================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-9977 MERITAGE CORPORATION (Exact Name of Registrant as Specified in Its Charter) MARYLAND 86-0611231 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 6613 NORTH SCOTTSDALE ROAD, SUITE 200 SCOTTSDALE, ARIZONA 85250 (Address of Principal Executive Offices) (Zip Code) (480) 998-8700 (Registrant's Telephone Number, Including Area Code) 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 [ ]. AS OF MAY 1, 2000, 5,563,796 SHARES OF MERITAGE CORPORATION COMMON STOCK WERE OUTSTANDING. ================================================================================ MERITAGE CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 TABLE OF CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS: Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999..................................... 3 Consolidated Statements of Earnings for the Three Months ended March 31, 2000 and 1999.................. 4 Consolidated Statements of Cash Flows for the Three Months ended March 31, 2000 and 1999............ 5 Notes to Consolidated Financial Statements............ 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................... 10 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................... 13 PART II. OTHER INFORMATION ITEMS 1-5. NOT APPLICABLE........................................ 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................... 14 SIGNATURES ............................................................ S.1 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MERITAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2000 1999 ------------- ------------- ASSETS Cash and cash equivalents $ 5,384,805 $ 13,422,016 Real estate under development 183,941,966 171,012,405 Deposits on real estate under option or contract 18,412,244 15,699,609 Other receivables 3,462,987 1,643,187 Deferred tax asset 717,436 698,634 Goodwill 18,474,847 18,741,625 Property and equipment, net 4,088,618 4,040,134 Other assets 1,541,579 1,301,286 ------------- ------------- Total Assets $ 236,024,482 $ 226,558,896 ============= ============= LIABILITIES Accounts payable and accrued liabilities $ 31,189,845 $ 41,950,761 Home sale deposits 10,101,617 8,261,000 Notes payable 100,077,727 85,936,601 ------------- ------------- Total Liabilities 141,369,189 136,148,362 ------------- ------------- STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; 50,000,000 shares authorized; issued and outstanding - 5,563,796 shares at March 31, 2000, and 5,474,906 shares at December 31, 1999 55,638 54,749 Additional paid-in capital 100,464,215 100,406,745 Accumulated deficit (3,377,652) (8,148,535) Less cost of shares held in treasury (237,667 shares) (2,486,908) (1,902,425) ------------- ------------- Total Stockholders' Equity 94,655,293 90,410,534 ------------- ------------- Total Liabilities and Stockholders' Equity $ 236,024,482 $ 226,558,896 ============= ============= See accompanying notes to consolidated financial statements 3 MERITAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) Three Months Ended March 31, ------------------------------ 2000 1999 ------------ ------------ Home sales revenue $ 91,652,660 $ 51,306,197 Land sales revenue 757,511 79,900 ------------ ------------ 92,410,171 51,386,097 Cost of home sales (74,956,349) (41,322,288) Cost of land sales (681,205) (34,500) ------------ ------------ (75,637,554) (41,356,788) Home sales gross profit 16,696,311 9,983,909 Land sales gross profit 76,306 45,400 ------------ ------------ 16,772,617 10,029,309 Commissions and other sales costs (5,778,560) (3,415,817) General and administrative expense (4,001,961) (3,146,047) Interest expense (1,522) (835) Other income, net 532,271 318,432 ------------ ------------ Earnings before income taxes 7,522,845 3,785,042 Income taxes (2,751,962) (1,460,000) ------------ ------------ Net earnings $ 4,770,883 $ 2,325,042 ============ ============ Basic earnings per share $ .90 $ .43 ============ ============ Diluted earnings per share $ .82 $ .38 ============ ============ See accompanying notes to consolidated financial statements 4 MERITAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 4,770,883 $ 2,325,042 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 694,065 458,978 (Increase) decrease in deferred tax asset (18,802) 1,214,000 Stock option compensation expense 58,359 148,329 Increase in real estate under development (12,929,561) (23,685,192) Increase in deposits on real estate under option or contract (2,712,635) (2,225,055) (Increase) decrease in other receivables and other assets (2,060,093) 598,500 Decrease in accounts payable and accrued liabilities (5,602,910) (5,695,430) Increase in home sale deposits 1,840,617 2,822,855 ------------ ------------ Net cash used in operating activities (15,960,077) (24,037,973) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for merger/acquisition (5,158,006) (6,966,890) Purchases of property and equipment (475,771) (749,857) ------------ ------------ Net cash used in investing activities (5,633,777) (7,716,747) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings 97,251,332 66,203,003 Repayment of borrowings (83,110,206) (39,464,652) Purchase of treasury shares (584,483) -- Stock options exercised -- 11,240 ------------ ------------ Net cash provided by financing activities 13,556,643 26,749,591 ------------ ------------ Net decrease in cash and cash equivalents (8,037,211) (5,005,129) Cash and cash equivalents at beginning of period 13,422,016 12,386,806 ------------ ------------ Cash and cash equivalents at end of period $ 5,384,805 $ 7,381,677 ============ ============ See accompanying notes to consolidated financial statements 5 MERITAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION We develop, construct and sell new high-quality, single-family homes in the semi-custom luxury, move-up and entry-level markets. We operate in the Dallas/Fort Worth, Austin and Houston, Texas markets as Legacy Homes, in the Phoenix and Tucson, Arizona metropolitan markets under the Monterey Homes and Meritage Homes of Arizona brand names, and in the San Francisco Bay and Sacramento, California markets as Meritage Homes of Northern California. BASIS OF PRESENTATION. Our consolidated financial statements include the accounts of Meritage Corporation and our subsidiaries. Intercompany balances and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to be consistent with current financial statement presentation. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly present our financial position and results of operations for the periods presented. The results of operations for any interim period are not necessarily indicative of results to be expected for a full fiscal year. NOTE 2 - REAL ESTATE UNDER DEVELOPMENT AND CAPITALIZED INTEREST The components of real estate under development follow (in thousands): March 31, December 31, 2000 1999 --------- --------- Homes under contract, in production $ 82,131 $ 71,987 Finished homesites and homesites under development 68,725 63,610 Model homes and homes held for resale 29,468 31,797 Land held for development 3,618 3,618 --------- --------- $ 183,942 $ 171,012 ========= ========= We capitalize certain interest costs incurred during development and construction. Capitalized interest is allocated to real estate under development and charged to cost of sales when the property is delivered. Summaries of interest capitalized and interest expensed follow (in thousands): March 31, ------------------- 2000 1999 ------- ------- Beginning unamortized capitalized interest $ 3,971 $ 1,982 Interest capitalized 1,868 1,089 Amortized in cost of home and land sales (1,565) (811) ------- ------- Ending unamortized capitalized interest $ 4,274 $ 2,260 ======= ======= Interest incurred $ 1,870 $ 1,090 Interest capitalized (1,868) (1,089) ------- ------- Interest expense $ 2 $ 1 ======= ======= 6 MERITAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) NOTE 3 - NOTES PAYABLE Notes payable consist of the following (in thousands): March 31, December 31, 2000 1999 --------- --------- $70 million bank revolving construction line of credit, interest payable monthly approximating prime (9.0% at March 31, 2000) or LIBOR (30 day LIBOR 6.1% at March 31, 2000), plus 1.75% payable December 31, 2001, secured by first deeds of trust on real estate $ 55,141 $ 37,411 $65 million bank revolving construction line of credit, interest payable monthly approximating prime or LIBOR plus 2.0%, payable at the earlier of close of escrow, maturity date of individual homes within the line or July 31, 2000, secured by first deeds of trust on real estate 28,285 26,104 $15 million unsecured bank revolving line of credit, interest payable monthly at prime, matured January 17, 2000 -- 6,000 Acquisition and development credit facilities totaling $4.5 million, interest payable monthly, ranging from prime to prime plus .25%; payable at the earlier of funding of construction financing or the maturity date of the individual projects, secured by first deeds of trust on real estate 1,628 1,396 Senior unsecured notes, maturing September 15, 2005, annual interest of 9.10% payable quarterly, principal payable in three equal installments on September 15, 2003, 2004 and 2005 15,000 15,000 Other 23 26 --------- --------- Total $ 100,077 $ 85,937 ========= ========= 7 MERITAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) NOTE 4 - EARNINGS PER SHARE A summary of the reconciliation from basic earnings per share to diluted earnings per share for the three months ended March 31, 2000 and 1999 follows (in thousands, except per share amounts): 2000 1999 ------ ------ Net earnings $4,771 $2,325 Basic EPS - Weighted average shares outstanding 5,287 5,425 ------ ------ Basic earnings per share $ .90 $ .43 ====== ====== Basic EPS - Weighted average shares outstanding 5,287 5,425 Effect of dilutive securities: Contingent shares and warrants 73 71 Stock options 458 563 ------ ------ Dilutive EPS - Weighted average shares outstanding 5,818 6,059 ------ ------ Diluted earnings per share $ .82 $ .38 ====== ====== Antidilutive stock options not included in diluted EPS 280 282 ====== ====== NOTE 5 - INCOME TAXES Components of income tax expense at March 31 are (in thousands): 2000 1999 ------- ------- Current taxes: Federal $ 2,419 $ 83 State 352 163 ------- ------- 2,771 246 ------- ------- Deferred taxes: Federal (17) 1,213 State (2) 1 ------- ------- (19) 1,214 ------- ------- Total $ 2,752 $ 1,460 ======= ======= 8 MERITAGE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (UNAUDITED) NOTE 6 - SEGMENT INFORMATION We classify our operations into three primary geographic segments: Texas, Arizona and California. These segments generate revenues through the sale of homes to external customers. We are not dependent on any one major customer. Operational information relating to the different business segments follows. Certain information has not been included by segment due to the immateriality of the amount to the segment or in total. We evaluate segment performance based on several factors, of which the primary financial measure is earnings before interest and taxes (EBIT). The accounting policies of the business segments are the same as those described in Notes 1 and 2. There are no significant transactions between segments. Three Months Ended March 31, ---------------------------- 2000 1999 -------- -------- (in thousands) HOME SALES REVENUE: Texas $ 49,430 $ 30,334 Arizona 21,942 19,628 California 20,281 1,344 -------- -------- Total $ 91,653 $ 51,306 ======== ======== EBIT: Texas $ 7,010 $ 3,735 Arizona 995 1,890 California 2,311 (422) Corporate and other (1,227) (606) -------- -------- Total $ 9,089 $ 4,597 ======== ======== AMORTIZATION OF CAPITALIZED INTEREST: Texas $ 635 $ 300 Arizona 578 503 California 352 8 -------- -------- Total $ 1,565 $ 811 ======== ======== At March 31, ---------------------------- ASSETS: 2000 1999 -------- -------- Texas $ 99,725 $ 97,832 Arizona 85,040 77,195 California 48,737 43,773 Corporate 2,522 7,759 -------- -------- Total $236,024 $226,559 ======== ======== 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements. The words "believe," "expect," "anticipate," and "project" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for future operations, financing needs or plans, the impact of inflation, the impact of changes in interest rates, plans relating to our products or services, potential real property acquisitions, and new or planned development projects, as well as assumptions relating to the foregoing. Statements in Exhibit 99 to this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 1999, including the Notes to the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," describe factors, among others, that could contribute to or cause such differences. Additional factors that could cause actual results to differ materially from those expressed in such forward-looking statements are set forth in "Business" and "Market for the Registrant's Common Stock and Related Stockholder Matters" in the our December 31, 1999 Annual Report on Form 10-K. RESULTS OF OPERATIONS The following discussion and analysis provides information regarding our results of operations for the quarters ended March 31, 2000 and March 31, 1999. All material balances and transactions between us and our subsidiaries have been eliminated. In management's opinion, the data reflects all adjustments, consisting of only normal recurring adjustments, necessary to fairly present our financial position and results of operations for the periods presented. HOME SALES REVENUE Home sales revenue is the product of the number of homes closed during the period and the average sales price per home. Comparative first quarter 2000 and 1999 home sales revenue follow (dollars in thousands): Quarter Ended March 31, Dollar/unit Percentage -------------------- Increase Increase 2000 1999 (Decrease) (Decrease) -------- -------- -------- -------- Total Dollars $ 91,653 $ 51,306 $ 40,347 79% Homes closed 440 257 183 71% Average sales price $ 208.3 $ 199.6 $ 8.7 4% Texas Dollars $ 49,430 $ 30,334 $ 19,096 63% Homes closed 302 200 102 51% Average sales price $ 163.7 $ 151.7 $ 12.0 8% Arizona Dollars $ 21,942 $ 19,628 $ 2,314 12% Homes closed 79 53 26 49% Average sales price $ 277.7 $ 370.3 $ (92.6) (25%) California Dollars $ 20,281 $ 1,344 $ 18,937 1,409% Homes closed 59 4 55 1,375% Average sales price $ 343.7 $ 336.0 $ 7.7 2% 10 The increase in total home sales revenue and number of homes closed in 2000 compared to 1999 results mainly from our strong market performances in Texas and California. Also in 2000, we closed a higher percentage of homes in beginning backlog than usual for our first quarters. HOME SALES GROSS PROFIT Gross profit is home sales revenue, net of housing cost of sales, which include developed homesite costs, home construction costs, amortization of common community costs (such as the cost of model complexes and architectural, legal and zoning costs), interest, sales tax, warranty, construction overhead and closing costs. Comparative 2000 and 1999 housing gross profit follows (dollars in thousands): Quarter Ended March 31, Dollar/percentage Percentage ------------------ Increase Increase 2000 1999 (Decrease) (Decrease) ------- ------ ------ ------ Dollars $16,696 $9,984 $6,712 67% Percent of home sales revenue 18.2% 19.5% (1.3%) (7%) The dollar increase in gross profit for the three months ended March 31, 2000 over the prior year period is attributable to the increase in number of homes closed. The gross profit margin decreased somewhat due to the increased deliveries of our new lower-priced, lower margin Arizona products. COMMISSIONS AND OTHER SALES COSTS Commissions and other sales costs, such as advertising and sales office expenses, were approximately $5.8 million, or 6.3% of home sales revenue in the first quarter of 2000 compared to $3.4 million, or 6.6% of home sales revenue in the first quarter of 1999. The slight decrease in these expenses as a percentage of home sales revenue was caused by holding down increases in advertising and other marketing costs. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses were approximately $4.0 million, or 4.3% of total revenue, in the first three months of 2000, as compared to approximately $3.1 million, or 6.1% of revenue, in 1999, a decrease as a percent of total revenue of 1.8%. The decrease in these amounts as a percentage of revenue was caused by holding down increases in these costs, while expanding home sales revenue. 1999 amounts include charges of approximately $600,000 (1.2% of revenue) related to the employment agreement buyout of a former Managing Director. OTHER INCOME The increase in other income primarily is due to management fees paid to the California division by unconsolidated parties and an increase in revenue from the mortgage operations in Texas. INCOME TAXES The increase in income tax expense to approximately $2,752,000 for the quarter ended March 31, 2000 from $1,460,000 in the prior year was caused by higher taxable income offset by a slightly lower effective tax rate SALES CONTRACTS Sales contracts for any period represent the number of homes ordered by customers (net of cancellations) multiplied by the average sales price per home ordered. Comparative 2000 and 1999 sales contracts follow (dollars in thousands): 11 Quarter Ended March 31, Dollar/unit Percentage -------------------- Increase Increase 2000 1999 (Decrease) (Decrease) -------- -------- -------- -------- Total Dollars $148,900 $103,738 $ 45,162 44% Homes ordered 629 555 74 13% Average sales price $ 236.7 $ 186.9 $ 49.8 27% Texas Dollars $ 60,920 $ 64,356 $ (3,436) (5)% Homes ordered 355 431 (76) (18)% Average sales price $ 171.6 $ 149.3 $ 22.3 15% Arizona Dollars $ 43,937 $ 30,992 $ 12,945 42% Homes ordered 137 99 38 38% Average sales price $ 320.7 $ 313.1 $ 7.7 2% California Dollars $ 44,043 $ 8,390 $ 35,653 425% Homes ordered 137 25 112 448% Average sales price $ 321.5 $ 335.6 $ (14.1) (4)% We do not include sales contingent upon the sale of a customer's existing home as a sales contract until the contingency is removed. Historically, we have experienced a cancellation rate of approximately 20% of gross sales. Total sales contracts increased in 2000 compared to 1999 due mainly to the expansion into California and continued economic strength in our operating markets. NET SALES BACKLOG Backlog represents net sales contracts that have not closed. Comparative 2000 and 1999 net sales backlog follows (dollars in thousands): At March 31, Dollar/unit Percentage -------------------- Increase Increase 2000 1999 (Decrease) (Decrease) -------- -------- -------- -------- Total Dollars $256,692 $197,725 $ 58,967 30% Homes in backlog 1,074 987 87 9% Average sales price $ 239.0 $ 200.3 $ 38.7 19% Texas Dollars $105,473 $111,199 $ (5,726) (5)% Homes in backlog 619 734 (115) (16)% Average sales price $ 170.4 $ 151.5 $ 18.9 12% Arizona Dollars $ 94,873 $ 77,743 $ 17,130 22% Homes in backlog 274 227 47 21% Average sales price $ 346.3 $ 342.5 $ 3.8 1% California Dollars $ 56,346 $ 8,783 $ 47,563 542% Homes in backlog 181 26 155 596% Average sales price $ 311.3 $ 337.8 $ (26.5) (8)% 12 Total dollar backlog at March 31, 2000 increased 30% over the 1999 amount due to a corresponding increase in homes in backlog. The number of homes in backlog at March 31, 2000 increased 9% over the same period in the prior year due to the increase in net orders caused by expansion into California and strong housing markets in which Meritage operates. LIQUIDITY AND CAPITAL RESOURCES Our principal uses of working capital are land purchases, homesite development and home construction. We use a combination of borrowings and funds generated by operations to meet our working capital requirements. At March 31, 2000, we had short-term secured revolving construction loan and acquisition and development facilities totaling $139.5 million, of which approximately $85 million was outstanding. An additional $27.2 million of unborrowed funds supported by approved collateral were available under our credit facilities at that date. We also have $15 million outstanding in unsecured, senior subordinated notes due September 15, 2005, which were issued in October 1998. In May 1999, we announced a stock repurchase program in which our Board of Directors approved the buyback of up to $6 million of outstanding Meritage stock. This amount was increased to $10 million at the first quarter, 2000 board meeting. As of March 31, 2000, 237,667 shares had been repurchased for an aggregate price of approximately $2.5 million. Management believes that the current borrowing capacity, cash on hand at March 31, 2000 and anticipated cash flows from operations are sufficient to meet liquidity needs for the foreseeable future. There is no assurance, however, that future amounts available from our sources of liquidity will be sufficient to meet future capital needs. The amount and types of indebtedness that we incur may be limited by the terms of the indenture governing our senior subordinated notes and our credit agreements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We do not trade in derivative financial instruments and at March 31, 2000, had no significant derivative financial instruments. We do have other financial instruments in the form of notes payable and senior debt, which are at fixed interest rates. Our lines of credit and credit facilities are at variable interest rates and are subject to market risk in the form of interest rate fluctuations. 13 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Exhibit Page or Number Description Method of Filing ------ ----------- ---------------- 10.1 Modification to Guaranty Federal Bank Loan, Filed herewith Dated as of March 29, 2000 10.2 $3.3 Million Construction Loan Agreement, Filed herewith by and among the Company and Compass Bank, Dated as of February 10, 2000 10.3 Change of Control Agreement between the Filed herewith Company and Steven J. Hilton 10.4 Change of Control Agreement between the Filed herewith Company and John R. Landon 10.5 Change of Control Agreement between the Filed herewith Company and Larry W. Seay 10.6 Change of Control Agreement between the Filed herewith Company and Richard T. Morgan 27 Financial Data Schedule Filed herewith 99 Private Securities Reform Act of 1995 Filed herewith Safe Harbor Compliance Statement for Forward-Looking Statements (b) REPORTS ON FORM 8-K We filed no reports on Form 8-K during the quarter ended March 31, 2000. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly cause this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, this 14th day of May, 2000. MERITAGE CORPORATION, a Maryland Corporation By /s/ LARRY W.SEAY ------------------------------------- Larry W. Seay Chief Financial Officer and Vice President-finance (Principal Financial Officer and Duly Authorized Officer) S-1