-----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, JirvcILk/dDdqY2XDJhH5BbJ2QHLKoDycYtUrg0DP3duyvH//yIHHtQgaTguhnFP kIi/SAlZTCM38Pi1g6le/g== 0000915350-97-000006.txt : 19970616 0000915350-97-000006.hdr.sgml : 19970616 ACCESSION NUMBER: 0000915350-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970613 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FORECAST GROUP LP CENTRAL INDEX KEY: 0000915350 STANDARD INDUSTRIAL CLASSIFICATION: GEN BUILDING CONTRACTORS - RESIDENTIAL BUILDINGS [1520] IRS NUMBER: 330582072 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-72106 FILM NUMBER: 97623351 BUSINESS ADDRESS: STREET 1: 10670 CIVIC CENTER DR CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730 BUSINESS PHONE: 9099877788 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended April 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OR 1934 For the transition period from N/A Commission File Number 33-72106 THE FORECAST GROUP "Registered Tradename", L.P. FORECAST "Registered Tradename" CAPITAL CORPORATION (Exact Name of Registrant as specified in its charter) California 33-0582072 California 33-0582077 (State of Organization) (IRS Employer Identification Number) 10670 Civic Center Drive, Rancho Cucamonga, California 91730 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (909)9877788 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered 11 3/8% Senior Notes Due 2000 None Securities Registered Pursuant to Section 12(g) of the Act: None Indicated by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO___ There was no voting stock held by non-affiliates of the Registrant at June 13, 1997. At June 13, 1997, Forecast "Registered Tradename" Capital Corporation had 2,500 shares of Common stock outstanding. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED BALANCE SHEETS (Amounts in 000's) April 30,1997 October 31, 1996 (unaudited) ------------- ---------------- Assets: - ------- Cash and Cash Equivalents $3,010 $12,350 Accounts Receivable 659 466 Accounts and Notes Receivable, Related Parties 4,042 5,239 Real Estate Inventory 71,292 80,760 Property and Equipment, Net 1,080 1,171 Other Assets 2,025 2,200 -------- -------- Total Assets $82,108 $102,186 ======== ======== Liabilities & Partners' Equity: - ------------------------------- Accounts Payable $7,404 $11,443 Accrued Expenses 1,991 3,624 Notes Payable: Senior Notes at 11 3/8% due December 2000 29,075 34,475 Collateralized by Real Estate Inventory 23,516 25,720 ------- ------- Total Notes Payable 52,591 60,195 ------- ------- Total Liabilities 61,986 75,262 Partners' Equity 20,886 27,688 Less: Capital Notes Receivable from Partners (764) (764) -------- -------- Net Partners' Equity 20,122 26,924 -------- -------- Total Liabilities & Partners' Equity $82,108 $102,186 ======= =========
[FN] See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF OPERATIONS AND PARTNERS'EQUITY FOR THE SIX AND THREE MONTHS ENDED APRIL 30, 1997 AND 1996 (Unaudited) (Amount in 000's) Six Months Ended Three Months Ended April 30, April 30, 1997 1996 1997 1996 ------- ------- ------- ------- Homebuilding Revenues $53,731 $58,103 $28,888 $31,594 Cost of Homes Sold 45,536 48,315 23,918 26,125 ------- ------- ------ ------ Gross Profit 8,195 9,788 4,970 5,469 ------- ------- ------ ------ Operating Expenses: - ------------------- Selling & Marketing Ex. 6,537 6,580 3,361 3,541 General & Admin. Ex. 3,738 3,425 1,606 1,673 Non-Cash Charge for Impairment of Real Estate Inventory 6,635 - - - ------ ----- ----- ----- Total Operating Ex. 16,910 10,005 4,967 5,214 ------ ------ ----- ----- Operating Income(Loss) (8,715) (217) 3 255 Other Income (Expenses): - ----------------------- Interest Income 196 131 65 65 Other Income and Expenses 83 115 44 50 ---- ---- ---- ---- Total Other Income (Expenses) 279 246 109 115 ---- ---- ---- ---- Income (Loss) before Extraordinary Gain (8,436) 29 112 370 Extraordinary Gain on Extinguishment of Senior Notes 1,634 1,876 - 493 ------ ------ ---- ----- Net Income (Loss) ($6,802) $1,905 $112 $863 ====== ====== ==== ===== Partners' Equity at Beginning of Period $27,688 $23,998 $20,774 $25,040 Net Income(Loss) this Period (6,802) 1,905 112 863 -------- ------ ------ ------ Subtotal 20,886 25,903 20,886 25,903 Less: Capital Notes Receivable from Partners (764) - (764) - ------- ------ ------- ------ Net Partners' Equity at End of Period $20,122 $25,903 $20,122 $25,903 ======= ======= ======= ========
[FN] See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND 1996 (Unaudited) (Amount in 000's) 1997 1996 ----- ----- Operating Activities: - --------------------- Net Income (Loss) ($6,802) $1,905 Adjustments to Reconcile Net Income (Loss) to Net Cash Generated from (Used for) Operating Activities Non-Cash Charge for Impairment of Real Estate Inventory 6,635 - Extraordinary Gain on Extinguishment of Senior Notes (1,634) (1,876) Depreciation and Amortization on Property and Equipment 146 128 Loss (Gain) on Sale of Property and Equipment - 9 Decrease (Increase) in Accounts Receivable (193) 174 Decrease (Increase) in Real Estate Inventory 2,833 (1,468) Decrease (Increase) in Other Assets 21 (454) Increase (Decrease) in Accounts Payable and Accrued Expenses (5,672) 221 ------- ------ Net Cash Generated from(Used for) Operating Activities (4,666) (1,361) ------- ------ Investing Activities: --------------------- Additions to Property and Equipment (55) (134) ------- ------ Net Cash Generated from(Used for) Investing Activities (55) (134) ------- ------ Financing Activities: --------------------- Retirement of Senior Notes at 11 3/8% due December 2000 (3,612) (3,251) Decrease (Increase) in Accounts and Notes Receivable, Related Parties 1,197 (2,701) Proceeds from Notes Payable 27,812 33,061 Proceeds from Notes Payable, Other 1,700 2,221 Principal Payments on Notes Payable (30,016) (28,709) Principal Payments on Notes Payable, Other (1,700) (2,221) ------- ------- Net Cash Generated from(Used for) Financing Activities (4,619) (1,600) ------- ------ Increase (Decrease) in Cash and Cash Equivalents (9,340) (3,095) Cash and Cash Equivalents at Beginning of Period 12,350 8,090 ------- ------ Cash and Cash Equivalents at End of Period $3,010 $4,995 ======= ======
[FN] See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related disclosures contained in the Form 10-K for the year ended October 31, 1996 (File No. 33-72106) as filed with the Securities and Exchange Commission. The results of operations for the six months ended April 30, 1997 do not necessarily indicate the results that can be expected for the full fiscal year. The results of operations for the six months ended April 30, 1997, and this Form 10-Q, also may be interpreted as, or actually contain, "forward looking" information, as that term is defined by the Securities and Exchange Commission. To the extent such forward looking information is contained in this filing, the company intends to use these disclosures to take advantage of the "Safe Harbor" provisions set out in the rules and regulations of the Securities and Exchange Commission, and thus strongly recommends that prior to making an investment decision a prospective investor should carefully consider the factors mentioned in Form 10-K for the year ended October 31, 1996 in relation to that "forward looking" information, as well as other financial and business information that may be available from a variety of sources regarding the home building industry as a whole, including, but not limited to: - - Changes in national economic conditions such as interest rates, consumer confidence and job loss or formation statistics - - Change in economic conditions in the markets in which the Company operates - Fluctuations in mortgage interest rates - - Cost increases resulting from adverse weather conditions, shortages of labor and construction materials - - Changes in governmental regulations which may delay new home development or impose additional costs or fees. 2. Real Estate Held for Development and Sale and Related Notes Payable Real estate held for development and sale and related notes payable consist of the following: (Amounts in 000's) April 30, 1997 ----------------------------------- Real Estate Notes Payable Inventory ------------- -------------- Land Held for Development $15,469 $0 Residential Projects in Process 47,998 17,669 Model Homes 7,825 5,847 ------ ------ Total $71,292 $23,516 ======= ======= October 31, 1996 -------------------------------- Real Estate Notes Payable Inventory ------------- ------------ Land Held for Development $15,067 $0 Residential Projects in Process 57,442 20,449 Model Homes 8,251 5,271 ------- ------- Total $80,760 $25,720 ======= =======
3. Interest Expense The following summarizes the components of interest expense incurred, capitalized, expensed and paid: (Amounts in 000's) For the Six Months For the Three Months Ended Ended April 30, April 30, --------------------- ------------------- 1997 1996 1997 1996 --------------------- -------------------- Interest incurred and capitalized $3,684 $3,760 $1,765 $1,848 Capitalized interest amortized to cost of homes sold $3,362 $2,825 $1,892 $1,589 Interest paid $3,913 $3,969 $939 $873
4. Transactions With Affiliates In December of 1994, Mr. Previti did, on his own account, purchase $550,000 of the Company's Senior Notes at a favorable discount from their face value. In January 1995, the Board of Directors of Forecast "Registered Tradename" Homes, Inc., resolved that it would be in the Company's best long-term interests to seek the assistance of Mr. James Previti, the Company's President and Chief Executive Officer, in acquiring the Company's Senior Notes on the open market, if he could acquire them at a favorable discount from their stated face value. At the same time, the Board of Directors agreed that the Company would repurchase the notes from Mr. Previti at his cost basis, plus interest, at such time as the Company had sufficient financial resources. Acting upon this authorization, Mr. Previti did acquire another $19,800,000 of Senior Notes of which $14,950,000 were repurchased and retired prior to October 31, 1996. In January 1997, Mr. Previti assigned his interest in the aggregate remaining $5,400,000 of Senior Notes to the Company, in exchange for the Company's assumption of margin debt of $1,700,000 owing by Mr. Previti, and forgiveness of two notes held by and owing to the Company in the total amount of $1,699,000 that were secured by Mr. Previti's interest in the Senior Notes. This transaction resulted in the Company repaying the margin debt of $1,700,000, plus accrued interest, which created an extraordinary gain of $1,634,000 in the first quarter of fiscal 1997. The Company believes that the transactions discussed above were on terms at least as favorable to the Company as a comparable transaction made on an arms length basis between unaffiliated parties. 5. 11 3/8% Senior Notes Due December 2000 In February 1994, the Company issued $50,000,000 in 11 3/8% Senior Notes through a public debt offering. The notes are joint and several obligations of the Company and Forecast "Registered Tradename"Capital Corporation, with interest only payments due semi-annually on June 15 and December 15 of each year. The notes are unsecured obligations of the Company and rank pari passu in right of payment with all senior indebtedness of the Company. As of April 30, 1997, the Company had retired a total of $20,925,000 of the Senior Notes, leaving $29,075,000 of Senior Notes still outstanding. The Indenture governing the Senior Notes requires the Company to maintain a minimum net worth of $25 million. If the Company's net worth at the end of any two consecutive fiscal quarters (the last day of such second consecutive fiscal quarter being referred to as the "Trigger Date") is less than $25 million , then the Company is required to make an offer to all Senior Note holders to acquire on a pro rata basis, Senior Notes in the aggregate principal amount of $5 million (the "Net Worth Offer") at a purchase price equal to 100% of the principal amount thereof, plus accrued interest to the date of repurchase. Notwithstanding this requirement to offer to, and then, repurchase Senior Notes, the Indenture allows the Company to credit against the Net Worth Offer, the principal amount of any Senior Notes acquired by the Company prior to the Trigger Date, through repurchase or optional redemption. The Company may not, however, use any specific Senior Note repurchase in any more than one Net Worth Offer. In no event shall the failure to meet the minimum net worth requirement at the end of any fiscal quarter be counted toward the making of more than one Net Worth Offer. For the fiscal quarters ended October 31, 1995 and January 31, 1996, the Company was not in compliance with the minimum net worth requirement. Therefore, under the terms of the Company's Indenture, January 31, 1996 became a Trigger Date for the Company, requiring a Net Worth Offer. However, despite this event, the Company had already repurchased or redeemed a sufficient amount of Senior Notes to meet any repurchase obligations resulting from the first Trigger Date. From April 30, 1996 through January 30, 1997, the Company's net worth was again above the $25 million threshold, thereby preventing the occurrence of a second Trigger Date. As a result of the Company's decision to record a non-cash charge for the impairment of real estate inventory at the end of the first quarter of 1997, for the fiscal quarters ended January 31, 1997 and April 30, 1997, the Company was again not in compliance with the minimum net worth requirement, which resulted in the occurrence of a Trigger Date on April 30, 1997. Notwithstanding the occurrence of this Trigger Date, the Company's acquisition and retirement of over $15 million in Senior Notes not previously used in a Net Worth offer, once again prevented the need to make a Net Worth Offer. Using the to date amount of retired Senior Notes, management believes it can prevent the occurrence of any Net Worth Offer up through October 30, 1998. 6. Real Estate Held for Development and Sale In March 1995, The Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of LongLived Assets and for Long-Lived Assets to Be Disposed Of" (Statement 121). Under Statement 121, when events or circumstances indicate that an impairment to an assets to be held and used might exist, the expected future undiscounted cash flows from the affected asset or group of assets must be estimated and compared to the carrying value of the asset or group of assets. If the sum of the estimated undiscounted cash flows is less than the carrying value of the assets, an impairment loss must be recorded. The impairment loss is measured by comparing the estimated fair value of the assets with their carrying amount. Statement 121 also requires that long-lived assets that are held for disposal be reported at the lower of the assets' carrying amount or fair value less costs of disposal. Management performs regular evaluations of its real estate inventory and analyzes future undiscounted cash flows for all real estate projects where impairment indicators are present. The evaluations consider the competitive nature of homebuilding operations in the Company's principal markets, including changes in sales prices, increases in sales incentives and future costs of development and holding costs during development based on current absorption estimates. Based on these evaluations, a non cash charge for the impairment of certain real estate assets amounting to $6,635,000 was recorded in the three months ending January 31, 1997. FORECAST "Registered Tradename" CAPITAL CORPORATION BALANCE SHEET (unaudited) April 30, 1997 October 31, 1996 -------------- --------------- Assets: - ------- Cash $500 $300 ---- ---- Total Assets $500 $300 ==== ==== Liabilities & Shareholders' Deficit: - --------------------------- Accounts Payable $400 $400 Accounts Payable, Related Parties 3,300 2,300 ----- ----- Total Liabilities 3,700 2,700 Common Stock, $1.00 par value: Authorized 10,000 shares Issued and Outstanding 2,500 shares 2,500 2,500 Accumulated Deficit (5,700) (4,900) ------- ------- Total Shareholders' Deficit (3,200) (2,400) ------- ------- Total Liabilities & Shareholders' Deficit $500 $300 ==== ====
[FN] See notes to consolidated financial statements. FORECAST "Registered Tradename" CAPITAL CORPORATION STATEMENTS OF OPERATIONS AND SHAREHOLDERS' EQUITY FOR THE SIX AND THREE MONTHS ENDED APRIL 30, 1997 AND 1996 (Unaudited) For the Six Months For the Three Months Ended Ended April 30, April 30, --------------------- ------------------- 1997 1996 1997 1996 --------------------- ------------------- General & Administrative Expenses $0 $0 $0 $0 Income Tax Expense 800 800 800 800 ------- ------ ------ ----- Net Income (Loss) ($800) ($800) ($800) ($800) ======= ====== ====== ====== Shareholders' Equity at Beginning of Period (2,400) (600) (2,400) (600) Net Income (Loss) this Period (800) (800) (800) (800) ------- ----- ------ ----- Shareholders' Equity at End of Period ($3,200) ($1,400) ($3,200) ($1,400) ======== ======== ======= =======
[FN] See notes to consolidated financial statements. FORECAST "Registered Tradename" CAPITAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation Forecast "Registered Tradename" Capital Corporation was incorporated in California on September 20, 1993. The Company is a wholly-owned subsidiary of The Forecast Group "Registered Tradename", L.P., a California limited partnership that is engaged in the residential real estate development business. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation SX. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related disclosures contained in the Form 10K for the year ended October 31, 1996 (File No. 3372106) as filed with the Securities and Exchange Commission. The results of operations for the six months ended April 30, 1997 do not necessarily indicate the results that can be expected for the full fiscal year. 2. Income Taxes The Company is a "C" Corporation for federal and state income tax reporting purposes and accounts for income taxes in accordance with Financial Accounting Standards Board Statement No. 109 "Accounting for Income Taxes". THE FORECAST GROUP "Registered Tradename", L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Part I. Item 2. Results of Operations The following table sets forth, for the period indicated, certain income statement items as percentages of total home building sales and certain other data: Percent of Percent of Housing Sales Housing Sales For the For the Six Months Three Months -------------- -------------- 1997 1996 1997 1996 -------------- ---------------- Homebuilding Revenues 100.00% 100.00% 100.00% 100.00% Cost of Homes Sold 84.75% 83.15% 82.80% 82.69% ------- ------ ------- ------ Gross Profit 15.25% 16.85% 17.20% 17.31% Operating Expenses: - ------------------- Selling & Marketing Expense 12.17% 11.32% 11.63% 11.21% General & Administrative Expense 6.96% 5.89% 5.56% 5.30% Non-Cash Charge for Impairment of Real Estate Inventory 12.35% 0.00% 0.00% 0.00% -------- ------ ------ ------ Total Operating Ex. 31.47% 17.22% 17.19% 16.50% Operating Income (Loss) (16.22%) (0.37%) 0.01% 0.81% Number of homes closed 369 425 194 231 Number of homes sold 419 504 282 312 Number of homes in backlog 215 273 Aggregate value of backlog in millions $30,930 $35,589 ======= =======
Results of Operations for the Three Months ended April 30, 1997 and April 30, 1996 Housing revenues for the three months ended April 30, 1997 were $28.9 million, a decrease of $2.7 million or 8.6% from the three months ended April 30, 1996. The revenues in fiscal 1997 represent 194 closings at an average sales price of $148,900 while the revenues in fiscal 1996 represent 231 unit closings at an average sales price of $136,800. This increase in the overall average sales price is attributable to a variance in the product mix and pricing of specific communities when comparing period to period. The decrease in the number of closings is attributable to fewer homes being in backlog at the beginning of the 1997 fiscal second quarter, which is largely attributable to increased competitive conditions in the Company's Southern California market, as well as a delay in opening new communities in Northern California. In addition, the Company had new home sales, net of cancellations, of 282 homes for the three months ended April 30, 1997. This represented a decrease of 30 homes or 9.6% from the comparable prior year period, and is primarily attributable to the increased competitive conditions in the Company's Phoenix and Southern California markets. Gross profit from housing sales were $5.0 million for the three months ended April 30, 1997, a decrease of $499,000, or 9.1%, from the three months ended April 30, 1996, as a result of decreased home closings. The overall gross profit percentage has remained relatively consistent from year-to-year. While the gross profit margin has decreased $499,000, the gross margin per unit has increased $1,900 due to higher average sale price and product mix in the closings. Selling and marketing expenses were $3.4 million during the three months ended April 30, 1997, a decrease of $180,000 or 5.1% from the three months ended April 30, 1996. The decrease is primarily attributable to a decrease in house closings, which was partially offset by an increase in advertising expenses needed to keep sales absorptions at similar levels to those reported for the three months ended April 30,1996. General and administrative expenses were $1.6 million during the three months ended April 30, 1997, a decrease of $67,000 or 4.0% from the three months ended April 30, 1996. The decrease can be largely attributed to the company's continued effort to reduce unnecessary overhead expenses. General and administrative costs continue to be monitored by management for improvement. Income before extraordinary gain was $112,000 during the three months ended April 30, 1997, a decrease of $258,000 from the three months ended April 30, 1996 as a result of a decrease in house closings. Results of Operations for the Six Months ended April 30, 1997 and April 30, 1996 Housing revenues for the six months ended April 30, 1997 were $53.7 million, a decrease of $4.4 million or 7.5% from the six months ended April 30, 1996. The decrease in revenue is a result of a 13% decrease in closings from the comparable prior year period. The decrease in closings is attributable to fewer homes in backlog at the beginning of the 1997 fiscal year largely due to competitive conditions in the Company's Phoenix and Southern California markets and the delay in opening new communities in Northern California. In addition, the Company had new home sales, net of cancellations, of 419 homes for the six months ended April 30, 1997, a decrease of 85 homes or 16% from the comparable prior year period. The decrease in sales is attributable to an unusually large number of cancellations during the first quarter of fiscal 1997 in the Company's Phoenix market, delays in opening new communities in Northern California, and the increased competitive conditions in the Company's Phoenix and Southern California markets. Gross profit from housing sales were $8.2 million for the six months ended April 30, 1997, a decrease of $1.6 million or 16.3%, from the six months ended April 30, 1996, primarily as a result of decreased home closings. This tightening of margins was the result of competitive conditions which limited the Company's ability to pass on price increases to its customers, as well as higher financing costs which were created by the Company carrying its inventories for longer periods. In the first quarter of fiscal 1997, the Company recorded a non-cash charge for the impairment of certain real estate assets benefiting future quarters' gross margins. Selling and marketing expenses for the six months ended April 30, 1997 were $6.5 million, a decrease of $43,000 or 0.6% from the six months ended April 30, 1996. The decrease is primarily attributable to a decrease in house closings, which is partially offset by an increase in advertising costs needed to keep sales absorptions at similar levels to those reported as of April 30, 1996. General and administrative expenses were $3.7 million for the six months ended April 30, 1997, an increase of $313,000 or 9.1% from the six months ended April 30, 1996. The increase is the result of a one-time extraordinary cost incurred in the Company's first quarter of fiscal 1997. Loss before extraordinary gain was $8.4 million for the six months ended April 30, 1997, as compared to $29,000 of income before extraordinary gain for the six months ended April 30,1996. The decrease in income is primarily attributable to the Company evaluating it's inventory in relation to future undiscounted cash flows and recording a non-cash charge of $6,635,000 during the first quarter of fiscal 1997. Liquidity and Capital Resources The residential real estate development business is inherently capital intensive. Significant cash expenditures are typically needed to acquire and develop land, construct homes and establish marketing programs for lengthy periods of time in advance of revenue realization. The Company generally finances its operations with secured borrowings from commercial banks, financial institutions and private investors, unsecured borrowings in the public market, and with available cash flow from operations. The Company had commitments for $36.4 million under several revolving credit facilities with commercial banks and financial institutions at April 30, 1997, of which $7.9 million was outstanding. In addition, at April 30, 1997, the Company had community specific facilities capable of providing aggregate fundings of $18.9 million, against which $9.8 million was outstanding at that time. The Company also benefits from a line of credit which is secured by some of its model homes for an amount not to exceed $5.8 million of which the entire $5.8 million was outstanding as of April 30, 1997. Borrowings under the credit facilities are secured by liens on specific real property owned by the Company, and carry limited recourse against the Company. As of April 30, 1997, the aggregate outstanding principal balance under the Company's credit facilities was $23.5 million and the recourse to the Company from those borrowings was $4.2 million. In February 1994, the Company issued $50 million in Senior Notes through a public debt offering, of which $29,075,000 were still outstanding on April 30, 1997. The notes are due in December 2000 and bear interest at the rate of 11 3/8% per annum, payable semi-annually on June 15 and December 15 of each year. For additional information regarding the Company's Senior Notes please refer to Note 5 of Notes to Consolidated Financial Statements. PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- (a) None Item 2. Changes in Securities --------------------- (a) None Item 3. Defaults upon Senior Securities ------------------------------- (a) Refer to note 5 of Notes to Consolidated Financial Statements. ------------------------------------------- Item 4. Submission of Matters to a Vote of Security Holders ---------------------------------------------------- (a) None Item 5. Other Information ----------------- (a) None Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) There are no exhibits attached to this report. (b) The Company did not file any reports on Form 8-K during the period. 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. THE FORECAST GROUP "Registered Tradename", L.P. ----------------------------------------------- By: FORECAST "Registered Tradename" HOMES, INC. ----------------------------------------------- A California Corporation its General Partner June 13, 1997 By: /s/ James P. Previti - -------------- ------------------------ Date James P. Previti President By: /s/ Larry Day -------------------- Larry Day Principal Accounting Officer By: FORECAST "Registered Tradename" CAPITAL CORPORATION June 13, 1997 By: /s/ James P. Previti - ------------- ------------------------- Date James P. Previti President By: /s/ Larry Day --------------------- Larry Day Principal Accounting Offier EX-27 2
5 6-MOS OCT-31-1997 APR-30-1997 3010000 0 4701000 0 71292000 82108000 1080000 146000 82108000 61986000 29075000 0 0 0 0 82108000 53731000 53731000 45536000 55811000 (279000) (6635000) 0 (8436000) (8436000) (8436000) 0 1634000 0 (6802000) 0 0
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