FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended April 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OR 1934
For the transition period from N/A
Commission File Number 33-72106
THE FORECAST GROUP "Registered Tradename", L.P.
FORECAST "Registered Tradename" CAPITAL CORPORATION
(Exact Name of Registrant as specified in its charter)
California 33-0582072
California 33-0582077
(State of Organization) (IRS Employer Identification Number)
10670 Civic Center Drive, Rancho Cucamonga, California 91730
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909)9877788
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
11 3/8% Senior Notes Due 2000 None
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicated by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO___
There was no voting stock held by non-affiliates of the
Registrant at June 13, 1997.
At June 13, 1997, Forecast "Registered Tradename" Capital
Corporation had 2,500 shares of Common stock outstanding.
<PAGE>
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED BALANCE SHEETS
(Amounts in 000's)
April 30,1997 October 31, 1996
(unaudited)
------------- ----------------
<S> <C> <C>
Assets:
- -------
Cash and Cash Equivalents $3,010 $12,350
Accounts Receivable 659 466
Accounts and Notes Receivable,
Related Parties 4,042 5,239
Real Estate Inventory 71,292 80,760
Property and Equipment, Net 1,080 1,171
Other Assets 2,025 2,200
-------- --------
Total Assets $82,108 $102,186
======== ========
Liabilities & Partners' Equity:
- -------------------------------
Accounts Payable $7,404 $11,443
Accrued Expenses 1,991 3,624
Notes Payable:
Senior Notes at 11 3/8% due
December 2000 29,075 34,475
Collateralized by Real Estate
Inventory 23,516 25,720
------- -------
Total Notes Payable 52,591 60,195
------- -------
Total Liabilities 61,986 75,262
Partners' Equity 20,886 27,688
Less: Capital Notes Receivable
from Partners (764) (764)
-------- --------
Net Partners' Equity 20,122 26,924
-------- --------
Total Liabilities &
Partners' Equity $82,108 $102,186
======= =========
</TABLE>
[FN] See notes to consolidated financial statements.
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS AND PARTNERS'EQUITY
FOR THE SIX AND THREE MONTHS ENDED APRIL 30, 1997 AND 1996
(Unaudited)
(Amount in 000's)
Six Months Ended Three Months Ended
April 30, April 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Homebuilding Revenues $53,731 $58,103 $28,888 $31,594
Cost of Homes Sold 45,536 48,315 23,918 26,125
------- ------- ------ ------
Gross Profit 8,195 9,788 4,970 5,469
------- ------- ------ ------
Operating Expenses:
- -------------------
Selling & Marketing Ex. 6,537 6,580 3,361 3,541
General & Admin. Ex. 3,738 3,425 1,606 1,673
Non-Cash Charge for
Impairment of Real
Estate Inventory 6,635 - - -
------ ----- ----- -----
Total Operating Ex. 16,910 10,005 4,967 5,214
------ ------ ----- -----
Operating Income(Loss) (8,715) (217) 3 255
Other Income (Expenses):
- -----------------------
Interest Income 196 131 65 65
Other Income and Expenses 83 115 44 50
---- ---- ---- ----
Total Other Income
(Expenses) 279 246 109 115
---- ---- ---- ----
Income (Loss) before
Extraordinary Gain (8,436) 29 112 370
Extraordinary Gain on
Extinguishment of
Senior Notes 1,634 1,876 - 493
------ ------ ---- -----
Net Income (Loss) ($6,802) $1,905 $112 $863
====== ====== ==== =====
Partners' Equity at
Beginning of Period $27,688 $23,998 $20,774 $25,040
Net Income(Loss)
this Period (6,802) 1,905 112 863
-------- ------ ------ ------
Subtotal 20,886 25,903 20,886 25,903
Less: Capital Notes
Receivable from Partners (764) - (764) -
------- ------ ------- ------
Net Partners' Equity
at End of Period $20,122 $25,903 $20,122 $25,903
======= ======= ======= ========
</TABLE>
[FN] See notes to consolidated financial statements.
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND 1996
(Unaudited)
(Amount in 000's)
1997 1996
----- -----
<S> <C> <C>
Operating Activities:
- ---------------------
Net Income (Loss) ($6,802) $1,905
Adjustments to Reconcile Net Income (Loss) to
Net Cash Generated from (Used for)
Operating Activities
Non-Cash Charge for Impairment of
Real Estate Inventory 6,635 -
Extraordinary Gain on Extinguishment
of Senior Notes (1,634) (1,876)
Depreciation and Amortization on
Property and Equipment 146 128
Loss (Gain) on Sale of Property and
Equipment - 9
Decrease (Increase) in Accounts
Receivable (193) 174
Decrease (Increase) in Real Estate
Inventory 2,833 (1,468)
Decrease (Increase) in Other Assets 21 (454)
Increase (Decrease) in Accounts Payable
and Accrued Expenses (5,672) 221
------- ------
Net Cash Generated from(Used for)
Operating Activities (4,666) (1,361)
------- ------
Investing Activities:
---------------------
Additions to Property and Equipment (55) (134)
------- ------
Net Cash Generated from(Used for)
Investing Activities (55) (134)
------- ------
Financing Activities:
---------------------
Retirement of Senior Notes at 11 3/8% due
December 2000 (3,612) (3,251)
Decrease (Increase) in Accounts and Notes
Receivable, Related Parties 1,197 (2,701)
Proceeds from Notes Payable 27,812 33,061
Proceeds from Notes Payable, Other 1,700 2,221
Principal Payments on Notes Payable (30,016) (28,709)
Principal Payments on Notes Payable, Other (1,700) (2,221)
------- -------
Net Cash Generated from(Used for)
Financing Activities (4,619) (1,600)
------- ------
Increase (Decrease) in Cash and Cash
Equivalents (9,340) (3,095)
Cash and Cash Equivalents at Beginning
of Period 12,350 8,090
------- ------
Cash and Cash Equivalents at End
of Period $3,010 $4,995
======= ======
</TABLE>
[FN] See notes to consolidated financial statements.
<PAGE>
THE FORECAST GROUP "Registered Tradename", L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and
related disclosures contained in the Form 10-K for the year ended
October 31, 1996 (File No. 33-72106) as filed with the Securities
and Exchange Commission.
The results of operations for the six months ended April 30,
1997 do not necessarily indicate the results that can be expected
for the full fiscal year.
The results of operations for the six months ended April 30,
1997, and this Form 10-Q, also may be interpreted as, or actually
contain, "forward looking" information, as that term is defined
by the Securities and Exchange Commission. To the extent such
forward looking information is contained in this filing, the
company intends to use these disclosures to take advantage of the
"Safe Harbor" provisions set out in the rules and regulations of
the Securities and Exchange Commission, and thus strongly
recommends that prior to making an investment decision a
prospective investor should carefully consider the factors
mentioned in Form 10-K for the year ended October 31, 1996 in
relation to that "forward looking" information, as well as other
financial and business information that may be available from a
variety of sources regarding the home building industry as a
whole, including, but not limited to:
- - Changes in national economic conditions such as interest
rates, consumer confidence and job loss or formation statistics
- - Change in economic conditions in the markets in which the
Company operates - Fluctuations in mortgage interest rates
- - Cost increases resulting from adverse weather conditions,
shortages of labor and construction materials
- - Changes in governmental regulations which may delay new home
development or impose additional costs or fees.
2. Real Estate Held for Development and Sale and Related Notes
Payable
Real estate held for development and sale and related notes
payable consist of the following:
<TABLE>
(Amounts in 000's) April 30, 1997
-----------------------------------
Real Estate Notes Payable
Inventory
------------- --------------
<S> <C> <C>
Land Held for Development $15,469 $0
Residential Projects in Process 47,998 17,669
Model Homes 7,825 5,847
------ ------
Total $71,292 $23,516
======= =======
October 31, 1996
--------------------------------
Real Estate Notes Payable
Inventory
------------- ------------
Land Held for Development $15,067 $0
Residential Projects in Process 57,442 20,449
Model Homes 8,251 5,271
------- -------
Total $80,760 $25,720
======= =======
</TABLE>
3. Interest Expense
The following summarizes the components of interest
expense incurred, capitalized, expensed and paid:
<TABLE>
(Amounts in 000's) For the Six Months For the Three Months
Ended Ended
April 30, April 30,
--------------------- -------------------
1997 1996 1997 1996
--------------------- --------------------
<S> <C> <C> <C> <C>
Interest incurred
and capitalized $3,684 $3,760 $1,765 $1,848
Capitalized interest
amortized to cost
of homes sold $3,362 $2,825 $1,892 $1,589
Interest paid $3,913 $3,969 $939 $873
</TABLE>
4. Transactions With Affiliates
In December of 1994, Mr. Previti did, on his own account,
purchase $550,000 of the Company's Senior Notes at a favorable
discount from their face value. In January 1995, the Board of
Directors of Forecast "Registered Tradename" Homes, Inc.,
resolved that it would be in the Company's best long-term
interests to seek the assistance of Mr. James Previti, the
Company's President and Chief Executive Officer, in acquiring the
Company's Senior Notes on the open market, if he could acquire
them at a favorable discount from their stated face value. At
the same time, the Board of Directors agreed that the Company
would repurchase the notes from Mr. Previti at his cost basis,
plus interest, at such time as the Company had sufficient
financial resources. Acting upon this authorization, Mr. Previti
did acquire another $19,800,000 of Senior Notes of which
$14,950,000 were repurchased and retired prior to October 31,
1996. In January 1997, Mr. Previti assigned his interest in the
aggregate remaining $5,400,000 of Senior Notes to the Company, in
exchange for the Company's assumption of margin debt of
$1,700,000 owing by Mr. Previti, and forgiveness of two notes
held by and owing to the Company in the total amount of
$1,699,000 that were secured by Mr. Previti's interest in the
Senior Notes. This transaction resulted in the Company repaying
the margin debt of $1,700,000, plus accrued interest, which
created an extraordinary gain of $1,634,000 in the first quarter
of fiscal 1997.
The Company believes that the transactions discussed above
were on terms at least as favorable to the Company as a
comparable transaction made on an arms length basis between
unaffiliated parties.
5. 11 3/8% Senior Notes Due December 2000
In February 1994, the Company issued $50,000,000 in 11 3/8%
Senior Notes through a public debt offering. The notes are joint
and several obligations of the Company and Forecast "Registered
Tradename"Capital Corporation, with interest only payments due
semi-annually on June 15 and December 15 of each year. The notes
are unsecured obligations of the Company and rank pari passu in
right of payment with all senior indebtedness of the Company. As
of April 30, 1997, the Company had retired a total of $20,925,000
of the Senior Notes, leaving $29,075,000 of Senior Notes still
outstanding.
The Indenture governing the Senior Notes requires the
Company to maintain a minimum net worth of $25 million.
If the Company's net worth at the end of any two consecutive
fiscal quarters (the last day of such second consecutive fiscal
quarter being referred to as the "Trigger Date") is less than $25
million , then the Company is required to make an offer to all
Senior Note holders to acquire on a pro rata basis, Senior Notes
in the aggregate principal amount of $5 million (the "Net Worth
Offer") at a purchase price equal to 100% of the principal amount
thereof, plus accrued interest to the date of repurchase.
Notwithstanding this requirement to offer to, and then,
repurchase Senior Notes, the Indenture allows the Company to
credit against the Net Worth Offer, the principal amount of any
Senior Notes acquired by the Company prior to the Trigger Date,
through repurchase or optional redemption. The Company may not,
however, use any specific Senior Note repurchase in any more than
one Net Worth Offer. In no event shall the failure to meet the
minimum net worth requirement at the end of any fiscal quarter be
counted toward the making of more than one Net Worth Offer.
For the fiscal quarters ended October 31, 1995 and
January 31, 1996, the Company was not in compliance with the
minimum net worth requirement. Therefore, under the terms of the
Company's Indenture, January 31, 1996 became a Trigger Date for
the Company, requiring a Net Worth Offer. However, despite this
event, the Company had already repurchased or redeemed a
sufficient amount of Senior Notes to meet any repurchase
obligations resulting from the first Trigger Date. From April
30, 1996 through January 30, 1997, the Company's net worth was
again above the $25 million threshold, thereby preventing the
occurrence of a second Trigger Date. As a result of the
Company's decision to record a non-cash charge for the impairment
of real estate inventory at the end of the first quarter of 1997,
for the fiscal quarters ended January 31, 1997 and April 30,
1997, the Company was again not in compliance with the minimum
net worth requirement, which resulted in the occurrence of a
Trigger Date on April 30, 1997. Notwithstanding the occurrence
of this Trigger Date, the Company's acquisition and retirement of
over $15 million in Senior Notes not previously used in a Net
Worth offer, once again prevented the need to make a Net Worth
Offer. Using the to date amount of retired Senior Notes,
management believes it can prevent the occurrence of any Net
Worth Offer up through October 30, 1998.
6. Real Estate Held for Development and Sale
In March 1995, The Financial Accounting Standards Board
(FASB) issued Statement No. 121, "Accounting for the Impairment
of LongLived Assets and for Long-Lived Assets to Be Disposed Of"
(Statement 121). Under Statement 121, when events or circumstances
indicate that an impairment to an assets to be held
and used might exist, the expected future undiscounted cash flows
from the affected asset or group of assets must be estimated and
compared to the carrying value of the asset or group of assets.
If the sum of the estimated undiscounted cash flows is less than
the carrying value of the assets, an impairment loss must be
recorded. The impairment loss is measured by comparing the
estimated fair value of the assets with their carrying amount.
Statement 121 also requires that long-lived assets that are held
for disposal be reported at the lower of the assets' carrying
amount or fair value less costs of disposal.
Management performs regular evaluations of its real estate
inventory and analyzes future undiscounted cash flows for all
real estate projects where impairment indicators are present. The
evaluations consider the competitive nature of homebuilding
operations in the Company's principal markets, including changes
in sales prices, increases in sales incentives and future costs
of development and holding costs during development based on
current absorption estimates. Based on these evaluations, a non
cash charge for the impairment of certain real estate assets
amounting to $6,635,000 was recorded in the three months ending
January 31, 1997.
<PAGE>
FORECAST "Registered Tradename" CAPITAL CORPORATION
BALANCE SHEET
(unaudited)
<TABLE>
April 30, 1997 October 31, 1996
-------------- ---------------
<S> <C> <C>
Assets:
- -------
Cash $500 $300
---- ----
Total Assets $500 $300
==== ====
Liabilities & Shareholders'
Deficit:
- ---------------------------
Accounts Payable $400 $400
Accounts Payable,
Related Parties 3,300 2,300
----- -----
Total Liabilities 3,700 2,700
Common Stock, $1.00 par value:
Authorized 10,000 shares
Issued and Outstanding
2,500 shares 2,500 2,500
Accumulated Deficit (5,700) (4,900)
------- -------
Total Shareholders' Deficit (3,200) (2,400)
------- -------
Total Liabilities
& Shareholders' Deficit $500 $300
==== ====
</TABLE>
[FN] See notes to consolidated financial statements.
FORECAST "Registered Tradename" CAPITAL CORPORATION STATEMENTS OF
OPERATIONS AND SHAREHOLDERS' EQUITY FOR THE SIX AND THREE MONTHS
ENDED APRIL 30, 1997 AND 1996
(Unaudited)
<TABLE>
For the Six Months For the Three Months
Ended Ended
April 30, April 30,
--------------------- -------------------
1997 1996 1997 1996
--------------------- -------------------
<S> <C> <C> <C> <C>
General & Administrative
Expenses $0 $0 $0 $0
Income Tax Expense 800 800 800 800
------- ------ ------ -----
Net Income (Loss) ($800) ($800) ($800) ($800)
======= ====== ====== ======
Shareholders' Equity at
Beginning of Period (2,400) (600) (2,400) (600)
Net Income (Loss)
this Period (800) (800) (800) (800)
------- ----- ------ -----
Shareholders' Equity
at End of Period ($3,200) ($1,400) ($3,200) ($1,400)
======== ======== ======= =======
</TABLE>
[FN] See notes to consolidated financial statements.
<PAGE>
FORECAST "Registered Tradename" CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Forecast "Registered Tradename" Capital Corporation was
incorporated in California on September 20, 1993. The Company is
a wholly-owned subsidiary of The Forecast Group "Registered
Tradename", L.P., a California limited partnership that is
engaged in the residential real estate development business. The
accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation SX. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and
related disclosures contained in the Form 10K for the year ended
October 31, 1996 (File No. 3372106) as filed with the Securities
and Exchange Commission.
The results of operations for the six months ended April
30, 1997 do not necessarily indicate the results that can be
expected for the full fiscal year.
2. Income Taxes
The Company is a "C" Corporation for federal and state
income tax reporting purposes and accounts for income taxes in
accordance with Financial Accounting Standards Board Statement
No. 109 "Accounting for Income Taxes".
<PAGE>
THE FORECAST GROUP "Registered Tradename", L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Part I. Item 2.
Results of Operations
The following table sets forth, for the period indicated,
certain income statement items as percentages of total home
building sales and certain other data:
<TABLE>
Percent of Percent of
Housing Sales Housing Sales
For the For the
Six Months Three Months
-------------- --------------
1997 1996 1997 1996
-------------- ----------------
<S> <C> <C> <C> <C>
Homebuilding Revenues 100.00% 100.00% 100.00% 100.00%
Cost of Homes Sold 84.75% 83.15% 82.80% 82.69%
------- ------ ------- ------
Gross Profit 15.25% 16.85% 17.20% 17.31%
Operating Expenses:
- -------------------
Selling & Marketing
Expense 12.17% 11.32% 11.63% 11.21%
General & Administrative
Expense 6.96% 5.89% 5.56% 5.30%
Non-Cash Charge for
Impairment of
Real Estate Inventory 12.35% 0.00% 0.00% 0.00%
-------- ------ ------ ------
Total Operating Ex. 31.47% 17.22% 17.19% 16.50%
Operating Income (Loss) (16.22%) (0.37%) 0.01% 0.81%
Number of homes closed 369 425 194 231
Number of homes sold 419 504 282 312
Number of homes in backlog 215 273
Aggregate value of backlog
in millions $30,930 $35,589
======= =======
</TABLE>
Results of Operations for the Three Months ended April 30, 1997
and April 30, 1996
Housing revenues for the three months ended April 30, 1997
were $28.9 million, a decrease of $2.7 million or 8.6% from the
three months ended April 30, 1996. The revenues in fiscal 1997
represent 194 closings at an average sales price of $148,900
while the revenues in fiscal 1996 represent 231 unit closings at
an average sales price of $136,800. This increase in the overall
average sales price is attributable to a variance in the product
mix and pricing of specific communities when comparing period to
period. The decrease in the number of closings is attributable
to fewer homes being in backlog at the beginning of the 1997
fiscal second quarter, which is largely attributable to increased
competitive conditions in the Company's Southern California
market, as well as a delay in opening new communities in Northern
California. In addition, the Company had new home sales, net of
cancellations, of 282 homes for the three months ended April 30,
1997. This represented a decrease of 30 homes or 9.6% from the
comparable prior year period, and is primarily attributable to
the increased competitive conditions in the Company's Phoenix
and Southern California markets.
Gross profit from housing sales were $5.0 million for the
three months ended April 30, 1997, a decrease of $499,000, or
9.1%, from the three months ended April 30, 1996, as a result of
decreased home closings. The overall gross profit percentage has
remained relatively consistent from year-to-year. While the
gross profit margin has decreased $499,000, the gross margin per
unit has increased $1,900 due to higher average sale price and
product mix in the closings.
Selling and marketing expenses were $3.4 million during the
three months ended April 30, 1997, a decrease of $180,000 or 5.1%
from the three months ended April 30, 1996. The decrease is
primarily attributable to a decrease in house closings, which was
partially offset by an increase in advertising expenses needed to
keep sales absorptions at similar levels to those reported for
the three months ended April 30,1996.
General and administrative expenses were $1.6 million during
the three months ended April 30, 1997, a decrease of $67,000 or
4.0% from the three months ended April 30, 1996. The decrease
can be largely attributed to the company's continued effort to
reduce unnecessary overhead expenses. General and administrative
costs continue to be monitored by management for improvement.
Income before extraordinary gain was $112,000 during the
three months ended April 30, 1997, a decrease of $258,000 from
the three months ended April 30, 1996 as a result of a decrease
in house closings.
Results of Operations for the Six Months ended April 30, 1997 and
April 30, 1996
Housing revenues for the six months ended April 30, 1997
were $53.7 million, a decrease of $4.4 million or 7.5% from the
six months ended April 30, 1996. The decrease in revenue is a
result of a 13% decrease in closings from the comparable prior
year period. The decrease in closings is attributable to fewer
homes in backlog at the beginning of the 1997 fiscal year largely
due to competitive conditions in the Company's Phoenix and
Southern California markets and the delay in opening new
communities in Northern California. In addition, the Company had
new home sales, net of cancellations, of 419 homes for the six
months ended April 30, 1997, a decrease of 85 homes or 16% from
the comparable prior year period. The decrease in sales is
attributable to an unusually large number of cancellations during
the first quarter of fiscal 1997 in the Company's Phoenix market,
delays in opening new communities in Northern California, and the
increased competitive conditions in the Company's Phoenix and
Southern California markets.
Gross profit from housing sales were $8.2 million for the
six months ended April 30, 1997, a decrease of $1.6 million or
16.3%, from the six months ended April 30, 1996, primarily as a
result of decreased home closings. This tightening of margins was
the result of competitive conditions which limited the Company's
ability to pass on price increases to its customers, as well as
higher financing costs which were created by the Company carrying
its inventories for longer periods. In the first quarter of
fiscal 1997, the Company recorded a non-cash charge for the
impairment of certain real estate assets benefiting future
quarters' gross margins.
Selling and marketing expenses for the six months ended
April 30, 1997 were $6.5 million, a decrease of $43,000 or 0.6%
from the six months ended April 30, 1996. The decrease is
primarily attributable to a decrease in house closings, which is
partially offset by an increase in advertising costs needed to
keep sales absorptions at similar levels to those reported as of
April 30, 1996.
General and administrative expenses were $3.7 million for
the six months ended April 30, 1997, an increase of $313,000 or
9.1% from the six months ended April 30, 1996. The increase is
the result of a one-time extraordinary cost incurred in the
Company's first quarter of fiscal 1997.
Loss before extraordinary gain was $8.4 million for the six
months ended April 30, 1997, as compared to $29,000 of income
before extraordinary gain for the six months ended April 30,1996.
The decrease in income is primarily attributable to the Company
evaluating it's inventory in relation to future undiscounted cash
flows and recording a non-cash charge of $6,635,000 during the
first quarter of fiscal 1997.
Liquidity and Capital Resources
The residential real estate development business is
inherently capital intensive. Significant cash expenditures are
typically needed to acquire and develop land, construct homes and
establish marketing programs for lengthy periods of time in
advance of revenue realization. The Company generally finances
its operations with secured borrowings from commercial banks,
financial institutions and private investors, unsecured
borrowings in the public market, and with available cash flow
from operations.
The Company had commitments for $36.4 million under several
revolving credit facilities with commercial banks and financial
institutions at April 30, 1997, of which $7.9 million was
outstanding. In addition, at April 30, 1997, the Company had
community specific facilities capable of providing aggregate
fundings of $18.9 million, against which $9.8 million was
outstanding at that time. The Company also benefits from a line
of credit which is secured by some of its model homes for an
amount not to exceed $5.8 million of which the entire $5.8
million was outstanding as of April 30, 1997. Borrowings under
the credit facilities are secured by liens on specific real
property owned by the Company, and carry limited recourse against
the Company. As of April 30, 1997, the aggregate outstanding
principal balance under the Company's credit facilities was $23.5
million and the recourse to the Company from those borrowings was
$4.2 million.
In February 1994, the Company issued $50 million in Senior
Notes through a public debt offering, of which $29,075,000 were
still outstanding on April 30, 1997. The notes are due in
December 2000 and bear interest at the rate of 11 3/8% per annum,
payable semi-annually on June 15 and December 15 of each year.
For additional information regarding the Company's Senior Notes
please refer to Note 5 of Notes to Consolidated Financial
Statements.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
(a) None
Item 2. Changes in Securities
---------------------
(a) None
Item 3. Defaults upon Senior Securities
-------------------------------
(a) Refer to note 5 of Notes to Consolidated Financial Statements.
-------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
(a) None
Item 5. Other Information
-----------------
(a) None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) There are no exhibits attached to this report.
(b) The Company did not file any reports on Form 8-K during the
period.
<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 FORECAST GROUP "Registered Tradename", L.P.
-----------------------------------------------
By: FORECAST "Registered Tradename" HOMES, INC.
-----------------------------------------------
A California Corporation
its General Partner
June 13, 1997 By: /s/ James P. Previti
- -------------- ------------------------
Date James P. Previti
President
By: /s/ Larry Day
--------------------
Larry Day
Principal Accounting Officer
By: FORECAST "Registered Tradename" CAPITAL CORPORATION
June 13, 1997 By: /s/ James P. Previti
- ------------- -------------------------
Date James P. Previti
President
By: /s/ Larry Day
---------------------
Larry Day
Principal Accounting Offier
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<FISCAL-YEAR-END> OCT-31-1997
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0
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