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 January 31, 2000
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
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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)987-7788
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 March 3, 2000.
At March 3, 2000, Forecast Capital Corporation had 2,500 shares
of Common stock outstanding.
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED BALANCE SHEETS
(Amount's in 000's)
January 31, 2000 October 31, 1999
(Unaudited)
---------------- ---------------
<S> <C> <C>
Assets:
- -------
Cash and Cash Equivalents $25,310 $22,594
Accounts Receivable 1,310 4,298
Accounts and Notes Receivable,
Related Parties 8,847 6,905
Real Estate Inventory 122,084 110,800
Property and Equipment, Net 459 551
Other Assets 1,594 1,770
-------- --------
Total Assets $159,604 $146,918
======== ========
Liabilities & Partners' Equity:
- -------------------------------
Accounts Payable $16,904 $24,941
Accrued Expenses 3,866 4,007
Other Liabilities - 514
Notes Payable:
Senior Notes at 11 3/8%
Due December 2000 19,700 19,700
Collateralized by Real Estate
Inventory 61,119 40,932
Other Notes Payable 3,680 4,106
------- -------
Total Notes Payable 84,499 64,738
------- -------
Total Liabilities $105,269 $94,200
Partners' Equity 54,335 53,018
Less: Capital Note Receivable
From Partner - (300)
------- -------
Net Partners' Equity 54,335 52,718
------- -------
Total Liabilities &
Partners' Equity $159,604 $146,918
======== ========
</TABLE>
[FN] See notes to consolidated financial statements.
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(Unaudited)
(Amount's in 000's)
For the Three Months Ended
January 31,
--------------------------
2000 1999
--------------------------
<S> <C> <C>
Homebuilding Revenues $61,041 $38,164
Cost of Homes Sold 48,782 30,902
------- -------
Gross Profit 12,259 7,262
------- -------
Land Sales Revenues - 7,268
Cost of Land Sold - 7,714
------- -------
Loss on Land Sales - (446)
------- -------
Operating Expenses:
- -------------------
Selling & Marketing Expenses 3,834 3,047
General & Administrative Expenses 4,174 3,137
Other Operating Costs 1,274 69
------ ------
Total Operating Expenses 9,282 6,253
------ ------
Operating Income 2,977 563
Other Income (Expenses):
- -----------------------
Interest Income 183 90
Interest Expense - (9)
Other Income and Expenses 182 686
------ ------
Total Other Income (Expenses) 365 767
------ ------
Net Income $3,342 $1,330
====== ======
Partners' Equity at
Beginning of Period $53,018 $31,443
Capital Distributions (2,025) -
Net Income this Period 3,342 1,330
------- -------
Subtotal 54,335 32,773
Less: Capital Notes Receivable
From Partners - (300)
------- -------
Net Partners' Equity at
End of Period $54,335 $32,473
======= =======
</TABLE>
[FN] See notes to consolidated financial statements.
<TABLE>
THE FORECAST GROUP "Registered Tradename", L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(Unaudited)
(Amount's in 000's)
For the Three Months Ended
January 31,
--------------------------
2000 1999
--------------------------
<S> <C> <C>
Operating Activities:
- ---------------------
Net Income $3,342 $1,330
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation on Property and Equipment 75 86
Loss on Sale of Property and Equipment 1 -
Loss on Land Sale - 446
Other Operating Costs 1,274 69
Equity Income of Unconsolidated
Joint Venture 101 80
Decrease in Accounts Receivable 2,988 580
Increase in Real Estate Inventory (12,558) (35,522)
Decrease (Increase) in Other Assets (52) (1,632)
Increase in Accounts Payable and
Accrued Expenses (8,178) (2,962)
(Decrease) Increase in Other Liabilities (514) 1,881
------- -------
Net Cash Used For Operating Activities (13,521) (35,644)
------- -------
Investing Activities:
- ---------------------
Contribution to Joint Venture - (7)
Distribution from Joint Venture 127 212
Additions to Property and Equipment 16 (76)
----- ----
Net Cash Provided by
Investing Activities 143 129
----- ----
Financing Activities:
- ---------------------
Capital Distributions (2,025) -
Decrease in Capital Note Receivable
from Partner 300 -
(Increase) Decrease in Accounts and
Notes Receivable, Related Parties (1,942) 2,513
Proceeds from Notes Payable,
Collateralized by Real Estate 57,691 58,281
Proceeds from Notes Payable, Other 80 85
Principal Payments on Notes Payable,
Collateralized by Real Estate (37,504) (28,475)
Principal Payments on Notes Payable, Other (506) (534)
------- -------
Net Cash Provided By
Financing Activities 16,094 31,870
------- -------
Increase (Decrease) in Cash
and Cash Equivalents 2,716 (3,645)
Cash and Cash Equivalents at
Beginning of Period 22,594 16,193
------- -------
Cash and Cash Equivalents at
End of Period $25,310 $12,548
======= =======
</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, 1999 (File No. 33-72106) as filed with the Securities
and Exchange Commission.
The results of operations for the three months ended January
31, 2000 do not necessarily indicate the results that can be
expected for the full fiscal year.
The results of operations for the three months ended January
31, 2000, 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, 1999 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 and federal fund interest rates
- Cost increases resulting from adverse weather conditions,
shortages of labor and/or 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>
(Amount's in 000's)
January 31, 2000
---------------------------
Real Estate
Inventory Notes Payable
---------------------------
<S> <C> <C>
Land Held for Development $12,509 $-
Residential Projects in Process 106,522 61,119
Model Homes 3,053 -
-------- -------
Total $122,084 $61,119
======== =======
October 31, 1999
---------------------------
Real Estate
Inventory Notes Payable
---------------------------
Land Held for Development $9,000 $-
Residential Projects in Process 100,720 40,932
Model Homes 1,080 -
-------- -------
Total $110,800 $40,932
======== =======
</TABLE>
3. Interest
The following summarizes the components of interest
incurred, capitalized, expensed and paid:
<TABLE>
(Amount's in 000's)
For the Three Months
Ended
January 31,
-----------------------
2000 1999
-----------------------
<S> <C> <C>
Interest Incurred and Capitalized $2,418 $2,191
Interest Incurred and Expensed - 9
------ ------
Total Interest Incurred $2,418 $2,200
====== ======
Capitalized Interest Amortized
to Cost of Homes Sold $1,804 $1,146
Interest Paid $2,978 $2,754
</TABLE>
4. Transactions With Affiliates
From time to time, the Trust and/or Mr. Previti have
guaranteed indebtedness of the Company in order to enable the
Company to obtain financing on more favorable terms than would
otherwise be available. There can be no assurances that the
Trust and/or Mr. Previti will continue to provide such guarantees
in the future.
As of January 31, 2000 a management fee receivable of
$590,000 is owed to the Company from an affiliated entity in
which Mr. Previti owns a 50% interest for development related
rights and services associated with certain real property in
Southern California. Another $30,000 is due the Company for
management fees from an affiliated entity in which Mr. Previti
owns a 87.5% interest for development related rights and services
associated with certain real property in Arizona.
During the three months ended January 31, 2000,
distributions to partners totaled $2.0 million, of which $300,000
was to Forecast Homes Inc. to pay off its note payable to
the Company.
5. Receivables From Affiliates
During the three months ended January 31, 2000,accounts and
notes receivable from related parties increased $1.9 million.
The increase results primarily from two new loans made by the
Company. The first is a $1,100,000 note receivable from an affiliated
entity in which Mr. Previti is a 50% owner, which is due December
31, 2000 at 10% interest, secured by a deed of trust with
assignments of rents. The second, is an unsecured note
receivable from an affiliated entity in which Mr. Previti is a
100% owner for $500,000 due December 31, 2000 at 10% interest.
6. 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. At January 31, 2000
Senior Notes with a face value of $19,700,000 are held in names
of investors other than the Company. The notes are joint and
several senior obligations of the Company and Forecast
"Registered Tradename" Capital Corporation ("Capital"), with
interest only payments due semi annually on June 15 and December
15 of each year. The notes are senior unsecured obligations of
the Company and rank parsi passu in right of payment with all
senior indebtedness of the Company.
The Indenture governing the Senior Notes permits the
Company to incur up to $15 million in recourse debt in addition
to the $50 million of Senior Notes, and to incur additional
recourse debt beyond this $15 million limitation if the Company
maintains certain debt-to-equity and debt coverage ratios. As of
January 31, 2000, the Company met both its debt-to-equity and
debt coverage ratio tests thereby providing the Company with
the flexibility to incur more than $15 million of recourse debt
had it been necessary. The Company is not precluded from
incurring additional debt on a non-recourse debt basis, without
regard to any interest or debt coverage ratios. Despite
this present ability to incur additional recourse debt, there
is no assurance that the Company will continue to meet these
ratio tests, and if not, that Mr. Previti and/or the Trust
will be willing to guarantee such indebtedness.
The Company is confident that through projected cashflow
from operations and secured borrowings, sufficient funds will be
available for paying off the Senior Notes on December 15, 2000.
During the next couple of months, the Company will be refining
the repayment sources and plans for the actual retirement of
those notes.
7. Real Estate Held for Development and Sale
In accordance with FASB Statement No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (Statement 121), when events or circumstances
indicate that an impairment to 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 future undiscounted cash flows, excluding
interest charges, 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.
On an ongoing basis, management analyzes future undiscounted
cash flows for all real estate projects where impairment
indicators are present. Based upon such analysis, no provision
for impairment loss was recorded for the three months ended
January 31, 2000 or 1999.
<PAGE>
FORECAST "Registered Tradename" CAPITAL CORPORATION
BALANCE SHEETS
<TABLE>
January 31, 2000 October 31, 1999
(unaudited)
---------------- ----------------
<S> <C> <C>
Assets:
- -------
Cash $800 $800
---- ----
Total Assets $800 $800
==== ====
Liabilities & Shareholders'
- ---------------------------
Deficit:
- --------
Accounts Payable $300 $300
Accounts Payable, Related Parties 6,400 6,400
------ ------
Total Liabilities $6,700 $6,700
------ ------
Common Stock, $1.00 par value:
Authorized 10,000 shares
Issued and Outstanding
2,500 shares 2,500 2,500
Accumulated Deficit (8,400) (8,400)
------ ------
Total Shareholders' Deficit (5,900) (5,900)
------ ------
Total Liabilities &
Shareholders' Deficit $800 $800
====== ======
</TABLE>
[FN] See notes to financial statements.
FORECAST "Registered Tradename" CAPITAL CORPORATION
STATEMENTS OF OPERATIONS AND SHAREHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(Unaudited)
<TABLE>
Three Months Ended
January 31,
--------------------
2000 1999
--------------------
<S> <C> <C>
General & Administrative Expenses $0 $0
Income Tax Expense - -
---- ----
Net Loss $0 $0
==== ====
Shareholders' Deficit at
Beginning of Period ($5,900) ($4,600)
Net Loss $0 $0
------ ------
Shareholders' Deficit at
End of Period ($5,900) ($4,600)
======= =======
</TABLE>
[FN] See notes to financial statements.
<PAGE>
FORECAST "Registered Tradename" CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Forecast "Registered Tradename" Capital Corporation (the
"Company") was incorporated in California on September 20, 1993,
and was formed solely for the purpose of serving as an Issuer of
the Senior Notes for The Forecast Group "Registered Tradename",
L.P. The authorized capital stock of the Company consists of
10,000 shares of common stock with a par value of $1.00 per
share. 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 Company is financially dependent on
The Forecast Group "Registered Tradename", L.P. to fund its
continuing operations.
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 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 10K for the year ended
October 31, 1999 (File No. 33-72106) as filed with the Securities
and Exchange Commission.
The results of operations for the three months ended January
31, 2000 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. This table excludes land
sales revenue and cost of land sold.
<TABLE>
Percent of Housing Sales
For the Three Months Ended
January 31,
---------------------------
2000 1999
---------------------------
<S> <C> <C>
Amounts as a Percentage of Revenues:
- ------------------------------------
Homebuilding Revenues 100.0% 100.0%
Cost of Homes Sold 79.9% 81.0%
----- ------
Gross Profit 20.1% 19.0%
----- ------
Operating Expenses:
Selling & Marketing Expenses 6.3% 8.0%
General & Administrative Expenses 6.8% 8.2%
Other Opearting Costs 2.1% 0.2%
---- ----
Total Operating Expenses 15.2% 16.4%
---- ----
Operating Income 4.9% 2.6%
==== ====
Number of Homes Closed 307 235
Number of Homes Sold 330 347
Number of Homes in Sales Backlog 269 345
Aggregate Value of Sales Backlog $52.0 $58.2
($ in millions)
</TABLE>
Results of Operations
For the Three Months ended January 31, 2000 and January 31, 1999
Housing revenues for the three months ended January 31, 2000
were a record $61.0 million, representing an increase of $22.9
million or 59.9% from the three months ended January 31, 1999.
The revenues for the three months ending January 31, 2000
represent 307 closings, an increase of 72 closings or 30.6% over
the three months ending January 31, 1999. The increase reflects
the continued strengthening California housing market which
resulted in an increased absorption rates and overall sales in
the Company's California submarkets. Prior year number of homes sold
are higher than the current year number due to the inclusion of 57
sales from our Arizona Division, which was sold to a national
homebuilder in the fourth quarter of the Company's 1999 fiscal year.
The average sales price of the homes closed during the three months
ended January 31, 2000 was $198,831 as compared to $162,400 for
the same period a year ago, representing an increase of 22.4%.
The increase in average sales price is due primarily to a greater
number of closings in communities with higher sales prices as
compared to the prior comparable period.
Gross profit from housing sales was $12.3 million for the
three months ended January 31, 2000, an increase of $5.0 million
or 68.5% from the three months ended January 31, 1999. Gross
profit per home increased to $39,932 from $30,902 representing a
29.2% increase over the comparable period in 1999. Gross profit
margin for the three months ended January 31, 2000 was 20.1% as
compared to 19.0% a year ago. The increase in gross margin was
due primarily to a higher concentration of sales in our higher
sales priced communities in the Northern California Division.
During the three months ended January 31, 1999, the Company
sold four parcels of land, which resulted in a net loss of
$466,000. No land was sold in the comparable three month period
of 2000.
For the three months ended January 31, 2000, the Company's
interest incurred increased 9.9% as compared to the three months
ended January 31, 1999. This increase is a result of increased
construction volume based upon new land acquisitions made in
order to sustain the record level of closings. The Company's
interest amortized to cost of homes sold (as a percentage of
revenue) decreased to 2.9%, for the three months ended January
31, 2000, from 3.0% for the same period a year ago. This
decrease is directly attributable to the Company's record level
of closings, which produced increased rates of capital turnover,
thereby resulting in lower capitalized interest costs.
Selling and marketing expenses increased by $787,000 or 25.8%
during the three months ended January 31, 2000 as compared to the
three months ended January 31, 1999. This increase is directly
attributable to the higher volume of closings during the period.
Selling and marketing, as a percentage of revenue, decreased
21.3% to 6.3% from 8.0% for the comparable period in 1999. This
decrease, as a percentage of revenue, is attributable to both the
higher closing volume and higher average sales prices.
General and administrative expenses increased $1.1 million
during the three months ended January 31, 2000 as compared to the
three months ended January 31, 1999. The $1.1 million increase
is attributable to an increase in the number of employees in the
Company which was necessary to facilitate the Company's continued
expansion and active investigation of new land acquisition
opportunities. However, general and administrative expenses, as
a percentage of revenue decreased 17.1% to 6.8% for the three
months ended January 31, 2000 from 8.2% as compared to the
comparable period a year ago.
Other operating costs increased $1.2 million during
the three months ended January 31, 2000 as compared to the three
months ended January 31, 1999. The increase is due to the
expensing of carrying costs of one community in Fontana now being
held for future development.
Net income was $3.3 million during the three months ended
January 31, 2000, as compared to a net income of $1.3 million for
the three months ended January 31, 1999. This was representative
of increased closings and the overall improvement of market
conditions in those areas in which the Company operates.
During the three months ended January 31, 2000,
distributions to partners totaled $2.0 million, of which
$300,000 was to Forecast Homes Inc. to pay off its note payable
to the Company.
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 cash flow from operations, secured borrowings
from commercial banks, financial institutions and private
investors and with unsecured borrowings in the capital markets.
The Company's financing needs depend primarily upon sales
volume, asset turnover and land acquisition. When liquidating
inventory through home closings, the Company generates cash. When
building inventory, the Company uses substantial amounts of cash
obtained through borrowings and cashflow from operations. The
Company has had adequate liquidity throughout its operating
history, despite recessionary periods, and historically the
Company's liquidity needs have been met through the use of cash
provided by a combination of closings and financing activities.
At certain times during the past few years the Company has
repurchased portions of its outstanding 11 3/8% Senior Notes due
2000, on the open market, at prices below par. The Company
subsequently retired such repurchased 11 3/8% Senior Notes,
reporting the resultant income as an extraordinary gain in the
Company's consolidated financial statements. At times, these
debt repurchases were utilized to cure certain unsatisfied
minimum net worth covenant requirements in the Indenture for the
11 3/8% Senior Notes.
At January 31, 2000, the Company had commitments for
$114.9 million under several revolving credit facilities with
commercial banks and financial institutions, of which $56.5
million was outstanding. In addition, at January 31, 2000, the
Company had community specific facilities capable of providing
aggregate fundings of $5.3 million, of which $3.3 million was
outstanding. Borrowings under the credit facilities are secured
by liens on specific real property owned by the Company, and
carry varying levels of recourse against the Company. The
Company also utilizes unsecured borrowing lines from time to time
to meet its operational needs and objectives. The unsecured
borrowing lines have commitments of $3.3 million, of which $1.3
was outstanding as of January 31, 2000. On January 31, 2000, the
aggregate outstanding principal balance under all of the
Company's credit facilities was $61.1 million and the recourse to
the Company from those borrowings was 21.6% of the total
outstanding sums, or $13.2 million.
To date, the Company has been able to obtain acceptable land
acquisition and construction financing. Consistent with an
industry trend, certain lenders require increased amounts of cash
invested in a project by borrowers in connection with both new
loans and the extension of existing loans. The Company currently
intends to continue utilizing conventional bank financing for
land acquisition and construction financing, and use its own cash
to fund that portion of the total project costs and acquisition
costs its Lenders require be supplied (in form of equity) in
order to obtain construction or land acquisition financing. At
times, in the past, the Company has failed to meet the debt-to
equity and debt coverage ratios that are set forth in the
Indenture governing the 11 3/8% Senior Notes, thereby resulting
in the Company being restricted in its ability to incur certain
levels of recourse indebtedness. In the past, to overcome the
limitation and assist the Company in meeting its liquidity needs,
Mr. Previti and/or the Previti Family Trust has guaranteed a
portion of the Company's indebtedness. As of January 31, 2000,
the Company met both its debt-to-equity and debt coverage ratio
tests, thereby providing the Company with the flexibility to
incur more than $15 million of recourse debt, had it been
necessary. Despite this present ability to incur additional
recourse debt, there is no assurance that the Company will
continue to meet these ratio tests, and if not, that Mr. Previti
and/or the Trust will be willing to guarantee such indebtedness.
The Company considers its current relationship with its lenders
to be good.
In February 1994, the Company issued $50 million in Senior
Notes through a public debt offering. As of January 31, 2000,
the Company had repurchased and retired a total of $21,400,000 of
the Senior Notes, with the remaining $28,600,000 having not been
retired, (including $8,900,000 which were repurchased and are
being held on margin in the Company's name at approximately 40%
of their face value). The notes are due in December 2000, with
interest at the rate of 11 3/8% per annum payable semi-annually
on June 15 and December 15 of each year.
The Indenture governing the Senior Notes requires the
Company to maintain a minimum net worth of $25 million. As of
January 31, 2000 the Company was in compliance with the net worth
provisions of the Indenture.
There can be no assurance that the impact of market
conditions affecting the demand for homes or the availability of
debt financing will not adversely affect the Company's future
needs for capital. However, the Company expects that available
capital resources will be sufficient to meet its normal operating
requirements over the near term.
Impact of Year 2000
In prior years, the Company discussed the nature and
progress of its plans to become Year 2000 ready. In late 1999,
the Company completed its remediation and testing of systems. As
a result of those planning and implementation efforts, the
Company experienced no significant disruptions in mission
critical information technology and no-information technology
systems and believes those systems successfully responded to the
Year 2000 date change. The Company did not have significant
expenses during 1999 in connection with remediating its systems.
The Company is not aware of any material problems resulting for
Year 2000 issues, either with its products, its internal systems, or
the products and service of third parties. The Company will
continue to monitor its mission critical computer applications
and those of its suppliers and vendors throughout the year 2000
to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
<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) None
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
March 3, 2000 By: /s/ James P. Previti
- ------------- --------------------------
Date James P. Previti
President
By: /s/ Richard B. Munkvold
----------------------------
Richard B. Munkvold
Senior Vice President-
Financial Operations
Principal Accounting Officer
By: FORECAST "Registered Tradename" CAPITAL CORPORATION
March 3, 2000 By: /s/ James P. Previti
- ------------- ------------------------
Date James P. Previti
President
By: /s/ Richard B. Munkvold
---------------------------
Richard B. Munkvold
Senior Vice President -
Financial Operations
Principal Accounting Officer
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