (13.2
    )
    
    
    39.0
    
    
    
    (41.7
    )
    
    
    71.1Income (loss) from continuing operations, net of taxes
    
    
    (122.1
    )
    
    
    67.0
    
    
    
    (184.3
    )
    
    
    121.6Discontinued operations:Income (loss) from discontinued operations
    
    
    (2.0
    )
    
    
    0.9
    
    
    
    (7.9
    )
    
    
    1.5Income (loss) from disposal of discontinued operations
    
    
    (13.6
    )
    
    
    
    
    
    
    (13.6
    )
    
    
    Provision (benefit) for income taxes
    
    
    (5.7
    )
    
    
    0.3
    
    
    
    (7.8
    )
    
    
    0.5Income (loss) from discontinued operations, net of taxes
    
    
    (9.9
    )
    
    
    0.6
    
    
    
    (13.7
    )
    
    
    1.0Net income (loss)
    
    $
    (132.0
    )
    
    $
    67.6
    
    
    $
    (198.0
    )
    
    $
    122.6EARNINGS (LOSS) PER COMMON SHARE, BASIC:Earnings (loss) from continuing operations
    
    $
    (2.04
    )
    
    $
    1.12
    
    
    $
    (3.09
    )
    
    $
    2.04Earnings (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.01
    
    
    
    (0.23
    )
    
    
    0.02Basic earnings (loss)
    
    $
    (2.21
    )
    
    $
    1.13
    
    
    $
    (3.32
    )
    
    $
    2.06EARNINGS (LOSS) PER COMMON SHARE, DILUTED:Earnings (loss) from continuing operations
    
    $
    (2.04
    )
    
    $
    1.09
    
    
    $
    (3.09
    )
    
    $
    1.97Earnings (loss) from discontinued operations
    
    
    (0.17
    )
    
    
    0.01
    
    
    
    (0.23
    )
    
    
    0.02Diluted earnings (loss)
    
    $
    (2.21
    )
    
    $
    1.10
    
    
    $
    (3.32
    )
    
    $
    1.99WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:Basic
    
    
    59,604,169
    
    
    
    59,572,856
    
    
    
    59,599,569
    
    
    
    59,580,962Diluted
    
    
    59,604,169
    
    
    
    61,405,216
    
    
    
    59,599,569
    
    
    
    61,539,678CASH DIVIDENDS PER SHARE
    
    $
    
    
    
    $
    0.015
    
    
    $
    
    
    
    $
    0.030
  4




---



##### Table of Contents



TOUSA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (198.0
    )
    
    $
    122.6(Income) loss from discontinued operations
    
    
    13.7
    
    
    
    (1.0
    )Income (loss) from continuing operations
    
    
    (184.3
    )
    
    
    121.6Adjustments to reconcile income (loss) from continuing operations to
net cash used in operating activities:Depreciation and amortization
    
    
    7.4
    
    
    
    6.6Non-cash compensation expense
    
    
    2.1
    
    
    
    6.9Provision for settlement of loss contingency
    
    
    110.9
    
    
    
    Loss on impairments of inventory and abandonment costs
    
    
    123.9
    
    
    
    7.6Goodwill impairments
    
    
    38.2
    
    
    
    Deferred income taxes
    
    
    (27.9
    )
    
    
    (2.1
    )Equity in (earnings) losses from unconsolidated joint ventures
    
    
    9.4
    
    
    
    (22.6
    )Distributions of earnings from unconsolidated joint ventures
    
    
    0.6
    
    
    
    19.2Loss on impairment of investments in unconsolidated joint ventures
    
    
    5.5
    
    
    
    Changes in operating assets and liabilities:Restricted cash
    
    
    0.7
    
    
    
    0.1Inventory
    
    
    (45.9
    )
    
    
    (271.0
    )Receivables from unconsolidated joint ventures
    
    
    (23.9
    )
    
    
    (15.0
    )Other assets
    
    
    (52.5
    )
    
    
    35.4Mortgage loans held for sale
    
    
    5.7
    
    
    
    (1.2
    )Accounts payable and other liabilities
    
    
    (45.4
    )
    
    
    (47.2
    )Customer deposits
    
    
    (7.7
    )
    
    
    (3.3
    )Net cash used in operating activities
    
    
    (83.2
    )
    
    
    (165.0
    )Cash flows from investing activities:Net additions to property and equipment
    
    
    (7.5
    )
    
    
    (9.9
    )Loans to unconsolidated joint ventures
    
    
    
    
    
    
    (7.5
    )Investments in unconsolidated joint ventures
    
    
    (21.1
    )
    
    
    (8.2
    )Capital distributions from unconsolidated joint ventures
    
    
    9.7
    
    
    
    25.2Net cash used in investing activities
    
    
    (18.9
    )
    
    
    (0.4
    )Cash flows from financing activities:Net borrowings from (repayments of) revolving credit facilities
    
    
    50.0
    
    
    
    (65.0
    )Net proceeds from notes offering
    
    
    
    
    
    
    248.8Net proceeds from (repayments of) Financial Services bank borrowings
    
    
    (6.8
    )
    
    
    3.1Payments for deferred financing costs
    
    
    (11.2
    )
    
    
    (3.2
    )Excess income tax benefit from exercise of stock options
    
    
    
    
    
    
    0.1Proceeds from stock option exercises
    
    
    
    
    
    
    0.2Dividends paid
    
    
    
    
    
    
    (1.8
    )Net cash provided by financing activities
    
    
    32.0
    
    
    
    182.2Net cash provided by (used in) continuing operations
    
    
    (70.1
    )
    
    
    16.8Cash flows from discontinued operations:Net cash used in operating activities
    
    
    (8.5
    )
    
    
    (2.5
    )Net cash provided by (used in) investing activities
    
    
    52.3
    
    
    
    (0.4
    )Net cash provided by (used in) discontinued operations
    
    
    43.8
    
    
    
    (2.9
    )Increase (decrease) in cash and cash equivalents
    
    
    (26.3
    )
    
    
    13.9Cash and cash equivalents at beginning of period
    
    
    54.2
    
    
    
    32.3Cash and cash equivalents at end of period
    
    $
    27.9
    
    
    $
    46.2Supplemental disclosure of non-cash financing activities:Increase (decrease) in obligations for inventory not owned
    
    $
    (73.5
    )
    
    $
    94.4Increase (decrease) in inventory not owned
    
    $
    (79.5
    )
    
    $
    94.4
  5




---



##### Table of Contents



TOUSA, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 1. Business and Organization
 Business
  Organization
  2. Summary of Significant Accounting Policies
 Principles of Consolidation and Basis of Presentation
    
    
    Impairment assessments of investments in unconsolidated joint ventures, long-lived
assets, including our inventory, and goodwill;
    
    Insurance and litigation related contingencies, including our accrual for settlement of
loss contingency related to the Transeastern Joint Venture (Transeastern JV);
    
    Realization of deferred income tax assets and liability for unrecognized tax benefits; and
    
    Estimated costs associated with construction and development activities in connection with our homebuilding operations.
   Interim Presentation
  6




---



##### Table of Contents



Earnings Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic weighted average shares outstanding
    
    
    59,604,169
    
    
    
    59,572,856
    
    
    
    59,599,569
    
    
    
    59,580,962Net effect of common stock equivalents
assumed to be exercised
    
    
    
    
    
    
    1,832,360
    
    
    
    
    
    
    
    1,958,716Diluted weighted average shares outstanding
    
    
    59,604,169
    
    
    
    61,405,216
    
    
    
    59,599,569
    
    
    
    61,539,678
 Revenue Recognition
 Accounting for
the Sales of Real Estate
 Recent Accounting Pronouncements
 Accounting for Servicing of Financial Assets
 Accounting for Uncertainty in Income
Taxes-an interpretation of SFAS 109
 Fair Value Measurements
 7




---



##### Table of Contents



Applicability of the Assessment of a Buyers Continuing Investment under FASB Statement No. 66,
Accounting for Sales of Real Estate, for Sales of Condominiums
 The Fair Value Option for Financial Assets and
Financial Liabilities
 3. Inventory
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest capitalized, beginning of period
    
    $
    75.4
    
    
    $
    49.1
    
    
    $
    68.7
    
    
    $
    44.2Interest incurred*
    
    
    29.3
    
    
    
    24.5
    
    
    
    56.5
    
    
    
    46.5Less interest included in:Cost of sales
    
    
    (22.8
    )
    
    
    (17.7
    )
    
    
    (43.1
    )
    
    
    (34.5
    )Other adjustments
    
    
    
    
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    (0.1
    )Interest capitalized, end of period
    
    $
    81.9
    
    
    $
    56.1
    
    
    $
    81.9
    
    
    $
    56.1
 
 *
    
    Included in interest incurred is the amortization of deferred finance costs
which amounted to $1.6 million and $0.9 million for the three months ended June 30,
2007 and June 30, 2006, respectively, and $2.7 million and $1.8 million for the six
months ended June 30, 2007 and June 30, 2006, respectively.  Consolidation of Variable Interest Entities
  8




---



##### Table of Contents



Accounting for the Impairment or Disposal of Long-Lived Assets
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Impairment charges on active communities:Florida
    
    $
    23.6
    
    
    $
    0.2
    
    
    $
    28.7
    
    
    $
    0.7Mid-Atlantic
    
    
    4.5
    
    
    
    
    
    
    
    6.6
    
    
    
    3.1Texas
    
    
    0.5
    
    
    
    
    
    
    
    0.6
    
    
    
    West
    
    
    12.8
    
    
    
    
    
    
    
    13.5
    
    
    
    1.7$
    41.4
    
    
    $
    0.2
    
    
    $
    49.4
    
    
    $
    5.5Write-offs of deposits and abandonment costs:Florida
    
    $
    12.1
    
    
    $
    1.0
    
    
    $
    12.8
    
    
    $
    1.1Mid-Atlantic
    
    
    13.5
    
    
    
    0.3
    
    
    
    13.9
    
    
    
    0.5Texas
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.1West
    
    
    17.6
    
    
    
    0.2
    
    
    
    47.5
    
    
    
    0.4$
    43.4
    
    
    $
    1.6
    
    
    $
    74.5
    
    
    $
    2.1Inventory impairments and abandonment costs
    
    $
    84.8
    
    
    $
    1.8
    
    
    $
    123.9
    
    
    $
    7.6
 9




---



##### Table of Contents



4. Transeastern Joint Venture
   The Equity Method of Accounting for
Investments in Common Stock
     10




---



##### Table of Contents



5. Investments in Unconsolidated Joint Ventures (Excluding the Transeastern JV)
  June 30, 2007Engle/Sunbelt
    
    
    Others
    
    
    TotalAssets:Cash and cash equivalents
    
    $
    9.4
    
    
    $
    16.1
    
    
    $
    25.5Inventories
    
    
    185.8
    
    
    
    448.6
    
    
    
    634.4Other assets
    
    
    3.2
    
    
    
    4.9
    
    
    
    8.1Total assets
    
    $
    198.4
    
    
    $
    469.6
    
    
    $
    668.0Liabilities and equity:Accounts payable and other liabilities
    
    $
    49.4
    
    
    $
    80.2
    
    
    $
    129.6Notes payable
    
    
    91.9
    
    
    
    197.9
    
    
    
    289.8Equity of:TOUSA, Inc.
    
    
    48.5
    
    
    
    96.9
    
    
    
    145.4Others
    
    
    8.6
    
    
    
    94.6
    
    
    
    103.2Total equity
    
    
    57.1
    
    
    
    191.5
    
    
    
    248.6Total liabilities and equity
    
    $
    198.4
    
    
    $
    469.6
    
    
    $
    668.0
 December 31, 2006Engle/Sunbelt
    
    
    Others
    
    
    TotalAssets:Cash and cash equivalents
    
    $
    22.5
    
    
    $
    13.5
    
    
    $
    36.0Inventories
    
    
    246.6
    
    
    
    450.8
    
    
    
    697.4Other assets
    
    
    2.9
    
    
    
    9.5
    
    
    
    12.4Total assets
    
    $
    272.0
    
    
    $
    473.8
    
    
    $
    745.8Liabilities and equity:Accounts payable and other liabilities
    
    $
    44.9
    
    
    $
    89.3
    
    
    $
    134.2Notes payable
    
    
    161.3
    
    
    
    195.7
    
    
    
    357.0Equity of:TOUSA, Inc.
    
    
    56.6
    
    
    
    81.8
    
    
    
    138.4Others
    
    
    9.2
    
    
    
    107.0
    
    
    
    116.2Total equity
    
    
    65.8
    
    
    
    188.8
    
    
    
    254.6Total liabilities and equity
    
    $
    272.0
    
    
    $
    473.8
    
    
    $
    745.8
 11




---



##### Table of Contents



Three Months Ended
    
    
    Three Months EndedJune 30, 2007
    
    
    June 30, 2006Engle/Sunbelt
    
    
    Others
    
    
    Total
    
    
    Engle/Sunbelt
    
    
    Others
    
    
    TotalRevenues
    
    $
    83.3
    
    
    $
    22.8
    
    
    $
    106.1
    
    
    $
    151.4
    
    
    $
    40.1
    
    
    $
    191.5Cost and expenses
    
    
    90.1
    
    
    
    24.0
    
    
    
    114.1
    
    
    
    127.2
    
    
    
    36.8
    
    
    
    164.0Net earnings (losses) of
unconsolidated joint ventures
    
    $
    (6.8
    )
    
    $
    (1.2
    )
    
    $
    (8.0
    )
    
    $
    24.2
    
    
    $
    3.3
    
    
    $
    27.5Our share of net earnings (losses)
    
    $
    (5.7
    )
    
    $
    (2.6
    )
    
    $
    (8.3
    )
    
    $
    20.4
    
    
    $
    2.4
    
    
    $
    22.8Management fees earned
    
    
    3.8
    
    
    
    0.7
    
    
    
    4.5
    
    
    
    7.0
    
    
    
    2.5
    
    
    
    9.5Income (loss) from unconsolidated
joint ventures
    
    $
    (1.9
    )
    
    $
    (1.9
    )
    
    $
    (3.8
    )
    
    $
    27.4
    
    
    $
    4.9
    
    
    $
    32.3
 Six Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    June 30, 2006Engle/Sunbelt
    
    
    Others
    
    
    Total
    
    
    Engle/Sunbelt
    
    
    Others
    
    
    TotalRevenues
    
    $
    176.1
    
    
    $
    96.2
    
    
    $
    272.3
    
    
    $
    300.4
    
    
    $
    83.1
    
    
    $
    383.5Cost and expenses
    
    
    185.6
    
    
    
    96.0
    
    
    
    281.6
    
    
    
    253.2
    
    
    
    72.9
    
    
    
    326.1Net earnings (losses) of
unconsolidated joint ventures
    
    $
    (9.5
    )
    
    $
    0.2
    
    
    $
    (9.3
    )
    
    $
    47.2
    
    
    $
    10.2
    
    
    $
    57.4Our share of net earnings (losses)
    
    $
    (8.1
    )
    
    $
    (1.3
    )
    
    $
    (9.4
    )
    
    $
    40.2
    
    
    $
    2.4
    
    
    $
    42.6Management fees earned
    
    
    8.0
    
    
    
    0.1
    
    
    
    8.1
    
    
    
    13.9
    
    
    
    5.4
    
    
    
    19.3Income (loss) from unconsolidated
joint ventures
    
    $
    (0.1
    )
    
    $
    (1.2
    )
    
    $
    (1.3
    )
    
    $
    54.1
    
    
    $
    7.8
    
    
    $
    61.9
    Engle/Sunbelt Joint Venture
  12




---



##### Table of Contents



TOUSA / Kolter Joint Venture
  13




---



##### Table of Contents



6. Other Assets
  June 30,
    
    
    December 31,2007
    
    
    2006Homebuilding:Deferred income taxes,  net
    
    $
    188.5
    
    
    $
    160.6Income taxes receivable
    
    
    52.2
    
    
    
    12.9Accounts receivable
    
    
    55.8
    
    
    
    37.0Deferred finance costs, net
    
    
    24.6
    
    
    
    16.1Prepaid expenses
    
    
    11.5
    
    
    
    7.4Other assets
    
    
    1.5
    
    
    
    2.6Total other assets
    
    $
    334.1
    
    
    $
    236.6
 7. Goodwill
   Six Months EndedJune 30,2007
    
    
    2006Balance at January 1
    
    $
    100.9
    
    
    $
    105.6Impairments
    
    
    (38.2
    )
    
    
    Balance at June 30
    
    $
    62.7
    
    
    $
    105.6
 Goodwill and Other Intangible Assets
 8. Accounts Payable and Other Liabilities
  June 30,
    
    
    December 31,2007
    
    
    2006Homebuilding:Accrual for settlement of loss contingency
    
    $
    385.9
    
    
    $
    275.0Accounts payable
    
    
    53.7
    
    
    
    70.2Interest
    
    
    38.7
    
    
    
    37.8Compensation
    
    
    16.1
    
    
    
    27.8Taxes, including income and real estate
    
    
    11.9
    
    
    
    10.4Accrual for unpaid invoices on delivered homes
    
    
    19.6
    
    
    
    23.6Accrued expenses
    
    
    55.1
    
    
    
    51.3Warranty costs
    
    
    6.9
    
    
    
    7.4Deferred revenue
    
    
    46.0
    
    
    
    50.7Total accounts payable and other liabilities
    
    $
    633.9
    
    
    $
    554.2
 14




---



##### Table of Contents



9. Homebuilding and Financial Services Borrowings
 Homebuilding Borrowings
  June 30,
    
    
    December 31,2007
    
    
    2006Senior notes due 2010, at 9%
    
    $
    300.0
    
    
    $
    300.0Senior notes due 2011, at 8 1/4%
    
    
    250.0
    
    
    
    250.0Discount on senior notes
    
    
    (3.0
    )
    
    
    (3.5
    )Senior subordinated notes due 2012, at 10 3/8%
    
    
    185.0
    
    
    
    185.0Senior subordinated notes due 2011, at 7 1/2%
    
    
    125.0
    
    
    
    125.0Senior subordinated notes due 2015, at 7 1/2%
    
    
    200.0
    
    
    
    200.0Premium on senior subordinated notes
    
    
    3.9
    
    
    
    4.2Existing Revolving Loan Facility
    
    
    50.0
    
    
    
    $
    1,110.9
    
    
    $
    1,060.7
    15




---



##### Table of Contents



1 4 1 4
 Financial Services Borrowings
    10. Income Taxes
 Accounting for Income Taxes
  16




---



##### Table of Contents



11. Commitments and Contingencies
  Warranty
  17




---



##### Table of Contents



Six Months EndedJune 30,2007
    
    
    2006Accrued warranty costs at January 1
    
    $
    7.4
    
    
    $
    6.6Liability recorded for warranties issued during the period
    
    
    2.7
    
    
    
    5.9Warranty work performed
    
    
    (4.2
    )
    
    
    (4.2
    )Adjustments
    
    
    1.0
    
    
    
    Accrued warranty costs at June 30
    
    $
    6.9
    
    
    $
    8.3
 Letters of Credit and Performance Bonds
  Class Action Lawsuit
  Liquidity
   18




---



##### Table of Contents



12. Stockholders Equity and Stock-Based Compensation
  Accounting for Stock-Based Compensation Share-Based Payment
   Weighted AverageOptions
    
    
    Exercise PriceOptions outstanding at beginning of period
    
    
    7,712,574
    
    
    $
    13.04Granted
    
    
    189,552
    
    
    $
    9.45Exercised
    
    
    
    
    
    $
    Forfeited
    
    
    11,250
    
    
    $
    18.12Options outstanding at end of period
    
    
    7,890,876
    
    
    $
    12.94
  19




---



##### Table of Contents



13. Operating and Reportable Segments
 Disclosures About Segments of an Enterprise and Related Information
  Florida: Central Florida, Jacksonville, Southeast Florida, Southwest Florida, Tampa / St. PetersburgMid-Atlantic:Baltimore / Southern Pennsylvania, Delaware, Nashville, Northern VirginiaTexas:Austin, Houston, San AntonioWest:Colorado, Las Vegas, Phoenix
  20




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Homebuilding:Florida
    
    $
    218.2
    
    
    $
    288.8
    
    
    $
    475.5
    
    
    $
    554.8Mid-Atlantic
    
    
    62.5
    
    
    
    64.7
    
    
    
    114.7
    
    
    
    141.2Texas
    
    
    170.8
    
    
    
    152.3
    
    
    
    320.0
    
    
    
    281.8West
    
    
    114.2
    
    
    
    115.6
    
    
    
    216.2
    
    
    
    227.0Total Homebuilding
    
    
    565.7
    
    
    
    621.4
    
    
    
    1,126.4
    
    
    
    1,204.8Financial Services
    
    
    11.0
    
    
    
    17.4
    
    
    
    23.0
    
    
    
    32.6Total revenues
    
    $
    576.7
    
    
    $
    638.8
    
    
    $
    1,149.4
    
    
    $
    1,237.4(Income) loss from unconsolidated joint ventures:Florida
    
    $
    2.5
    
    
    $
    (5.6
    )
    
    $
    5.9
    
    
    $
    (3.9
    )Mid-Atlantic
    
    
    (2.6
    )
    
    
    (2.1
    )
    
    
    (0.7
    )
    
    
    (3.2
    )Texas
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    West
    
    
    1.6
    
    
    
    (30.4
    )
    
    
    (0.1
    )
    
    
    (58.6
    )Total (income) loss from unconsolidated joint ventures
    
    $
    1.5
    
    
    $
    (37.9
    )
    
    $
    5.1
    
    
    $
    (65.7
    )Results of Operations:Homebuilding:Florida
    
    $
    (14.7
    )
    
    $
    59.1
    
    
    $
    9.1
    
    
    $
    110.5Mid-Atlantic
    
    
    (42.1
    )
    
    
    7.6
    
    
    
    (45.7
    )
    
    
    12.2Texas
    
    
    14.4
    
    
    
    15.3
    
    
    
    28.7
    
    
    
    28.1West
    
    
    (47.2
    )
    
    
    44.2
    
    
    
    (76.8
    )
    
    
    76.3Total Homebuilding
    
    
    (89.6
    )
    
    
    126.2
    
    
    
    (84.7
    )
    
    
    227.1Financial Services
    
    
    2.3
    
    
    
    6.4
    
    
    
    5.0
    
    
    
    10.9Corporate and unallocated
    
    
    (48.0
    )
    
    
    (26.6
    )
    
    
    (146.3
    )
    
    
    (45.3
    )Total income (loss) from continuing operations before income taxes
    
    $
    (135.3
    )
    
    $
    106.0
    
    
    $
    (226.0
    )
    
    $
    192.7
 21




---



##### Table of Contents



June 30,
    
    
    December 31,2007
    
    
    2006Assets:Homebuilding:Florida
    
    $
    888.9
    
    
    $
    892.9Mid-Atlantic
    
    
    196.6
    
    
    
    230.4Texas*
    
    
    253.1
    
    
    
    210.6West
    
    
    683.9
    
    
    
    721.4Assets held for sale*
    
    
    14.1
    
    
    
    124.8Financial Services
    
    
    59.2
    
    
    
    65.5Corporate and unallocated
    
    
    545.6
    
    
    
    596.6Total assets
    
    $
    2,641.4
    
    
    $
    2,842.2Investments in Unconsolidated Joint Ventures:Florida
    
    $
    30.6
    
    
    $
    29.4Mid-Atlantic
    
    
    2.6
    
    
    
    5.3Texas
    
    
    7.0
    
    
    
    6.8West
    
    
    92.5
    
    
    
    87.5Total Investments in Unconsolidated Joint Ventures
    
    $
    132.7
    
    
    $
    129.0
 
 *
    
    The Texas region excludes the Dallas division, which is now classified as a discontinued operation. 14. Discontinued Operations
     15. Settlement of Transeastern Litigation
  22




---



##### Table of Contents



Settlement with Mezzanine Lenders
   Subordinated PIK Notes
  Convertible PIK Preferred Stock
   Warrants
  23




---



##### Table of Contents



Settlement with Joint Venture Partner
  Financing
    The Charter Amendment
  24




---



##### Table of Contents



16. Summarized Financial Information
  
 Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)ASSETSHOMEBUILDING:Cash and cash equivalents
    
    $
    19.4
    
    
    $
    4.8
    
    
    $
    
    
    
    $
    
    
    
    $
    24.2Inventory
    
    
    
    
    
    
    1,944.3
    
    
    
    
    
    
    
    
    
    
    
    1,944.3Property and equipment, net
    
    
    5.5
    
    
    
    23.4
    
    
    
    
    
    
    
    
    
    
    
    28.9Investments in unconsolidated joint ventures
    
    
    
    
    
    
    132.7
    
    
    
    
    
    
    
    
    
    
    
    132.7Receivables from unconsolidated joint ventures, net
    
    
    
    
    
    
    41.2
    
    
    
    
    
    
    
    
    
    
    
    41.2Investments in/ advances to consolidated
subsidiaries
    
    
    1,845.4
    
    
    
    (179.1
    )
    
    
    12.3
    
    
    
    (1,678.6
    )
    
    
    Other assets
    
    
    271.5
    
    
    
    62.6
    
    
    
    
    
    
    
    
    
    
    
    334.1Goodwill
    
    
    
    
    
    
    62.7
    
    
    
    
    
    
    
    
    
    
    
    62.7Assets held for sale
    
    
    
    
    
    
    14.1
    
    
    
    
    
    
    
    
    
    
    
    14.12,141.8
    
    
    
    2,106.7
    
    
    
    12.3
    
    
    
    (1,678.6
    )
    
    
    2,582.2FINANCIAL SERVICES:Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    11.0Mortgage loans held for sale
    
    
    
    
    
    
    
    
    
    
    36.2
    
    
    
    
    
    
    
    36.2Other assets
    
    
    
    
    
    
    
    
    
    
    12.0
    
    
    
    
    
    
    
    12.0
    
    
    
    
    
    
    
    59.2
    
    
    
    
    
    
    
    59.2Total assets
    
    $
    2,141.8
    
    
    $
    2,106.7
    
    
    $
    71.5
    
    
    $
    (1,678.6
    )
    
    $
    2,641.4LIABILITIES AND STOCKHOLDERS EQUITYHOMEBUILDING:Accounts payable and other liabilities
    
    $
    453.2
    
    
    $
    180.7
    
    
    $
    
    
    
    $
    
    
    
    $
    633.9Customer deposits
    
    
    
    
    
    
    54.9
    
    
    
    
    
    
    
    
    
    
    
    54.9Obligations for inventory not owned
    
    
    
    
    
    
    227.1
    
    
    
    
    
    
    
    
    
    
    
    227.1Notes payable
    
    
    1,060.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060.9Bank borrowings
    
    
    50.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50.0Liabilities associated with assets held for sale
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    2.41,564.1
    
    
    
    465.1
    
    
    
    
    
    
    
    
    
    
    
    2,029.2FINANCIAL SERVICES:Accounts payable and other liabilities
    
    
    
    
    
    
    
    
    
    
    5.9
    
    
    
    
    
    
    
    5.9Bank borrowings
    
    
    
    
    
    
    
    
    
    
    28.6
    
    
    
    
    
    
    
    28.6
    
    
    
    
    
    
    
    34.5
    
    
    
    
    
    
    
    34.5Total liabilities
    
    
    1,564.1
    
    
    
    465.1
    
    
    
    34.5
    
    
    
    
    
    
    
    2,063.7Total stockholders equity
    
    
    577.7
    
    
    
    1,641.6
    
    
    
    37.0
    
    
    
    (1,678.6
    )
    
    
    577.7Total liabilities and stockholders equity
    
    $
    2,141.8
    
    
    $
    2,106.7
    
    
    $
    71.5
    
    
    $
    (1,678.6
    )
    
    $
    2,641.4
 25




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)ASSETSHOMEBUILDING:Cash and cash equivalents
    
    $
    53.6
    
    
    $
    (2.4
    )
    
    $
    
    
    
    $
    
    
    
    $
    51.2Inventory
    
    
    
    
    
    
    2,078.5
    
    
    
    
    
    
    
    
    
    
    
    2,078.5Property and equipment, net
    
    
    6.5
    
    
    
    22.0
    
    
    
    
    
    
    
    
    
    
    
    28.5Investments in unconsolidated joint ventures
    
    
    
    
    
    
    129.0
    
    
    
    
    
    
    
    
    
    
    
    129.0Receivables from unconsolidated joint ventures, net
    
    
    
    
    
    
    27.2
    
    
    
    
    
    
    
    
    
    
    
    27.2Investments in/ advances to consolidated
subsidiaries
    
    
    1,933.4
    
    
    
    (188.9
    )
    
    
    8.2
    
    
    
    (1,752.7
    )
    
    
    Other assets
    
    
    190.1
    
    
    
    46.5
    
    
    
    
    
    
    
    
    
    
    
    236.6Goodwill
    
    
    
    
    
    
    100.9
    
    
    
    
    
    
    
    
    
    
    
    100.9Assets held for sale
    
    
    
    
    
    
    124.8
    
    
    
    
    
    
    
    
    
    
    
    124.82,183.6
    
    
    
    2,337.6
    
    
    
    8.2
    
    
    
    (1,752.7
    )
    
    
    2,776.7FINANCIAL SERVICES:Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    11.0Mortgage loans held for sale
    
    
    
    
    
    
    
    
    
    
    41.9
    
    
    
    
    
    
    
    41.9Other assets
    
    
    
    
    
    
    
    
    
    
    12.6
    
    
    
    
    
    
    
    12.6
    
    
    
    
    
    
    
    65.5
    
    
    
    
    
    
    
    65.5Total assets
    
    $
    2,183.6
    
    
    $
    2,337.6
    
    
    $
    73.7
    
    
    $
    (1,752.7
    )
    
    $
    2,842.2LIABILITIES AND STOCKHOLDERS EQUITYHOMEBUILDING:Accounts payable and other liabilities
    
    $
    348.0
    
    
    $
    206.2
    
    
    $
    
    
    
    $
    
    
    
    $
    554.2Customer deposits
    
    
    
    
    
    
    62.6
    
    
    
    
    
    
    
    
    
    
    
    62.6Obligations for inventory not owned
    
    
    
    
    
    
    300.6
    
    
    
    
    
    
    
    
    
    
    
    300.6Notes payable
    
    
    1,060.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060.7Bank borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liabilities associated with assets held for sale
    
    
    
    
    
    
    47.8
    
    
    
    
    
    
    
    
    
    
    
    47.81,408.7
    
    
    
    617.2
    
    
    
    
    
    
    
    
    
    
    
    2,025.9FINANCIAL SERVICES:Accounts payable and other liabilities
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    
    
    
    
    6.0Bank borrowings
    
    
    
    
    
    
    
    
    
    
    35.4
    
    
    
    
    
    
    
    35.4
    
    
    
    
    
    
    
    41.4
    
    
    
    
    
    
    
    41.4Total liabilities
    
    
    1,408.7
    
    
    
    617.2
    
    
    
    41.4
    
    
    
    
    
    
    
    2,067.3Total stockholders equity
    
    
    774.9
    
    
    
    1,720.4
    
    
    
    32.3
    
    
    
    (1,752.7
    )
    
    
    774.9Total liabilities and stockholders equity
    
    $
    2,183.6
    
    
    $
    2,337.6
    
    
    $
    73.7
    
    
    $
    (1,752.7
    )
    
    $
    2,842.2
 26




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)HOMEBUILDING:Revenues
    
    $
    
    
    
    $
    565.7
    
    
    $
    
    
    
    $
    
    
    
    $
    565.7Cost of sales
    
    
    
    
    
    
    547.9
    
    
    
    
    
    
    
    
    
    
    
    547.9Gross profit
    
    
    
    
    
    
    17.8
    
    
    
    
    
    
    
    
    
    
    
    17.8Selling, general and administrative
expenses
    
    
    18.1
    
    
    
    71.3
    
    
    
    
    
    
    
    (4.4
    )
    
    
    85.0(Income) loss from unconsolidated joint
ventures, net
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5Provision for settlement of loss
contingency
    
    
    32.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.0Goodwill impairment
    
    
    
    
    
    
    38.2
    
    
    
    
    
    
    
    
    
    
    
    38.2Other (income) expenses, net
    
    
    64.0
    
    
    
    2.1
    
    
    
    
    
    
    
    (67.4
    )
    
    
    (1.3
    )Homebuilding pretax income (loss)
    
    
    (114.1
    )
    
    
    (95.3
    )
    
    
    
    
    
    
    71.8
    
    
    
    (137.6
    )FINANCIAL SERVICES:Revenues
    
    
    
    
    
    
    
    
    
    
    15.4
    
    
    
    (4.4
    )
    
    
    11.0Expenses
    
    
    
    
    
    
    
    
    
    
    10.7
    
    
    
    (2.0
    )
    
    
    8.7Financial Services pretax income
    
    
    
    
    
    
    
    
    
    
    4.7
    
    
    
    (2.4
    )
    
    
    2.3Income (loss) from continuing
operations before income taxes
    
    
    (114.1
    )
    
    
    (95.3
    )
    
    
    4.7
    
    
    
    69.4
    
    
    
    (135.3
    )Provision (benefit) for income taxes
    
    
    17.9
    
    
    
    (33.1
    )
    
    
    2.0
    
    
    
    
    
    
    
    (13.2
    )Income (loss) from continuing operations
    
    
    (132.0
    )
    
    
    (62.2
    )
    
    
    2.7
    
    
    
    69.4
    
    
    
    (122.1
    )Discontinued operations:Income (loss) from discontinued
operations
    
    
    
    
    
    
    (2.0
    )
    
    
    
    
    
    
    
    
    
    
    (2.0
    )Income (loss) from disposal of
discontinued operations
    
    
    
    
    
    
    (13.6
    )
    
    
    
    
    
    
    
    
    
    
    (13.6
    )Provision for income taxes
    
    
    
    
    
    
    (5.7
    )
    
    
    
    
    
    
    
    
    
    
    (5.7
    )Income (loss) from discontinued
operations, net of taxes
    
    
    
    
    
    
    (9.9
    )
    
    
    
    
    
    
    
    
    
    
    (9.9
    )Net income (loss)
    
    $
    (132.0
    )
    
    $
    (72.1
    )
    
    $
    2.7
    
    
    $
    69.4
    
    
    $
    (132.0
    )
 27




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)HOMEBUILDING:Revenues
    
    $
    
    
    
    $
    621.4
    
    
    $
    
    
    
    $
    
    
    
    $
    621.4Cost of sales
    
    
    
    
    
    
    462.2
    
    
    
    
    
    
    
    
    
    
    
    462.2Gross profit
    
    
    
    
    
    
    159.2
    
    
    
    
    
    
    
    
    
    
    
    159.2Selling, general and administrative
expenses
    
    
    27.0
    
    
    
    74.1
    
    
    
    
    
    
    
    (1.2
    )
    
    
    99.9(Income) loss from unconsolidated joint
ventures, net
    
    
    
    
    
    
    (37.9
    )
    
    
    
    
    
    
    
    
    
    
    (37.9
    )Provision for settlement of loss
contingency
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other (income) expenses, net
    
    
    (91.1
    )
    
    
    14.0
    
    
    
    
    
    
    
    74.7
    
    
    
    (2.4
    )Homebuilding pretax income (loss)
    
    
    64.1
    
    
    
    109.0
    
    
    
    
    
    
    
    (73.5
    )
    
    
    99.6FINANCIAL SERVICES:Revenues
    
    
    
    
    
    
    
    
    
    
    18.6
    
    
    
    (1.2
    )
    
    
    17.4Expenses
    
    
    
    
    
    
    
    
    
    
    13.6
    
    
    
    (2.6
    )
    
    
    11.0Financial Services pretax income
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    1.4
    
    
    
    6.4Income (loss) from continuing
operations before income taxes
    
    
    64.1
    
    
    
    109.0
    
    
    
    5.0
    
    
    
    (72.1
    )
    
    
    106.0Provision (benefit) for income taxes
    
    
    (3.5
    )
    
    
    40.1
    
    
    
    2.4
    
    
    
    
    
    
    
    39.0Income (loss) from continuing operations
    
    
    67.6
    
    
    
    68.9
    
    
    
    2.6
    
    
    
    (72.1
    )
    
    
    67.0Discontinued operations:Income (loss) from discontinued
operations
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Income (loss) from disposal of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for income taxes
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3Income (loss) from discontinued
operations, net of taxes
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Net income (loss)
    
    $
    67.6
    
    
    $
    69.5
    
    
    $
    2.6
    
    
    $
    (72.1
    )
    
    $
    67.6
 28




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)HOMEBUILDING:Revenues
    
    $
    
    
    
    $
    1,126.4
    
    
    $
    
    
    
    $
    
    
    
    $
    1,126.4Cost of sales
    
    
    
    
    
    
    1,028.7
    
    
    
    
    
    
    
    
    
    
    
    1,028.7Gross profit
    
    
    
    
    
    
    97.7
    
    
    
    
    
    
    
    
    
    
    
    97.7Selling, general and administrative
expenses
    
    
    39.8
    
    
    
    143.7
    
    
    
    
    
    
    
    (7.1
    )
    
    
    176.4(Income) loss from unconsolidated joint
ventures, net
    
    
    
    
    
    
    5.1
    
    
    
    
    
    
    
    
    
    
    
    5.1Provision for settlement of loss
contingency
    
    
    110.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110.9Goodwill impairment
    
    
    
    
    
    
    38.2
    
    
    
    
    
    
    
    
    
    
    
    38.2Other (income) expenses, net
    
    
    57.9
    
    
    
    10.5
    
    
    
    
    
    
    
    (70.3
    )
    
    
    (1.9
    )Homebuilding pretax income (loss)
    
    
    (208.6
    )
    
    
    (99.8
    )
    
    
    
    
    
    
    77.4
    
    
    
    (231.0
    )FINANCIAL SERVICES:Revenues
    
    
    
    
    
    
    
    
    
    
    30.1
    
    
    
    (7.1
    )
    
    
    23.0Expenses
    
    
    
    
    
    
    
    
    
    
    21.8
    
    
    
    (3.8
    )
    
    
    18.0Financial Services pretax income
    
    
    
    
    
    
    
    
    
    
    8.3
    
    
    
    (3.3
    )
    
    
    5.0Income (loss) from continuing
operations before income taxes
    
    
    (208.6
    )
    
    
    (99.8
    )
    
    
    8.3
    
    
    
    74.1
    
    
    
    (226.0
    )Provision (benefit) for income taxes
    
    
    (10.6
    )
    
    
    (34.7
    )
    
    
    3.6
    
    
    
    
    
    
    
    (41.7
    )Income (loss) from continuing operations
    
    
    (198.0
    )
    
    
    (65.1
    )
    
    
    4.7
    
    
    
    74.1
    
    
    
    (184.3
    )Discontinued operations:Income (loss) from discontinued
operations
    
    
    
    
    
    
    (7.9
    )
    
    
    
    
    
    
    
    
    
    
    (7.9
    )Income (loss) from disposal of
discontinued operations
    
    
    
    
    
    
    (13.6
    )
    
    
    
    
    
    
    
    
    
    
    (13.6
    )Provision for income taxes
    
    
    
    
    
    
    (7.8
    )
    
    
    
    
    
    
    
    
    
    
    (7.8
    )Income (loss) from discontinued
operations, net of taxes
    
    
    
    
    
    
    (13.7
    )
    
    
    
    
    
    
    
    
    
    
    (13.7
    )Net income (loss)
    
    $
    (198.0
    )
    
    $
    (78.8
    )
    
    $
    4.7
    
    
    $
    74.1
    
    
    $
    (198.0
    )
 29




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)HOMEBUILDING:Revenues
    
    $
    
    
    
    $
    1,204.8
    
    
    $
    
    
    
    $
    
    
    
    $
    1,204.8Cost of sales
    
    
    
    
    
    
    899.8
    
    
    
    
    
    
    
    
    
    
    
    899.8Gross profit
    
    
    
    
    
    
    305.0
    
    
    
    
    
    
    
    
    
    
    
    305.0Selling, general and administrative
expenses
    
    
    46.3
    
    
    
    149.2
    
    
    
    
    
    
    
    (2.2
    )
    
    
    193.3(Income) loss from unconsolidated joint
ventures, net
    
    
    
    
    
    
    (65.7
    )
    
    
    
    
    
    
    
    
    
    
    (65.7
    )Provision for settlement of loss
contingency
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other (income) expenses, net
    
    
    (162.7
    )
    
    
    22.1
    
    
    
    
    
    
    
    136.2
    
    
    
    (4.4
    )Homebuilding pretax income (loss)
    
    
    116.4
    
    
    
    199.4
    
    
    
    
    
    
    
    (134.0
    )
    
    
    181.8FINANCIAL SERVICES:Revenues
    
    
    
    
    
    
    
    
    
    
    34.8
    
    
    
    (2.2
    )
    
    
    32.6Expenses
    
    
    
    
    
    
    
    
    
    
    26.2
    
    
    
    (4.5
    )
    
    
    21.7Financial Services pretax income
    
    
    
    
    
    
    
    
    
    
    8.6
    
    
    
    2.3
    
    
    
    10.9Income (loss) from continuing
operations before income taxes
    
    
    116.4
    
    
    
    199.4
    
    
    
    8.6
    
    
    
    (131.7
    )
    
    
    192.7Provision (benefit) for income taxes
    
    
    (6.2
    )
    
    
    73.6
    
    
    
    3.7
    
    
    
    
    
    
    
    71.1Income (loss) from continuing operations
    
    
    122.6
    
    
    
    125.8
    
    
    
    4.9
    
    
    
    (131.7
    )
    
    
    121.6Discontinued operations:Income (loss) from discontinued
operations
    
    
    
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    1.5Income (loss) from disposal of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for income taxes
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    0.5Income (loss) from discontinued
operations, net of taxes
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    1.0Net income (loss)
    
    $
    122.6
    
    
    $
    126.8
    
    
    $
    4.9
    
    
    $
    (131.7
    )
    
    $
    122.6
 30




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Net cash provided by (used in) operating
activities
    
    $
    (159.7
    )
    
    $
    (9.3
    )
    
    $
    11.7
    
    
    $
    74.1
    
    
    $
    (83.2
    )Cash flows from investing activities:Net additions to property and equipment
    
    
    (0.8
    )
    
    
    (6.1
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    (7.5
    )Loans to unconsolidated joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investments in unconsolidated joint
ventures
    
    
    
    
    
    
    (21.1
    )
    
    
    
    
    
    
    
    
    
    
    (21.1
    )Capital distributions from unconsolidated
joint ventures
    
    
    
    
    
    
    9.7
    
    
    
    
    
    
    
    
    
    
    
    9.7Net cash used in investing activities
    
    
    (0.8
    )
    
    
    (17.5
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    (18.9
    )Cash flows from financing activities:Net borrowings from (repayments of)
revolving credit facilities
    
    
    50.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50.0Net (repayments of) proceeds from
Financial Services bank borrowings
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    
    
    
    
    (6.8
    )Payments for deferred financing costs
    
    
    (11.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11.2
    )Increase (decrease) in intercompany
transactions
    
    
    88.1
    
    
    
    (9.9
    )
    
    
    (4.1
    )
    
    
    (74.1
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    126.9
    
    
    
    (9.9
    )
    
    
    (10.9
    )
    
    
    (74.1
    )
    
    
    32.0Net cash provided by (used in) continuing operations
    
    
    (33.6
    )
    
    
    (36.7
    )
    
    
    0.2
    
    
    
    
    
    
    
    (70.1
    )Net cash provided by (used in) discontinued
operations
    
    
    
    
    
    
    43.8
    
    
    
    
    
    
    
    
    
    
    
    43.8Increase (decrease) in cash and cash
equivalents
    
    
    (33.6
    )
    
    
    7.1
    
    
    
    0.2
    
    
    
    
    
    
    
    (26.3
    )Cash and cash equivalents at beginning of
period
    
    
    50.6
    
    
    
    (3.2
    )
    
    
    6.8
    
    
    
    
    
    
    
    54.2Cash and cash equivalents at end of period
    
    $
    17.0
    
    
    $
    3.9
    
    
    $
    7.0
    
    
    $
    
    
    
    $
    27.9
 31




---



##### Table of Contents



Non-TOUSA,
    
    
    Guarantor
    
    
    Guarantor
    
    
    IntercompanyInc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    Total(Dollars in millions)Net cash provided by (used in) operating
activities
    
    $
    34.6
    
    
    $
    (73.7
    )
    
    $
    5.8
    
    
    $
    (131.7
    )
    
    $
    (165.0
    )Cash flows from investing activities:Net additions to property and equipment
    
    
    (1.6
    )
    
    
    (7.2
    )
    
    
    (1.1
    )
    
    
    
    
    
    
    (9.9
    )Loans to unconsolidated joint ventures
    
    
    
    
    
    
    (7.5
    )
    
    
    
    
    
    
    
    
    
    
    (7.5
    )Investments in unconsolidated joint
ventures
    
    
    
    
    
    
    (8.2
    )
    
    
    
    
    
    
    
    
    
    
    (8.2
    )Capital distributions from unconsolidated
joint ventures
    
    
    
    
    
    
    25.2
    
    
    
    
    
    
    
    
    
    
    
    25.2Net cash provided by (used in) investing activities
    
    
    (1.6
    )
    
    
    2.3
    
    
    
    (1.1
    )
    
    
    
    
    
    
    (0.4
    )Cash flows from financing activities:Net borrowings from (repayments of)
revolving credit facilities
    
    
    (65.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65.0
    )Net proceeds from notes offering
    
    
    248.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248.8Net (repayments of) proceeds from
Financial Services bank borrowings
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    
    
    
    
    3.1Payments for deferred financing costs
    
    
    (3.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.2
    )Excess income tax benefit from exercise
of stock options
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Proceeds from stock option exercises
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Dividends paid
    
    
    (1.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.8
    )Increase (decrease) in intercompany
transactions
    
    
    (214.4
    )
    
    
    91.5
    
    
    
    (8.8
    )
    
    
    131.7
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (35.3
    )
    
    
    91.5
    
    
    
    (5.7
    )
    
    
    131.7
    
    
    
    182.2Net cash provided by (used in) continuing
operations
    
    
    (2.3
    )
    
    
    20.1
    
    
    
    (1.0
    )
    
    
    
    
    
    
    16.8Net cash provided by (used in)
discontinued operations
    
    
    
    
    
    
    (2.9
    )
    
    
    
    
    
    
    
    
    
    
    (2.9
    )Increase (decrease) in cash and cash
equivalents
    
    
    (2.3
    )
    
    
    17.2
    
    
    
    (1.0
    )
    
    
    
    
    
    
    13.9Cash and cash equivalents at beginning of
period
    
    
    20.2
    
    
    
    3.4
    
    
    
    8.7
    
    
    
    
    
    
    
    32.3Cash and cash equivalents at end of period
    
    $
    17.9
    
    
    $
    20.6
    
    
    $
    7.7
    
    
    $
    
    
    
    $
    46.2
 32




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Executive Summary
  Florida
    
    Mid-Atlantic
    
    Texas
    
    WestCentral Florida
    
    Delaware
    
    Austin
    
    Las VegasJacksonville
    
    Baltimore/Southern Pennsylvania
    
    Houston
    
    ColoradoSoutheast Florida
    
    Nashville
    
    San Antonio
    
    PhoenixSouthwest Florida
    
    Northern VirginiaTampa /St. Petersburg
      33




---



##### Table of Contents




    
    limiting new arrangements to acquire land;
    
    engaging in bulk sales of land and unsold homes;
    
    reducing the number of homes under construction;
    
    re-negotiating terms or abandoning our rights under option contracts;
    
    considering other asset dispositions including the possible sale of underperforming
assets, communities, divisions and joint venture interests (see Recent Developments
regarding the sale of our Dallas division);
    
    reducing inventory target levels; and
    
    other initiatives designed to monetize our assets.
  Recent Developments
 Transeastern JV Settlement
    Sale of Dallas Operations
 Accounting for the Impairment or Disposal of Long-Lived Assets
 SEC Inquiry
  34




---



##### Table of Contents



Total Controlled Homesites by our Homebuilding Operations (Including Joint Ventures)
     June 30, 2007
    
    
    December 31, 2006Total
    
    
    
    
    
    
    
    
    
    
    TotalOwned
    
    
    Optioned
    
    
    Controlled
    
    
    Owned
    
    
    Optioned
    
    
    ControlledContinuing operations
    
    
    19,900
    
    
    
    25,400
    
    
    
    45,300
    
    
    
    21,200
    
    
    
    39,400
    
    
    
    60,600Discontinued operations
    
    
    200
    
    
    
    500
    
    
    
    700
    
    
    
    1,000
    
    
    
    3,100
    
    
    
    4,100Total
    
    
    20,100
    
    
    
    25,900
    
    
    
    46,000
    
    
    
    22,200
    
    
    
    42,500
    
    
    
    64,700Unconsolidated joint ventures
    
    
    3,000
    
    
    
    1,300
    
    
    
    4,300
    
    
    
    2,900
    
    
    
    2,100
    
    
    
    5,000Transeastern joint venture
    
    
    4,000
    
    
    
    1,000
    
    
    
    5,000
    
    
    
    2,200
    
    
    
    13,500
    
    
    
    15,700Combined total
    
    
    27,100
    
    
    
    28,200
    
    
    
    55,300
    
    
    
    27,300
    
    
    
    58,100
    
    
    
    85,400
 35




---



##### Table of Contents



Owned and Optioned Land Summary for our Consolidated Operations
  June 30, 2007
    
    
    December 31, 2006Total
    
    
    
    
    
    
    
    
    
    
    TotalOwned
    
    
    Optioned
    
    
    Controlled
    
    
    Owned
    
    
    Optioned
    
    
    ControlledRegion:Florida
    
    
    5,600
    
    
    
    8,600
    
    
    
    14,200
    
    
    
    6,900
    
    
    
    11,000
    
    
    
    17,900Mid-Atlantic
    
    
    1,000
    
    
    
    1,400
    
    
    
    2,400
    
    
    
    800
    
    
    
    2,700
    
    
    
    3,500Texas*
    
    
    2,800
    
    
    
    5,300
    
    
    
    8,100
    
    
    
    2,700
    
    
    
    7,800
    
    
    
    10,500West
    
    
    10,500
    
    
    
    10,100
    
    
    
    20,600
    
    
    
    10,800
    
    
    
    17,900
    
    
    
    28,700Continuing operations
    
    
    19,900
    
    
    
    25,400
    
    
    
    45,300
    
    
    
    21,200
    
    
    
    39,400
    
    
    
    60,600Discontinued operations*
    
    
    200
    
    
    
    500
    
    
    
    700
    
    
    
    1,000
    
    
    
    3,100
    
    
    
    4,100Consolidated total
    
    
    20,100
    
    
    
    25,900
    
    
    
    46,000
    
    
    
    22,200
    
    
    
    42,500
    
    
    
    64,700
 
 *
    
    The Texas region excludes the Dallas division, which is now classified as a discontinued operation.  Residences Completed or
    
    
    Homesites Finished or
    
    
    Raw Land Held forUnder Construction
    
    
    Under Construction
    
    
    Future Development
    
    
    Total6/30/07
    
    
    12/31/06
    
    
    6/30/07
    
    
    12/31/06
    
    
    6/30/07
    
    
    12/31/06
    
    
    6/30/07
    
    
    12/31/06Region:Florida
    
    
    1,500
    
    
    
    1,700
    
    
    
    3,600
    
    
    
    3,500
    
    
    
    500
    
    
    
    1,700
    
    
    
    5,600
    
    
    
    6,900Mid-Atlantic
    
    
    400
    
    
    
    300
    
    
    
    600
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    800Texas*
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,400
    
    
    
    1,100
    
    
    
    400
    
    
    
    600
    
    
    
    2,800
    
    
    
    2,700West
    
    
    400
    
    
    
    800
    
    
    
    2,600
    
    
    
    2,200
    
    
    
    7,500
    
    
    
    7,800
    
    
    
    10,500
    
    
    
    10,800Continuing
operations
    
    
    3,300
    
    
    
    3,800
    
    
    
    8,200
    
    
    
    7,300
    
    
    
    8,400
    
    
    
    10,100
    
    
    
    19,900
    
    
    
    21,200Discontinued
operations*
    
    
    
    
    
    
    200
    
    
    
    100
    
    
    
    300
    
    
    
    100
    
    
    
    500
    
    
    
    200
    
    
    
    1,000Consolidated total
    
    
    3,300
    
    
    
    4,000
    
    
    
    8,300
    
    
    
    7,600
    
    
    
    8,500
    
    
    
    10,600
    
    
    
    20,100
    
    
    
    22,200
 
 *
    
    The Texas region excludes the Dallas division, which is now classified as a discontinued operation. Homebuilding Operations
    36




---



##### Table of Contents



Financial Services Operations
   Critical Accounting Policies
 Income Taxes
  Accounting for Uncertainty in Income
Taxes  an interpretation of SFAS 109,
 37




---



##### Table of Contents



Results of Operations  Consolidated
 Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
     Homebuilding
     38




---



##### Table of Contents



Net Sales Orders and Homes in Backlog (Consolidated)
    Net Sales Orders and Homes in Backlog (Unconsolidated Joint Ventures)
    Financial Services
  39




---



##### Table of Contents



Discontinued Operations
   Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
     Homebuilding
  40




---



##### Table of Contents



Net Sales Orders (Consolidated)
   Net Sales Orders (Unconsolidated Joint Ventures)
  41




---



##### Table of Contents



Financial Services
   Discontinued Operations
    42




---



##### Table of Contents



Reportable Segments
 Disclosures About Segments of an Enterprise and Related Information
 Homebuilding Operations
  Florida: Jacksonville, Central Florida, Southeast Florida, Southwest Florida, Tampa/St. PetersburgMid-Atlantic:Baltimore/Southern Pennsylvania, Delaware, Nashville, Northern Virginia Texas:Austin, Houston, San AntonioWest:Colorado, Las Vegas, Phoenix
 Selected Homebuilding Operations and Financial Data
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Homebuilding revenues:Florida:Sales of homes
    
    $
    192.8
    
    
    $
    278.9
    
    
    $
    449.1
    
    
    $
    544.9Sales of land
    
    
    25.4
    
    
    
    9.9
    
    
    
    26.4
    
    
    
    9.9Total Florida
    
    
    218.2
    
    
    
    288.8
    
    
    
    475.5
    
    
    
    554.8Mid-Atlantic:Sales of homes
    
    
    62.4
    
    
    
    64.7
    
    
    
    114.6
    
    
    
    134.7Sales of land
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    6.5Total Mid-Atlantic
    
    
    62.5
    
    
    
    64.7
    
    
    
    114.7
    
    
    
    141.2Texas:Sales of homes*
    
    
    167.0
    
    
    
    150.4
    
    
    
    313.9
    
    
    
    278.7Sales of land*
    
    
    3.8
    
    
    
    1.9
    
    
    
    6.1
    
    
    
    3.1Total Texas*
    
    
    170.8
    
    
    
    152.3
    
    
    
    320.0
    
    
    
    281.8West:Sales of homes
    
    
    113.1
    
    
    
    111.3
    
    
    
    215.1
    
    
    
    203.5Sales of land
    
    
    1.1
    
    
    
    4.3
    
    
    
    1.1
    
    
    
    23.5Total West
    
    
    114.2
    
    
    
    115.6
    
    
    
    216.2
    
    
    
    227.0Total homebuilding revenues
    
    $
    565.7
    
    
    $
    621.4
    
    
    $
    1,126.4
    
    
    $
    1,204.8
 
 *
    
    The Texas region excludes the Dallas division, which is now classified as a discontinued operation. 43




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Results of Operations:Homebuilding:Florida
    
    $
    (14.7
    )
    
    $
    59.1
    
    
    $
    9.1
    
    
    $
    110.5Mid-Atlantic
    
    
    (42.1
    )
    
    
    7.6
    
    
    
    (45.7
    )
    
    
    12.2Texas*
    
    
    14.4
    
    
    
    15.3
    
    
    
    28.7
    
    
    
    28.1West
    
    
    (47.2
    )
    
    
    44.2
    
    
    
    (76.8
    )
    
    
    76.3Total Homebuilding
    
    
    (89.6
    )
    
    
    126.2
    
    
    
    (84.7
    )
    
    
    227.1Financial Services
    
    
    2.3
    
    
    
    6.4
    
    
    
    5.0
    
    
    
    10.9Corporate and unallocated
    
    
    (48.0
    )
    
    
    (26.6
    )
    
    
    (146.3
    )
    
    
    (45.3
    )Total income (loss) before income taxes
    
    $
    (135.3
    )
    
    $
    106.0
    
    
    $
    (226.0
    )
    
    $
    192.7
 
 *
    
    The Texas region excludes the Dallas division, which is now classified as a discontinued operation. Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Impairment charges on active communities:Florida
    
    $
    23.6
    
    
    $
    0.2
    
    
    $
    28.7
    
    
    $
    0.7Mid-Atlantic
    
    
    4.5
    
    
    
    
    
    
    
    6.6
    
    
    
    3.1Texas
    
    
    0.5
    
    
    
    
    
    
    
    0.6
    
    
    
    West
    
    
    12.8
    
    
    
    
    
    
    
    13.5
    
    
    
    1.7$
    41.4
    
    
    $
    0.2
    
    
    $
    49.4
    
    
    $
    5.5Write-offs of deposits and abandonment costs:Florida
    
    $
    12.1
    
    
    $
    1.0
    
    
    $
    12.8
    
    
    $
    1.1Mid-Atlantic
    
    
    13.5
    
    
    
    0.3
    
    
    
    13.9
    
    
    
    0.5Texas
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.1West
    
    
    17.6
    
    
    
    0.2
    
    
    
    47.5
    
    
    
    0.4$
    43.4
    
    
    $
    1.6
    
    
    $
    74.5
    
    
    $
    2.1Inventory impairments and abandonment costs
    
    $
    84.8
    
    
    $
    1.8
    
    
    $
    123.9
    
    
    $
    7.6
 44




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Deliveries:
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $Consolidated:Florida
    
    
    509
    
    
    $
    192.8
    
    
    
    753
    
    
    $
    278.9
    
    
    
    1,229
    
    
    $
    449.1
    
    
    
    1,499
    
    
    $
    544.9Mid-Atlantic
    
    
    168
    
    
    
    62.4
    
    
    
    171
    
    
    
    64.7
    
    
    
    320
    
    
    
    114.6
    
    
    
    333
    
    
    
    134.7Texas*
    
    
    649
    
    
    
    167.0
    
    
    
    612
    
    
    
    150.4
    
    
    
    1,221
    
    
    
    313.9
    
    
    
    1,116
    
    
    
    278.7West
    
    
    330
    
    
    
    113.1
    
    
    
    342
    
    
    
    111.3
    
    
    
    604
    
    
    
    215.1
    
    
    
    663
    
    
    
    203.5Continuing operations
    
    
    1,656
    
    
    
    535.3
    
    
    
    1,878
    
    
    
    605.3
    
    
    
    3,374
    
    
    
    1,092.7
    
    
    
    3,611
    
    
    
    1,161.8Discontinued operations*
    
    
    69
    
    
    
    16.1
    
    
    
    156
    
    
    
    36.3
    
    
    
    182
    
    
    
    43.6
    
    
    
    297
    
    
    
    66.1Consolidated total
    
    
    1,725
    
    
    
    551.4
    
    
    
    2,034
    
    
    
    641.6
    
    
    
    3,556
    
    
    
    1,136.3
    
    
    
    3,908
    
    
    
    1,227.9Unconsolidated joint ventures:Florida (excluding
Transeastern)
    
    
    37
    
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    11.3
    
    
    
    
    
    
    
    Transeastern
    
    
    328
    
    
    
    73.3
    
    
    
    689
    
    
    
    204.9
    
    
    
    607
    
    
    
    146.3
    
    
    
    1,061
    
    
    
    321.1Mid-Atlantic
    
    
    9
    
    
    
    2.5
    
    
    
    28
    
    
    
    8.3
    
    
    
    10
    
    
    
    2.8
    
    
    
    88
    
    
    
    25.8West
    
    
    320
    
    
    
    93.3
    
    
    
    473
    
    
    
    175.2
    
    
    
    638
    
    
    
    194.5
    
    
    
    936
    
    
    
    343.7Total unconsolidated joint
ventures
    
    
    694
    
    
    
    179.5
    
    
    
    1,190
    
    
    
    388.4
    
    
    
    1,295
    
    
    
    354.9
    
    
    
    2,085
    
    
    
    690.6Combined total
    
    
    2,419
    
    
    $
    730.9
    
    
    
    3,224
    
    
    $
    1,030.0
    
    
    
    4,851
    
    
    $
    1,491.2
    
    
    
    5,993
    
    
    $
    1,918.5
 
 *
    
    The Texas Region excludes the Dallas division, which is now classified as a discontinued operation. Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Sales Orders(1):
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $
    
    
    Homes
    
    
    $Consolidated:Florida
    
    
    439
    
    
    $
    138.0
    
    
    
    624
    
    
    $
    237.1
    
    
    
    1,037
    
    
    $
    355.3
    
    
    
    1,250
    
    
    $
    491.9Mid-Atlantic
    
    
    207
    
    
    
    71.0
    
    
    
    175
    
    
    
    70.2
    
    
    
    428
    
    
    
    152.6
    
    
    
    334
    
    
    
    137.4Texas*
    
    
    624
    
    
    
    153.4
    
    
    
    694
    
    
    
    175.8
    
    
    
    1,282
    
    
    
    318.1
    
    
    
    1,335
    
    
    
    339.3West
    
    
    303
    
    
    
    79.1
    
    
    
    222
    
    
    
    78.8
    
    
    
    556
    
    
    
    159.9
    
    
    
    776
    
    
    
    270.7Continuing operations
    
    
    1,573
    
    
    
    441.5
    
    
    
    1,715
    
    
    
    561.9
    
    
    
    3,303
    
    
    
    985.9
    
    
    
    3,695
    
    
    
    1,239.3Discontinued operations*
    
    
    (1
    )
    
    
    
    
    
    
    131
    
    
    
    32.9
    
    
    
    70
    
    
    
    19.4
    
    
    
    308
    
    
    
    72.6Consolidated total
    
    
    1,572
    
    
    
    441.5
    
    
    
    1,846
    
    
    
    594.8
    
    
    
    3,373
    
    
    
    1,005.3
    
    
    
    4,003
    
    
    
    1,311.9Unconsolidated joint ventures:Florida (excluding
Transeastern)
    
    
    8
    
    
    
    0.8
    
    
    
    1
    
    
    
    0.8
    
    
    
    12
    
    
    
    1.7
    
    
    
    12
    
    
    
    4.8Transeastern
    
    
    158
    
    
    
    25.1
    
    
    
    85
    
    
    
    45.6
    
    
    
    194
    
    
    
    17.8
    
    
    
    108
    
    
    
    63.6Mid-Atlantic
    
    
    10
    
    
    
    2.1
    
    
    
    15
    
    
    
    3.2
    
    
    
    13
    
    
    
    2.8
    
    
    
    58
    
    
    
    14.8West
    
    
    144
    
    
    
    31.4
    
    
    
    170
    
    
    
    44.0
    
    
    
    387
    
    
    
    95.4
    
    
    
    584
    
    
    
    185.3Total unconsolidated joint
ventures
    
    
    320
    
    
    
    59.4
    
    
    
    271
    
    
    
    93.6
    
    
    
    606
    
    
    
    117.7
    
    
    
    762
    
    
    
    268.5Combined total
    
    
    1,892
    
    
    $
    500.9
    
    
    
    2,117
    
    
    $
    688.4
    
    
    
    3,979
    
    
    $
    1,123.0
    
    
    
    4,765
    
    
    $
    1,580.4
 
 (1)
    
    Net of cancellations.*
    
    The Texas Region excludes the Dallas division, which is now classified as a discontinued operation. 45




---



##### Table of Contents



June 30, 2007
    
    
    June 30, 2006Sales Backlog:
    
    Homes
    
    
    $
    
    
    Average Price
    
    
    Homes
    
    
    $
    
    
    Average PriceConsolidated:Florida
    
    
    2,036
    
    
    $
    758.0
    
    
    $
    372
    
    
    
    2,688
    
    
    $
    983.7
    
    
    $
    366Mid-Atlantic
    
    
    314
    
    
    
    118.5
    
    
    $
    377
    
    
    
    247
    
    
    
    97.3
    
    
    $
    394Texas*
    
    
    1,035
    
    
    
    277.8
    
    
    $
    268
    
    
    
    1,169
    
    
    
    314.9
    
    
    $
    269West
    
    
    421
    
    
    
    136.5
    
    
    $
    324
    
    
    
    964
    
    
    
    371.0
    
    
    $
    385Continuing operations
    
    
    3,806
    
    
    
    1,290.8
    
    
    $
    339
    
    
    
    5,068
    
    
    
    1,766.9
    
    
    $
    349Discontinued operations*
    
    
    21
    
    
    
    5.8
    
    
    $
    278
    
    
    
    299
    
    
    
    71.7
    
    
    $
    240Consolidated total
    
    
    3,827
    
    
    
    1,296.6
    
    
    $
    339
    
    
    
    5,367
    
    
    
    1,838.6
    
    
    $
    343Unconsolidated joint ventures:Florida (excluding Transeastern)
    
    
    18
    
    
    
    4.6
    
    
    $
    254
    
    
    
    48
    
    
    
    14.1
    
    
    $
    294Transeastern
    
    
    284
    
    
    
    65.8
    
    
    $
    232
    
    
    
    2,125
    
    
    
    628.8
    
    
    $
    296Mid-Atlantic
    
    
    6
    
    
    
    1.3
    
    
    $
    215
    
    
    
    62
    
    
    
    20.3
    
    
    $
    328West
    
    
    194
    
    
    
    55.0
    
    
    $
    284
    
    
    
    1,191
    
    
    
    427.1
    
    
    $
    359Total unconsolidated joint ventures
    
    
    502
    
    
    
    126.7
    
    
    $
    252
    
    
    
    3,426
    
    
    
    1,090.3
    
    
    $
    318Combined total
    
    
    4,329
    
    
    $
    1,423.3
    
    
    $
    329
    
    
    
    8,793
    
    
    $
    2,928.9
    
    
    $
    333
 
 *
    
    The Texas Region excludes the Dallas division, which is now classified as a discontinued operation. Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Average Price:
    
    Deliveries
    
    
    Sales Orders
    
    
    Deliveries
    
    
    Sales Orders
    
    
    Deliveries
    
    
    Sales Orders
    
    
    Deliveries
    
    
    Sales OrdersConsolidated:Florida
    
    $
    379
    
    
    $
    314
    
    
    $
    370
    
    
    $
    380
    
    
    $
    365
    
    
    $
    343
    
    
    $
    364
    
    
    $
    394Mid-Atlantic
    
    $
    371
    
    
    $
    343
    
    
    $
    378
    
    
    $
    401
    
    
    $
    358
    
    
    $
    357
    
    
    $
    405
    
    
    $
    411Texas*
    
    $
    257
    
    
    $
    246
    
    
    $
    246
    
    
    $
    253
    
    
    $
    257
    
    
    $
    248
    
    
    $
    250
    
    
    $
    254West
    
    $
    343
    
    
    $
    261
    
    
    $
    325
    
    
    $
    355
    
    
    $
    356
    
    
    $
    288
    
    
    $
    307
    
    
    $
    349Continuing operations
    
    $
    323
    
    
    $
    281
    
    
    $
    322
    
    
    $
    328
    
    
    $
    324
    
    
    $
    298
    
    
    $
    322
    
    
    $
    335Discontinued
operations
    
    $
    233
    
    
    $
    (46
    )
    
    $
    232
    
    
    $
    251
    
    
    $
    240
    
    
    $
    277
    
    
    $
    222
    
    
    $
    236Consolidated total
    
    $
    320
    
    
    $
    281
    
    
    $
    315
    
    
    $
    322
    
    
    $
    320
    
    
    $
    298
    
    
    $
    314
    
    
    $
    328Unconsolidated joint
ventures:Florida (excluding
Transeastern)
    
    $
    282
    
    
    $
    99
    
    
    
    
    
    
    $
    772
    
    
    $
    282
    
    
    $
    142
    
    
    
    
    
    
    $
    395Transeastern
    
    $
    223
    
    
    $
    159
    
    
    $
    297
    
    
    $
    536
    
    
    $
    241
    
    
    $
    92
    
    
    $
    303
    
    
    $
    589Mid-Atlantic
    
    $
    282
    
    
    $
    207
    
    
    $
    297
    
    
    $
    218
    
    
    $
    282
    
    
    $
    216
    
    
    $
    293
    
    
    $
    255West
    
    $
    292
    
    
    $
    219
    
    
    $
    370
    
    
    $
    259
    
    
    $
    305
    
    
    $
    246
    
    
    $
    367
    
    
    $
    317Total unconsolidated
joint ventures
    
    $
    259
    
    
    $
    186
    
    
    $
    326
    
    
    $
    345
    
    
    $
    274
    
    
    $
    194
    
    
    $
    331
    
    
    $
    352Combined total
    
    $
    302
    
    
    $
    265
    
    
    $
    319
    
    
    $
    325
    
    
    $
    307
    
    
    $
    282
    
    
    $
    320
    
    
    $
    332
 
 *
    
    The Texas Region excludes the Dallas division, which is now classified as a discontinued operation. Three Months Ended June 30, 2007 compared to Three Months Ended June 30, 2006
 Florida:
 46




---



##### Table of Contents



Mid-Atlantic:
  Texas:
  West:
  Six Months Ended June 30, 2007 compared to Six Months Ended June 30, 2006
 Florida:
 47




---



##### Table of Contents



Mid-Atlantic:
  Texas:
  West:
  Financial Services Operations
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    11.0
    
    
    $
    17.4
    
    
    $
    23.0
    
    
    $
    32.6Expenses
    
    
    8.7
    
    
    
    11.0
    
    
    
    18.0
    
    
    
    21.7Financial services pretax income
    
    $
    2.3
    
    
    $
    6.4
    
    
    $
    5.0
    
    
    $
    10.9
 48




---



##### Table of Contents



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
 Sources and Uses of Cash
       Realization of Deferred Tax Asset
   49




---



##### Table of Contents



Seasonality
  Financing Activities
 1 4 1 2 1 2
    50




---



##### Table of Contents



1 4 1 4
 pari passu pari passu
  51




---



##### Table of Contents



June 30,
    
    
    December 31,2007
    
    
    2006Notes payable
    
    $
    1,060.9
    
    
    $
    1,060.7Bank borrowings
    
    
    50.0
    
    
    
    Homebuilding borrowings*
    
    $
    1,110.9
    
    
    $
    1,060.7Less: unrestricted cash
    
    
    20.9
    
    
    
    47.4Homebuilding net debt
    
    $
    1,090.0
    
    
    $
    1,013.3Stockholders equity
    
    
    577.7
    
    
    
    774.9Total capital**
    
    $
    1,667.7
    
    
    $
    1,788.2Ratio
    
    
    65.4
    %
    
    
    56.7
    %
 
 *
    
    Does not include obligations for inventory not owned
of $227.1 million at June 30, 2007 and $300.6 million
at December 31, 2006, all of which are non-recourse to
us. Obligations for inventory not owned in our
consolidated statements of financial condition
represent liabilities associated with our land banking
and similar activities, including obligations in
variable interest entities which have been consolidated
by us and in which we have a less than 50% ownership
interest, and the creditors have no recourse against
us. As a result, the obligations have been specifically
excluded from the calculation of leverage ratios
pursuant to the terms of our revolving credit facility.**
    
    Does not include Financial Services bank borrowings
of $28.6 million at June 30, 2007 and $35.4 million at
December 31, 2006.     52




---



##### Table of Contents



Off Balance Sheet Arrangements
 Land and Homesite Option Contracts
   Investments in Unconsolidated Joint Ventures
   53




---



##### Table of Contents



TOUSA / Kolter Joint Venture
  Transeastern JV
   The Equity Method of Accounting for
Investments in Common Stock
  54




---



##### Table of Contents



Accounting for Contingencies
 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    our expectations regarding population growth and median income growth trends and their
impact on future housing demand in our markets;
    
    our expectation regarding the impact of geographic and customer diversification;
    
    our expectations regarding our successful implementation of our asset management
strategy and its impact on our business;
    
    our belief that homes in premier locations will continue to attract homebuyers in both
strong and weak economic conditions;
    
    our expectations regarding future land sales;
    
    our belief regarding growth opportunities within our financial services business;
    
    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;
    
    the impact of inflation on our future results of operations;
    
    our expectations regarding our ability to pass through to our customers any increases in our costs;
    
    our expectations regarding our continued use of option contracts, investments in land development joint ventures;
    
    our expectations regarding the housing market in 2007 and 2008; and
    
    our expectations regarding our use of cash in operations.
  55




---



##### Table of Contents




    
    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 in our homebuilding operations and
financial services business;
    
    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 rates, inflation, or unemployment rates or declines in median income growth,
consumer confidence or the demand for, or the price of, housing;
    
    events which would impede our ability to open new communities and/or deliver homes
within anticipated time frames and/or within anticipated budgets;
    
    our ability to successfully enter into, utilize, and recognize the anticipated benefits of, joint ventures and option contracts;
    
    a decline in the value of the land and home inventories we maintain;
    
    an increase in the cost of, or shortages in the availability of, qualified labor and materials;
    
    our ability to successfully dispose of developed properties or undeveloped land or
homesites at expected prices and within anticipated time frames;
    
    our ability to compete in our existing and future markets;
    
    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;
    
    an increase or change in government regulations, or in the interpretation and/or
enforcement of existing government regulations; and
    
    the impact of any or all of the above risks on the operations or financial results of
our unconsolidated joint ventures.
 56




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4. CONTROLS AND PROCEDURES
  57




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Deutsche Bank Trust Co. Americas v. Technical Olympic USA, Inc. and TOUSA Homes L.P
 Deutsche Bank Securities Inc. v. Technical Olympic USA, Inc., EH/Transeastern, LLC, and
TE/TOUSA Senior, LLC,
  Class Action Lawsuit
 Durgin, et al, v. TOUSA, Inc., et al,
 
 ITEM 1A. RISK FACTORS
 Set forth below is a discussion of the material changes in our risk factors as previously disclosed
in Item 1A of Part 1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006
(2006 Form 10-K ).
  Our substantial indebtedness could adversely affect our financial health.
  
    
    increase our vulnerability to general adverse economic, industry and competitive conditions;
    
    require us to dedicate a substantial portion of our cash flow from operations to payments on
our indebtedness, thereby reducing the availability of our cash flow to fund working capital,
capital expenditures, acquisition of property and other general corporate purposes;
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate;
    
    place us at a competitive disadvantage compared to our competitors that have less debt; and
    
    limit our ability to borrow additional funds.
  58




---



##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description3.5
    
    Certificate of Amendment of the Certificate of Incorporation,
filed on July 30, 2007.3.6
    
    Certificate of Designation, Powers, Preferences And Rights of 8%
Series A Convertible Pay-In-Kind Preferred Stock, filed on July
31, 2007.4.14
    
    Indenture for the 14.75% Senior Subordinated PIK Election Notes
due 2015, dated as of July 31, 2007, among TOUSA, Inc., the
subsidiaries named therein and Wells Fargo Bank, N.A., as Trustee. (included in Exhibit A to Exhibit 4.14).4.15
    
    Form of TOUSA, Inc. Senior Subordinated PIK Election Note due 2015.4.16
    
    Stock Purchase Warrant dated July 31, 2007.4.17
    
    Registration Rights Agreement dated July 31, 2007
(8% Series A Convertible Pay-In-Kind Preferred Stock).4.18
    
    Registration Rights Agreement dated July 31, 2007
(14.75% Senior Subordinated PIK Election Notes due 2015).4.19
    
    Registration Rights Agreement dated July 31, 2007
(Stock Purchase Warrant).10.43
    
    Settlement and Release Agreement dated as of May 30, 2007, by and
among: (i) TOUSA, Inc., f/k/a Technical Olympic USA, Inc.; (ii)
TOUSA LLC; (iii) TOUSA Homes, L.P.; (iv) TOI, LLC; (v) TE/TOUSA,
LLC; (vi) TE/TOUSA Mezzanine Two, LLC; (vii) TE/TOUSA Mezzanine,
LLC; (viii) TE/TOUSA Senior, LLC; (ix) EH/Transeastern, LLC; (x)
Falcone/TEP Holdings, LLC, f/k/a Falcone/Ritchie LLC; (xi) TEP
Holdings, Inc., f/k/a Transeastern Properties, Inc.; (xii) Arthur
J. Falcone; (xiii) Edward W. Falcone; and (xiv) those certain
entities identified and listed on Schedule 1 thereto.10.44
    
    Mutual Release and Consent Agreement dated as of July 31, 2007, by
and among EH/Transeastern, LLC, TE/TOUSA Senior, LLC, TOUSA, Inc.
(f/k/a Technical Olympic USA, Inc.), TOUSA Homes, LP, TE/TOUSA
LLC, TE/TOUSA Mezzanine Two, LLC, TE/TOUSA Mezzanine, LLC, the
lenders party to that certain $450,000,000 Senior Credit Agreement dated as of August 1, 2005, by and among EH/Transeastern, LLC, and TE/TOUSA Senior, LLC, as Borrowers,
CIT Group/Business Credit, Inc., as successor Administrative Agent,
and the lenders a party thereto.10.45
    
    Settlement and Release Agreement dated as of June 29, 2007, by and
among: (i) Technical Olympic S.A.; (ii) TOUSA, Inc. f/k/a
Technical Olympic USA, Inc.; (iii) TOUSA, LLC; (iv) TOI, LLC.; (v)
TOUSA Homes, L.P.; (vi) TE/TOUSA, LLC; (vii) TE/TOUSA Mezzanine
Two, LLC; (viii) TE/TOUSA Mezzanine, LLC; (ix) TE/TOUSA Senior,
LLC; (x) EH/Transeastern, LLC; and (xi) the lenders party to that
certain $137,500,000 Senior Mezzanine Credit Agreement dated as of
August 1, 2005, by and among TE/TOUSA Mezz, as Borrower, Deutsche
Bank Trust Company Americas, as Administrative Agent, the lenders
now or hereafter a party thereto, and Deutsche Bank Securities
Inc., as Sole Lead Arranger and Sole Book Running Manager.10.46
    
    Settlement and Release Agreement dated as of June 29, 2007, by and
among: (i) Technical Olympic S.A.; (ii) TOUSA, Inc. f/k/a
Technical Olympic USA, Inc.; (iii) TOUSA, LLC; (iv) TOI, LLC; (v)
TOUSA Homes, L.P.; (vi) TE/TOUSA, LLC; (vii) TE/TOUSA Mezzanine
Two, LLC; (viii) TE/TOUSA Mezzanine, LLC; (ix) TE/TOUSA Senior,
LLC; (x) EH/Transeastern, LLC; and (xi) the lenders party to that
certain $87,500,000 Junior Mezzanine Credit Agreement dated as of
August 1, 2005, by and among TE/TOUSA Mezz Two, as Borrower,
Deutsche Bank Trust Company Americas as Administrative Agent, the
lenders party thereto, and Deutsche Bank Securities Inc., as Sole
Lead Arranger and Sole Book Running Manager.10.47
    
    Amendment Agreement dated as of July 31, 2007 by and among TOUSA,
Inc., each subsidiary of TOUSA, Inc. party thereto, the lenders
party thereto and Citicorp North America, Inc., as Administrative
Agent for the lenders and issuers party thereto amending and
restating the First Amended and Restated Credit Agreement dated as
of January 30, 2007 in accordance with the Second Amended and
Restated Revolving Credit Agreement dated as of July 31, 2007 as
attached thereto providing for revolving credit loans not to
exceed $700,000,000 at any one time outstanding.10.48
    
    First Lien Term Loan Credit Agreement among TOUSA, Inc., the
lenders party thereto and Citicorp North America, Inc., as
Administrative Agent for the lenders, dated as of July 31, 2007
providing for a $200,000,000 Term Loan.10.49
    
    Second Lien Term Loan Credit Agreement among TOUSA, Inc., the
lenders party thereto and Citicorp North America, Inc., as
Administrative Agent for the lenders, dated as of July 31, 2007
providing for a $300,000,000 Term Loan.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.
 59




---



##### Table of Contents



SIGNATURES
  TOUSA, Inc.Date: August 9, 2007
    By:
    /s/ STEPHEN M. WAGMANName:
    Stephen M. WagmanTitle:
    Executive Vice President and
Chief Financial OfficerDate: August 9, 2007
    By:
    /s/ ANGELA F. VALDESName:
    Angela F. ValdesTitle:
    Vice President, Chief Accounting
Officer and Corporate Controller 60