UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the period ended: June 30, 1997 Commission file number: 001-11981
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
(Exact name of registrant as specified in its charter)
Delaware 52-1449733
(State of organization) (I.R.S. Employer Identification No.)
218 North Charles Street, Suite 500, Baltimore, Maryland 21201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(410)962-8044
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 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
The Company had 11,092,889 Growth Shares outstanding as of August 13,
1997, the latest practicable date.
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
INDEX TO FORM 10-Q
Part I- FINANCIAL INFORMATION
Item
1. Financial Statements
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II- OTHER INFORMATION
Item
4. Submission of Matters to a Vote of Security Holders
6. Exhibits and Reports on Form 8-K
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) (unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $11,500 $34,817
Interest receivable 1,591 1,352
Investment in mortgage revenue bonds and other bond
related investments, net (Note 2) 202,672 183,632
Investment in parity working capital loans, demand
notes and other loans, net (Note 3) 11,112 10,158
Other assets 492 318
Restricted assets (Note 4) 1,359 -
------------ ------------
TOTAL ASSETS $228,726 $230,277
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $731 $870
Distributions payable - 8,095
Unearned revenue (Note 5) 815 329
------------ ------------
TOTAL LIABILITIES 1,546 9,294
------------ ------------
Commitments and contingencies (Notes 4, 5 and 8) - -
<PAGE>
Shareholders' equity:
Unrealized gain on mortgage revenue bonds and other
bond related investments available for sale, net (Note 2) 13,383 12,423
Preferred shares:
Series I (16,329 shares issued and outstanding) 11,704 11,254
Series II (7,637 shares issued and outstanding) 6,330 6,086
Preferred capital distribution shares:
Series I (8,909 shares issued and outstanding) 4,758 4,559
Series II (3,809 shares issued and outstanding) 2,172 2,080
Term growth shares (2,000 shares issued and outstanding) 93 -
Growth shares (11,156,397 shares outstanding, including
11,153,168 issued, 2,431 deferred, and 798 restricted shares) 189,835 185,514
Less growth shares held in treasury at cost (60,307 shares at
June 30, 1997 and 60,798 at December 31, 1996) (926) (933)
Less unearned compensation - restricted shares (Note 6) (169) -
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 227,180 220,983
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $228,726 $230,277
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share, per share and per BAC data)
(unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
INCOME:
Interest on mortgage revenue bonds and other bond
related investments $4,124 $3,463 $8,143 $6,526
Interest on parity working capital loans, demand notes
and other loans 751 54 1,556 107
Interest on short-term investments 200 80 470 154
Equity in MLP II - 929 - 1,808
Other income 251 - 501 -
------------ ------------ ------------- -----------
TOTAL INCOME 5,326 4,526 10,670 8,595
------------ ------------ ------------- -----------
EXPENSES:
Operating expenses 739 951 1,551 1,793
Minority interest - 5 - 10
Other-than-temporary impairments related to investments in mortgage
revenue bonds (Note 2) - 3,990 - 3,990
------------ ------------ ------------- -----------
TOTAL EXPENSES 739 4,946 1,551 5,793
------------ ------------ ------------- -----------
NET INCOME (LOSS) $4,587 ($420) $9,119 $2,802
============ ============ ============= ===========
<PAGE>
NET INCOME (LOSS) DURING 1996 ALLOCATED TO:
General Partners $0 ($4) $0 $28
============ ============ ============= ===========
Limited Partners:
Series I $0 ($1,498) $0 $572
============ ============ ============= ===========
Series II $0 $1,082 $0 $2,202
============ ============ ============= ===========
NET INCOME (LOSS) PER BAC:
Series I $0 ($7.49) $0 $2.86
============ ============ ============= ===========
Series II $0 $11.24 $0 $22.87
============ ============ ============= ===========
NET INCOME DURING 1997 ALLOCATED TO:
Preferred shares:
Series I $229 $450
============ =============
Series II $121 $244
============ =============
Preferred capital distribution shares:
Series I $99 $199
============ =============
Series II $44 $92
============ =============
Term growth shares $94 $185
============ =============
Growth shares $4,000 $7,949
============ =============
NET INCOME PER SHARE:
Preferred shares:
Series I $14.00 $27.55
============ =============
Series II $15.90 $31.95
============ =============
Preferred capital distribution shares:
Series I $11.18 $22.36
============ =============
Series II $11.61 $24.22
============ =============
Growth shares $0.36 $0.72
============ =============
Weighted average growth shares outstanding 11,104,142 11,099,631
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (unaudited)
<TABLE>
<CAPTION>
For the six months ended
June 30,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,119 $2,802
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in MLP II net income - (1,808)
Income allocated to minority interest - 10
Other-than-temporary impairments related to investments in
mortgage revenue bonds - 3,990
Increase (decrease) in valuation allowance on parity
working capital loans (11) 90
Depreciation and amortization 33 -
Restricted share compensation expense 13 -
Deferred shares issued under the Non-Employee Directors'
Share Plan 40 -
Director fees paid by reissuance of treasury shares 8 -
(Increase) in interest receivable (239) (20)
(Increase) in other assets (113) (37)
Increase (decrease) in accounts payable and accrued expenses (139) 592
(Decrease) in due to affiliates - (6)
Increase in unearned fees collected 127 -
------------ ------------
Net cash provided by operating activities 8,838 5,613
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of mortgage revenue bonds and other bond
related investments (18,130) -
Origination of other loans (943) -
Purchases of furniture and equipment (64) -
Investment in MMACap, LLC (Note 4) (1,000) -
Principal payments received 20 -
Distributions from MLP II - 2,357
------------ ------------
Net cash provided by (used in) investing activities (20,117) 2,357
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (12,038) (7,972)
------------ ------------
NET (DECREASE) IN CASH AND CASH
EQUIVALENTS (23,317) (2)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 34,817 9,810
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,500 $9,808
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD JANUARY 1, 1997 THROUGH JUNE 30, 1997
(In thousands, except share data) (unaudited)
<TABLE>
<CAPTION>
Preferred
Preferred Shares Capital Distribution
Series I Series II Series I Series II
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Balance, January 1, 1997 $11,254 $6,086 $4,559 $2,080
Net income 450 244 199 92
Distributions - - - -
Reissuance of treasury stock - - - -
Deferred shares issued under the
Non-Employee Directors' Share Plan - - - -
Change in value of mortgage revenue bonds
and other bond related investments
available for sale, net - - - -
Restricted share grants - - - -
Amortization of deferred compensation - - - -
------------- ------------- ------------- ----------------
Balance, June 30, 1997 $11,704 $6,330 $4,758 $2,172
============= ============= ============= ================
SHARE ACTIVITY:
Balance, January 1, 1997 16,329 7,637 8,909 3,809
Reissuance of treasury stock - - - -
Deferred shares issued under the
Non-Employee Directors' Share Plan - - - -
Vesting of restricted shares - - - -
------------- ------------- ------------- ----------------
Balance, June 30, 1997 16,329 7,637 8,909 3,809
============= ============= ============= ================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Unrealized Gain
on mortgage revenue
bonds and other
bond related
Term Growth Growth Treasury Unearned investments, available
Shares Shares Shares Compensation for sale, net Total
------------- ------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $0 $185,514 ($933) $0 $12,423 $220,983
Net income 185 7,949 - - - 9,119
Distributions (92) (3,851) - - - (3,943)
Reissuance of treasury stock - 1 7 - - 8
Deferred shares issued under the
Non-Employee Directors' Share Plan - 40 - - - 40
Change in value of mortgage revenue bonds
and other bond related investments
available for sale, net - - - - 960 960
Restricted share grants - 182 - (182) - -
Amortization of deferred compensation - - - 13 - 13
------------- ------------- ------------- ---------------- -------------- ----------------
Balance, June 30, 1997 $93 $189,835 ($926) ($169) $13,383 $227,180
============= ============= ============= ================ ============== ================
SHARE ACTIVITY:
Balance, January 1, 1997 2,000 11,092,370 60,798
Reissuance of treasury stock - 491 (491)
Deferred shares issued under the
Non-Employee Directors' Share Plan - 2,431 -
Vesting of restricted shares - 798 -
------------- ------------- -------------
Balance, June 30, 1997 2,000 11,096,090 60,307
============= ============= =============
The accompanying notes are an integral part of these financial statements.
<PAGE>
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
Municipal Mortgage and Equity, L.L.C. (the "Company") is in the
business of originating, investing in and servicing tax-exempt mortgage
revenue bonds issued by state and local government authorities to finance
multifamily housing developments and secured by nonrecourse mortgage
loans on the underlying properties. The Company, organized in July 1995 as
a limited liability company under Delaware law, is the successor to the
business of the SCA Tax Exempt Fund Limited Partnership (the
"Partnership"), which was merged into the Company effective August 1,
1996 (the "Merger"). Accordingly, the accompanying financial statements
represent the financial position of the Company at June 30, 1997 and
December 31, 1996; results of operations include those of the Partnership for
the six months ended June 30, 1996 and those of the Company for the six
months ended June 30, 1997. Certain 1996 amounts have been reclassified
to conform to the 1997 presentation.
On June 30, 1997, the Company acquired a 99.9% member interest
in MMACap, LLC for $1.0 million (see further discussion in Note 4). The
other 0.1% member interest in MMACap, LLC was purchased by MME I
Corporation, an affiliate of the Company. As a result of this acquisition, the
consolidated financial statements of the Company include MMACap, LLC.
The accompanying unaudited financial statements have been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission and in the opinion of management contain all adjustments
(consisting of only normal recurring accruals) necessary to present a fair
statement of the results for the periods presented. These results have been
determined on the basis of accounting principles and policies discussed in
Note 2 to the Financial Statements appearing in the Company's 1996 Annual
Report on Form 10-K (the "Company's 1996 Form 10-K"). Certain
information and footnote disclosures normally included in financial statements
presented in accordance with generally accepted accounting principles have
been condensed or omitted. The accompanying financial statements should
be read in conjunction with the financial statements and notes thereto
included in the Company's 1996 Form 10-K.
NOTE 2 - INVESTMENT IN MORTGAGE REVENUE BONDS AND
OTHER BOND RELATED INVESTMENTS
The Company invests in various mortgage revenue bonds and other
bond related investments, the proceeds of which are used to make
nonrecourse mortgage loans on multifamily housing developments. The
Company's rights and the specific terms of the bonds are defined by the
various loan documents which were negotiated at the time of settlement. The
basic terms and structure of each bond are described in Note 5 to the
Company's 1996 Form 10-K. On February 14, 1995, the Partnership
refunded 11 of the original mortgage revenue bonds into 11 Series A Bonds
and 11 Series B Bonds. As part of the financing consummated on February
14, 1995 (the "Financing"), custody receipts in the Series A Bonds were sold
to third party investors. A complete description of the Financing and the
bond terms is set forth in Notes 4 and 5 to the Company's 1996 Form 10-K.
As of June 30, 1997, the Company held 32 bonds (12 participating
bonds, six non-participating bonds, 12 participating subordinate bonds and
two non-participating subordinate bonds) and one bond related investment,
which are collateralized by 33 individual properties. The following table
provides certain information with respect to each of the bonds and other
bond related investments.
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
--------------------------------- ---------------------------------
Base Face Amortized Unrealized Fair Amortized Unrealized Fair
Investment in Mortgage Interest Maturity Amount Cost Gain (Loss) Value Cost Gain (Loss) Value
Revenue Bonds (Note 2) Rate Date (000s) (000s) (000s) (000s) (000s) (000s) (000s)
- -------------------------- ---------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Participating Bonds (1):
Alban Place (2) 7.875 Oct. 2008 $10,065 $10,065 ($667) $9,398 $10,065 ($773) $9,292
Creekside Village (2) 7.500 Nov. 2009 11,760 7,396 162 7,558 7,396 120 7,516
Emerald Hills (2) 7.750 Apr. 2008 6,725 6,725 455 7,180 6,725 455 7,180
Lakeview Garden (2) 7.750 Aug. 2007 9,003 5,674 125 5,799 5,674 98 5,772
Newport-on-Seven (2) 8.125 Aug. 2008 10,125 7,898 618 8,516 7,898 618 8,516
North Pointe (2) 7.875 Aug. 2006 25,185 12,738 1,536 14,274 12,738 1,536 14,274
Northridge Park (2) 7.500 June 2012 8,815 8,815 (2,638) 6,177 8,815 (2,959) 5,856
Riverset (2) 7.875 Nov. 1999 19,000 19,000 560 19,560 19,000 560 19,560
Southfork Village (2) 7.875 Jan. 2009 10,375 10,375 1,337 11,712 10,375 1,337 11,712
Villa Hialeah (2) 7.875 Oct. 2009 10,250 10,250 (2,616) 7,634 10,250 (2,609) 7,641
Willowgreen (2) 8.000 Dec. 2010 9,275 6,770 6 6,776 6,770 (13) 6,757
The Crossings (7) 5.500 July 2007 7,055 7,055 - 7,055 - - -
--------------------------------- ---------------------------------
Subtotal participating bonds 112,761 (1,122) 111,639 105,706 (1,630) 104,076
--------------------------------- ---------------------------------
Non-Participating Bonds:
Riverset II (4) 9.500 Oct. 2019 7,610 7,226 821 8,047 7,222 826 8,048
Charter House (4) 7.450 July 2026 7,675 7,751 1 7,752 7,752 (38) 7,714
Hidden Valley (4) 8.250 Jan. 2026 1,705 1,705 9 1,714 1,705 (46) 1,659
Oakbrook (4) 8.200 July 2026 3,210 3,242 8 3,250 3,242 14 3,256
Torries Chase (4) 8.150 Jan. 2026 2,080 2,080 10 2,090 2,080 20 2,100
Southgate (7) 8.000 June 2027 11,075 11,075 - 11,075 - - -
--------------------------------- ---------------------------------
Subtotal non-participating bonds 33,079 849 33,928 22,001 776 22,777
--------------------------------- ---------------------------------
Participating Subordinate Bonds (1):
Barkley Place (3) 16.000 Jan. 2030 3,480 2,445 880 3,325 2,445 483 2,928
Gilman Meadows (3) 3.000 Jan. 2030 2,875 2,530 859 3,389 2,530 964 3,494
Hamilton Chase (3) 3.000 Jan. 2030 6,250 4,140 788 4,928 4,140 778 4,918
Mallard Cove I (3) 3.000 Jan. 2030 1,670 798 146 944 798 146 944
Mallard Cove II (3) 3.000 Jan. 2030 3,750 2,429 420 2,849 2,429 420 2,849
Meadows (3) 16.000 Jan. 2030 3,635 3,716 719 4,435 3,716 719 4,435
Montclair (3) 3.000 Jan. 2030 6,840 1,691 2,798 4,489 1,691 2,798 4,489
Newport Village (3) 3.000 Jan. 2030 4,175 2,973 2,100 5,073 2,973 1,901 4,874
Nicollet Ridge (3) 3.000 Jan. 2030 12,415 6,075 494 6,569 6,075 573 6,648
Steeplechase Falls (3) 16.000 Jan. 2030 5,300 5,852 2,361 8,213 5,852 2,361 8,213
Whispering Lake (3) 3.000 Jan. 2030 8,500 4,779 1,182 5,961 4,779 1,182 5,961
Riverset II (4) 10.000 Oct. 2019 1,489 - 955 955 - 913 913
--------------------------------- ---------------------------------
Subtotal participating subordinate bonds 37,428 13,702 51,130 37,428 13,238 50,666
--------------------------------- ---------------------------------
Non-Participating Subordinate Bonds:
Independence Ridge (4) 12.500 Dec. 2015 1,045 1,045 (10) 1,035 1,045 - 1,045
Locarno (4) 12.500 Dec. 2015 675 675 (7) 668 675 - 675
--------------------------------- ---------------------------------
Subtotal non-participating subordinate bonds 1,720 (17) 1,703 1,720 - 1,720
--------------------------------- ---------------------------------
Other Bond Related Investments:
RITES (4) 3,580 4,301 262 4,563 4,354 299 4,653
Interest rate swap (5) 7,200 - (206) (206) - (260) (260)
Purchase commitment (6) 33,900 - (85) (85) - - -
--------------------------------- ---------------------------------
Subtotal other bond related investments 4,301 (29) 4,272 4,354 39 4,393
--------------------------------- ---------------------------------
Total investment in mortgage
revenue bonds and other bond related investments $189,289 $13,383 $202,672 $171,209 $12,423 $183,632
================================= =================================
(1) These bonds also contain additional interest features contingent on available cash flow, except for Barkley Place, Meadows,
and Steeplechase Falls.
(2) One of the original 22 bonds.
(3) Series B Bonds derived from original 22 bonds.
(4) 1996 Acquisitions.
(5) Amount represents notional amount of interest rate swap agreement.
(6) On November 12, 1996, the Company agreed to purchase a bond with a face
amount of $33,900,000. For further discussion see Note 8.
(7) 1997 Acquisition. The Crossing's bond paid an additional yield maintenance
fee of 3.31% until the bond refunding in July 1997 at which time the base
interest rate was changed to 8.00%.
</TABLE>
<PAGE>
On January 27, 1997, the Company acquired a $7.1 million tax-exempt
mortgage revenue bond collateralized by a 200-unit multifamily
apartment project known as The Crossings, located in DeKalb County,
Georgia. Prior to refunding in July 1997, the stated annual interest rate on
the bond was 5.5%. On July 11, 1997, the bond was refunded, and as a
result, the stated annual interest rate was changed to 8.0% and the maturity
date was extended to a 30-year term (2027) with a prepayment option in the
twelfth year. Also as part of the refunding, the Company now participates in
the growth of the value of the underlying property collateral through
contingent interest payments from the property's cash flow. These contingent
interest payments are taxable income for federal income tax purposes. Prior
to the refunding, under the terms of the transaction, the Company received
an effective annual interest rate of 8.81% on the bond as a result of a yield
maintenance agreement entered into between the borrower and the Company.
The 3.31% yield maintenance fee earned on the bonds was taxable income for
federal income tax purposes. Additionally, in conjunction with this bond
purchase, the Company made a taxable loan discussed further in Note 3.
On June 11, 1997, the Company acquired a $11,075,000 tax-exempt
mortgage revenue bond collateralized by a 215 unit multifamily apartment
project known as Southgate, located in Howard County, Maryland. The bond
bears interest at a stated annual rate of 8.0%. Principal payments begin in
August 1997 until maturity in 2027. Additionally, in conjunction with this
bond purchase, the Company made a taxable loan discussed further in Note
3.
Under the provisions of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," ("FAS 115"), investments in mortgage revenue bonds and other
bond related investments are classified as available-for-sale debt securities
and are carried at fair value. The fair values of participating bonds, which
are wholly collateral dependent and for which only a limited market exists,
are estimated by the Company. The fair value of non-participating bonds and
other bond related investments are based on values from external pricing
sources for these or similar bonds. For the quarter ended June 30, 1997, the
net adjustment to unrealized gains and losses on mortgage revenue bonds and
other bond related investments available for sale increased shareholders'
equity by approximately $960,000.
Indicated impairments must be considered other-than-temporary when
it becomes probable that all amounts under the bond will not be collected in
accordance with the bond's contractual terms. During the second quarter of
1996, the Partnership recorded other-than-temporary impairments totaling
$3,990,000 on five bonds. There were no other-than-temporary impairments
in the second quarter of 1997. The Company will continue to use its best
efforts in estimating the fair value of its mortgage revenue bonds and other
bond related investments.
NOTE 3 - INVESTMENT IN PARITY WORKING CAPITAL LOANS,
DEMAND NOTES AND OTHER LOANS
As of June 30, 1997, the Company held ten parity working capital
loans relating to the 11 remaining original mortgage revenue bonds. The
terms of the loans are identical to the mortgage revenue bonds to which they
relate. A complete description is included in Note 6 to the Company's 1996
Form 10-K.
As of June 30, 1997, the Company held ten Working Capital
Demand Notes, eleven Accrued Interest Demand Notes and eleven Load
Loan Demand Notes (collectively the "Demand Notes"). The Demand Notes
are due on demand, but in no case later than January 2030. The Demand
Notes bear interest at a compound annual rate equal to the Blended Annual
rate in effect for that calendar year as published by the Internal Revenue
Service. A complete description is included in Note 6 to the Company's 1996
Form 10-K.
On January 9, 1997, in conjunction with the purchase of the bond
collateralized by The Crossings property, the Company made a loan on the
property not to exceed $844,000 of which approximately $563,000 was
drawn by the borrower. The annual stated interest rate on the loan was
8.81% until the bond refunding. On July 11, 1997, in conjunction with the
bond refunding, the loan was amended resulting in a new annual stated
interest rate of 8% on the loan. An additional $181,000 was drawn on the
loan at the time of the bond refunding. Principal payments on the bond and
the loan will be made monthly through maturity in 2027.
On June 11, 1997, in conjunction with the purchase of the bond
collateralized by the Southgate property, the Company made a $380,000
loan on the property. The loan bears interest at an annual stated rate of 8.0%.
Principal payments begin in August 1997 until maturity in 2027.
Interest on the parity working capital loans, Demand Notes and other
loans are taxable to the shareholders for federal income tax purposes.
NOTE 4 - RESTRICTED ASSETS
On June 30, 1997, the Company acquired a 99.9% member interest
in MMACap, LLC for $1.0 million. The other 0.1% member interest in
MMACap, LLC was purchased by MME I, Corporation, an affiliate of the
Company. As a result of this acquisition, the consolidated financial statements
of the Company include MMACap, LLC. The only asset of MMACap, LLC
is a $1.4 million Fannie Mae risk-sharing collateral account. The collateral
account is part of a structured finance program developed by Fannie Mae to
facilitate the credit enhancement of bonds for which there is shared risk. The
risk-sharing collateral account provides additional security for three enhanced
bonds currently within a cross collateralized pool. In the event any of the
bonds in the pool cannot fund their debt service payments, the money in the
collateral account can be used to fund debt service short falls. The Company
does not believe that any loss is likely. The collateral account will not be
released to the Company until the interest and principal obligations on all
the bonds are fulfilled. The release of the collateral account is anticipated
to be in 2006 when the bonds are expected to be refunded. In the interim, the
Company will receive the interest earned on the balance of the collateral
reserve account. The approximate $360,000 discount on the purchase has
been recorded as unearned revenue and will be amortized into income as
guarantee fee revenue over the expected life of the collateral account.
As part of the purchase of this collateral account, the Company
assumed a Master Recourse Agreement with Fannie Mae. Under this
agreement, the Company can add additional assets to the existing pool
discussed above. This will enable the Company to securitize bonds with
Fannie Mae credit enhancement. As bonds are added to the pool, the
expected life on the collateral account may be adjusted.
NOTE 5 - UNEARNED REVENUE
In addition to the unearned revenue resulting from the purchase
discussed in Note 4, the Company receives loan acquisition fees on certain
bond purchases which are deferred and recorded as unearned revenue. These
fees are then amortized into income to approximate a level yield over the
estimated lives of the related investments. The Company also received a loan
guarantee fee in December 1996 (see further discussion in Note 8) that was
deferred and is being amortized into income over the term of the guarantee
period.
NOTE 6 - NON-EMPLOYEE DIRECTORS' SHARE PLAN AND
EMPLOYEE INCENTIVE PLAN
Common Stock Options
On April 24, 1997, options to purchase 641,970 Growth Shares were
issued under the 1996 Share Incentive Plan. The options were issued at an
exercise price of $16 7/8, the fair value of the Growth Shares on the date of
grant. The options vest over five years.
On May 28, 1997, options to purchase 12,500 Growth Shares were
issued under the Non-Employee Directors' Share Plan. The options were
issued at an exercise price of $16 13/16, the fair value of the Growth Shares
on date of grant. These options are exercisable in full on the first anniversary
of the date of grant.
Restricted Shares
On April 24, 1997, 10,769 restricted shares were granted under the
1996 Share Incentive Plan. The market value of the shares awarded was
approximately $182,000. This amount was recorded as unearned
compensation and is shown as a separate component of shareholders' equity.
Unearned compensation is being amortized into expense over the vesting
period.
NOTE 7 - RELATED PARTY TRANSACTIONS
Upon consummation of the Merger, all employees of an affiliate of
the former Managing General Partner of the Partnership who were necessary
for the prudent operations of the Company became employees of the
Company, which now incurs their salary expenses directly. Certain
administrative services, including services performed by shared personnel,
continue to be performed by an affiliate that receives direct reimbursement
from the Company on a monthly basis. The expense associated with the
shared personnel was previously charged to salaries as shown in the following
table.
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
------------------------- ------------------------
1997 1996 1997 1996
(000's) (000's) (000's) (000's)
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Charged to Series I:
Salaries of noncontrolling persons &
related expenses $0 $130 $0 $238
Other administrative expenses - 25 - 49
----------- ----------- ---------- -----------
Expenses reimbursed $0 $155 $0 $287
=========== =========== ========== ===========
Charged to Series II:
Salaries of noncontrolling persons &
related expenses $0 $63 $0 $114
Other administrative expenses - 12 - 24
----------- ----------- ---------- -----------
Expenses reimbursed $0 $75 $0 $138
=========== =========== ========== ===========
Charged to Company subsequent to July 31, 1996:
Other administrative expenses $67 $0 $138 $0
=========== =========== ========== ===========
Total:
Salaries of noncontrolling persons &
related expenses $0 $193 $0 $352
Other administrative expenses 67 37 138 73
----------- ----------- ---------- -----------
Expenses reimbursed $67 $230 $138 $425
=========== =========== ========== ===========
</TABLE>
Mr. Mark K. Joseph, the Company's Chairman and Chief Executive
Officer, controls and is an officer of, and Mr. Michael L. Falcone, the
Company's Executive Vice President, has an interest in and is an officer of,
an entity which is responsible for a full range of property management
functions for certain properties that serve as collateral for the Company's
bond investments. For these services the affiliated entity receives property
management fees pursuant to management fee contracts. In addition, certain
former affiliated entities of the Partnership also receive property
management fees pursuant to management fee contracts. Consistent with the
Company's Amended and Restated Certificate of Formation and Operating
Agreement, as amended, (the "Operating Agreement"), each affiliate and
former affiliate property management contract is presented to the
independent members of the Board of Directors for approval with
information documenting the comparability of the proposed fees to those in
the market area of the property. During the six months ended June 30,
1997 and 1996, these fees approximated $326,000 and $521,000,
respectively.
Mr. Joseph controls the general partners of 16 of the 22 operating
partnerships whose property collateralizes the Company's original bonds and
Mr. Thomas R. Hobbs, the Company's Senior Vice President, serves as an
officer of such general partners. These operating partnerships were created
as successors to the original borrowers to preserve the loan obligations and
the participation in cash flow for the Company and thereby assure that the
Company will continue to recognize tax-exempt income. However, such
entities could have interests which do not fully coincide with, or even are
adverse to, the interests of the Company. Such entities could choose to act
in accordance with their own interests, which could adversely affect the
Company. Among the actions such entities could desire to take might be
selling a property, thereby causing a redemption event, at a time and under
circumstances which would not be advantageous to the Company.
On September 1, 1996, the eleven operating partnerships included in the
Financing entered into an agreement with the Company whereby the principal
amortization on the Working Capital and Load Loan Demand Notes were
suspended. The managing general partner of these operating partnerships is
an entity controlled by Mr. Joseph. This action did not change the total
cash payments received from the operating partnerships, but did result in
additional interest income of $468,000 for the six months ended June 30,
1997.
Shelter Development Holdings, Inc., the "Special Shareholder", is
personally liable for the obligations and liabilities of the Company. Mr.
Joseph has an ownership interest in the Special Shareholder. In the event
that a business combination or change in control occurs, and the Special
Shareholder does not approve of such transaction, then the Special
Shareholder has the right to terminate its status as the Special Shareholder.
In the event of such termination, the Company would be obligated to pay the
Special Shareholder $1,000,000.
Prior to the Merger, the former associate general partner received fees
for mortgage servicing from the operating partnerships owning the original
mortgaged properties. The fees paid by all operating partnerships to the
former associate general partner approximated $989,000 for the six months
ended June 30, 1996 . On August 1, 1996, the former general partners and
their affiliates contributed to the Company their mortgage servicing
activities in exchange for Growth Shares, and the Company now receives the
cash flow associated with these fees. Upon receipt of the mortgage servicing
activities, the Company terminated the mortgage servicing fees paid on bonds
collateralized by properties controlled by affiliates of the Company. As a
result, the Company now receives these fees in two forms, (1) as mortgage
servicing fees from the bonds collateralized by properties controlled by non-
affiliates and paid to the former associate general partner which is now
substantially owned by the Company, and (2) as additional bond interest for
bonds collateralized by properties controlled by affiliates of the Company.
For the six months ended June 30, 1997, the cash flow associated with these
fees paid to the Company approximated $246,000 in mortgage servicing fees
and $740,000 in additional bond interest.
An affiliate of the former managing general partner was previously
engaged as a project acquisition and servicing agent. The affiliate received
as compensation, project selection and acquisition fees (one percent of the
gross proceeds) and annual mortgage servicing fees to the extent the net
proceeds raised by the Financing were permanently invested. On August 1,
1996, the rights to these fees were exchanged for Growth Shares in
connection with the Merger transaction.
In addition, 177061 Canada Ltd. (formerly Shelter Corporation of
Canada Limited), a general partner of the former Associate General Partner,
is contractually obligated to the nonaffiliated borrowers of North Pointe and
Whispering Lake to fund operating deficits. The unaccrued and unpaid
balances due under the limited operating deficit guarantees, including
interest as of June 30, 1997, totaled $54,000 and $71,000 for North Pointe and
Whispering Lake, respectively. Scheduled payments totaling $35,000 and
$59,000 were received on the North Pointe obligation and recorded as
income for the six months ended June 30, 1997 and 1996, respectively.
Under the Whispering Lake obligation, $49,000 and $83,000 were received
and recorded as income for the six months ended June 30, 1997 and 1996,
respectively.
The borrower of the funds to be provided by the $33.9 million mortgage
revenue bond described in Note 8 will be the Shelter Foundation, a public
non-profit foundation that provides housing and related services to families
of low and moderate income. Mr. Joseph is the President and one of five
directors of the Shelter Foundation. In addition, companies of which Mr.
Joseph owns an indirect minority interest and Mr. Falcone owns a direct
minority interest, will receive a consulting fee of 1.0% of the loan amount
and will serve as property manager of the related apartment project for a fee
of $13,750 per month.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
On November 12, 1996, the Company committed to purchase a
$33,900,000 mortgage revenue bond to be issued by the DeKalb County
Housing Authority for a 722-unit multifamily apartment project known as the
Village of Stone Mountain located in suburban Atlanta, Georgia. The bonds
will provide for annual interest payments of 8.75% (of which 8% will be
required to be paid on a current basis, with the remaining .75% payable from
available net cash flow) plus contingent interest equal to the lesser of (i)
7.25% or (ii) one-third of the property's net cash flow. Pending the issuance
of the bond, which is anticipated to occur in late 1997 or early 1998, the
Company on December 17, 1996 guaranteed bridge financing provided by
NationsBank for a fee of 1.0% of the loan amount and an annual guarantee
fee of 1.0% until bond issuance.
The Company's exposure (in the event of the borrower's non-performance) for
the guarantee of the bridge financing is equal to the contractual amount of
the purchase commitment. The Company does not believe that any loss is
likely.
NOTE 9 - SUBSEQUENT EVENTS
Distributions
On July 9, 1997, a distribution of 35.0 cents for the three months
ended June 30, 1997 was declared for Growth Shareholders of record on
July 21, 1997 and was paid on August 4, 1997. In accordance with the
Company's Operating Agreement, Preferred Shares and Preferred CD Shares
are paid distributions semiannually. As a result, on July 9, 1997, a per
share distribution for the six months ended June 30, 1997 was also declared
to the preferred shareholders as shown in the following table:
<TABLE>
<CAPTION>
Preferred Capital
BACs Growth Preferred Shares Distribution Shares
------------------- ------ ------------------ -------------------
Series I Series II Shares Series I Series II Series I Series II
------------------- ------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Distributions paid on July 31, 1996
to holders of record on June 30, 1996:
For the six months ended
June 30, 1996 from the Partnership
(prior to the Merger) $26.25 $27.50 N/A N/A N/A N/A N/A
Distributions paid on May 9, 1997
to holders of record on April 28, 1997:
For the three months ended
March 31, 1997 N/A N/A 0.3450 - - - -
Distributions paid on August 4, 1997
to holders of record on July 21, 1997:
For the three months ended
June 30, 1997 N/A N/A 0.3500 - - - -
For the six months ended
June 30, 1997 N/A N/A - 26.25 30.64 21.57 25.00
--------------------------------------------------------------------
Total $26.25 $27.50 $0.69500 $26.25 $30.64 $21.57 $25.00
====================================================================
</TABLE>
On June 30, 1997, the preferred shareholders were asked pursuant to an
action by written consent to vote on an amendment to the Company's
Operating Agreement to change the frequency of Preferred Share and
Preferred CD Share distributions from twice a year to four times a year. Each
class of Preferred Shares and Preferred CD Shares voted separately on this
proposal. This amendment would not have taken place for a class of
preferred shares unless more than 50% of the shares in that class (both Series
I and Series II combined) approved this amendment. No meeting of preferred
shareholders was held in connection with this solicitation. The proposed
amendment has been approved and the quarterly distributions will commence
in or around November 1997 for the quarter ending September 30, 1997.
Other
On July 1, 1997, the Company purchased $3.36 million (par value) in
RITES, a security offered by Merrill Lynch through its P-FLOATS program
for $3.5 million (see discussion of the P-FLOATs program in Note 5 to the
Company's 1996 Form 10-K). For the Series PA-152 P-FLOATs and RITES,
Merrill placed into a trust $10.1 million in multifamily revenue bonds with a
coupon of 7.375% collateralized by Indian Lakes Apartments, located in
Virginia Beach, Virginia. The trust was securitized into $6.72 million in
P-FLOATs and $3.36 million in RITES. The premium paid for the Indian Lakes
RITES is being amortized into income to approximate a level yield over the
term of the RITES. The Indian Lakes RITES are subject to mandatory semi-
annual call provisions.
The Company entered into an interest rate swap contract with a notional
amount of $6.5 million to hedge against the interest rate exposure on the
Company's investment in the Indian Lakes RITES. Under the interest rate
swap agreement, the Company is obligated to pay Merrill Lynch Capital
Services, Inc. (the "Counterparty") a fixed rate equal to 4.79%. In return,
the Counterparty will pay the Company a floating rate equivalent to the PSA
Municipal Swap Index, an index of weekly tax-exempt variable rate issues.
The Indian Lakes interest rate swap agreement matures January 3, 2006.
The swap contract in conjunction with the Indian Lakes RITES is intended
to produce a relatively constant yield of approximately 10.5% over the
effective duration of the RITES. Risk arises from the possible inability of
the Counterparty to meet the terms of the contract with the Company. However,
there is no current indication of such inability.
On July 7, 1997, the Company entered into a joint program with the
Montford Companies to originate tax-exempt transactions. The Company and
the Montford Companies agreed to work jointly over an initial two year
period to invest in tax-exempt trust certificates backed by tax-exempt
housing bonds. The Company anticipates acquiring up to $50 million in
senior interest in tax-exempt bonds through this joint program; however, the
Company is not obligated to acquire any bonds as a result of entering this
joint program. The Company received a $250,000 program development fee
for structuring, documenting, underwriting and generally developing the
program.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Business
Municipal Mortgage and Equity, L.L.C. (the "Company") is in the
business of originating, investing in and servicing tax-exempt mortgage
revenue bonds issued by state and local government authorities to finance
multifamily housing developments. The Company is a limited liability
company that, as a result of a merger effective August 1, 1996 (the
"Merger"), is the successor to the business of SCA Tax Exempt Fund
Limited Partnership (the "Partnership"). Accordingly, the financial
statements included herein present the financial position of the Company at
June 30, 1997 and December 31, 1996; results of operations include the
operations of the Company for the six months ended June 30, 1997 and those
of the Partnership for the six months ended June 30, 1996.
The Partnership was a closed-end limited partnership whose assets, until
1995, consisted principally of 22 mortgage revenue bonds and related
working capital loans acquired with the $296 million proceeds from two
1986 offerings of Beneficial Assignee Certificates ("BACs") representing the
assignment of its limited partnership interests. In 1995, the Partnership,
in a financing transaction (the "Financing") described more fully in Note 4
to the Company's 1996 Annual Report on Form 10-K (the "Company's 1996
Form 10-K") , raised $67.7 million of Financing proceeds of which $5.0
million was invested in demand notes and the remaining proceeds, after
expenses and working capital reserves, of $56.8 million are being used for
further investment in mortgage revenue bonds.
As a result of elections made by the Partnership's BAC holders in
connection with the Merger, the outstanding BACs were exchanged for
either Preferred Shares, Preferred Capital Distribution Shares ("Preferred CD
Shares"), or Growth Shares (including a limited number of Term Growth
Shares) of the Company. As more fully explained in Note 8 to the
Company's 1996 Form 10-K, all of these shares participate, to varying
degrees, in the investment results of the bonds and related loans held by the
Partnership at the time of the Merger, and only the Growth Shares and the
Term Growth Shares participate in the investment results of the bonds and
other bond related investments purchased with the proceeds from the
Financing and any future financings.
The Company is required to distribute to the holders of Preferred Shares
and Preferred CD Shares cash flow attributable to such shares, as defined in
the Company's Amended and Restated Certificate of Formation and
Operating Agreement, (the "Operating Agreement"). The Company is
required to distribute 2.0% of the net cash flow to the holders of Term
Growth Shares. The balance of the Company's net income is allocated to the
Growth Shares and the Company's policy is to distribute to Growth
Shareholders a portion, not less than 80%, of the cash flow associated with
this income.
Certain of the bonds held by the Company are participating bonds that
provide for payment of contingent interest, based upon the performance of
the underlying properties, in addition to base interest at a fixed rate.
Because the mortgage loans underlying all of the bonds held by the Company are
nonrecourse, all debt service on the bonds, and therefore cash flow available
for distribution to all shareholders, is dependent upon the performance of the
underlying properties.
Results of Operations
Quarterly Results Analysis
Total income for the three months ended June 30, 1997 increased by
approximately $800,000 over the same period last year due primarily to (1)
an increase in cash generated by property operations which led to an increase
in debt service paid of approximately $174,000, (2) the contribution of
mortgage servicing activities by the former general partners of the
Partnership which served to increase interest received from the properties
collateralizing the bonds by approximately $371,000, and (3) an increase in
interest collected from the properties of approximately $234,000 due to the
suspension of principal payments on the demand notes.
Operating expenses for the three months ended June 30, 1997 decreased
by approximately $212,000 from the prior year due to a decrease in merger-
related expenses of approximately $325,000 offset by an increase in costs
associated with the administration of a public company and the Company's
expansion.
Year-to-Date Results Analysis
Total income for the six months ended June 30, 1997 increased by
approximately $2,075,000 over the same period last year due primarily to (1)
an increase in cash generated by property operations which led to an increase
in debt service paid of approximately $497,000, (2) the contribution of
mortgage servicing activities by the former general partners of the
Partnership which served to increase interest received from the properties
collateralizing the bonds by approximately $732,000, (3) an increase in
interest revenue and acquisition fees earned on new acquisitions of
approximately $373,000, and (4) an increase in interest collected from the
properties of approximately $468,000 due to the suspension of principal
payments on the demand notes.
Operating expenses for the six months ended June 30, 1997 decreased by
approximately $242,000 from the prior year due to a decrease in merger-
related expenses of approximately $600,000 offset by an increase in costs
associated with the administration of a public company and the Company's
expansion.
Liquidity and Capital Resources
At June 30, 1997, the Company had cash and cash equivalents of
approximately $11.5 million available for investment.
The Company (including the predecessor Partnership) has financed its
operations with the proceeds from the Partnership's 1986 BAC offerings, the
proceeds from the Financing and cash provided by debt service and fees
relating to the bonds and related loans and notes acquired with such
proceeds. Cash flow from operating activities was $8.8 million and $5.6
million for the six months ended June 30, 1997 and 1996, respectively. The
increase for the six months ended June 30, 1997 over the same period in
1996 was due primarily to the fact that in the first and second quarter of 1996
the income from the temporary investment of the Financing proceeds, as well
as the debt service on certain notes, both of which were held by MLP II
Acquisition Limited Partnership (a limited partnership, which was accounted
for under the equity method), were classified as cash flow from investing
activities. Had they been classified as cash flow from operating activities
during this period, cash flow from operating activities would have been $8.0
million during the six months ended June 30, 1996.
On July 9, 1997, a distribution of 35.0 cents for the three months ended
June 30, 1997 was declared for holders of Growth Shares. For the same
period, $93,260 in distributions were declared for Term Growth
Shareholders. In accordance with the Company's Operating Agreement,
Preferred Shares and Preferred CD shares are paid distributions semiannually.
As a result, on July 9, 1997, a per share distribution for the six months ended
June 30, 1997 was also declared to the preferred shareholders as follows:
Preferred Series I, $26.25, Preferred Series II, $30.64, Preferred Capital
Distribution Series I, $21.57, and Preferred Capital Distribution Series II,
$25.00. All distributions were for holders of record on July 21, 1997 and
were paid on August 4, 1997.
The Company expects to meet its cash needs in the short-term from
operating cash flow. In addition, the Company's business plan anticipates
making additional investments of approximately $50 million to $75 million
of additional mortgage revenue bonds during 1997 (assuming the purchase
of a $33.9 million bond for which a commitment has been made ). In order
to achieve its plan, the Company will be required to obtain additional debt,
securitization or equity financing of approximately $50 million to $75 million
during 1997. The Company currently has no commitments or understandings
with respect to such financings, and there can be no assurance that any such
financings will be available when needed.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On June 30, 1997, the preferred shareholders were asked pursuant to an
action by written consent to vote on an amendment to the Company's
Operating Agreement to change the frequency of Preferred Share and
Preferred CD Share distributions from twice a year to four times a year. Each
class of Preferred Shares and Preferred CD Shares voted separately on this
proposal. This amendment would not have taken place for a class of
preferred shares unless more than 50% of the shares in that class (both Series
I and Series II combined) approved this amendment. No meeting of preferred
shareholders was held in connection with this solicitation. The proposed
amendment has been approved and the quarterly distributions will commence
in or around November 1997 for the quarter ending September 30, 1997.
As of August 8, 1997, with respect to the Preferred Shares, 14,782 votes
were cast in favor of the amendment, 324 votes opposed the amendment, and
365 votes abstained. As of August 8, 1997, with respect to the Preferred CD
Shares, 8,884 votes were cast in favor of the amendment, 169 votes opposed
the amendment, and 126 votes abstained. The Company terminated this
solicitation on August 8, 1997 and will file an amendment to its Operating
Agreement soon.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
The Registrant filed no reports on Form 8-K for the
period covered by this report.
PAGE
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
(Registrant)
By: /s/ Mark K. Joseph
Mark K. Joseph
Chief Executive Officer and Chief Financial Officer
DATED: August 14, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COMPANY AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THOSE FINANCIAL STATEMENTS AND THE FOOTNOTES PROVIDED
WITHIN THIS SCHEDULE.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 11,500,000
<SECURITIES> 0
<RECEIVABLES> 1,591,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,091,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 228,726,000
<CURRENT-LIABILITIES> 731,000
<BONDS> 0
<COMMON> 189,835,000
0
25,057,000
<OTHER-SE> 12,288,000
<TOTAL-LIABILITY-AND-EQUITY> 228,726,000
<SALES> 0
<TOTAL-REVENUES> 10,670,000
<CGS> 0
<TOTAL-COSTS> 1,551,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,119,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,119,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,119,000
<EPS-PRIMARY> .72<F1>
<EPS-DILUTED> .72<F1>
<FN>
<F1> The earnings per share reflects the earnings per share of the
Growth Shares.
</FN>
</TABLE>
