-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BZVig9aIDR3mL2+7c9FMTpa5fA6D66DGvIc3F4sUgSoDFKa2aQE9nM9Uud/8NRl3 H5pjIKRY8rA0+uH+hS1jhg== 0000773141-99-000009.txt : 19990728 0000773141-99-000009.hdr.sgml : 19990728 ACCESSION NUMBER: 0000773141-99-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990719 ITEM INFORMATION: FILED AS OF DATE: 19990727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MDC HOLDINGS INC CENTRAL INDEX KEY: 0000773141 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 840622967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08951 FILM NUMBER: 99671200 BUSINESS ADDRESS: STREET 1: 3600 S YOSEMITE ST STE 900 CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037731100 MAIL ADDRESS: STREET 1: 3600 S YOSEMITE ST STREET 2: SUITE 900 CITY: DENVER STATE: CO ZIP: 80237 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 Date of Report (Date of earliest event reported): July 19, 1999 M.D.C. Holdings, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-8951 84-0622967 - ----------------- -------------------- ------------------- (State or other (Commission file number) (I.R.S. employer jurisdiction of identification no.) incorporation) 3600 South Yosemite Street, Suite 900, Denver, Colorado 80237 - -------------------------------------------------------- --------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (303) 773-1100 ------------------------------------------------------------------ Not Applicable ----------------------------------------------------------------- (Former name or former address, if changed since last report.) ITEM 5. OTHER EVENTS On July 19, 1999 the Registrant issued the press release attached as Exhibit 99.1 to this Current Report on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ------------------- M.D.C. HOLDINGS, INC. By:/s/ Daniel S. Japha --------------------- Vice President of Law and Secretary Dated: July 27, 1999 EX-99.1 2 EXHIBIT 99.1 NEWS BULLETIN M.D.C. HOLDINGS, INC. RICHMOND AMERICAN HOMES HOMEAMERICAN MORTGAGE FOR IMMEDIATE RELEASE MONDAY, JULY 19, 1999 - ------------------------------------------------------------------------------ Contacts: Paris G. Reece III Daniel S. Japha Chief Financial Officer Director, Investor Relations (303) 804-7706 (303) 804-7730 (Financial Information) (General Information) MDC HOLDINGS REPORTS 98% INCREASE IN SECOND QUARTER EARNINGS * Record quarterly earnings per share of $1.10 vs. $.58 a year ago * Highest revenues, home closings, home orders and backlog in Company history * Record homebuilding profits of $44.0 million, up 160% * Record home gross margins of 19.8%, a 320 basis point increase DENVER, Monday, July 19, 1999 - M.D.C. Holdings, Inc. (NYSE/PCX: MDC), which builds homes under the name "Richmond American Homes," today announced net income for the three months ended June 30, 1999 of $25.0 million, or $1.10 per share, the highest quarterly net income in the Company's history and 98% higher than net income of $12.6 million, or $.58 per share, for the same period in 1998. Total revenues for the quarter ended June 30, 1999 totalled a record $400 million, 32% higher than revenues of $304 million for the same period in 1998. Larry A. Mizel, MDC's chairman and chief executive officer, stated, "We are pleased to report MDC has achieved the best operating results for any quarter or six-month period in its 27-year history. Our focused operating strategy and efficiency initiatives have enabled us to capitalize on our nation's historic economic expansion to propel MDC to among the leaders in our industry in virtually every major performance category. Over the past year, we have increased our market share in our select, high-growth housing markets, translated operating efficiencies into record home gross margins and returns, and positioned MDC to begin the next century. With our record backlog of 3,894 homes with an estimated sales value of $800 million, and expectations of a continued favorable environment for homebuilding for the balance of this year, we are well-positioned to close more than 7,000 homes and establish new annual records for revenues and profitability in 1999." -more- M.D.C. HOLDINGS, INC. Page 2 Net income for the six months ended June 30, 1999 was $38.7 million, or $1.71 per share, compared with $5.2 million, or $.27 per share, for the same period in 1998. Net income for the first six months of 1998 included an extraordinary after-tax loss of $15.3 million, or $.68 per share, recognized in connection with the January 1998 refinancing of MDC's senior debt. Total revenues for the six months ended June 30, 1999 totalled a record $697 million, representing an increase of 27% over revenues of $547 million for the first six months of 1998. Record Homebuilding Profits Increase Over 120% Operating profits from the Company's homebuilding operations increased to $44.0 million and $69.2 million, respectively, for the three and six months ended June 30, 1999, representing increases of 160% and 123%, compared with $16.9 million and $31.1 million, respectively, for the same periods in 1998. These profit improvements primarily resulted from significant increases in home gross margins, home closings and average selling prices (up $22,000 in the second quarter). Home gross margins improved to 19.8% and 19.3%, respectively, for the second quarter and first half of 1999, compared with 16.6% and 16.2%, respectively, for the same periods in 1998. Home sales revenues of $389 million and $677 million for the second quarter and first half of 1999 were the highest for comparable periods in the Company's history. Paris G. Reece III, MDC's executive vice president and chief financial officer said, "All of our homebuilding divisions recorded positive operating profits for the second quarter of 1999. Our Colorado operations continued to post the strongest absolute profit gains, while most of our other divisions exceeded by more than 100% their operating results from a year ago. Contributing to these outstanding divisional performances were substantial improvements in home gross margins in most divisions, increases in average selling prices in all divisions, higher home closings in all markets but Maryland and a reduction in homebuilding S,G&A expenses as a percentage of home sales revenues by more than 120 basis points from the second quarter of 1998." Reece continued, "We are especially proud of our continued improvement in home gross margins, which reached almost 22% excluding capitalized interest in the second quarter of 1999. The 320 basis point increase in margins over the second quarter of 1998 marks the 13th consecutive quarter that we have realized year-over-year improvements in our quarterly home gross margins. These continued home gross margin increases are a direct result of initiatives implemented in each of our divisions designed to reduce costs and increase operating efficiencies. These initiatives have resulted in more effective home pricing strategies, reduced interest, warranty and construction costs, increased sales of options and upgrades, and more -more- M.D.C. HOLDINGS, INC. Page 3 efficient inventory management. The benefits of these initiatives should enable the Company to continue the trend of higher year-over-year quarterly home gross margins for the balance of 1999. Such margins may be less than those realized in the 1999 second quarter due to increases in land and construction costs for homes in backlog." Strong Financial Services Results Operating profits from the Company's mortgage lending operations were $3.3 million and $6.8 million, respectively, for the quarter and six months ended June 30, 1999, compared with $2.6 million and $4.6 million, respectively, for the same periods in 1998. This improvement in operating profit primarily resulted from record levels of mortgage loan originations which increased 24% and 20%, respectively, for the quarter and six months ended June 30, 1999. Operating profit from the financial services segment was $3.3 million and $6.8 million, respectively, for the three and six months ended June 30, 1999, compared with $7.2 million and $9.2 million, respectively, for the same periods in 1998. The 1998 periods benefited from the recognition of a $4.5 million pre-tax gain related to the September 1996 sale of the Company's asset management business. Strengthened Balance Sheet and Improved Operating Efficiency During the second quarter and first six months of 1999, the Company continued its strategy of strengthening its balance sheet and improving its financial position. Homebuilding and corporate debt levels decreased, compared with June 30, 1998 levels, by 14% to $230 million, despite a $120 million increase in work-in-process and land inventories. The debt reduction was aided by the fourth quarter 1998 conversion into MDC common stock of all $28 million principal amount of the Company's convertible subordinated notes. These factors contributed to a reduction in the Company's homebuilding and corporate debt to capital ratio at June 30, 1999 to .40 from .53 at June 30, 1998. Lower debt levels and more favorable effective interest rates on the Company's outstanding debt contributed to reductions of 9% and 13%, respectively, in the Company's corporate and homebuilding interest incurred in the second quarter and first six months of 1999, compared with the same periods in 1998. Second quarter and first half 1999 earnings before interest, taxes, depreciation and amortization ("EBITDA"), as adjusted, increased to $53.9 million and $87.7 million, respectively, compared with $36.1 million and $61.4 million, respectively, for the same periods in 1998. These adjusted EBITDA increases, combined with the 1999 reductions in interest incurred, resulted in increases in the Company's ratio of EBITDA, -more- M.D.C. HOLDINGS, INC. Page 4 as adjusted, to interest incurred to 10.3 and 8.8, respectively, for the three and six months ended June 30, 1999, compared with 6.3 and 5.3, respectively, for the comparable periods in 1998. MDC is one of the largest homebuilders in the United States. The Company also provides mortgage financing, primarily for MDC's home buyers, through its wholly owned subsidiary, HomeAmerican Mortgage Corporation. MDC is a major regional homebuilder with a significant presence in some of the country's best housing markets. The Company is the largest homebuilder in metropolitan Denver; among the top five homebuilders in Northern Virginia, Tucson and Colorado Springs; among the top ten homebuilders in Southern California, Phoenix, suburban Maryland and Las Vegas; and has a growing presence in the San Francisco Bay area. All earnings per share amounts discussed above are on a diluted basis. Certain statements in this press release, including those related to projected home gross margins, closing levels, revenues and profitability, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) demographic changes; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives; (10) building moratoria; (11) governmental regulation, including the interpretation of tax, labor and environmental laws; (12) changes in consumer confidence and preferences; (13) required accounting changes; (14) the impact on the Company of Y2K compliance by the Company and its vendors, suppliers and subcontractors and by various governmental and regulatory agencies; and (15) other factors over which the Company has little or no control. -more- M.D.C. HOLDINGS, INC. Condensed Consolidated Balance Sheets (In thousands)
June 30, December 31, 1999 1998 ------------- ------------- ASSETS Corporate Cash and cash equivalents.............................. $ 11,000 $ 2,460 Property and equipment, net............................ 2,604 2,901 Deferred income taxes.................................. 18,218 17,949 Deferred debt issue costs, net......................... 2,493 2,589 Other assets, net...................................... 5,675 5,670 ------------- ------------- 39,990 31,569 ------------- ------------- Homebuilding Cash and cash equivalents.............................. 8,145 7,279 Home sales and other accounts receivable............... 11,814 12,771 Inventories, net Housing completed or under construction.............. 360,330 294,104 Land and land under development...................... 254,605 217,180 Prepaid expenses and other assets, net................. 52,657 58,981 ------------- ------------- 687,551 590,315 ------------- ------------- Financial Services....................................... 89,171 92,129 ------------- ------------- Total Assets................................................ $ 816,712 $ 714,013 ============= ============= LIABILITIES Corporate Accounts payable and accrued expenses.................. $ 35,671 $ 32,378 Income taxes payable................................... 18,237 14,568 Senior notes, net...................................... 174,364 174,339 ------------- ------------- 228,272 221,285 ------------- ------------- Homebuilding Accounts payable and accrued expenses.................. 150,751 131,374 Line of credit......................................... 55,000 21,871 Note payable........................................... 1,044 866 ------------- ------------- 206,795 154,111 ------------- ------------- Financial Services....................................... 41,524 40,486 ------------- ------------- Total Liabilities.................................... 476,591 415,882 ------------- ------------- STOCKHOLDERS' EQUITY Total Stockholders' Equity........................... 340,121 298,131 ------------- ------------- Total Liabilities and Stockholders' Equity.................. $ 816,712 $ 714,013 ============= ============= -more-
M.D.C. HOLDINGS, INC. Condensed Consolidated Statements of Income (In thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 ------------ ------------ ------------ ------------- REVENUES Homebuilding.......................... $ 391,130 $ 293,420 $ 681,010 $ 532,017 Financial Services.................... 7,011 10,149 13,925 14,820 Corporate............................. 1,618 310 1,949 543 ------------ ------------ ------------ ------------ Total Revenues.................... $ 399,759 $ 303,879 $ 696,884 $ 547,380 ============ ============ ============ ============ NET INCOME Homebuilding.......................... $ 43,996 $ 16,907 $ 69,150 $ 31,051 Financial Services.................... 3,297 7,162 6,845 9,187 ------------ ------------ ------------ ------------ Operating Profit.................. 47,293 24,069 75,995 40,238 Corporate general and administrative expense, net........................ (6,041) (3,730) (12,015) (7,009) ------------ ------------ ------------ ------------ Income before income taxes............ 41,252 20,339 63,980 33,229 Provision for income taxes............ (16,295) (7,758) (25,272) (12,720) ------------- ------------ ------------- ------------ Income before extraordinary item...... 24,957 12,581 38,708 20,509 Extraordinary loss from early extinguishment of debt, net of income tax benefit of $9,587........ - - - - - - (15,314) ------------ ------------ ------------ ------------ Net Income........................ $ 24,957 $ 12,581 $ 38,708 $ 5,195 ============ ============ ============ ============ EARNINGS PER SHARE Basic Income before extraordinary item.. $ 1.12 $ .70 $ 1.74 $ 1.14 ============ ============ ============ ============ Net Income........................ $ 1.12 $ .70 $ 1.74 $ .29 ============ ============ ============ ============ Diluted Income before extraordinary item.. $ 1.10 $ .58 $ 1.71 $ .95 ============ ============ ============ ============ Net Income........................ $ 1.10 $ .58 $ 1.71 $ .27 ============ ============ ============ ============ WEIGHTED-AVERAGE SHARES OUTSTANDING Basic............................. 22,274 18,042 22,189 17,981 ============ ============ ============ ============ Diluted........................... 22,695 22,469 22,630 22,472 ============ ============ ============ ============ DIVIDENDS PAID PER SHARE $ .05 $ .04 $ .10 $ .07 ============ ============ ============ ============
-more- M.D.C. HOLDINGS, INC. Information on Business Segments (In thousands)
Three Months Six Months Ended June 30, Ended June 30, -------------------------- --------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Homebuilding Home sales........................... $ 389,144 $ 291,752 $ 677,228 $ 524,515 Land sales........................... 1,439 1,276 2,825 6,803 Other revenues....................... 547 392 957 699 ----------- ----------- ----------- ----------- Total Homebuilding Revenues...... 391,130 293,420 681,010 532,017 ----------- ----------- ----------- ----------- Home cost of sales................... 312,065 243,253 546,813 439,522 Land cost of sales................... 984 1,179 2,023 4,285 Asset impairment charges............. - - 3,000 - - 3,000 Marketing............................ 21,226 18,146 38,109 33,396 General and administrative........... 12,859 10,935 24,915 20,763 ----------- ----------- ----------- ----------- 347,134 276,513 611,860 500,966 ----------- ----------- ----------- ----------- Homebuilding Operating Profit.... 43,996 16,907 69,150 31,051 ----------- ----------- ----------- ----------- Financial Services Mortgage Lending Revenues Interest revenues.................... 616 502 1,277 1,033 Origination fees..................... 3,217 2,275 5,720 4,140 Gains on sales of mortgage servicing. 1,026 692 2,289 927 Gains on sales of mortgage loans, net 2,010 2,012 4,350 4,016 Mortgage servicing and other......... 142 72 289 102 Asset Management Revenues.............. - - 4,596 - - 4,602 ----------- ----------- ----------- ----------- Total Financial Services Revenues 7,011 10,149 13,925 14,820 ----------- ----------- ----------- ----------- General and Administrative Expenses.... 3,714 2,987 7,080 5,633 ----------- ----------- ----------- ----------- Financial Services Operating 3,297 7,162 6,845 9,187 ----------- ----------- ----------- ----------- Profit......................... Total Operating Profit.................... 47,293 24,069 75,995 40,238 ----------- ----------- ----------- ----------- Corporate Interest and other revenues.......... (1,618) (310) (1,949) (543) Interest expense..................... - - - - - - - - General and administrative........... 7,659 4,040 13,964 7,552 ----------- ----------- ----------- ----------- Net Corporate Expenses........... 6,041 3,730 12,015 7,009 ----------- ----------- ----------- ----------- Income Before Income Taxes and Extraordinary Item..................... $ 41,252 $ 20,339 $ 63,980 $ 33,229 =========== =========== =========== ===========
-more- M.D.C. HOLDINGS, INC. Selected Financial Data (Dollars in thousands, except per share amounts)
June 30, December 31, June 30, 1999 1998 1998 ------------ ------------ ------------ BALANCE SHEET DATA Stockholders' Equity......................................... $ 340,121 $ 298,131 $ 237,886 Book Value Per Share Outstanding (pro forma for June 30, 1998 based on conversion of the 8 3/4% convertible subordinated notes)............................ $ 15.27 $ 13.56 $ 12.26 Homebuilding and Corporate Debt.............................. $ 230,408 $ 197,076 $ 267,810 Ratio of Homebuilding and Corporate Debt to Equity........... .68 .66 1.13 Total Capital (excluding mortgage lending debt).............. $ 570,529 $ 495,207 $ 505,696 Ratio of Homebuilding and Corporate Debt to Total Capital.... .40 .40 .53 Total Liquidity.............................................. $ 273,535 $ 298,334 $ 259,637 Total Homebuilding Inventories............................... $ 614,935 $ 511,284 $ 495,313 Interest Capitalized in Homebuilding Inventories............. $ 22,183 $ 26,332 $ 33,316 Interest Capitalized as a Percent of Homebuilding Inventories 3.6% 5.2% 6.7% Total Lots Owned............................................. 9,191 8,925 8,358 Total Lots Under Option...................................... 7,950 7,729 6,198 Active Subdivisions.......................................... 122 130 132
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- --------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ OPERATING DATA EBITDA, As Adjusted Income From Continuing Operations......................... $ 24,957 $ 12,581 $ 38,708 $ 20,509 Add: Income taxes........................................ 16,295 7,758 25,272 12,720 Corporate & homebuilding interest expense........... - - - - - - - - Interest in home and land cost of sales............. 7,581 7,957 14,100 16,174 Other fixed charges................................. 229 200 527 326 Depreciation and amortization....................... 4,865 4,617 9,092 8,658 Asset impairment charges............................ - - 3,000 - - 3,000 ------------ ------------ ------------ ------------ Total EBITDA, As Adjusted.................................... $ 53,927 $ 36,113 $ 87,699 $ 61,387 ============ ============ ============ ============ Fixed Charges Incurred....................................... $ 5,460 $ 5,927 $ 10,478 $ 11,825 Ratio of EBITDA, As Adjusted, to Fixed Charges............... 9.9 6.1 8.4 5.2 Ratio of EBITDA, As Adjusted, to Interest Incurred........... 10.3 6.3 8.8 5.3 Homebuilding and Corporate SG&A as a Percent of Home Sales Revenues................................................... 10.7% 11.4% 11.4% 11.8% Interest Data Interest Incurred............................................ $ 5,231 $ 5,727 $ 9,951 $ 11,499 Interest Capitalized......................................... $ 5,231 $ 5,727 $ 9,951 $ 11,499 Interest in Home Cost of Sales as a Percent of Home Sales Revenues................................................... 2.0% 2.7% 2.0% 2.8%
-more- M.D.C. HOLDINGS, INC. Homebuilding Operational Data (Dollars in thousands)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Home Sales Revenues.............................. $ 389,144 $ 291,752 $ 677,228 $ 524,515 Average Selling Price Per Home Closed............ $ 208.8 $ 186.8 $ 204.5 $ 185.2 Home Gross Margins............................... 19.8% 16.6% 19.3% 16.2% Excluding Interest in Home Cost of Sales.... 21.8% 19.3% 21.3% 19.0% Orders For Homes, Net (Units) Colorado.................................... 759 687 1,604 1,597 California.................................. 407 310 800 620 Arizona..................................... 413 430 938 951 Nevada...................................... 146 163 274 305 Virginia.................................... 194 163 461 427 Maryland.................................... 110 96 198 225 ------------ ------------ ------------ ------------ Total................................... 2,029 1,849 4,275 4,125 ============ ============ ============ ============ Homes Closed (Units) Colorado.................................... 691 631 1,193 1,111 California.................................. 317 194 540 375 Arizona..................................... 469 365 855 691 Nevada...................................... 115 106 256 196 Virginia.................................... 190 163 310 285 Maryland.................................... 82 103 157 174 ------------ ------------ ------------ ------------ Total................................... 1,864 1,562 3,311 2,832 ============ ============ ============ ============ June 30, December 31, June 30, 1999 1998 1998 ------------ ------------ --------- Backlog (Units) Colorado.................................... 1,766 1,355 1,366 California.................................. 586 326 515 Arizona..................................... 779 696 653 Nevada...................................... 164 146 204 Virginia.................................... 405 254 353 Maryland.................................... 194 153 234 ------------ ------------ ------------ Total................................... 3,894 2,930 3,325 ============ ============ ============ Estimated Sales Value................... $ 800,000 $ 580,000 $ 640,000 ============ ============ ============
-###- M.D.C. Holdings, Inc. 1999 First Half Operating Performance Performance Graphs Set forth below are graphs that show the increasing levels of Diluted Operating Earnings Per Share, Home Gross Margin Percent and Ratio of EBITDA to Interest Incurred. Diluted Operating Earnings Per Share |------------------------------------------------------| | | | | | | 2.50| | | 1st Half 1999 | $2.32 | | Up 80% O 2.00| |------| | | L | | | | $1.71 | L 1.50| | | | |---------| | 2nd Qtr Up 90% A | $1.18 | | | | | | R 1.00| $.98 |------| | | | $.95 | $1.10 | | S |------| | | | | | |---------| |(2nd Qtr)| | 0.50| | | | | | | | $.58 | |---------| | | | | | | | | |(2nd Qtr)| | | | 0.00| | | | | | | | | | | | 0|------------------------------------------------------| 6 Mths Ended June 30, 1996 1997 1998 --------------------- 1998 1999 Home Gross Margin Percent |-----------------------------------------------------| 22.0| | | | | 21.3% | 1st Half 1999 20.0| | / |Up 310 Basis Points | - 19.5% | 19.0% -/ 19.3% | 18.0| 17.5% / | |-------| | | 16.7% / 16.9% | 16.2% | | | 16.0| |-------| | |-------| | | | 2nd Qtr of 19.8% | 14.5% | | | | | | | |Up 320 Basis Points 14.0| 13.7% |-------| | | | | | | | | |-------| | | | | | | | | | | 12.0|-----------------------------------------------------| 6 Mths Ended June 30, 1996 1997 1998 --------------------- 1998 1999 ---/---/- Home Gross Margin Before Interest in Cost of Sales Ratio of EBITDA to Interest Incurred |-----------------------------------------------| 10.0| | | 9.0| | 8.8 | 8.0| | |------| | 1st Half 1999 7.0| 6.4 | | | | Up 65% 6.0| |------| | 5.3 | | | 5.0| | | | |------| | | | 4.0| 3.4 | | | | | | | | 2nd Qtr of 10.3 3.0| 2.8 |------| | | | | | | | | Up 63% 2.0|------| | | | | | | | | | | 1.0| | | | | | | | | | | | 0.0|-----------------------------------------------| 6 Mths Ended June 30, 1996 1997 1998 -------------------- 1998 1999 -----END PRIVACY-ENHANCED MESSAGE-----