-----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, CpUHEVNkjmDgTXSIBODPeIlILqaf6jKYaqj84zU0xFaKkNR6UPArYGomCgSiR6YS yqKQwDD9Bv2p5GG0aB3cQQ== 0000915350-00-000006.txt : 20000307 0000915350-00-000006.hdr.sgml : 20000307 ACCESSION NUMBER: 0000915350-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000303 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: SEC FILE NUMBER: 033-72106 FILM NUMBER: 560585 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 January 31, 2000 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)987-7788 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 March 3, 2000. At March 3, 2000, Forecast Capital Corporation had 2,500 shares of Common stock outstanding. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED BALANCE SHEETS (Amount's in 000's) January 31, 2000 October 31, 1999 (Unaudited) ---------------- --------------- Assets: - ------- Cash and Cash Equivalents $25,310 $22,594 Accounts Receivable 1,310 4,298 Accounts and Notes Receivable, Related Parties 8,847 6,905 Real Estate Inventory 122,084 110,800 Property and Equipment, Net 459 551 Other Assets 1,594 1,770 -------- -------- Total Assets $159,604 $146,918 ======== ======== Liabilities & Partners' Equity: - ------------------------------- Accounts Payable $16,904 $24,941 Accrued Expenses 3,866 4,007 Other Liabilities - 514 Notes Payable: Senior Notes at 11 3/8% Due December 2000 19,700 19,700 Collateralized by Real Estate Inventory 61,119 40,932 Other Notes Payable 3,680 4,106 ------- ------- Total Notes Payable 84,499 64,738 ------- ------- Total Liabilities $105,269 $94,200 Partners' Equity 54,335 53,018 Less: Capital Note Receivable From Partner - (300) ------- ------- Net Partners' Equity 54,335 52,718 ------- ------- Total Liabilities & Partners' Equity $159,604 $146,918 ======== ========
[FN] See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS' EQUITY FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (Unaudited) (Amount's in 000's) For the Three Months Ended January 31, -------------------------- 2000 1999 -------------------------- Homebuilding Revenues $61,041 $38,164 Cost of Homes Sold 48,782 30,902 ------- ------- Gross Profit 12,259 7,262 ------- ------- Land Sales Revenues - 7,268 Cost of Land Sold - 7,714 ------- ------- Loss on Land Sales - (446) ------- ------- Operating Expenses: - ------------------- Selling & Marketing Expenses 3,834 3,047 General & Administrative Expenses 4,174 3,137 Other Operating Costs 1,274 69 ------ ------ Total Operating Expenses 9,282 6,253 ------ ------ Operating Income 2,977 563 Other Income (Expenses): - ----------------------- Interest Income 183 90 Interest Expense - (9) Other Income and Expenses 182 686 ------ ------ Total Other Income (Expenses) 365 767 ------ ------ Net Income $3,342 $1,330 ====== ====== Partners' Equity at Beginning of Period $53,018 $31,443 Capital Distributions (2,025) - Net Income this Period 3,342 1,330 ------- ------- Subtotal 54,335 32,773 Less: Capital Notes Receivable From Partners - (300) ------- ------- Net Partners' Equity at End of Period $54,335 $32,473 ======= =======
[FN] See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (Unaudited) (Amount's in 000's) For the Three Months Ended January 31, -------------------------- 2000 1999 -------------------------- Operating Activities: - --------------------- Net Income $3,342 $1,330 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation on Property and Equipment 75 86 Loss on Sale of Property and Equipment 1 - Loss on Land Sale - 446 Other Operating Costs 1,274 69 Equity Income of Unconsolidated Joint Venture 101 80 Decrease in Accounts Receivable 2,988 580 Increase in Real Estate Inventory (12,558) (35,522) Decrease (Increase) in Other Assets (52) (1,632) Increase in Accounts Payable and Accrued Expenses (8,178) (2,962) (Decrease) Increase in Other Liabilities (514) 1,881 ------- ------- Net Cash Used For Operating Activities (13,521) (35,644) ------- ------- Investing Activities: - --------------------- Contribution to Joint Venture - (7) Distribution from Joint Venture 127 212 Additions to Property and Equipment 16 (76) ----- ---- Net Cash Provided by Investing Activities 143 129 ----- ---- Financing Activities: - --------------------- Capital Distributions (2,025) - Decrease in Capital Note Receivable from Partner 300 - (Increase) Decrease in Accounts and Notes Receivable, Related Parties (1,942) 2,513 Proceeds from Notes Payable, Collateralized by Real Estate 57,691 58,281 Proceeds from Notes Payable, Other 80 85 Principal Payments on Notes Payable, Collateralized by Real Estate (37,504) (28,475) Principal Payments on Notes Payable, Other (506) (534) ------- ------- Net Cash Provided By Financing Activities 16,094 31,870 ------- ------- Increase (Decrease) in Cash and Cash Equivalents 2,716 (3,645) Cash and Cash Equivalents at Beginning of Period 22,594 16,193 ------- ------- Cash and Cash Equivalents at End of Period $25,310 $12,548 ======= =======
[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, 1999 (File No. 33-72106) as filed with the Securities and Exchange Commission. The results of operations for the three months ended January 31, 2000 do not necessarily indicate the results that can be expected for the full fiscal year. The results of operations for the three months ended January 31, 2000, 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, 1999 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 and federal fund interest rates - Cost increases resulting from adverse weather conditions, shortages of labor and/or 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: (Amount's in 000's) January 31, 2000 --------------------------- Real Estate Inventory Notes Payable --------------------------- Land Held for Development $12,509 $- Residential Projects in Process 106,522 61,119 Model Homes 3,053 - -------- ------- Total $122,084 $61,119 ======== ======= October 31, 1999 --------------------------- Real Estate Inventory Notes Payable --------------------------- Land Held for Development $9,000 $- Residential Projects in Process 100,720 40,932 Model Homes 1,080 - -------- ------- Total $110,800 $40,932 ======== =======
3. Interest The following summarizes the components of interest incurred, capitalized, expensed and paid: (Amount's in 000's) For the Three Months Ended January 31, ----------------------- 2000 1999 ----------------------- Interest Incurred and Capitalized $2,418 $2,191 Interest Incurred and Expensed - 9 ------ ------ Total Interest Incurred $2,418 $2,200 ====== ====== Capitalized Interest Amortized to Cost of Homes Sold $1,804 $1,146 Interest Paid $2,978 $2,754
4. Transactions With Affiliates From time to time, the Trust and/or Mr. Previti have guaranteed indebtedness of the Company in order to enable the Company to obtain financing on more favorable terms than would otherwise be available. There can be no assurances that the Trust and/or Mr. Previti will continue to provide such guarantees in the future. As of January 31, 2000 a management fee receivable of $590,000 is owed to the Company from an affiliated entity in which Mr. Previti owns a 50% interest for development related rights and services associated with certain real property in Southern California. Another $30,000 is due the Company for management fees from an affiliated entity in which Mr. Previti owns a 87.5% interest for development related rights and services associated with certain real property in Arizona. During the three months ended January 31, 2000, distributions to partners totaled $2.0 million, of which $300,000 was to Forecast Homes Inc. to pay off its note payable to the Company. 5. Receivables From Affiliates During the three months ended January 31, 2000,accounts and notes receivable from related parties increased $1.9 million. The increase results primarily from two new loans made by the Company. The first is a $1,100,000 note receivable from an affiliated entity in which Mr. Previti is a 50% owner, which is due December 31, 2000 at 10% interest, secured by a deed of trust with assignments of rents. The second, is an unsecured note receivable from an affiliated entity in which Mr. Previti is a 100% owner for $500,000 due December 31, 2000 at 10% interest. 6. 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. At January 31, 2000 Senior Notes with a face value of $19,700,000 are held in names of investors other than the Company. The notes are joint and several senior obligations of the Company and Forecast "Registered Tradename" Capital Corporation ("Capital"), with interest only payments due semi annually on June 15 and December 15 of each year. The notes are senior unsecured obligations of the Company and rank parsi passu in right of payment with all senior indebtedness of the Company. The Indenture governing the Senior Notes permits the Company to incur up to $15 million in recourse debt in addition to the $50 million of Senior Notes, and to incur additional recourse debt beyond this $15 million limitation if the Company maintains certain debt-to-equity and debt coverage ratios. As of January 31, 2000, the Company met both its debt-to-equity and debt coverage ratio tests thereby providing the Company with the flexibility to incur more than $15 million of recourse debt had it been necessary. The Company is not precluded from incurring additional debt on a non-recourse debt basis, without regard to any interest or debt coverage ratios. Despite this present ability to incur additional recourse debt, there is no assurance that the Company will continue to meet these ratio tests, and if not, that Mr. Previti and/or the Trust will be willing to guarantee such indebtedness. The Company is confident that through projected cashflow from operations and secured borrowings, sufficient funds will be available for paying off the Senior Notes on December 15, 2000. During the next couple of months, the Company will be refining the repayment sources and plans for the actual retirement of those notes. 7. Real Estate Held for Development and Sale In accordance with FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (Statement 121), when events or circumstances indicate that an impairment to 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 future undiscounted cash flows, excluding interest charges, 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. On an ongoing basis, management analyzes future undiscounted cash flows for all real estate projects where impairment indicators are present. Based upon such analysis, no provision for impairment loss was recorded for the three months ended January 31, 2000 or 1999. FORECAST "Registered Tradename" CAPITAL CORPORATION BALANCE SHEETS January 31, 2000 October 31, 1999 (unaudited) ---------------- ---------------- Assets: - ------- Cash $800 $800 ---- ---- Total Assets $800 $800 ==== ==== Liabilities & Shareholders' - --------------------------- Deficit: - -------- Accounts Payable $300 $300 Accounts Payable, Related Parties 6,400 6,400 ------ ------ Total Liabilities $6,700 $6,700 ------ ------ Common Stock, $1.00 par value: Authorized 10,000 shares Issued and Outstanding 2,500 shares 2,500 2,500 Accumulated Deficit (8,400) (8,400) ------ ------ Total Shareholders' Deficit (5,900) (5,900) ------ ------ Total Liabilities & Shareholders' Deficit $800 $800 ====== ======
[FN] See notes to financial statements. FORECAST "Registered Tradename" CAPITAL CORPORATION STATEMENTS OF OPERATIONS AND SHAREHOLDERS' DEFICIT FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (Unaudited) Three Months Ended January 31, -------------------- 2000 1999 -------------------- General & Administrative Expenses $0 $0 Income Tax Expense - - ---- ---- Net Loss $0 $0 ==== ==== Shareholders' Deficit at Beginning of Period ($5,900) ($4,600) Net Loss $0 $0 ------ ------ Shareholders' Deficit at End of Period ($5,900) ($4,600) ======= =======
[FN] See notes to financial statements. FORECAST "Registered Tradename" CAPITAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation Forecast "Registered Tradename" Capital Corporation (the "Company") was incorporated in California on September 20, 1993, and was formed solely for the purpose of serving as an Issuer of the Senior Notes for The Forecast Group "Registered Tradename", L.P. The authorized capital stock of the Company consists of 10,000 shares of common stock with a par value of $1.00 per share. 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 Company is financially dependent on The Forecast Group "Registered Tradename", L.P. to fund its continuing operations. 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 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 10K for the year ended October 31, 1999 (File No. 33-72106) as filed with the Securities and Exchange Commission. The results of operations for the three months ended January 31, 2000 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. This table excludes land sales revenue and cost of land sold. Percent of Housing Sales For the Three Months Ended January 31, --------------------------- 2000 1999 --------------------------- Amounts as a Percentage of Revenues: - ------------------------------------ Homebuilding Revenues 100.0% 100.0% Cost of Homes Sold 79.9% 81.0% ----- ------ Gross Profit 20.1% 19.0% ----- ------ Operating Expenses: Selling & Marketing Expenses 6.3% 8.0% General & Administrative Expenses 6.8% 8.2% Other Opearting Costs 2.1% 0.2% ---- ---- Total Operating Expenses 15.2% 16.4% ---- ---- Operating Income 4.9% 2.6% ==== ==== Number of Homes Closed 307 235 Number of Homes Sold 330 347 Number of Homes in Sales Backlog 269 345 Aggregate Value of Sales Backlog $52.0 $58.2 ($ in millions)
Results of Operations For the Three Months ended January 31, 2000 and January 31, 1999 Housing revenues for the three months ended January 31, 2000 were a record $61.0 million, representing an increase of $22.9 million or 59.9% from the three months ended January 31, 1999. The revenues for the three months ending January 31, 2000 represent 307 closings, an increase of 72 closings or 30.6% over the three months ending January 31, 1999. The increase reflects the continued strengthening California housing market which resulted in an increased absorption rates and overall sales in the Company's California submarkets. Prior year number of homes sold are higher than the current year number due to the inclusion of 57 sales from our Arizona Division, which was sold to a national homebuilder in the fourth quarter of the Company's 1999 fiscal year. The average sales price of the homes closed during the three months ended January 31, 2000 was $198,831 as compared to $162,400 for the same period a year ago, representing an increase of 22.4%. The increase in average sales price is due primarily to a greater number of closings in communities with higher sales prices as compared to the prior comparable period. Gross profit from housing sales was $12.3 million for the three months ended January 31, 2000, an increase of $5.0 million or 68.5% from the three months ended January 31, 1999. Gross profit per home increased to $39,932 from $30,902 representing a 29.2% increase over the comparable period in 1999. Gross profit margin for the three months ended January 31, 2000 was 20.1% as compared to 19.0% a year ago. The increase in gross margin was due primarily to a higher concentration of sales in our higher sales priced communities in the Northern California Division. During the three months ended January 31, 1999, the Company sold four parcels of land, which resulted in a net loss of $466,000. No land was sold in the comparable three month period of 2000. For the three months ended January 31, 2000, the Company's interest incurred increased 9.9% as compared to the three months ended January 31, 1999. This increase is a result of increased construction volume based upon new land acquisitions made in order to sustain the record level of closings. The Company's interest amortized to cost of homes sold (as a percentage of revenue) decreased to 2.9%, for the three months ended January 31, 2000, from 3.0% for the same period a year ago. This decrease is directly attributable to the Company's record level of closings, which produced increased rates of capital turnover, thereby resulting in lower capitalized interest costs. Selling and marketing expenses increased by $787,000 or 25.8% during the three months ended January 31, 2000 as compared to the three months ended January 31, 1999. This increase is directly attributable to the higher volume of closings during the period. Selling and marketing, as a percentage of revenue, decreased 21.3% to 6.3% from 8.0% for the comparable period in 1999. This decrease, as a percentage of revenue, is attributable to both the higher closing volume and higher average sales prices. General and administrative expenses increased $1.1 million during the three months ended January 31, 2000 as compared to the three months ended January 31, 1999. The $1.1 million increase is attributable to an increase in the number of employees in the Company which was necessary to facilitate the Company's continued expansion and active investigation of new land acquisition opportunities. However, general and administrative expenses, as a percentage of revenue decreased 17.1% to 6.8% for the three months ended January 31, 2000 from 8.2% as compared to the comparable period a year ago. Other operating costs increased $1.2 million during the three months ended January 31, 2000 as compared to the three months ended January 31, 1999. The increase is due to the expensing of carrying costs of one community in Fontana now being held for future development. Net income was $3.3 million during the three months ended January 31, 2000, as compared to a net income of $1.3 million for the three months ended January 31, 1999. This was representative of increased closings and the overall improvement of market conditions in those areas in which the Company operates. During the three months ended January 31, 2000, distributions to partners totaled $2.0 million, of which $300,000 was to Forecast Homes Inc. to pay off its note payable to the Company. 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 cash flow from operations, secured borrowings from commercial banks, financial institutions and private investors and with unsecured borrowings in the capital markets. The Company's financing needs depend primarily upon sales volume, asset turnover and land acquisition. When liquidating inventory through home closings, the Company generates cash. When building inventory, the Company uses substantial amounts of cash obtained through borrowings and cashflow from operations. The Company has had adequate liquidity throughout its operating history, despite recessionary periods, and historically the Company's liquidity needs have been met through the use of cash provided by a combination of closings and financing activities. At certain times during the past few years the Company has repurchased portions of its outstanding 11 3/8% Senior Notes due 2000, on the open market, at prices below par. The Company subsequently retired such repurchased 11 3/8% Senior Notes, reporting the resultant income as an extraordinary gain in the Company's consolidated financial statements. At times, these debt repurchases were utilized to cure certain unsatisfied minimum net worth covenant requirements in the Indenture for the 11 3/8% Senior Notes. At January 31, 2000, the Company had commitments for $114.9 million under several revolving credit facilities with commercial banks and financial institutions, of which $56.5 million was outstanding. In addition, at January 31, 2000, the Company had community specific facilities capable of providing aggregate fundings of $5.3 million, of which $3.3 million was outstanding. Borrowings under the credit facilities are secured by liens on specific real property owned by the Company, and carry varying levels of recourse against the Company. The Company also utilizes unsecured borrowing lines from time to time to meet its operational needs and objectives. The unsecured borrowing lines have commitments of $3.3 million, of which $1.3 was outstanding as of January 31, 2000. On January 31, 2000, the aggregate outstanding principal balance under all of the Company's credit facilities was $61.1 million and the recourse to the Company from those borrowings was 21.6% of the total outstanding sums, or $13.2 million. To date, the Company has been able to obtain acceptable land acquisition and construction financing. Consistent with an industry trend, certain lenders require increased amounts of cash invested in a project by borrowers in connection with both new loans and the extension of existing loans. The Company currently intends to continue utilizing conventional bank financing for land acquisition and construction financing, and use its own cash to fund that portion of the total project costs and acquisition costs its Lenders require be supplied (in form of equity) in order to obtain construction or land acquisition financing. At times, in the past, the Company has failed to meet the debt-to equity and debt coverage ratios that are set forth in the Indenture governing the 11 3/8% Senior Notes, thereby resulting in the Company being restricted in its ability to incur certain levels of recourse indebtedness. In the past, to overcome the limitation and assist the Company in meeting its liquidity needs, Mr. Previti and/or the Previti Family Trust has guaranteed a portion of the Company's indebtedness. As of January 31, 2000, the Company met both its debt-to-equity and debt coverage ratio tests, thereby providing the Company with the flexibility to incur more than $15 million of recourse debt, had it been necessary. Despite this present ability to incur additional recourse debt, there is no assurance that the Company will continue to meet these ratio tests, and if not, that Mr. Previti and/or the Trust will be willing to guarantee such indebtedness. The Company considers its current relationship with its lenders to be good. In February 1994, the Company issued $50 million in Senior Notes through a public debt offering. As of January 31, 2000, the Company had repurchased and retired a total of $21,400,000 of the Senior Notes, with the remaining $28,600,000 having not been retired, (including $8,900,000 which were repurchased and are being held on margin in the Company's name at approximately 40% of their face value). The notes are due in December 2000, with interest at the rate of 11 3/8% per annum payable semi-annually on June 15 and December 15 of each year. The Indenture governing the Senior Notes requires the Company to maintain a minimum net worth of $25 million. As of January 31, 2000 the Company was in compliance with the net worth provisions of the Indenture. There can be no assurance that the impact of market conditions affecting the demand for homes or the availability of debt financing will not adversely affect the Company's future needs for capital. However, the Company expects that available capital resources will be sufficient to meet its normal operating requirements over the near term. Impact of Year 2000 In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. In late 1999, the Company completed its remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and no-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company did not have significant expenses during 1999 in connection with remediating its systems. The Company is not aware of any material problems resulting for Year 2000 issues, either with its products, its internal systems, or the products and service of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- (a) None Item 2. Changes in Securities ---------------------- (a) None Item 3. Defaults upon Senior Securities ------------------------------- (a) None 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 March 3, 2000 By: /s/ James P. Previti - ------------- -------------------------- Date James P. Previti President By: /s/ Richard B. Munkvold ---------------------------- Richard B. Munkvold Senior Vice President- Financial Operations Principal Accounting Officer By: FORECAST "Registered Tradename" CAPITAL CORPORATION March 3, 2000 By: /s/ James P. Previti - ------------- ------------------------ Date James P. Previti President By: /s/ Richard B. Munkvold --------------------------- Richard B. Munkvold Senior Vice President - Financial Operations Principal Accounting Officer EX-27 2
5 3-MOS OCT-31-2000 JAN-31-2000 25310000 0 10157000 0 122084000 159604000 459000 75000 159604000 105269000 19700000 0 0 0 0 159604000 61041000 61041000 48782000 58064000 (365000) 0 0 3342000 3342000 3342000 0 0 0 3342000 0 0
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