<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number: 0-08305
-------
THE WRITER CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-0510478
----------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.
6061 S. Willow Dr., #232, Englewood, Colorado 80111
-------------------------------------------------------------
(Address of principal executive offices) Zip Code
(303) 779-4100
--------------
(Registrant's telephone number, including area code)
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 during the
preceding 12 months (or for such shorter period that the registrant is required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
The number of share outstanding of the registrant's common stock as of November
6, 1998 was 7,430,590.
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
------
<S> <C> <C>
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
September 30, 1998 and
December 31, 1997 (Unaudited) 3
Condensed Consolidated Statements
of Operations for the three and nine months
ended September 30, 1998 and 1997 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1998 and
1997 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS AND LIQUIDITY AND
CAPITAL RESOURCES. 9
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13
PART II. OTHER INFORMATION 14
</TABLE>
2
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Residential real estate held for sale, net:
Homes under construction $19,847,000 $16,804,000
Model homes and furnishings 4,350,000 3,516,000
Land and land development 14,577,000 16,041,000
Raw land 9,000 739,000
----------- -----------
Subtotal 38,783,000 37,100,000
Office property and equipment, less accumulated
depreciation of $518,000 and $401,000 601,000 470,000
Other assets:
Cash and cash equivalents 811,000 1,015,000
Restricted cash 761,000 722,000
Accounts receivable 533,000 315,000
Deferred tax asset 1,500,000 1,251,000
Other 847,000 707,000
----------- -----------
Total Assets $43,836,000 $41,580,000
----------- -----------
----------- -----------
</TABLE>
(Continued)
3
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
LIABILITIES
Notes payable $18,200,000 $19,221,000
Accounts payable and accrued expenses 6,538,000 4,796,000
Accrued interest 162,000 182,000
----------- -----------
Subtotal 24,900,000 24,199,000
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; authorized,
10,000,000 shares; 7,430,600 and 7,354,600
shares issued and outstanding 743,000 735,000
Additional paid-in capital 12,429,000 12,352,000
Retained earnings 5,764,000 4,294,000
----------- -----------
Total Stockholders Equity, net 18,936,000 17,381,000
----------- -----------
$43,836,000 $41,580,000
----------- -----------
----------- -----------
</TABLE>
(Concluded)
See notes to consolidated financial statements.
4
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30,
1998 1997 1998 1997
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Residential operations:
Revenue $ 15,017,000 $ 12,902,000 $ 42,049,000 $ 31,808,000
Cost of sales (12,212,000) (10,565,000) (33,621,000) (25,723,000)
Expenses (2,192,000) (1,740,000) (7,052,000) (5,120,000)
------------ ------------ ------------ ------------
Income from residential operations 613,000 597,000 1,376,000 965,000
Interest and other income, net 28,000 195,000 152,000 1,240,000
------------ ------------ ------------ ------------
Net income before income taxes 641,000 792,000 1,528,000 2,205,000
Income tax (expense) benefit (35,000) 220,000 (58,000) 220,000
------------ ------------ ------------ ------------
Net income $ 606,000 $ 1,012,000 $1,470,000 $2,425,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per basic share $.08 $.14 $0.20 $.33
Earnings per diluted share $.08 $.13 $0.19 $.32
Weighted average number of shares
Outstanding
Basic 7,430,000 7,355,000 7,405,000 7,355,000
Diluted 7,859,000 7,758,000 7,838,000 7,757,000
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1998 1997
------------- ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 1,065,000 $ 784,000
------------ ------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING
ACTIVITIES:
Purchases of office property and equipment (333,000) (314,000)
Proceeds from sale of office property 905,000
------------ ------------
Net cash (used in) provided by
investing activity (333,000) 591,000
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 28,025,000 21,443,000
Principal payments on notes payable (29,046,000) (22,745,000)
Proceeds from the sale of common stock 85,000
------------ ------------
Net cash used in financing activities (936,000) (1,302,000)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (204,000) 73,000
CASH AND CASH EQUIVALENTS, beginning of period 1,015,000 995,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 811,000 $ 1,068,000
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. ACCOUNTING POLICIES:
The consolidated balance sheet as of September 30, 1998, the related condensed
consolidated statements of operations and cash flows for the three and nine
month periods ended September 30, 1998 and 1997 are unaudited, but in
management's opinion, include all adjustments necessary for a fair presentation
of such financial statements. Such adjustments consisted only of normal
recurring items. Interim results are not necessarily indicative of results for
a full year.
The consolidated financial statements include the accounts of The Writer
Corporation and its wholly owned subsidiaries (the Company). All significant
intercompany transactions and balances have been eliminated in consolidation.
The financial statements should be read in conjunction with the audited
Consolidated Financial Statements included in the annual report on Form 10-K for
the year ended December 31, 1997. Except as described herein, the accounting
policies utilized in the preparation of these financial statements are the same
as those set forth in the Company's annual financial statements except as
modified for interim accounting treatment.
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," which establishes standards
for reporting and display of comprehensive income and its components. The
Company's comprehensive income for the three and nine months ended September 30,
1998 and 1997 is the same amount as the Company's net income for these periods.
7
<PAGE>
EARNINGS PER SHARE
The following table reconciles income and the number of shares outstanding used
in the calculation of basic and diluted earnings per share.
<TABLE>
<CAPTION>
Income Shares Per Share
--------------- ---------- ---------
<S> <C>
For the Nine Months Ended September 30, 1998:
Net Income $1,470,000 7,405,000 $0.20
Effect of options 133,000
Effect of convertible debt 49,000 300,000
---------- ---------
Net income per share - assuming dilution $1,519,000 7,838,000 $0.19
---------- --------- -----
---------- --------- -----
For the Quarter Ended September 30, 1998:
Net Income $ 606,000 7,430,000 $0.08
Effect of options 129,000
Effect of convertible debt 16,000 300,000
---------- ---------
Net income per share - assuming dilution $ 622,000 7,859,000 $0.08
---------- --------- -----
---------- --------- -----
For the Nine Months Ended September 30, 1997:
Net Income $2,425,000 7,355,000 $0.33
Effect of options 60,000
Effect of convertible debt 48,000 342,000
---------- ---------
Net income per share - assuming dilution $2,473,000 7,757,000 $0.32
---------- --------- -----
---------- --------- -----
For the Quarter Ended September 30, 1997:
Net Income $1,012,000 7,355,000 $0.14
Effect of options 61,000
Effect of convertible debt 16,000 342,000
---------- ---------
Net income per share - assuming dilution $1,028,000 7,758,000 $0.13
---------- --------- -----
---------- --------- -----
</TABLE>
8
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES.
FORWARD LOOKING STATEMENT
In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward looking statements contained
in the following discussion and elsewhere in this report and in any other
statements made by or on behalf of the Company whether or not in future filings
with the Securities and Exchange Commission. Forward looking statements are
statements not based on historical information and which relate to the future
operations, strategies, financial results, or other developments. In
particular, statements using verbs such as, "expected", "anticipate", "believe",
or words of similar import generally involve forward looking statements.
Without limiting the foregoing, forward looking statements include statements
which represent the Company's beliefs concerning future, or projected levels of
sales of the Company's homes, investments in land or other assets, projected
absorption rates, or the Company's ability to attract needed financing, or the
continued earnings or profitability of the Company's activities. Forward
looking statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic, and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by or on behalf of the Company. Whether or not
actual results differ materially from forward looking statements may depend on
numerous foreseeable and unforeseeable events or developments, some of which may
be national in scope, such as general economic conditions and interest rates;
some of which may be related to the homebuilding industry generally, such as
price, competition, regulatory developments, and industry consolidation; and
others of which may relate to the Company specifically, such as credit
availability and the liquidity necessary to provide equity into land acquisition
and development transactions and other factors.
FINANCIAL CONDITION
The following presents the Company's financial condition at September 30, 1998,
except where stated otherwise, comparisons are to December 31, 1997.
During the first nine months of 1998 the Company increased its backlog of homes
under contract 192% to 213 units from 73 units at year end. This backlog
represents potential revenue of $41,600,000 at September 30, 1998 versus
$16,200,000 at December 31, 1997, a 157% increase. On June 30, 1998 the
Company's backlog was 158 units representing potential revenue of $31,600,000.
These increases reflect continued stability in market conditions in the Denver
metropolitan area, which are exceeding our expectations, supplemented by our
expansion into Northern Colorado.
The Company's work in process inventory of homes under construction increased by
$3,043,000, or 18% from the year end balance. This increase is attributable to
the previously mentioned increased backlog.
Model homes and furnishings increased by $834,000, or 24% which reflects the
construction, furnishing and opening of models at the Park Square community at
Lowry and models for the Northern Division operations at the Stetson Creek and
River West communities.
9
<PAGE>
The Company's land and land development accounts decreased by $1,464,000, or 9%
which reflects the Company's continued emphasis on moving lots into production.
This movement has been accelerated due to the increased sales activity at the
Company's communities.
The Company's raw land accounts decreased by $730,000, or 99% reflecting the
platting of a 97 unit town home parcel in Castle Pines North. At this time all
land held has been platted. The remaining balance represents funds spent in
planning a parcel currently under contract and is expected to close in 1998.
The site has 140 single family units. The Company is investigating several
parcels of land, which in addition to the lots currently held are expected to
provide for the Company's land needs in the foreseeable future.
The Company's office property and equipment, less accumulated depreciation
accounts have increased $131,000, or 28% reflecting investment in office
furniture and equipment and construction equipment to establish the new Northern
Division and three new sales centers.
Cash balances have decreased by $204,000, or 20%. This reflects the Company's
effort to accelerate payments on debt and to pay subcontractors and vendors.
Accounts receivable increased by $218,000, or 69% reflecting additional deposits
with utility companies, counties and escrows established pursuant to landscape
agreements at the time of home closing with buyers. The escrow deposits are
disbursed to the Company after the completion of the landscape improvements.
The Company's deferred tax asset has been increased by $249,000, or 20%. The
Company's continued improvement in operations now provides a basis for
additional recognition of the Company's deferred tax assets. These deferred tax
assets stem primarily from land valuation allowances previously expensed within
prior periods which are now being utilized to reduce tax liabilities payable.
Other assets have increased by $140,000, or 20%. The increase is primarily
attributable to income tax deposits.
The Company's notes payable account was reduced by $1,021,000, or 5% despite the
increase in the Company's work in process inventory which is essentially 100%
financed. The decrease in notes payable reflects the accelerated payments on
the Company's land debt as closings have increased. In addition the Company has
paid down all but $350,000 advanced from its revolving line of credit and
retired its Series-A 1992 notes.
Accounts payable and accrued expenses has increased by $1,742,000, or 36%. This
increase is reflective of recording estimated costs on 30 homes closed in
September 1998, compared to 16 homes closed in December of 1997. The increase
also reflects the higher work in process balances and an increase of $474,000,
or 77% in customer earnest deposits. In addition the Company significantly
increased profit sharing interest due to development lenders from the year end
balance due to the higher closing levels during the third quarter. These profit
sharing amounts were paid subsequent to quarter end. They stem from the
Company's Peninsula project, which will be completed in 1998.
The Company's capital stock and additional paid in capital accounts were
increased due to the issuance of stock to a former and a current employee who
exercised qualified stock options. The increase in retained earnings reflects
the Company's net income of $1,470,000 for the nine month period ending
September 30, 1998.
10
<PAGE>
RESULTS OF OPERATIONS
The Company closed 62 and 184 homes for the three and nine month periods ending
September 30, 1998 compared to 58 and 140 homes for the same periods in the
prior year. The periods reflect increases of 7% and 31% respectively. For the
first nine months of 1998, the Company's average sales price was $221,900 which
is a $1,000 increase over the average sales price during the full year of 1997.
This increase reflects a modest increase in the Company's overall base housing
prices, but is also impacted by the mix of products which is illustrated below.
<TABLE>
<CAPTION>
Closings Townhomes Cluster Homes Single Family Total
- -------- --------- ------------- ------------- -----
<S> <C> <C> <C> <C>
3 month period ended Sept. 30, 1998 31 4 27 62
3 month period ended Sept. 30, 1997 23 5 30 58
9 month period ended Sept. 30, 1998 85 17 82 184
9 month period ended Sept. 30, 1997 57 10 73 140
</TABLE>
The combination of the increased unit activity and the higher average sales
price resulted in revenues related to home sales of $13,798,000 and $40,830,000
for the three and nine month periods ended September 30, 1998. These amounts
reflect increases from comparable prior year periods of $896,000 or 7% for the
third quarter, and $9,718,000 or 31% for the nine month period. These amounts
exclude the revenue generated from certain lot sales of $695,000 and $1,219,000
which were recorded in the first quarter of 1997 and the third quarter of 1998,
respectively. The Company's gross profit as a percentage of revenue improved by
1% for both the three and nine month periods ended September 30, 1998. Gross
profit increased by $468,000 to $2,805,000 during the third quarter of 1998 due
to the increase in sales volume. This represents a 20% increase in gross profit
over the prior year third quarter. During the nine month period ended September
30, 1998 the Company's gross profit increased by $2,343,000, to $8,428,000 which
represents a 39% increase over the previous nine month period ending September
30, 1997.
Operating expenses increased $452,000 and $1,932,000 for the three and the nine
month periods ending September 30, 1998 as compared to the same periods a year
ago. The increase in operating expenses can be attributed to an increase in
company sales volume during these periods. As a percentage of revenues,
operating expenses have slowed to 15% during the three month period ending
September 30, 1998 as compared to 17% for the nine month period ending September
30, 1998. The Company's marketing expenses increased by $874,000 over the prior
year period reflecting the opening of three new communities and increased
commissions and closing costs, which increase relative to the higher revenue
levels. The Company's general and administrative expenses also increased by
$702,000 due to higher compensation levels and consulting expenses associated
with new product design and installation of the Company's new management
information system. In addition investor profit sharing interest payments have
increased by $478,000 over the same period last year reflecting increased
closings at the Company's Peninsula and Northpark communities. These increases
were partially offset by decreases in the Company's other interest expense
related to its debt and decreased real estate taxes associated with inventory
holdings.
As a result of these factors the Company increased income from operations by 43%
during the first nine months of 1998 as compared to the same period in 1997.
The Company's operating income was $613,000 and $1,376,000 for the three and
nine month periods ending September 30, 1998, as compared to $597,000 and
$965,000 during the prior year periods.
11
<PAGE>
During the first quarter of 1997, the Company sold its office building and
retired debt resulting in other income of $648,000. Also included in the other
income category is $342,000, from a one time refund of taxes and fees.
At December 31, 1997 the Company had a deferred tax asset of $2,301,000 of which
$1,050,000 was reserved because of uncertainties as to that assets' ultimate
realization. As the Company has realized income it can now be more certain than
not that a portion of the asset will be utilized and therefore recognized a
deferred tax benefit of $204,000 and $518,000, which offsets current income tax
expense of $239,000 and $576,000 for three and nine month periods ended
September 30, 1998, respectively.
All of these factors resulted in the Company recording net income of $606,000
and $1,470,000 for the three and nine month periods ended September 30, 1998,
versus $1,012,000 and $2,425,000 for the comparable previous year periods. The
results for nine months ending September 30, 1997 included other income of
$990,000 mentioned above, and benefitted from a net operating tax carryforward
of $382,000. If these one time items were excluded, net income would have been
approximately $1,053,000 for the nine months ending September 30, 1997, versus
$1,470,000 of net income in 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1998 the Company continued to improve its
liquidity and capital resources through its profitable operations. The Company
generated $1,065,000 of cash from its operating activities during the first nine
months of 1998. The Company invested $333,000 and $314,000 in office property
and equipment during the nine months ending September 30, 1998 and September 30,
1997, respectively. In addition the prior year periods' investing activities
included proceeds of $905,000, primarily from the sale of the Company's office
building. The Company reduced its overall debt in 1998 by $1,021,000 due
primarily to the acceleration of land debt repayments. These accelerated
repayments have been achievable because of the additional increase in sales
volume.
The Company's lending relationships and borrowing capacities remain stable and
have been enhanced by more favorable terms and higher commitments which were
negotiated during recent renewals. The Company's debt to equity ratio continues
to be strong and has improved to less than a 1:1 ratio. The strength of the
Company's balance sheet and operations continues to provide a basis for enhanced
credit terms from virtually all of the Company's lenders, resulting in lower
interest costs.
The Company has maintained its secured line of credit which provides $1,450,000
of available working capital to the Company. This reflects a slight decrease
from the commitment amounts at December 31, 1997 which is attributable to the
reducing collateral base as the Company sells homes at its Castle Pines North
project. Although the Company has secured additional development financing with
this same collateral, the Company has agreed with its lender to maintain the
line of credit amount at its current level due to the enhanced value of the
underlying properties, notwithstanding the reduced number of units. In addition
the Company maintains a $500,000 unsecured working capital facility with another
lender. The Company has $350,000 drawn on the secured line at September 30,
1998, which was repaid in October, 1998, leaving these facilities available to
the Company to support growth and working capital needs, in addition to its
operating income and associated cash flow.
The Company continues in its desire to expand its operations through additional
land acquisitions and community development. However the current market
conditions command relatively high levels of pricing for both developed and
undeveloped ground, and therefore the Company intends to proceed cautiously with
its land acquisition activity. Virtually all land acquisition and community
development will require cash
12
<PAGE>
equity contributions from the Company in order to secure financing. The
Company believes its present working capital coupled with ongoing profitable
operations will provide the necessary equity for planned managed growth.
INFORMATION SYSTEMS AND YEAR 2000 ISSUE
The inability of computer software and other equipment utilizing microprocessors
to recognize and properly process data fields containing a two year digit is
commonly referred to as the year 2000 compliance issue. As the year 2000
approaches such systems may be unable to accurately process certain date-based
information.
The Company has identified all significant applications in its software and
equipment that require modification to insure year 2000 compliance. The Company
has completed testing of its internal hardware and has determined that it is
compliant with regard to the year 2000 issue. None of the Company's equipment
that may contain embedded computer chips are critical to the Company's
operations. The Company has contacted all significant vendors and others upon
whom it relies to assure that their systems will be converted in a timely
fashion. All have made representations to the Company that their systems will
be compliant. The Company utilizes software to process its management
information, which has been developed by an outside vendor. Currently, the
vendor software is not year 2000 compliant, but the vendor has represented that
it will provide an updated software release sometime during the fourth quarter
of 1998 or the first quarter of 1999. The Company intends to install this
upgrade during the first quarter of 1999. Other application software, (such as
spreadsheets, word processing and other personal and work group applications),
will be upgraded when the year 2000 compliant software is available. The
Company plans to be 100% year 2000 compliant by June 30, 1999.
The total cost to the Company of these year 2000 compliance issues is not
anticipated to be material, and has not been material to date. All costs to
date have been expensed.
Should the outside software vendors not provide year 2000 compliant releases, it
could have a material adverse affect on the Company's management information
system. The Company will know at the end of the first quarter of 1999 if there
is a possibility of the vendor not providing a year 2000 solution. Should this
possibility occur, other similar software packages are available with estimated
installation costs of $100,000 to $250,000. The Company believes its worst case
scenario is that the Company would not have any automated processing
capabilities and would have to rely upon manual processing of accounting and
other data. This would require additional clerical help until such time that an
alternative information processing system can be put in place. The Company does
not believe that this scenario will occur. However, if it should, the Company
does not expect that it would have a material adverse affect on the Company's
financial position and results of operations.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
13
<PAGE>
THE WRITER CORPORATION
AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) There were no reports on Form 8-K filed for the quarter ended
September 30, 1998.
14
<PAGE>
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 WRITER CORPORATION
(Registrant)
Date: November 9, 1998 By: /s/ Daniel J. Nickless
--------------------------------
Daniel J. Nickless
Executive Vice President and
Chief Operating and Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,572,000<F1>
<SECURITIES> 0
<RECEIVABLES> 533,000
<ALLOWANCES> 0
<INVENTORY> 38,783,000<F2>
<CURRENT-ASSETS> 0
<PP&E> 1,119,000
<DEPRECIATION> 518,000
<TOTAL-ASSETS> 43,836,000<F3>
<CURRENT-LIABILITIES> 6,700,000
<BONDS> 18,200,000
0
0
<COMMON> 743,000
<OTHER-SE> 18,193,000
<TOTAL-LIABILITY-AND-EQUITY> 43,836,000
<SALES> 42,049,000
<TOTAL-REVENUES> 42,049,000
<CGS> 33,621,000
<TOTAL-COSTS> 33,621,000
<OTHER-EXPENSES> 6,900,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,528,000
<INCOME-TAX> 58,000
<INCOME-CONTINUING> 1,470,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,470,000
<EPS-PRIMARY> .20
<EPS-DILUTED> .19
<FN>
<F1>Cash includes $761,000 of restricted cash
<F2>Inventory includes homes under construction $19,847,000, model homes &
furnishings $4,350,000, land & land development $14,577,000, unplatted land
$9,000
<F3>Total Assets includes other assets of $2,347,000
</FN>
</TABLE>
