10-Q 1 tfg0110q3q.txt TFG 7/31/01 10-Q 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 July 31, 2001 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. (Exact Name of Registrant as specified in its charter) California 33-0582072 ----------- ---------- (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 ------------------- ----------------------------------------- None 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 August 23, 2001. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED BALANCE SHEETS (Amounts in 000's) July 31, 2001 October 31, 2000 (Unaudited) ------------- ---------------- Assets: ------- Cash and Cash Equivalents $26,378 $26,607 Accounts Receivable 2,628 809 Accounts and Notes Receivable, Related Parties 3,951 14,149 Real Estate Inventory 212,707 142,768 Property and Equipment, Net 352 435 Other Assets 2,629 1,565 -------- -------- Total Assets $248,645 $186,333 ======== ======== Liabilities & Partners' Equity: ------------------------------- Accounts Payable $42,117 $31,382 Accrued Expenses 6,231 6,498 Notes Payable: Senior Notes at 11 3/8% due December 2000 - 19,700 Collateralized by Real Estate Inventory 78,551 44,028 Unsecured 2,518 - Other Notes Payable - 3,525 -------- -------- Total Notes Payable 81,069 67,253 -------- -------- Total Liabilities $129,417 $105,133 Partners' Equity 119,228 81,200 -------- -------- Total Liabilities & Partners' Equity $248,645 $186,333 ======== ========

See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS' EQUITY FOR THE NINE AND THREE MONTHS ENDED JULY 31, 2001 AND 2000 (Unaudited) (Amount's in 000's) Nine Months Ended Three Months Ended July 31, July 31, ----------------- ------------------ 2001 2000 2001 2000 ----------------- ------------------ Homebuilding Revenues $320,188 $213,288 $127,728 $83,202 Cost of Homes Sold 240,342 169,719 94,314 66,027 -------- -------- -------- ------- Gross Profit 79,846 43,569 33,414 17,175 -------- -------- -------- ------- Land Sale Revenues 19,739 - - - Cost of Land Sold 18,431 - 135 - -------- -------- -------- ------- Gain/(Loss) on Land Sales 1,308 - (135) - -------- -------- -------- ------- Operating Expenses: ------------------- Selling & Marketing Exp. 13,771 11,884 5,317 3,885 General & Admin. Expenses 21,542 14,895 8,157 5,636 Other Operating Costs 187 1,343 159 1 ------ ------ ------ ----- Total Operating Expenses 35,500 28,122 13,633 9,522 ------ ------ ------ ----- Operating Income 45,654 15,447 19,646 7,653 Other Income ------------ Interest Income 745 757 206 275 Other Income and Expenses, net 194 555 323 117 ------ ------- ------- ------ Total Other Income 939 1,312 529 392 ------- ------- ------- ------ Net Income $46,593 $16,759 $20,175 $8,045 ======= ======= ======= ====== Partners' Equity at Beginning of Period $81,200 $53,018 $102,053 $59,707 Capital Distributions, net (8,565) (2,035) (3,000) (10) Net Income this Period 46,593 16,759 20,175 8,045 -------- ------- -------- ------ Partners' Equity at End of Period $119,228 $67,742 $119,228 $67,742 ======== ======= ======== =======

See notes to consolidated financial statements. THE FORECAST GROUP "Registered Tradename", L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2001 AND 2000 (Unaudited) (Amounts in 000's) For the Nine Months Ended July 31, ------------------------- 2001 2000 ------------------------- Operating Activities: --------------------- Net Income $46,593 $16,759 Adjustments to Reconcile Net Income to Net Cash Used for Operating Activities Depreciation on Property and Equipment 181 211 Loss on Sale of Property and Equipment 1 1 Gain on Land/Lot Sales (1,308) - Other Operating Costs 187 1,343 Equity Income of Unconsolidated Joint Venture 746 376 (Increase)/Decrease in Accounts Receivable (1,819) 3,516 Increase in Real Estate Inventory (68,818) (37,068) Increase in Other Assets (2,251) (71) Increase/(Decrease) in Accounts Payable and Accrued Expenses 10,468 (1,332) ------ ------ Net Cash Used for Operating Activities (16,020) (16,265) ------ ------ Investing Activities: --------------------- Contribution to Joint Venture - (5) Distribution from Joint Venture 441 397 Additions to Property and Equipment (99) (188) Proceeds from Sale of Property and Equipment - 29 ------ ----- Net Cash Provided by Investing Activities 342 233 ------ ----- Financing Activities: --------------------- Capital Distributions, net (8,565) (2,035) Decrease in Capital Notes Receivable from Partner - 300 Decrease/(Increase) in Accounts and Notes Receivable, Related Parties 10,198 (1,907) Proceeds from Notes Payable, Collateralized by Real Estate 234,694 154,374 Proceeds from Notes Payable, Unsecured 9,099 - Proceeds from Notes Payable, Other 3,769 240 Principal Payments on Notes Payable, Senior Notes (19,700) - Principal Payments on Notes Payable, Collateralized by Real Estate (200,171) (132,350) Principal Payments on Notes Payable, Unsecured (6,581) - Principal Payments on Notes Payable, Other (7,294) (900) ------- ------- Net Cash Provided by Financing Activities 15,449 17,722 ------- ------- (Decrease)/Increase in Cash and Cash Equivalents (229) 1,690 Cash and Cash Equivalents at Beginning of Period 26,607 22,594 ------- ------- Cash and Cash Equivalents at End of Period $26,378 $24,284 ======= =======

See notes to consolidated financial statements. 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, 2000 (File No. 33-72106) as filed with the Securities and Exchange Commission. The results of operations for the nine months ended July 31, 2001, do not necessarily indicate the results that can be expected for the full fiscal year. The results of operations for the nine months ended July 31, 2001, 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 the Form 10-K for the year ended October 31, 2000 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 - Changes in economic conditions in the markets in which the Company operates - Fluctuations in mortgage and federal funds 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. Inventory A summary of inventory is as follows: (Amounts in 000's) July 31, 2001 October 31, 2000 ------------- ---------------- Homes Under Construction $128,601 $71,399 Development Projects in Process 53,837 49,501 Unimproved Land 17,762 15,293 Model Homes 12,507 6,575 -------- -------- Total $212,707 $142,768 ======== ========

3. Interest The following summarizes the components of interest incurred, capitalized, expensed and paid: (Amounts in 000's) For the Nine Months For the Three Months Ended Ended July 31, July 31, ----------------- ------------------ 2001 2000 2001 2000 ----------------- ------------------ Interest incurred and capitalized $7,329 $7,647 $2,215 $2,397 Interest incurred and expensed - - - - ------ ------ ------ ------ Total Interest Incurred $7,329 $7,647 $2,215 $2,397 ====== ====== ====== ====== Capitalized interest amortized to cost of homes sold $5,702 $5,743 $1,902 $2,187 Interest paid $8,182 $8,207 $2,215 $2,957

4. Transactions With Affiliates During the nine months ended July 31, 2001, the Company sold land in Bullhead, Arizona to an affiliated entity in which Mr. Previti is the 100% owner for a sales price of $1,713,361. The Company received cash payments of $400,000 and an unsecured note of $1,313,000. No gain or loss was recognized on the sale. 5. Receivables From Affiliates During the nine months ended July 31, 2001, accounts and notes receivable from related parties decreased $10.2 million to $4.0 million. The decrease primarily relates to the paydown of certain receivables from affiliated entities in which Mr. Previti is the 100% owner. The Company anticipates additional paydowns during the fourth fiscal quarter. 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. On December 13, 2000, the Company retired the remaining outstanding $19,700,000 of Senior Notes held in the names of investors other than the Company. 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 of 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 nine months ended July 31, 2001 or 2000. 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/lot sales revenue and costs of land/lots sold. Percent of Percent of Housing Sales Housing Sales For the Nine For the Three Months Ended Months Ended July 31, July 31, ---------------- --------------- 2001 2000 2001 2000 ---------------- --------------- Homebuilding Revenues 100.0% 100.0% 100.0% 100.0% Cost of Homes Sold 75.1% 79.6% 73.8% 79.4% ------ ------ ------ ------ Gross Profit 24.9% 20.4% 26.2% 20.6% Operating Expenses: ------------------- Selling & Marketing Expenses 4.3% 5.6% 4.2% 4.7% General & Admin. Expenses 6.7% 7.0% 6.4% 6.8% Other Operating Costs 0.1% 0.6% 0.1% 0.0% ------ ----- ----- ----- Total Operating Expenses 11.1% 13.2% 10.7% 11.5% ------ ----- ----- ----- Operating Income 13.8% 7.2% 15.5% 9.1% ====== ===== ===== =====

Amount % Amount Amount % Amount Change Change ---------------------- ------------------- Number of sales, net of cancellations: ---------------------- Northern California 652 -0.6% 656 204 -22.1% 262 Southern California 959 60.9% 596 365 92.1% 190 Arizona 31 N/A - 22 N/A - ----- ----- ----- --- ------ --- Total 1,642 31.2% 1,252 591 30.8% 452 Number of closings: ------------------- Northern California 704 35.9% 518 240 10.6% 217 Southern California 744 34.8% 552 329 74.1% 189 Arizona 3 N/A - 2 N/A - ----- ----- ----- --- ----- --- Total 1,451 35.6% 1,070 571 40.6% 406 Backlog units at end of period: ---------------- Northern California 196 -26.6% 267 Southern California 347 115.5% 161 Arizona 28 N/A - --- ------ --- Total 571 33.4% 428 Aggregate value of backlog (in millions) $128.5 $89.5 ====== =====

Results of Operations For the Nine Months ended July 31, 2001 and July 31, 2000 Despite weather related delays in the commencement of construction at the beginning of calendar year 2001, and the media predictions of an economic slowdown and an impending energy shortage, (which the Company was insulated from due to its continued focus on the entry-level and affordable price point markets) the Company was able to produce record revenues, closings and home sales for the nine-month period ended July 31, 2001. Housing revenues were $320.2 million, an increase of $106.9 million, or 50.1%, from the nine months ended July 31, 2000. The closings of 1,451 homes were an increase of 381 closings, or 35.6%, over the nine-month period ended July 31, 2000. The record home sales were 1,642 homes, representing an increase of 390 homes, or 31.2%, over the nine-month period ended July 31, 2000. The increase in these three indices was due to increased demand for housing by first-time homebuyers that stemmed from the continued strength of the affordable range of the California housing market and, to a lesser degree, the reduction of mortgage rates during the period. The average sales price of the homes closed in the nine months ended July 31, 2001 was $220,667, an increase of $21,332 or 10.7%, as compared to the nine- month period ended July 31, 2000. The increase in average sales price was due primarily to the Company's ability to increase prices in its high demand communities. The Company was successfully able to achieve this result by carefully weighing the affordability of its homes against the desired absorption of those same homes, while at the same time not seeking to raise prices merely to achieve the highest possible revenues. Gross profit from housing sales was $79.8 million for the nine months ended July 31, 2001, representing an increase of $36.3 million, or 83.3%, from the nine months ended July 31, 2000. During the same nine-month period, gross profit per home increased to $55,028, from $40,719, representing a 35.1% increase over the comparable period in 2000. Gross profit margin for the nine months ended July 31, 2001 rose to 24.9% versus 20.4% for the same period one year earlier. The increase in gross profit and gross margin was due primarily to increasing inventory turns which reduced interest in cost of sales and the continued strength of the affordable range of the California housing market, which permitted the Company to increase sales prices while it maintained construction costs at level amounts. During the nine months ended July 31, 2001, the Company sold 245 lots in Phoenix, Arizona, 28 lots in Perris, California, one parcel of land located in Bullhead, Arizona, 61 lots in Oceanside, California, and 69 lots in Corona, California, all of which, in the aggregate, resulted in net gains of $1,308,000. There were no land sales in the comparable nine-month period of 2000. The Company's interest amortized to cost of homes sold (as a percentage of revenue) decreased to 1.8%, for the nine months ended July 31, 2001, from 2.7% for the same period a year ago. This decrease is directly attributable to the Company's increased level of closings in the first nine months of fiscal year 2001, which increased the rate of capital turnover, thereby resulting in lower capitalized interest costs. In addition, the Company continuously evaluates the cost of capital charged by each of its lenders and carefully monitors and manages its debt level relating to those lenders. Selling and marketing expenses increased $1.9 million or 15.9% during the nine months ended July 31, 2001, as compared to the nine months ended July 31, 2000, but decreased 23.2%, as a percentage of revenue, when compared to the comparable period in 2000. This decrease, as a percentage of revenue, is attributable to the higher closing volume, higher average sales prices, and lower incentives required to achieve the desired sales absorptions. General and administrative expenses decreased from 7.0% to 6.7%, as a percentage of revenue, for the nine months ended July 31, 2001 as compared to the nine months ended July 31, 2000. The decrease is primarily attributable to efficiencies in operations and the higher volume of closings achieved during the nine months ended July 31, 2001. Other operating costs for the nine months ended July 31, 2001 were $187,000, as compared to $1,343,000 for the nine months ended July 31, 2000. The other operating costs of $1,343,000 during the nine months ended July 31, 2000, was due to expensing the carrying costs of one community in Fontana that had been held for future development. The Company has begun developing the Fontana community and began closing homes in the second quarter of fiscal 2001. Net income increased 178.0% to $46.6 million during the nine months ended July 31, 2001, as compared to net income of $16.8 million for the nine months ended July 31, 2000. Net income, as a percentage of revenue, increased to 14.6% as compared to 7.9% a year ago. These results are attributable to maintaining efficient production costs and high inventory turnover, while taking advantage of increases in the average selling price within each sub-market. Results of Operations For the Three Months ended July 31, 2001 and July 31, 2000 Despite media predictions of an economic slowdown and an impending energy shortage, the Company's continued focus on the entry-level and affordable price point markets enabled it to produce record revenues and closings for the three- month period ended July 31, 2001. Housing revenues were $127.7 million, an increase of $44.5 million, or 53.5%, from the three months ended July 31, 2000. The July 31, 2001 three month closings of 571 homes represented an increase of 165 closings, or 40.6%, over the three-month period ended July 31, 2000. The home sales realized were 591 homes, representing an increase of 139 homes, or 30.8%, over the three-month period ended July 31, 2000. The increase in sales in Southern California off-set a decrease in sales in Northern California, which is directly attributable to delays in opening a number of new communities during the three months ended July 31, 2001. This situation is expected to change when, in the fourth quarter, Northern California will open four new communities, which will serve to bring the fiscal year 2001 sales back into line with our full year business plan. The increase in revenues and closings is due to a continuing high level of interest and demand for housing by first-time homebuyers that stemmed from the continued strength of the affordable range of the California housing market and, to a lesser degree, the reduction of mortgage rates during the period. The average sales price of the homes closed in the three months ended July 31, 2001 was $223,691, an increase of $18,760 or 9.2%, as compared to the three-month period ended July 31, 2000. The increase in average sales price was due primarily to the Company's ability to increase prices in its high demand communities. The Company was successfully able to achieve this result by carefully weighing the affordability of its homes against the desired absorption of those same homes, while at the same time not seeking to raise prices merely to achieve the highest possible revenues. Gross profit from housing sales was $33.4 million for the three months ended July 31, 2001, representing an increase of $16.2 million, or 94.5%, from the three months ended July 31, 2000. During the same three-month period, gross profit per home increased to $58,518, from $42,303, representing a 38.3% increase over the comparable period in 2000. Gross profit margin for the three months ended July 31, 2001 rose to 26.2% versus 20.6% for the same period one year earlier. The increase in gross profit and gross margin was due primarily to the continued strength of the California affordable housing market and that market's ability to absorb increased sales prices while at the same time maintaining construction costs at level amounts. During the three months ended July 31, 2001, the Company incurred (as a loss on land sales) an additional $135,000 in costs relating to the March 2001 sale of the 245 lots sold in Phoenix, Arizona. There were no land sales, or realization of costs, in the comparable three-month period of 2000. The Company's interest amortized to cost of homes sold (as a percentage of revenue) decreased to 1.5%, for the three months ended July 31, 2001 from 2.6% for the same period a year ago. This decrease is directly attributable to the Company's increased level of closings experienced in the third quarter of fiscal year 2001, which resulted in increased rates of capital turnover, and lower capitalized interest costs. In addition, the Company continuously evaluates the cost of capital charged by each of its lenders and carefully monitors and manages its debt level relating to those lenders. Selling and marketing expenses increased $1.4 million or 36.9% during the three months ended July 31, 2001, as compared to the three months ended July 31, 2000, but decreased 10.6%, when compared to the comparable period in 2000. This decrease, as a percentage of revenue, is attributable to the higher closing volume, higher average sales prices, and lower incentives required to achieve the desired sales absorptions. General and administrative expenses decreased from 6.8% to 6.4%, as a percentage of revenue, for the three months ended July 31, 2001 as compared to the three months ended July 31, 2000. The decrease is primarily attributable to efficiencies in operations and the higher volume of closings achieved during the three months ended July 31, 2001. Net income increased 150.8% to $20.2 million during the three months ended July 31, 2001, as compared to a net income of $8.0 million for the three months ended July 31, 2000. Net income, as a percentage of revenue, increased to 15.8% as compared to 9.7% a year ago. These results are attributable to maintaining efficient production costs and high inventory turnover, while taking advantage of increases in the average selling price within each sub-market. 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 and financial institutions 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. In February 1994, the Company issued $50 million of 11 3/8% Senior Notes due in 2000 through a public debt offering. At certain times during the past few years the Company repurchased portions of its outstanding 11 3/8% Senior Notes on the open market. In December 2000, the Company paid off and retired all remaining outstanding Senior Notes. At July 31, 2001, the Company had commitments for $105.8 million under several revolving credit facilities with commercial banks and financial institutions, of which $70.4 million was outstanding. In addition, at July 31, 2001, the Company had community specific facilities capable of providing aggregate fundings of $8.2 million, all of which 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 $2.5 million, all of which was outstanding as of July 31, 2001. On July 31, 2001, the aggregate outstanding principal balance under all of the Company's credit facilities was $81.1 million and the recourse to the Company from those borrowings was 33.4% of the total outstanding balance, or $27.1 million. The lender institutions charge interest rates ranging from LIBOR plus 2.10% (5.74% as of July 31, 2001) to prime plus .50% (7.25% as of July 31, 2001). 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. 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, in the form of retained earnings and debt financing, will be sufficient to meet its normal operating requirements over the near term. PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- (a) None Item 2. Changes in Securities ---------------------- (a) Senior Notes were paid in full on December 13, 2000 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. 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 August 23, 2001 By: /s/ James P. Previti --------------- -------------------------- Date James P. Previti President By: /s/ Richard B. Munkvold ----------------------------- Richard B. Munkvold Chief Financial Officer Principal Accounting Officer

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