FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
------------------
OR
--- 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 1-14122
-----------
D.R. HORTON, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2386963
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Ascension Blvd., Suite 100, Arlington, Texas 76006
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(817) 856-8200
----------------------------------------------------
(Registrant's telephone number, including area code)
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.01 par value -- 64,201,548 shares as of May 10, 1999
------------
This Report contains 20 pages.
--
<PAGE>
INDEX
D.R. HORTON, INC.
PART I. FINANCIAL INFORMATION. Page
----
ITEM 1. Financial Statements.
Consolidated Balance Sheets--March 31, 1999
and September 30, 1998. 3
Consolidated Statements of Income--Three Months
and Six Months Ended March 31, 1999 and 1998. 4
Consolidated Statement of Stockholders' Equity--Six
Months Ended March 31, 1999. 5
Consolidated Statements of Cash Flows--Six Months
Ended December 31, 1999 and 1998. 6
Notes to Consolidated Financial Statements. 7-9
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition. 10-16
ITEM 3. Quantitative and Qualitative Disclosures
about Market Risk 17
PART II. OTHER INFORMATION.
ITEM 4. Submission of Matters to a Vote of Security Holders. 18
ITEM 6. Exhibits and Reports on Form 8-K. 19
SIGNATURES. 20
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
1999 1998
------------------------------
(In thousands)
(Unaudited)
ASSETS
Homebuilding:
Cash $54,693 $76,754
Inventories:
Finished homes and construction
in progress 911,666 717,709
Residential lots - developed
and under development 785,694 630,252
Land held for development 9,154 10,072
----------- ----------
1,706,514 1,358,033
Property and equipment (net) 35,765 25,456
Earnest money deposits and
other assets 109,730 74,827
Excess of cost over net assets
acquired (net) 113,344 56,782
----------- ----------
2,020,046 1,591,852
----------- ----------
Financial Services:
Mortgage loans held for sale 78,963 72,325
Other assets 3,763 3,658
----------- ----------
82,726 75,983
----------- ----------
$2,102,772 $1,667,835
=========== ==========
LIABILITIES
Homebuilding:
Accounts payable and other liabilities $301,462 $259,005
Notes payable:
Unsecured:
Revolving credit facility due 2002 300,000 455,000
8% senior notes due 2009, net 382,915 -
8 3/8% senior notes due 2004, net 147,952 147,754
10% senior notes due 2006, net 147,217 147,156
6 7/8% convertible subordinated
notes due 2002, net - 58,794
Other secured 24,962 17,303
----------- ----------
1,003,046 826,007
----------- ----------
1,304,508 1,085,012
Financial Services:
Other liabilities 1,901 1,444
Notes payable to financial institutions 64,214 28,497
----------- ----------
66,115 29,941
----------- ----------
1,370,623 1,114,953
----------- ----------
Minority interest 3,548 3,446
----------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value,
30,000,000 shares authorized,
no shares issued - -
Common stock, $.01 par value,
200,000,000 shares authorized,
64,170,878 at March 31, 1999
and 55,836,733 at September 30,
1998, issued and outstanding 642 558
Additional capital 418,243 301,503
Retained earnings 310,252 247,375
Treasury stock, 33,000 shares at cost (536) -
----------- ----------
728,601 549,436
----------- ----------
$2,102,772 $1,667,835
=========== ==========
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Six Months
Ended March 31, Ended March 31,
------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
(In thousands, except net income per share)
(Unaudited)
Homebuilding:
Revenues
Home sales................. $683,174 $448,594 $1,294,875 $866,430
Land/lot sales............. 7,426 263 48,553 1,083
--------- --------- ----------- ---------
690,600 448,857 1,343,428 867,513
--------- --------- ----------- ---------
Cost of sales
Home sales................. 564,165 368,200 1,061,540 710,145
Land/lot sales............. 6,154 244 42,931 836
--------- --------- ----------- ---------
570,319 368,444 1,104,471 710,981
--------- --------- ----------- ---------
Gross profit
Home sales................. 119,009 80,394 233,335 156,285
Land/lot sales............. 1,272 19 5,622 247
--------- --------- ----------- ---------
120,281 80,413 238,957 156,532
Selling, general and
administrative expense......... 66,621 48,430 132,192 94,157
Interest expense............... 3,088 2,593 5,881 5,068
Other (income)................. (734) (1,010) (1,724) (2,053)
--------- --------- ----------- ---------
51,306 30,400 102,608 59,360
--------- --------- ----------- ---------
Financial Services:
Revenues....................... 8,481 4,102 16,283 8,643
Selling, general and
administrative expense......... 5,229 2,493 10,203 5,790
Interest expense............... 669 328 1,412 645
Other (income)................. (760) (523) (1,639) (1,054)
--------- --------- ----------- ---------
3,343 1,804 6,307 3,262
--------- --------- ----------- ---------
INCOME BEFORE INCOME TAXES. 54,649 32,204 108,915 62,622
Provision for income taxes..... 21,229 12,712 42,800 24,806
--------- --------- ----------- ---------
NET INCOME................. $33,420 $19,492 $66,115 $37,816
========= ========= =========== =========
Net income per share:
Basic...................... $0.53 $0.37 $1.08 $0.72
Diluted.................... $0.52 $0.33 $1.05 $0.64
========= ========= =========== =========
Weighted average number of
shares of stock outstanding:
Basic...................... 63,334 52,847 61,367 52,812
Diluted.................... 64,251 62,260 62,960 62,193
========= ========= =========== =========
Cash dividends per share....... $0.03 $0.0225 $0.0525 $0.0425
========= ========= =========== =========
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Common Additional Retained Treasury Stockholders'
Stock Capital Earnings Stock Equity
--------------------------------------------------------------------------
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balances at October 1, 1998 $558 $301,503 $247,375 $0 $549,436
Net income - - 66,115 - 66,115
Stock issued as partial consideration
for acquisition
(2,555,911 shares) 26 54,974 - - 55,000
Issuance under D.R. Horton, Inc.
employee benefit plans
(4,341 shares) - 59 - - 59
Exercise of stock options
(204,550 shares) 2 2,436 - - 2,438
Conversion of convertible subordinated
notes (5,569,343 shares) 56 59,271 - - 59,327
Purchase of treasury stock
(33,000 shares) - - - (536) (536)
Cash dividends - - (3,238) - (3,238)
--------------------------------------------------------------------------
Balances at March 31, 1999 $642 $418,243 $310,252 ($536) $728,601
==========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
D. R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months
Ended March 31,
----------------------
1999 1998
--------- ----------
(In thousands)
(Unaudited)
OPERATING ACTIVITIES
Net income $66,115 $37,816
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 9,017 4,856
Changes in operating assets and liabilities:
Increase in inventories (238,421) (146,724)
Increase in earnest money deposits and
other assets (28,744) (13,548)
Increase in mortgage loans held for sale (6,638) (4,825)
Increase in accounts payable, accrued
expenses and customer deposits 24,624 23,527
--------- ----------
NET CASH USED IN OPERATING ACTIVITIES (174,047) (98,898)
--------- ----------
INVESTING ACTIVITIES
Net purchase of property and equipment (13,336) (8,131)
Net cash paid for acquisitions (1,300) (25,575)
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES (14,636) (33,706)
--------- ----------
FINANCING ACTIVITIES
Net increase in notes payable 167,899 146,366
Proceeds from exercise of stock options 2,497 1,561
Purchase of treasury shares (536) -
Payment of cash dividends (3,238) (2,273)
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 166,622 145,654
--------- ----------
INCREASE (DECREASE) IN CASH (22,061) 13,050
Cash at beginning of period 76,754 78,228
--------- ----------
Cash at end of period $54,693 $91,278
========= ==========
Supplemental cash flow information:
Interest paid $6,868 $5,801
========= ==========
Income taxes paid $47,000 $29,716
========= ==========
Supplemental disclosures of noncash activities:
Notes payable assumed related to acquisitions $103,384 $49,333
========= ==========
Conversion of subordinated notes to common stock $59,327 $127
========= ==========
Issuance of common stock related to acquisition $55,000 $0
========= ==========
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements include the
accounts of D.R. Horton, Inc. and its subsidiaries (the "Company"). Intercompany
accounts and transactions have been eliminated in consolidation. The statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and six month periods ended
March 31, 1999, are not necessarily indicative of the results that may be
expected for the year ending September 30, 1999.
Business - The Company is a national builder that is engaged primarily in the
construction and sale of single-family housing in the United States. The Company
designs, builds and sells single-family houses on lots developed by the Company
and on finished lots which it purchases, ready for home construction.
Periodically, the Company sells land or lots it has developed. The Company also
provides title agency and mortgage brokerage services to its homebuyers.
NOTE B - NET INCOME PER SHARE
Basic net income per share for the three and six month periods ended March 31,
1999 and 1998, is based on the weighted average number of shares of common stock
outstanding. Diluted net income per share is based on the weighted average
number of shares of common stock and dilutive common stock equivalents
outstanding.
The following table sets forth the computation of basic and diluted earnings per
share (in thousands):
Three months ended Six months ended
March 31, March 31,
------------------- -----------------
1999 1998 1999 1998
Numerator:
Net income $33,420 $19,492 $66,115 $37,816
Effect of dilutive securities:
Interest expense associated with
6 7/8% convertible subordinated
notes, net - 873 - 1,748
-------- -------- ------- -------
Numerator for diluted earnings
per share after assumed
conversions $33,420 $20,365 $66,115 $39,564
======== ======== ======= =======
Denominator:
Denominator for basic earnings
per share---weighted
average shares 63,334 52,847 61,367 52,812
Effect of dilutive securities:
6 7/8% convertible subordinated
notes - 8,163 659 8,264
Employee stock options 917 1,250 934 1,117
-------- -------- ------- -------
Denominator for diluted earnings
per share---adjusted
weighted average shares
and assumed conversions 64,251 62,260 62,960 62,193
======== ======== ======= =======
-7-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
NOTE C - PROVISIONS FOR INCOME TAXES
Deferred tax liabilities and assets, arising from temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes, consist primarily of differences
in depreciation, warranty costs and inventory cost capitalization methods and
were, as of March 31, 1999, not significant.
The provisions for income tax expense for the three and six month periods ended
March 31, 1999 and 1998, are based on the effective tax rates estimated to be in
effect for the respective years. The deferred income tax provisions were not
significant in either period.
The difference between income tax expense and tax computed by applying the
statutory Federal income tax rate to income before income taxes is due primarily
to the effect of applicable state income taxes.
NOTE D - INTEREST
Three months ended Six months ended
March 31, March 31,
------------------- -------------------
1999 1998 1999 1998
(In thousands)
Capitalized interest,
beginning of period $32,759 $33,289 $35,153 $28,952
Capitalized interest in
Cambridge inventory 4,120 - 4,120 -
Interest incurred 18,748 16,924 34,031 31,973
Interest expensed:
Directly (3,088) (2,593) (5,881) (5,068)
Amortized to cost of sales (12,956) (9,562) (27,840) (17,799)
--------- -------- --------- --------
Capitalized interest,
end of period $39,583 $38,058 $39,583 $38,058
========= ======== ========= ========
NOTE E - ACQUISITIONS
On January 28, 1999, the Company acquired the operating assets (primarily
inventories) of Cambridge Homes of Chicago. In the transaction, the Company
issued 2,555,911 shares of common stock, valued at $55 million, and assumed
debt, consisting primarily of notes payable associated with the acquired assets,
of approximately $103 million, which was paid with borrowings under the
revolving credit facility. The Cambridge acquisition was treated as a purchase
for accounting purposes.
At May 11, 1999, the determination of the final valuation of the Cambridge
acquisition had not been completed. Any subsequent adjustments to the beginning
balance sheet amounts estimated herein will be recorded in future periods as
adjustments to the excess of cost over net assets acquired.
-8-
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
March 31, 1999
NOTE F - SUMMARIZED FINANCIAL INFORMATION
The 8%, 8 3/8%, and 10% senior notes payable are fully and unconditionally
guaranteed, on a joint and several basis, by all direct and indirect
subsidiaries other than certain inconsequential subsidiaries. Each of the
guarantors is a wholly-owned subsidiary. Summarized financial information of the
Company and its subsidiaries, including the non-guarantor subsidiaries, is
presented below. Additional financial information relating to the non-guarantor
financial services subsidiaries is included in the accompanying primary
financial statements. Separate financial statements and other disclosures
concerning the guarantor subsidiaries are not presented because management has
determined that they are not material to investors.
As of and for the periods ended: (In thousands)
<TABLE>
<CAPTION>
March 31, 1999 - 6 months Nonguarantor Subsidiaries
(Unaudited) D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $1,515,871 $1,759,925 $87,213 $31,602 ($1,291,839) $2,102,772
Total liabilities........ 1,081,135 1,405,400 78,893 20,593 (1,211,850) 1,374,171
Revenues................. 261,060 1,070,182 16,283 12,186 0 1,359,711
Gross profit............. 34,402 202,052 0 2,503 0 238,957
Net income............... 12,683 49,861 3,829 (258) 0 66,115
<CAPTION>
March 31, 1998 - 6 months Nonguarantor Subsidiaries
(Unaudited) D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $803,290 $1,212,939 $45,884 $30,427 ($584,546) $1,507,994
Total liabilities........ 572,806 978,781 30,365 17,601 (556,660) 1,042,893
Revenues................. 151,933 709,040 8,643 6,540 0 876,156
Gross profit............. 24,413 130,783 0 1,336 0 156,532
Net income............... 3,150 33,278 1,936 (548) 0 37,816
<CAPTION>
September 30, 1998 - year Nonguarantor Subsidiaries
D.R. ------------------------- Inter-
Horton, Guarantor Financial company
Inc. Subsidiaries Services Other Eliminations Total
---------- -------------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total assets............. $1,169,347 $1,548,554 $89,097 $30,672 ($1,169,835) $1,667,835
Total liabilities........ 906,014 1,272,398 81,820 19,301 (1,161,134) 1,118,399
Revenues................. 362,847 1,777,833 21,892 14,369 0 2,176,941
Gross profit............. 44,553 342,300 0 2,586 0 389,439
Net income............... 2,140 88,128 4,418 (1,306) 0 93,380
</TABLE>
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - CONSOLIDATED
D. R. Horton, Inc. and subsidiaries (the "Company") provide homebuilding
activities in 23 states and 40 markets through its 50 homebuilding divisions.
Through its financial services activities, the Company also provides mortgage
banking and title agency services in many of these same markets.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Consolidated revenues for the three months ended March 31, 1999, increased
54.3%, to $699.1 million, from $453.0 million for the comparable period of 1998,
primarily due to increases in both home and land/lot sales revenues.
Income before income taxes for the three months ended March 31, 1999, increased
69.7%, to $54.6 million, from $32.2 million for the comparable period of 1998.
As a percentage of revenues, income before income taxes for the three months
ended March 31, 1999, increased 0.7%, to 7.8%, from 7.1% for the comparable
period of 1998 primarily due to the overall reduction in selling, general and
administrative expenses as a percentage of revenues.
The consolidated provision for income taxes increased 67.0%, to $21.2 million
for the three months ended March 31, 1999, from $12.7 million for the same
period of 1998, due to the corresponding increase in income before income taxes.
The effective income tax rate was down 0.7% to 38.8% for the three months ended
March 31, 1999, compared to 39.5% for the same period of 1998.
Six Months Ended March 31, 1999 Compared to Six Months Ended March 31, 1998
Consolidated revenues for the six months ended March 31, 1999, increased 55.2%,
to $1,359.7 million, from $876.2 million for the comparable period of 1998,
primarily due to increases in both home and land/lot sales revenues.
Income before income taxes for the six months ended March 31, 1999, increased
73.9%, to $108.9 million, from $62.6 million for the comparable period of 1998.
As a percentage of revenues, income before income taxes for the six months ended
March 31, 1999, increased 0.9%, to 8.0%, from 7.1% for the comparable period of
1998 primarily due to the overall reduction in selling, general and
administrative expenses as a percentage of revenues.
The consolidated provision for income taxes increased 72.5%, to $42.8 million
for the six months ended March 31, 1999, from $24.8 million for the same period
of 1998, due to the corresponding increase in income before income taxes. The
effective income tax rate was down 0.3% to 39.3% for the six months ended March
31, 1999, compared to 39.6% for the same period of 1998.
-10-
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - HOMEBUILDING
The following tables summarize financial data for the Company's homebuilding
activities:
<TABLE>
<CAPTION>
Percentages of Homebuilding Revenues
Three Months Ended Six Months Ended
March 31, March 31,
---------- ----------
1999 1998 1999 1998
-------- -------- -------- --------
Cost and expenses:
<S> <C> <C> <C> <C>
Cost of sales........................ 82.6% 82.1% 82.2% 81.9%
Selling, general and administrative
expense.............................. 9.6 10.8 9.8 10.9
Interest expense..................... 0.5 0.5 0.5 0.6
-------- -------- -------- --------
Total costs and expenses..................... 92.7 93.4 92.5 93.4
Other (income)............................... (0.1) (0.2) (0.1) (0.2)
-------- -------- -------- --------
Income before income taxes................... 7.4% 6.8% 7.6% 6.8%
======== ======== ======== ========
<CAPTION>
Homes Closed
Three Months Ended March 31, Six Months Ended March 31,
1999 1998 1999 1998
---- ---- ---- ----
Homes Homes Homes Homes
Closed Revenues Closed Revenues Closed Revenues Closed Revenues
-------- -------- -------- -------- -------- --------- -------- --------
($'s in millions) ($'s in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic............... 707 $130.0 422 $ 72.4 1,339 $ 243.4 672 $120.3
Midwest.................... 375 71.3 134 24.9 621 117.5 240 45.2
Southeast.................. 589 94.5 554 82.2 1,184 188.3 1,067 156.8
Southwest.................. 1,795 244.7 1,369 175.1 3,440 463.5 2,867 366.0
West....................... 697 142.7 483 94.0 1,425 282.2 937 178.1
-------- -------- -------- -------- -------- --------- -------- ---------
4,163 $683.2 2,962 $448.6 8,009 $1,294.9 5,783 $866.4
======== ======== ======== ======== ======== ========= ======== =========
<CAPTION>
New Sales Contracts (net of cancellations)
Three Months Ended March 31, Six Months Ended March 31,
1999 1998 1999 1998
---- ---- ---- ----
Homes Homes Homes Homes
Sold $ Sold $ Sold $ Sold $
-------- -------- -------- -------- -------- --------- -------- ---------
($'s in millions) ($'s in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic............... 930 $170.8 651 $115.1 1,501 $ 282.4 947 $ 167.7
Midwest.................... 566 111.6 294 56.4 794 157.1 425 81.1
Southeast.................. 813 131.3 788 117.5 1,358 216.3 1,346 198.3
Southwest.................. 2,289 324.3 2,014 267.6 3,934 553.9 3,288 432.1
West....................... 1,033 200.2 900 173.1 1,581 309.2 1,521 295.7
-------- -------- -------- -------- -------- --------- -------- ---------
5,631 $938.2 4,647 $729.7 9,168 $1,518.9 7,527 $1,174.9
======== ======== ======== ======== ======== ========= ======== =========
<CAPTION>
Sales Backlog
March 31,
1999 1998
---- ----
Homes $ Homes $
---------- ---------- --------- ---------
($'s in millions)
<S> <C> <C> <C> <C>
Mid-Atlantic.................................. 1,094 $ 219.9 879 $159.7
Midwest....................................... 1,044 212.5 365 71.4
Southeast..................................... 907 144.3 999 147.0
Southwest..................................... 3,537 514.3 2,448 326.7
West.......................................... 1,370 278.3 1,307 260.2
---------- ---------- --------- ---------
7,952 $1,369.3 5,998 $965.0
========== ========== ========= =========
<FN>
- ----------
The Company's market regions consist of the following markets:
Mid-Atlantic Baltimore, Charleston, Charlotte, Greensboro, Greenville,
Hilton Head, Myrtle Beach, New Jersey, Newport News,
Raleigh/Durham, Richmond, Suburban Washington D.C. and
Wilmington
Midwest Chicago, Cincinnati, Louisville, Minneapolis/St. Paul and
St. Louis
Southeast Atlanta, Birmingham, Jacksonville, Nashville, Orlando,
Pensacola and South Florida
Southwest Albuquerque, Austin, Dallas/Fort Worth, Houston, Killeen,
Phoenix, San Antonio and Tucson
West Denver, Las Vegas, Los Angeles, Portland, Sacramento,
Salt Lake City and San Diego
</FN>
</TABLE>
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Revenues from homebuilding activities increased 53.9%, to $690.6 million (4,163
homes closed) for the three months ended March 31, 1999, from $448.9 million
(2,962 homes closed) for the comparable period of 1998. The Company periodically
sells land or lots to others and revenues from these activities were $7.4
million in the three months ended March 31, 1999, compared to $0.3 million for
the same quarter of 1998. The number of homes closed increased in all of the
Company's market regions, with percentage increases ranging from 179.9% in the
Midwest region to 6.3% in the Southeast region. The increases in both revenues
and homes closed were due to strong housing demand, the Company's entrance into
new markets, and the increases attributable to the acquisition of Cambridge
Homes (January, 1999); C. Richard Dobson Builders, Inc. (February, 1998); Mareli
Development & Construction Co. (May, 1998); and RMP Development, Inc. (June,
1998). In markets where the Company operated during both fiscal years, home
sales revenues increased by 46.0%, to $655.1 million (3,989 homes closed).
The average selling price of homes closed during the three months ended March
31, 1999 was $164,100, up from $151,400 for the same period of 1998. The
increase in average selling price was due to changes in the mix of homes closed
and increased selling prices.
New net sales contracts increased 21.2%, to 5,631 homes ($938.2 million) for the
three months ended March 31, 1999, from 4,647 ($729.7 million) for the same
period of 1998. Percentage increases in new net sales contracts were achieved in
all of the Company's market regions, with increases ranging from 92.5% in the
Midwest region to 3.2% in the Southeast region. The overall increase in new net
sales contracts was due in part to sales achieved by the Cambridge and the 1998
acquisitions, while new net sales contracts increased 12.4%, to 5,224 homes, in
markets where the Company operated in both periods. The average amount of new
net sales contracts in the three months ended March 31, 1999, was $166,600, up
6.1% over the $157,000 average in the three months ended March 31, 1998. This
increase was due to changes in the mix of homes sold and increased selling
prices.
The Company was operating in 606 subdivisions at March 31, 1999, compared to 485
at March 31, 1998. At March 31, 1999, the Company's backlog of sales contracts
was $1,369.3 million (7,952 homes), up 41.9% from the comparable amount at March
31, 1998. In markets where the Company operated during both quarters, the sales
contract backlog was $1,330.5 million (7,712 homes), up 37.9% from March 31,
1998. The average sales price of homes in sales backlog was $172,200 at March
31, 1999, up 7.0% from the $160,900 average at March 31, 1998. The average sales
price of homes in backlog typically is higher than the sales price of closed
homes because it takes longer to construct more expensive homes.
Cost of sales increased by 54.8%, to $570.3 million for the three months ended
March 31, 1999, from $368.4 million for the comparable quarter of 1998. The
increase in cost of sales was primarily attributable to the increase in
revenues. Cost of home sales as a percentage of home sales revenues was up 0.5%
to 82.6% for the three months ended March 31, 1999, from 82.1% for the
comparable period of 1998, primarily due to the application of purchase
accounting causing a $7.4 million inventory write-up associated with homes
acquired with Cambridge and closed subsequent to the acquisition. Cost of
land/lot sales decreased to 82.9% of land/lot sales revenues for the three
months ended March 31, 1999, from 92.8% for the comparable period of 1998. Total
homebuilding cost of sales increased to 82.6% for the three months ended March
31, 1999, from 82.1% for the comparable period of 1998, primarily due to the
Cambridge inventory write-up.
Selling, general and administrative (SG&A) expenses from homebuilding activities
increased by 37.6%, to $66.6 million in the three months ended March 31, 1999,
from $48.4 million in the comparable period of 1998. As a percentage of
revenues, SG&A expenses decreased to 9.6% for the three months ended March 31,
1999, from 10.8% for the comparable period of 1998. The decrease in SG&A
expenses as a percentage of revenue is primarily due to the Company's cost
containment efforts and the increased revenues that absorb the fixed elements of
overhead.
Interest expense associated with homebuilding activities increased to $3.1
million in the three months ended March 31, 1999, from $2.6 million in the
comparable period of 1998. As a percentage of homebuilding revenues,
homebuilding interest expense was 0.5% in both periods. The Company follows a
policy of capitalizing interest only on inventory under construction or
development.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During both periods, the Company expensed the portion of incurred interest and
other financing costs which could not be charged to inventory. Capitalized
interest and other financing costs are included in cost of sales at the time of
home closings.
Six Months Ended March 31, 1999 Compared to Six Months Ended March 31, 1998
Revenues from homebuilding activities increased 54.9%, to $1,343.4 million
(8,009 homes closed) for the six months ended March 31, 1999, from $867.5
million (5,783 homes closed) for the comparable period of 1998. The Company
periodically sells land or lots to others and revenues from these activities
were $48.6 million for the six months ended March 31, 1999, up from $1.1 million
for the same period of 1998. The number of homes closed increased in all of the
Company's market regions, with percentage increases ranging from 158.8% in the
Midwest region to 11.0% in the Southeast region. The increases in both revenues
and homes closed were due to strong housing demand, the Company's entrance into
new markets, and the increases attributable to the acquisition of Cambridge
Homes (January, 1999); C. Richard Dobson Builders, Inc. (February, 1998); Mareli
Development & Construction Co. (May, 1998); and RMP Development, Inc. (June,
1998). In markets where the Company operated during both fiscal years, revenues
increased by 41.6%, to $1,227.3 million (7,577 homes closed).
The average selling price of homes closed during the six months ended March 31,
1999 was $161,700, up from $149,800 for the same period of 1998. The increase in
average selling price was due to changes in the mix of homes closed and
increased selling prices.
New net sales contracts increased 21.8%, to 9,168 homes ($1,518.9 million) for
the six months ended March 31, 1999, from 7,527 homes ($1,174.9 million) for the
same period of 1998. Percentage increases in new net sales contracts were
achieved in all of the Company's market regions, with increases ranging from
86.8% in the Midwest region to 0.9% in the Southeast region. The overall
increase in new net sales contracts was due in part to sales achieved by the
Cambridge and the 1998 acquisitions, while new net sales contracts increased
12.3%, to 8,454 homes, in markets where the Company operated in both periods.
The average amount of new net sales contracts in the six months ended March 31,
1999, was $165,700, up 6.1% over the $156,100 average in the six months ended
March 31, 1998. This increase was due to changes in the mix of homes sold and
increased selling prices.
Cost of sales increased by 55.3%, to $1,104.5 million for the six months ended
March 31, 1999, from $711.0 million for the comparable period of 1998. The
increase in cost of sales was primarily attributable to the increase in
revenues. Cost of home sales as a percentage of home sales revenues was 82.0%
for the both six-month periods, despite $7.4 million of increased costs of goods
sold during the period from the Cambridge acquisition. Cost of land/lot sales
increased to 88.4% of land/lot sales revenues for the six months ended March 31,
1999, from 77.2% for the comparable period of 1998. Total homebuilding cost of
sales increased to 82.2% for the six months ended March 31, 1999, from 81.9% for
the comparable period of 1998.
Selling, general and administrative (SG&A) expenses from homebuilding activities
increased by 40.4%, to $132.2 million in the six months ended March 31, 1999,
from $94.2 million in the comparable period of 1998. As a percentage of
revenues, SG&A expenses decreased to 9.8% for the six months ended March 31,
1999, from 10.9% for the comparable period of 1998. The decrease in SG&A
expenses as a percentage of revenue is primarily due to the Company's cost
containment efforts and the increased revenues that absorb the fixed elements of
overhead. Included in SG&A expenses for the six months ended March 31, 1999, is
a $6.4 million charge for severance benefits associated with former Continental
executives.
Interest expense associated with homebuilding activities increased to $5.9
million in the six months ended March 31, 1999, from $5.1 million in the
comparable period of 1998. As a percentage of homebuilding revenues,
homebuilding interest expense decreased to 0.5% in the six months ended March
31, 1999, from 0.6% in the comparable period of 1998. The Company follows a
policy of capitalizing interest only on inventory under construction or
development. During both periods, the Company expensed the portion of incurred
interest and other financing costs which could not be charged to inventory.
Capitalized interest and other financing costs are included in cost of sales at
the time of home closings.
-13-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FINANCIAL SERVICES
The following table summarizes financial data for the Company's financial
services operations:
Three months ended Six months ended
March 31, March 31,
------------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
Number of loans originated............ 1,911 1,285 3,668 2,458
------- ------- ------- -------
Loan acquisition fees................. $2,030 $1,057 $3,772 $2,383
Sale of servicing and marketing gains. 4,025 1,780 7,964 3,801
Other revenues........................ 918 383 1,723 738
------- ------- ------- -------
Total mortgage banking revenues....... 6,973 3,220 13,459 6,922
Title policy premiums, net............ 1,508 882 2,824 1,721
------- ------- ------- -------
Total financial services revenues..... 8,481 4,102 16,283 8,643
General and administrative expenses... 5,229 2,493 10,203 5,790
Interest expense...................... 669 328 1,412 645
Interest/other (income)............... (760) (523) (1,639) (1,054)
------- ------- ------- -------
Income before income taxes............ $3,343 $1,804 $6,307 $3,262
======= ======= ======= =======
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Revenues from financial services operations increased 106.8%, to $8.5 million in
the three months ended March 31, 1999, from $4.1 million in the comparable
period of 1998. The increase in financial services revenues was due to the rapid
expansion of the Company's mortgage loan and title services provided to the
Company's homebuilding customers and growth in the homebuilding operations.
These mortgage and title activities continue to be expanded to additional
homebuilding markets. SG&A expenses associated with financial services increased
109.7%, to $5.2 million in the three months ended March 31, 1999, from $2.5
million in the comparable period of 1998. As a percentage of financial services
revenues, SG&A expenses increased by 0.9%, to 61.7% in the three months ended
March 31, 1999, from 60.8% in the comparable period of 1998, due to startup
expenses for the new markets.
Six Months Ended March 31, 1999 Compared to Six Months Ended March 31, 1998
Revenues from financial services operations increased 88.4%, to $16.3 million in
the six months ended March 31, 1999, from $8.6 million in the comparable period
of 1998. The increase in financial services revenues was due to the rapid
expansion of the Company's mortgage loan and title services provided to the
Company's homebuilding customers and growth in the homebuilding operations.
These mortgage and title activities continue to be expanded to additional
homebuilding markets. SG&A expenses associated with financial services increased
76.2%, to $10.2 million in the six months ended March 31, 1999, from $5.8
million in the comparable period of 1998. As a percentage of financial services
revenues, SG&A expenses decreased by 4.3%, to 62.7% in the six months ended
March 31, 1999, from 67.0% in the comparable period of 1998, due to 1998 startup
expenses for new markets entered in the first quarter of 1998.
-14-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had available cash and cash equivalents of $54.7
million. Inventories (including finished homes, construction in progress, and
developed residential lots and other land) at March 31, 1999, had increased by
$348.5 million since September 30, 1998, due to a general increase in business
activity, the expansion of operations in the Company's market areas and the
acquisition of Cambridge's $110.1 million inventory. The inventory increase was
financed using the Company's credit agreement, issuing $55 million of common
stock for the acquisition of Cambridge and by retaining earnings. The increased
borrowing was partially offset by the conversion of $58.8 million of 6 7/8%
convertible subordinated notes to common stock. As a result, the Company's ratio
of homebuilding notes payable to total homebuilding capital at March 31, 1999,
was 57.9% and consolidated notes payable to total capital was 59.4%, decreases
of 2.2% and 1.5% over the September 30, 1998 levels of 60.1% and 60.9%,
respectively. The stockholders' equity to total assets ratio increased to 34.6%
at March 31, 1999, from 32.9% at September 30, 1998.
On February 4, 1999, under an existing shelf registration statement, the Company
issued $385 million aggregate principal amount of 8% Senior Notes, due 2009. The
proceeds of the notes were used to repay outstanding debt under our revolving
credit facility and for general corporate purposes. The Company has filed a $600
million universal shelf registration statement that is presently effective and
facilitates access to the capital markets.
The Company has an $825 million, unsecured revolving credit facility, consisting
of a $775 million four-year revolving loan and a $50 million four-year letter of
credit facility that matures in 2003. At March 31, 1999, the Company had
outstanding homebuilding debt of $1,003.0 million, of which $300.0 million
represented advances under the revolving credit facility. Under the debt
covenants associated with the revolving credit facility, at March 31, 1999, the
Company had additional borrowing capacity of $475.0 million. The Company has
entered into multi-year interest rate swap agreements, aggregating $300 million,
that fix the interest rate on a portion of the variable rate revolving credit
facility.
The financial services activities have a $75 million, one-year mortgage
warehouse facility with a bank that is secured by mortgage loans held for sale.
The warehouse facility is not guaranteed by the parent company. As of March 31,
1999, $64.2 million had been drawn under this facility with additional financing
needs provided by the Company. In the future, it is anticipated that all
mortgage company activities will be financed under the warehouse facility.
On January 28, 1999, the Company acquired the operating assets of Cambridge
Properties, a partnership doing business as Cambridge Homes. In the transaction,
the Company issued 2,555,911 shares of our common stock under our shelf
registration statement, and assumed debt of approximately $103 million, which
was repaid with borrowings under our revolving credit facility.
The Company's rapid growth and acquisition strategy require significant amounts
of cash. It is anticipated that future home construction, lot and land purchases
and acquisitions will be funded through internally generated funds and new and
existing credit facilities. Additionally, an effective shelf registration
contains about 7.4 million shares of common stock issuable to effect, in whole
or in part, possible future acquisitions.
During fiscal 1999, the Company's Board of Directors has declared one quarterly
cash dividend of $.0225 per common share and two quarterly cash dividends of
$.03 per common share, the last of which is payable May 14, 1999, to
stockholders of record on May 6, 1999.
In November, 1998, the Company's Board of Directors approved stock and debt
repurchase programs for up to $100 million each. These programs are intended to
allow the Company to take advantage of favorable market conditions, should they
occur. During the second fiscal quarter, the Company repurchased, in the open
market, 33,000 shares of its common stock at an average cost of $16.24.
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for ordinary expenditures for the construction of homes, the acquisition
of land and lots for development and sale of homes, at March 31, 1999, the
Company had no material commitments for capital expenditures.
YEAR 2000
The "Year 2000" issue (Y2K) refers to potential complications that may be caused
by computer hardware and software that were not designed for the change in the
century. If not corrected, such computer hardware and software may cause
management information systems to fail or miscalculate data.
The Company has assessed (and continues to assess) its vulnerability to Y2K.
Modifications and replacements of computer hardware and software to prepare for
Y2K are ongoing. The Company has assessed and tested its principal homebuilding
hardware and management information system and believes them to be Y2K
compliant. Evaluation, modification and testing of non-principal homebuilder
hardware and management information systems are in process and such systems are
expected to be converted to the principal management information system or Y2K
modifications are expected to be completed by August, 1999, at a cost of less
than one million dollars.
Management information systems for the Company's financial services activities
also are being evaluated and will require modifications or upgraded software
packages that are expected to be completed by August, 1999, at minimal cost.
As part of a program on continuous technology updates, for the past several
years, the Company has upgraded personal computers in its locations and this
process continues. As this occurs during 1999, personal computers at each
company location will be tested for Y2K compliance. These personal computer
upgrades are considered to be ongoing and are not considered to be specifically
Y2K related. The Company expects to incur costs to replace or repair such
equipment, but has not presently determined the amount of these costs.
The Company is presently evaluating other potential Y2K issues, including
non-management information systems. A Y2K coordinator is directing the Company's
overall effort to address these issues. As part of these reviews, the Company's
relationships with payroll service providers, vendors, contractors, financial
institutions and other third parties is being reviewed to determine the impact,
if any, Y2K will have on these relationships.
The Company expects to incur Y2K specific costs in the future, but does not
anticipate that these costs will be material. It is possible that the Company
could encounter disruptions to its business that could have a material adverse
effect on its results of operations if all systems are not Y2K compliant. Also,
the Company could be materially impacted by widespread economic or financial
market disruptions or by Y2K computer system failures at government agencies on
which the Company is dependent for utilities, zoning, building permits and
related matters. There can be no assurance that Y2K will not adversely affect
the Company and its operations.
SAFE HARBOR STATEMENT
Certain statements contained herein, as well as statements made by the Company
in periodic press releases and oral statements made by the Company's officials
to analysts and stockholders in the course of presentations about the Company
may be construed as "Forward-Looking Statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such statements may involve unstated
risks, uncertainties and other factors that may cause actual results to differ
materially from those initially anticipated. Such risks, uncertainties and other
factors include, but are not limited to, the Company's substantial leverage,
changes in general economic and market conditions, changes in interest rates and
the availability of mortgage financing, changes in costs and availability of
material, supplies and labor, general competitive conditions, the availability
of capital and the ability to successfully effect acquisitions.
-16-
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is subject to interest rate risk on its long term debt. The Company
manages its exposure to changes in interest rates by optimizing the use of
variable and fixed rate debt. In addition, the Company hedges its exposure to
changes in interest rates on its variable rate bank debt by entering into
interest rate swap agreements to obtain a fixed interest rate for a portion of
these borrowings.
The following table shows, as of March 31, 1999, the Company's long term debt
obligations, principal cash flows by scheduled maturity, weighted average
interest rates and estimated fair market value. In addition, the table shows the
notional amounts and weighted average interest rates of the Company's interest
rate swaps.
<TABLE>
<CAPTION>
Six Months
Ended
Sept. 30, Year ended September 30,
--------- ------------------------------------------------------------------------
($ in millions)
FMV @
1999 2000 2001 2002 2003 Thereafter Total 3/31/99
--------- --------- -------- --------- -------- ---------- -------- ---------
Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate....................... $ 6.7 $ 1.0 $ 0 $ 0 $ 0 $678.1 $685.8 $694.0
Average interest rate............ 8.27% 8.27% --- --- --- 8.81% 8.81% ---
Variable rate.................... $ 81.5 $ 0 $ 0 $300.0 $ 0 $0 $381.5 $381.5
Average interest rate............ 5.95% --- --- 5.58% --- --- 5.64% ---
Interest Rate Swaps:
Variable to fixed................ $300.0 $300.0 $300.0 $200.0 $200.0 $200.0 --- ($ 3.1)
Average pay rate................. 5.53% 5.53% 5.36% 5.10% 5.10% 5.09% --- ---
Average receive rate............. 90 day LIBOR
</TABLE>
-17-
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
(a) On January 15, 1999, the Company held its Annual Meeting
of Stockholders (the "Meeting"). At the Meeting, the stockholders
re-elected ten members of the Board of Directors of the Company to
serve until the Company's next annual meeting of stockholders and until
their respective successors are elected and qualified. The names of the
ten directors, the votes cast for and the number of votes withheld were
as follows:
Name Votes For Votes Withheld
---- --------- --------------
Bradley S. Anderson 55,012,093 975,581
Richard Beckwitt 55,052,300 935,374
Richard I. Galland 55,051,175 936,499
Donald R. Horton 55,011,893 975,781
Richard L. Horton 55,012,093 975,581
Terrill J. Horton 55,012,093 975,581
David J. Keller 55,011,493 976,181
Francine I. Neff 55,010,768 976,906
Scott J. Stone 55,011,893 975,781
Donald J. Tomnitz 55,011,893 975,781
(b) At the Meeting, a vote also was taken for the approval and
adoption of a proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock, $0.01 par value, from 100,000,000 shares to 200,000,000 shares.
The following votes were cast upon this proposal:
For: 51,979,353
Against: 3,978,060
Abstain: 30,259
(c) At the Meeting, a vote was taken for the approval and
adoption of a proposal to adopt the D.R. Horton, Inc. 1999 Employee
Stock Purchase Plan. The following votes were cast upon this proposal:
For: 44,333,150
Against: 5,142,758
Abstain: 57,057
-18-
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Amended and Restated Certificate of
Incorporation, as amended, of the Company,
is incorporated by reference from
Exhibit 4.2 to the Company's registration
statement (No. 333-76175) on Form S-3,
filed April 13, 1999.
(b) Reports on Form 8-K.
On February 2, 1999, the Company filed a Current
Report on Form 8-K (Items 5 and 7), which filed an
underwriting agreement, a supplemental indenture and a
statement of computation of ratio of earnings to fixed
changes, all relating to the offering and issuance of $385
million principal amount of the Company's 8% Senior Notes,
due 2009.
-19-
<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.
D.R. HORTON, INC.
Date: May 11, 1999 By /s/ David J. Keller
-----------------------------------------------
David J. Keller, on behalf of D.R. Horton, Inc.
and as Executive Vice President, Treasurer
and Chief Financial Officer
(Principal Financial and Accounting Officer)
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial invormation extracted from the
Consolidated Balance Sheets and Consolidated Statements of Income found on
pages 3 and 4 of the Company's Form 10-Q for the year-to-date, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 54,693
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,706,514
<CURRENT-ASSETS> 1,840,170
<PP&E> 35,765
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,102,772
<CURRENT-LIABILITIES> 303,363
<BONDS> 0
0
0
<COMMON> 642
<OTHER-SE> 727,959
<TOTAL-LIABILITY-AND-EQUITY> 2,102,772
<SALES> 1,343,428
<TOTAL-REVENUES> 1,359,711
<CGS> 1,104,471
<TOTAL-COSTS> 1,104,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,293
<INCOME-PRETAX> 108,915
<INCOME-TAX> 42,800
<INCOME-CONTINUING> 66,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,115
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.05
</TABLE>
