<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
Commission File Number: 0-15925
CAPITAL PACIFIC HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2956559
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
4100 MacArthur Blvd., Suite 200, Newport Beach, CA 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 622-8400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) 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 XX No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class and Title of Shares Outstanding as of
Capital Stock January 10, 1997
------------------ ------------------------
<S> <C>
Common Stock, $.10 Par Value 14,995,000
</TABLE>
<PAGE> 2
CAPITAL PACIFIC HOLDINGS, INC.
INDEX TO FORM 10-Q/A
Page
----
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets -
November 30, 1996 and February 29, 1996 1
Consolidated Statements of Operations for the
Three Months Ended November 30, 1996 and 1995 and
the Nine Months Ended November 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Nine Months Ended November 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-9
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial
Condition 10-14
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8K
(a) Exhibit
Number Description Method of Filing
------- ----------------------- ----------------
27 Financial Data Schedule Filed with this
document
(b) Reports on Form 8-K
None Filed
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
November 30, February 29,
1996 1996
(Unaudited)
------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 7,427 $ 13,850
Restricted cash 1,557 1,429
Accounts and notes receivable 593 4,421
Residential inventories 242,597 227,194
Plant, property and equipment 6,657 6,685
Prepaid expenses and other assets 10,497 12,929
--------- ---------
$ 269,328 $ 266,508
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 17,272 $ 26,333
Accrued liabilities 4,751 10,006
Notes payable 80,207 63,929
Bonds payable 100,000 100,000
--------- ---------
Total liabilities 202,230 200,268
--------- ---------
Minority Interest 419 2,894
Stockholders' equity (deficit):
Common stock, par value $.10 per share, 30,000,000 shares
authorized; 14,995,000 issued and outstanding 1,500 1,500
Additional paid-in capital 211,888 211,888
Accumulated deficit (146,709) (150,042)
--------- ---------
Total stockholders' equity 66,679 63,346
--------- ---------
$ 269,328 $ 266,508
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 1 -
<PAGE> 4
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended November 30, ended November 30,
------------------------ ------------------------
1996 1995 1996 1995
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Revenue:
Sales of homes $ 47,146 $ 30,754 $ 154,615 $90,094
Sales of land and lots 2,226 1,355 3,808 2,088
Interest and other income 804 1,449 2,045 2,932
-------- -------- --------- -------
50,176 33,558 160,468 95,114
-------- -------- --------- -------
Costs and expenses:
Cost of homes 41,398 26,346 130,607 75,890
Cost of land and lots 607 946 1,830 1,416
Selling, general and administrative 6,860 5,230 24,323 17,422
Minority Interest (15) 183 (149) 307
-------- -------- --------- -------
48,850 32,705 156,611 95,035
-------- -------- --------- -------
Income before income taxes 1,326 853 3,857 79
Provision for income taxes 386 303 524 28
-------- -------- --------- -------
NET INCOME $ 940 $ 550 $ 3,333 $ 51
======== ======== ========= =======
Net income per common share: $ 0.06 $ 0.04 $ 0.22 $ 0.00
======== ======== ========= =======
Weighted average number of common shares 14,995 14,995 14,995 14,995
======== ======== ========= =======
</TABLE>
The accompanying notes are an integral part of these statements.
- 2 -
<PAGE> 5
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
November 30,
-------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,333 $ 51
Adjustments to reconcile net income to net
cash used in operating activities:
(Increase) decrease in restricted cash (128) 108
Depreciation and amortization 842 1,022
(Increase) in residential inventories (15,403) (57,408)
(Increase) decrease in receivables, prepaid
expenses and other assets 4,565 (2,499)
(Decrease) increase in accounts payable (9,061) 17,285
(Decrease) in accrued liabilities (5,255) (5,423)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (21,107) (46,864)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant, property and equipment, net (814) (1,103)
Decrease in investment in partnerships 1,695 50
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 881 (1,053)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in minority interest in joint ventures (2,475) 308
Borrowings from notes payable, net 16,278 31,224
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 13,803 31,532
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,423) (16,385)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,850 22,401
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,427 $ 6,016
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE> 6
CAPITAL PACIFIC HOLDINGS, INC., AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements, and notes thereto, included in the Form 10-K for the fiscal year
ended February 29, 1996 of Capital Pacific Holdings, Inc. (the "Company"). In
the opinion of management, the financial statements presented herein include all
adjustments (which are solely of a normal recurring nature) necessary to present
fairly the Company's financial position and results of operations. The results
of operations for the three month period ended November 30, 1996, are not
necessarily indicative of the results that may be expected for the year ending
February 28, 1997.
2. Notes payable:
Notes payable at November 30, 1996 and February 29, 1996, are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
November 30, February 29,
1996 1996
-----------------------------
<S> <C> <C>
Promissory notes collateralized by
deeds of trust, including
interest varying from 9.5 percent to
prime plus 1.0 percent $ 3,671 $ 3,661
Notes payable to bank at bank's prime rate
plus 1.0 percent, maturing December 31,
1996 0 241
Notes payable to banks, including
interest varying from prime plus
.5 percent to prime plus 2.5 percent,
maturing between June 30, 1997 & March
31, 1998 secured by certain real estate
inventories on a non-recourse basis 42,347 32,073
Notes payable to banks, including interest
at prime plus 1.0 percent with terms of
the commitment reducing commencing
October 1, 1997 through March 31, 1998,
secured by certain real estate
inventories on a recourse basis 32,098 25,454
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C> <C>
Contingent promissory note payable to
previous owner of Clark Wilson secured by
Stock Pledge Agreement on a non-recourse
basis, under which the amounts due,
including interest at 8 percent, are fully
dependent on the performance of the entity
acquired
2,091 2,500
------- -------
$80,207 $63,929
======= =======
</TABLE>
5
<PAGE> 8
3. Supplemental Guarantor Information
In connection with the offering in fiscal 1995 of $100,000,000 in
senior unsecured notes (the "Offering"), the Company and certain of its
wholly-owned subsidiaries (Guarantors) jointly, severally, fully and
unconditionally guaranteed such notes. Supplemental condensed combined financial
information of the Company, Guarantors and non-guarantors is presented as
follows. As discussed in Note 3 in Notes To Supplemental Guarantor Information,
these financial statements are prepared using the equity method of accounting
for the Company's and the Guarantors' investments in subsidiaries and
partnerships. This supplemental financial information should be read in
conjunction with the consolidated financial statements.
As Of And For The Nine Months Ended November 30, 1996
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Capital Pacific Non- Total
Holdings, Inc. Guarantors (1) Guarantors (2) Eliminations (4) Consolidated
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
Cash $ 4,993 $ 882 $ 1,552 $ 0 $ 7,427
Inventories 161,745 43,300 37,552 242,597
Investment in Partnerships
and subsidiaries (3) 34,385 513 0 (33,843) 1,055
Intercompany advances 31,805 0 0 (31,805) 0
Other 18,085 1,598 6,399 (7,833) 18,249
--------------------------------------------------------------------------------------------
Total Assets $251,013 $ 46,293 $ 45,503 ($ 73,481) $ 269,328
============================================================================================
Accounts payable and
accrued liabilities $ 12,555 $ 6,373 $ 4,238 ($ 1,143) $ 22,023
Intercompany advances 0 17,565 14,240 (31,805) 0
Notes payable 164,872 6,199 9,136 180,207
Minority interest 0 0 0 419 419
Shareholders' equity 73,586 16,156 17,889 (40,952) 66,679
--------------------------------------------------------------------------------------------
Total Liabilities & Equity $251,013 $ 46,293 $ 45,503 ($ 73,481) $ 269,328
============================================================================================
STATEMENT OF OPERATIONS
Revenues:
Sales of homes and land $ 66,540 $ 27,446 $ 64,437 $ 0 $ 158,423
Interest and other
income, net 1,052 169 618 206 2,045
Equity in income of
partnerships and
subsidiaries (3) 10,665 (122) 0 (10,543) 0
--------------------------------------------------------------------------------------------
Total Revenues 78,257 27,493 65,055 (10,337) 160,468
--------------------------------------------------------------------------------------------
Cost of homes and land 56,398 23,970 52,069 132,437
Selling, general and
administrative 10,155 4,254 9,914 24,323
Minority interest 0 0 0 (149) (149)
--------------------------------------------------------------------------------------------
Income (loss) before
provision (benefit) for
income taxes 11,704 (731) 3,072 (10,188) 3,857
Provision (benefit) for
income taxes 1,468 259 (1,203) 524
--------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 10,236 ($ 990) $ 4,275 ($ 10,188) $ 3,333
============================================================================================
</TABLE>
- 6 -
<PAGE> 9
<TABLE>
<CAPTION>
Capital Pacific Non- Total
Holdings, Inc. Guarantors (1) Guarantors (2) Eliminations (4) Consolidated
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
Net cash from (used in)
operating activities ($13,224) ($6,122) ($1,761) $0 ($21,107)
Net cash from (used in)
investment activities 80 801 0 0 881
Net cash from (used in)
financing activities 12,103 3,456 (1,756) 0 13,803
--------------------------------------------------------------------------------------------
Net increase (decrease)
in cash (1,041) (1,865) (3,517) 0 (6,423)
Cash - beginning of
period 6,034 2,747 5,069 0 13,850
--------------------------------------------------------------------------------------------
Cash - end of period $ 4,993 $ 882 $ 1,552 $0 $ 7,427
============================================================================================
</TABLE>
- 7 -
<PAGE> 10
NOTES TO SUPPLEMENTAL GUARANTOR INFORMATION
(1) Guarantors are Durable Homes, Inc., J.M. Peters Nevada, Inc.,
and Peters Ranchland Company, Inc., all wholly-owned
subsidiaries of Capital Pacific Holdings, Inc.
(2) The non-guarantors are:
(a) The limited partnerships in which Peters Ranchland Company, Inc.,
is a general partner:
- Ranchland Alicante Development, L.P.
- Ranchland Montilla Development, L.P.
- Ranchland Fairway Estates Development, L.P.
- Ranchland Portola Development, L.P.
- Grand Coto Estates, L.P.
(b) The limited partnerships in which J.M. Peters California, Inc., is
a general partner:
- J.M.P. Mulholland Estates I, L.P.
- J.M.P. Mulholland Estates II, L.P.
(c) The limited partnership in which J.M. Peters Nevada, Inc. and
Durable Homes, Inc. are general partners:
- Taos Estates, L.P.
(d) The general partnership in which Capital Pacific Holdings, Inc., is
a general partner:
- Peters Walnut Estates
(e) The wholly-owned subsidiaries of Capital Pacific Holdings, Inc.:
- Newport Design Center
- Capital Pacific Communities, Inc.
- Capital Pacific Homes, Inc. (formerly known as
Durable Homes of California, Inc.)
- J.M. Peters Arizona, Inc. (expected to become a
guarantor in fiscal year 1997)
- Capital Pacific Mortgage, Inc. (expected to become a
guarantor in fiscal year 1997)
- Clark Wilson Homes, Inc. (expected to become a
guarantor in fiscal year 1997)
- Fairway Financial Company
- Parkland Estates Company, Inc. (expected to become a
guarantor in fiscal year 1997)
- J.M. Peters California, Inc. (expected to become a
guarantor in fiscal year 1997)
- J.M. Peters Homes of Arizona, Inc.
8
<PAGE> 11
NOTES TO SUPPLEMENTAL GUARANTOR INFORMATION (CONT.)
(f) Fifty percent owned entities of Capital Pacific Holdings, Inc.:
- Bay Hill Escrow, Inc.
- J.M.P. Harbor View, L.P.
- J.M.P. Canyon Estates, L.P.
(3) Investments in partnerships and subsidiaries are accounted for by the
Company and the Guarantors on the equity method of accounting for
purposes of the supplemental combining presentation.
(4) The elimination entries eliminate investments in subsidiaries,
partnerships and intercompany balances.
9
<PAGE> 12
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
OVERVIEW
The Company experienced a successful third quarter of operations. Pre-tax net
income for the quarter exceeded $1.3 million. Net earnings for the first nine
months of fiscal 1997 have surpassed $3.3 million, making the first nine months
of fiscal 1997 more profitable than the entire fiscal year 1996. Housing sales
revenues increased 53.3% and closings increased 17% compared to the
corresponding quarter of the previous year. These increases in key results are
the consequence of improvements in existing operations and are not the results
of newly acquired operations. While prior results should not be used to predict
future performance, this quarter represents a continuation of a trend of
improved performance from ongoing operations.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
Certain statements in the financial discussion and analysis by management
contain "forward-looking" information (as defined in the Private Securities
Litigation Reform Act of 1995) that involves risk and uncertainty, including
projections and assumptions regarding the business environment in which the
Company operates. Actual future results and trends may differ materially
depending on a variety of factors, including the Company's successful execution
of internal performance strategies; changes in general national and regional
economic conditions, such as levels of employment, consumer confidence and
income, availability to homebuilders of financing for acquisitions, development
and construction, availability of financing to homebuyers for permanent
mortgages, interest rate levels and the demand for housing; supply levels of
labor and materials; difficulties in obtaining permits or approvals from
governmental authorities; difficulties in marketing homes; regulatory and
weather and other environmental uncertainties; competitive influences; and the
outcome of pending and future legal claims and proceedings.
RESULTS OF OPERATIONS
THIRD QUARTER OF FISCAL 1997 COMPARED WITH THE THIRD QUARTER OF FISCAL 1996:
The Company increased net income by $390 thousand to $940 thousand for the third
quarter of fiscal 1997 compared to net income of $550 thousand for the third
quarter of fiscal 1996, an increase of 70.9 percent. The increase is a
result of increased closing volume and an increase in the average selling price
of homes closed.
Revenues from housing sales for the third quarter of fiscal 1997 increased 53.3%
from the corresponding period of fiscal 1996 to $47.1 million from $30.8
million. Home closings for the third quarter of fiscal 1997 increased
9.7% to 259 from 236 homes during the third quarter of fiscal 1996.
These amounts include closings of 7 homes in unconsolidated joint venture
operations during the third quarter of fiscal 1997 compared to 30 homes during
the third quarter of fiscal 1996. In addition to the increased closing activity,
the Company's average sales price per unit increased to $187,100 for the third
quarter of fiscal 1997 from $149,300 for the third quarter of fiscal 1996, a
25.3% increase.
The Company's increased closings resulted in an increase in cost of home sales
for the three months ended November 30, 1996 to $41.4 million from $26.3 million
for the three months ended November 30, 1995. Despite the increased volume,
the Company's gross profit margin on home and lot closings remained flat at
14.9 percent during the third quarter of fiscal 1997 as compared to 15.0
percent during the third quarter of fiscal 1996.
The increase in Company activity resulted in an increase in selling, general and
administrative expense of $1.6 million or 31.2% for the third quarter of fiscal
1997 as compared to the third quarter of fiscal 1996. As a percentage of housing
revenue, selling, general and administrative expenses improved to 14.6% in
10
<PAGE> 13
the third quarter of fiscal 1997 compared to 17.0% for the corresponding quarter
of fiscal 1996. This improvement is due to increased unit volume and the
Company's cost containment efforts.
Minority interest income was $15 thousand for the third quarter of fiscal 1997
compared to an expense of $183 thousand for the third quarter of fiscal 1996.
The change is due primarily to progress in completing consolidated joint venture
projects.
The Company's net orders (homes contracted for sale, less cancellations)
decreased by 14% to 227 in the third quarter of fiscal 1997 compared to 264 for
the corresponding quarter of fiscal 1996. The Company's backlog (homes under
contract but not closed) decreased by 23.9% to 418 homes at November 30, 1996
from 549 homes at November 30, 1995. The decreases in net orders and backlog
result from the Company's efforts to stabilize the number of homes under
construction. These efforts have had the effect of reducing the number of homes
released for sale during the third quarter of fiscal 1997. In dollar terms, the
decrease in backlog is expected to be considerably less than the decrease
stated in terms of the number of homes.
FIRST NINE MONTHS OF FISCAL 1997 COMPARED WITH THE FIRST NINE MONTHS OF FISCAL
1996:
The Company increased net income by $3.2 million to $3.3 million for the nine
months ended November 30, 1996, as compared to net income of $51 thousand for
the nine months ended November 30, 1995.
Revenues from housing sales for the first nine months of fiscal 1997 increased
by $64.5 million or 71.6% to $154.6 million from $90.1 million for the first
nine months of fiscal 1996. Home closings for the first nine months of fiscal
1997 increased by 19.6% to 843 from 705 homes during the first nine months of
fiscal 1996. These amounts include closings of 28 homes in unconsolidated joint
ventures for the first nine months of fiscal 1997 compared to 62 homes closed
for the first nine months of fiscal 1996. In addition to the increased closing
activity, the Company's average sales price per home closing increased to
$189,700 for the first nine months of fiscal 1997 from $140,100 for the first
nine months of fiscal 1996, a 35.4% increase.
The Company's increased closings resulted in an increase in cost of sales for
the first nine months of fiscal 1997 to $130.6 million from $75.9 million for
the first nine months of fiscal 1996. The Company's increased average sales
price contributed to a 1.9% increase in gross profit margin on homes and lots to
16.4% for the first nine months of fiscal 1997, from 16.1% for the first nine
months of fiscal 1996.
Selling, general and administrative expense increased $6.9 million or 39.6% for
the first nine months of fiscal 1997, as compared to the first nine months of
fiscal 1996. As a percentage of housing revenue, selling, general and
administrative expense improved to 15.7% for the first nine months of fiscal
1997 from 19.3% for the first nine months of fiscal 1996. This improvement is
due to increased unit volume and the Company's cost containment efforts.
Minority interest income was $149 thousand for the first nine months of fiscal
1997 compared to an expense of $307 thousand for the first nine months of fiscal
1996. The change is the result of
11
<PAGE> 14
the Company's progress towards completing consolidated joint venture projects.
The Company has recorded an income tax provision of $524 thousand for the first
nine months of fiscal 1997 on pre-tax income of $3.9 million. The provision
reflects the net benefit from the usage of federal net operating loss carrybacks
which generated a federal income tax refund for prior periods of $845 thousand.
The Company also has available federal net operating loss carryforwards which
can be used to reduce current and future taxable income. The Company will
recognize any benefit from these carryforwards only at the time the
carryforwards are actually utilized.
Interest incurred was $16.4 million for the first nine months of fiscal 1997
compared to $13.7 million for the first nine months of fiscal 1996. Interest
included in cost of sales was $12.7 million for the first nine months of fiscal
1997 compared to $5.6 million for the first nine months of fiscal 1996.
The Company's net orders (homes contracted for sale, less cancellations)
increased by 3.3% to 849 for the first nine months of fiscal 1997, as compared
to 822 homes for the corresponding period of fiscal 1996.
The Company's unit/lot closings and revenues for the first nine months of fiscal
1997 are segregated by region as follows:
<TABLE>
<CAPTION>
Unit/lot Closings Revenues
----------------- --------
<S> <C> <C>
California 253 $ 77.6 million
Texas 277 45.0 million
Nevada 225 31.9 million
Arizona 114 13.9 million
--- -------------
869 $168.4 million
</TABLE>
The unit/lot and revenue figures for California include 28 homes and $10.0
million in revenues on projects in unconsolidated joint ventures for the first
nine months of fiscal 1997.
FINANCIAL CONDITION
As of November 30, 1996, the Company has in place three separate facilities (the
"Facilities") with its principal bank lender as follows:
- $25 million Non-Recourse Secured Acquisition and Development line of
credit ("Non-Recourse A & D Line")
- $40 million Recourse Secured Production line of credit ("Recourse
Production Line")
- $25 million Non-Recourse Secured Production line of credit ("Non-
Recourse Production Line")
In addition, the Company has in place lines of credit in Nevada and Texas, as
more fully described below.
A commitment fee is payable annually. Availability of funds under
12
<PAGE> 15
the Facilities are subject to certain bank and other requirements. At November
30, 1996, the Company had aggregate borrowings outstanding of $62.9 million
under the Facilities.
The Facilities are secured by liens on various completed or under construction
homes and lots held by the Company. Pursuant to the Facilities, the Company is
subject to certain covenants, which require, among other things, the maintenance
of a consolidated liabilities to consolidated net worth ratio, minimum
liquidity, minimum net worth and loss limitations, all as defined in the
documents that evidence the Facilities. At November 30, 1996, the Company was in
compliance with these covenants. The Facilities also define certain events that
constitute events of default. As of November 30, 1996, no such event of default
has occurred.
Durable and Clark Wilson also have secured non-recourse lines of credit to
facilitate construction activity. Durable's $15.0 million facility has a
maturity date of July 1, 1997. Clark Wilson has a non-recourse secured line of
credit for $15.0 million with a maturity date of June 30, 1997. Clark Wilson has
an additional $17.8 million in non-recourse secured lines of credit with banks
having terms with maturity dates ranging from May 31, 1997 through July 19,
1998.
For the nine months ended November 30, 1996, the Company closed the sale of 843
homes and 26 land lots. This amount includes 28 homes closed in unconsolidated
joint ventures. At November 30, 1996, the Company had in excess of 500 homes
under construction.
Construction activity is being financed out of Company cash, bank financing and
the existing joint ventures, including joint ventures with investment advisors
to the State of California Public Employees Retirement System ("CalPERS"). The
Company anticipates that it will continue to utilize both bank financing and
joint ventures to cover liquidity needs in excess of Company cash.
The Company expects that cash flow generated from operations and from additional
financing permitted by the terms of the Indenture will be sufficient to cover
the debt service on the Offering, the Facilities and the Company's other bank
lines and to fund the Company's current development and construction activities
for the reasonably foreseeable future.
BALANCE SHEET ITEMS
Cash and cash equivalents decreased to $7.4 million at November 30, 1996 from
$13.8 million at February 29, 1996 due to a reduction of trade accounts payable.
The Company anticipates that the level of cash and financing available is
sufficient to meet its needs in the near term.
Residential inventories increased from $227.0 million at February 29, 1996 to
$242.6 million at November 30, 1996. The increase is due to the progress made on
the over 500 residential homes under construction.
13
<PAGE> 16
Notes payable have increased from $63.9 million at February 29, 1996 to $80.2
million at November 30, 1996, due principally to increased construction
activity. Accounts payable and accrued liabilities have decreased to $22.0
million at November 30, 1996 from $36.3 million at February 29, 1996.
14
<PAGE> 17
PART II - OTHER INFORMATION
Item 6 - EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
Exhibit number
--------------
27 Financial Data Schedule
(b) Reports on form 8K
None filed
II - 1
<PAGE> 18
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.
CAPITAL PACIFIC HOLDINGS, INC.
Date: February 12, 1997 BY: /S/ DALE DOWERS
---------------------------------
Dale Dowers, President and
Chief Executive Officer
Date: February 12, 1997 BY:/S/ MARQUIS L. CUMMINGS
----------------------------------
Marquis L. Cummings, Vice
President and Chief Financial
Officer
(Principal Financial Officer)
II - 2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> NOV-30-1996
<CASH> 7,427
<SECURITIES> 0
<RECEIVABLES> 593
<ALLOWANCES> 0
<INVENTORY> 242,597
<CURRENT-ASSETS> 0
<PP&E> 10,217
<DEPRECIATION> 3,560
<TOTAL-ASSETS> 269,328
<CURRENT-LIABILITIES> 22,023
<BONDS> 180,207
0
0
<COMMON> 1,500
<OTHER-SE> 65,179
<TOTAL-LIABILITY-AND-EQUITY> 269,328
<SALES> 158,423
<TOTAL-REVENUES> 160,468
<CGS> 132,437
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24,174
<LOSS-PROVISION> 0
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