EXHIBIT 99.1
[WILLIAM LYON HOMES LOGO]
| Contact: | Investor Relations |
W. Douglass Harris
William Lyon Homes
(949) 833-3600
WILLIAM LYON HOMES REPORTS SECOND QUARTER RESULTS;
NET INCOME UP 96.1%
NEWPORT BEACH, CA—August 12, 2003—William Lyon Homes (NYSE: WLS) today reported net income for the second quarter ended June 30, 2003, up 96.1% to $13,792,000, or $1.38 per diluted share, on operating revenue of $158,734,000, as compared with net income of $7,032,000, or $0.66 per diluted share, on operating revenue of $129,455,000 for the comparable period a year ago. Combined operating revenue from home sales including unconsolidated joint ventures was $209,659,000 for the quarter ended June 30, 2003, as compared with $194,239,000 for the comparable period a year ago.
For the six months ended June 30, 2003, the Company reported net income of $18,674,000, or $1.87 per diluted share, on operating revenue of $231,195,000, as compared with net income of $10,145,000, or $0.95 per diluted share, on operating revenue of $221,120,000 for the comparable period a year ago. Combined operating revenue from home sales including unconsolidated joint ventures was $349,443,000 for the six months ended June 30, 2003, as compared with $334,346,000 for the comparable period a year ago.
Operating revenue for the three and six months ended June 30, 2003 includes $17,000,000 from the sale of land resulting in a gross profit of approximately $6,200,000.
The Company’s combined results including unconsolidated joint ventures were as follows: Net new home orders for the quarter ended June 30, 2003 were 948 homes, up 23.4% from 768 homes for the quarter ended June 30, 2002. Net new home orders for the six months ended June 30, 2003 were 1,705, up slightly from 1,703 homes for the six months ended June 30, 2002. The average
number of sales locations during the quarter ended June 30, 2003 was 39, up 8.3% from 36 in the comparable quarter a year ago. The number of homes closed in the second quarter of 2003 was 510 homes, down 9.3% from 562 homes in the second quarter of 2002. At June 30, 2003, the backlog of homes sold but not closed totaled 1,507 homes, up 17.9% from 1,278 homes at June 30, 2002, and up 41.0% from 1,069 homes at March 31, 2003. The dollar amount of backlog of homes sold but not closed was $567,852,000, up 15.2% from $492,941,000 a year ago, and up 37.4% from $413,369,000 at March 31, 2003. Selected financial and operating information for the Company including unconsolidated joint ventures, is set forth in greater detail in a schedule attached to this release.
During the second quarter of 2003, the average sales price of the Company’s homes in California (including unconsolidated joint ventures) was $493,900, up 24.8% as compared to $395,600 for the comparable period a year ago. The higher average sales price was due primarily to price appreciation in certain projects and a change in product mix. The average sales prices in Arizona and Nevada were $229,900 and $305,900, respectively, during the second quarter of 2003 as compared to $216,300 and $242,900, respectively, for the comparable period a year ago, due primarily to a change in product mix.
The Company’s operating income for the quarter ended June 30, 2003 was $22,567,000, up 137.5% from $9,503,000 for the quarter ended June 30, 2002. Operating income for the six months ended June 30, 2003 was $30,188,000, up 129.8% from $13,137,000 for the six months ended June 30, 2002.
The gross margin percentage on home sales for the Company’s consolidated projects for the quarter ended June 30, 2003 was 17.4%, up from 17.1% for the quarter ended March 31, 2003 and up from 13.3% for the quarter ended June 30, 2002. The gross margin percentage on home sales for the Company’s unconsolidated joint ventures for the quarter ended June 30, 2003 was 23.0%, up from 22.4% for the quarter ended March 31, 2003 and up from 15.4% for the quarter ended June 30, 2002.
General William Lyon, Chairman and Chief Executive Officer stated: “We are proud of the results for the second quarter of 2003. The number of new orders during the quarter is a record for any quarter in the Company’s history and the backlog at June 30, 2003 is a record for any quarter in the Company’s history.
Wade H. Cable, President and Chief Operating Officer stated: “The Company has increased its number of sales locations from 30 at September 30, 2002 to 46 at June 30, 2003. We anticipate opening approximately 15 new communities during the remainder of 2003 while closing out approximately 13 communities, which would result in approximately 48 active sales locations at
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the end of 2003. At June 30, 2003 the Company and its joint ventures owned or controlled approximately 14,531 lots. Assuming that the economic conditions affecting the homebuilding industry remain relatively stable, we expect that this growth in the number of active communities, together with the number of lots under our control, should position the Company for growth in 2004”.
In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46,Consolidation of Variable Interest Entities(“Interpretation No. 46”), which addresses the consolidation of variable interest entities (“VIEs”). Under Interpretation No. 46, arrangements that are not controlled through voting or similar rights are accounted for as VIEs. An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE. VIEs include certain homebuilding and land development joint ventures, and certain entities with which the Company enters into option agreements for the purchase of land or lots from an entity and pays a non-refundable deposit or enters into land banking arrangements. Interpretation No. 46 applies immediately to arrangements created after January 31, 2003 and, with respect to arrangements created before February 1, 2003, the interpretation will apply to the Company beginning on July 1, 2003.
Based on the Company’s analysis of arrangements created after January 31, 2003, no VIEs have been created for the period February 1, 2003 through June 30, 2003 with respect to option agreements or land banking arrangements. At June 30, 2003, three joint ventures created after January 31, 2003 have been determined to be VIEs in which the Company is considered the primary beneficiary. Accordingly, the assets, liabilities and operations of these three joint ventures have been consolidated with the Company’s financial statements as of June 30, 2003 and for the three months ended June 30, 2003. Included in the Company’s consolidated balance sheet at June 30, 2003 are real estate inventories related to the VIEs of $38,861,000, together with the related minority interest of $29,538,000. These joint ventures have not obtained construction financing from outside lenders, but are financing their activities through equity contributions from each of the joint venture partners.
The Company has not yet determined the anticipated impact of adopting Interpretation No. 46 for arrangements existing as of January 31, 2003. However, such adoption will likely require the consolidation in the Company’s third quarter financial statements of the assets, liabilities and operations of certain existing joint ventures, as well as option agreements or land banking arrangements. Because the Company already recognizes its proportionate share of joint venture earnings and losses under the equity method of accounting, the adoption of Interpretation No. 46 will not affect the Company’s consolidated net income.
The Company will hold a conference call on Wednesday, August 13, 2003 at 11:00 a.m. Pacific Time to discuss the second quarter 2003 earnings results. The dial-in number is (800) 299-8538 (enter passcode number 42648644). Participants may call in beginning at 10:45 a.m. Pacific Time.
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In addition, the call will be broadcast from William Lyon Homes’ website atwww.lyonhomes.com in the “Investor Relations” section of the site. The call will be recorded and replayed beginning on August 13, 2003 at 2:00 p.m. Pacific Time through midnight on August 22, 2003. The dial-in number for the replay is (888) 286-8010 (enter passcode number 67805591). Replays of the call will also be available on the Company’s website approximately two hours after broadcast.
William Lyon Homes is one of the oldest and largest homebuilders in the Southwest with development communities in California, Arizona and Nevada and at June 30, 2003 had 46 sales locations. The Company’s corporate headquarters are located in Newport Beach, California.
Certain statements contained in this release that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties and actual results may differ materially from those projected or implied. Further, certain forward-looking statements are based on assumptions of future events which may not prove to be accurate. Factors that may impact such forward-looking statements include, among others, changes in general economic conditions and in the markets in which the Company competes, terrorism or hostilities involving the United States, changes in mortgage and other interest rates, changes in prices of homebuilding materials, weather, the occurrence of events such as landslides, soil subsidence and earthquakes that are uninsurable, not economically insurable or not subject to effective indemnification agreements, the availability of labor and homebuilding materials, changes in governmental laws and regulations, the timing of receipt of regulatory approvals and the opening of projects, and the availability and cost of land for future development, as well as the other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2003 | 2002 | |||||||||||||||||||||||
| Unconsolidated | Unconsolidated | |||||||||||||||||||||||
| Joint | Combined | Joint | Combined | |||||||||||||||||||||
| Consolidated | Ventures | Total | Consolidated | Ventures | Total | |||||||||||||||||||
Selected Financial Information | ||||||||||||||||||||||||
Homes closed | 368 | 142 | 510 | 412 | 150 | 562 | ||||||||||||||||||
Home sales revenue | $ | 139,681 | $ | 69,978 | $ | 209,659 | $ | 126,886 | $ | 67,353 | $ | 194,239 | ||||||||||||
Cost of sales | (115,444 | ) | (53,884 | ) | (169,328 | ) | (110,027 | ) | (57,005 | ) | (167,032 | ) | ||||||||||||
Gross margin | $ | 24,237 | $ | 16,094 | $ | 40,331 | $ | 16,859 | $ | 10,348 | $ | 27,207 | ||||||||||||
Gross margin percentage | 17.4 | % | 23.0 | % | 19.2 | % | 13.3 | % | 15.4 | % | 14.0 | % | ||||||||||||
Number of homes closed | ||||||||||||||||||||||||
California | 174 | 142 | 316 | 239 | 150 | 389 | ||||||||||||||||||
Arizona | 76 | — | 76 | 63 | — | 63 | ||||||||||||||||||
Nevada | 118 | — | 118 | 110 | — | 110 | ||||||||||||||||||
Total | 368 | 142 | 510 | 412 | 150 | 562 | ||||||||||||||||||
Average sales price | ||||||||||||||||||||||||
California | $ | 494,900 | $ | 492,800 | $ | 493,900 | $ | 362,100 | $ | 449,000 | $ | 395,600 | ||||||||||||
Arizona | 229,900 | — | 229,900 | 216,300 | — | 216,300 | ||||||||||||||||||
Nevada | 305,900 | — | 305,900 | 242,900 | — | 242,900 | ||||||||||||||||||
Total | $ | 379,600 | $ | 492,800 | $ | 411,100 | $ | 308,000 | $ | 449,000 | $ | 345,600 | ||||||||||||
Number of net new home orders | ||||||||||||||||||||||||
California | 469 | 189 | 658 | 326 | 290 | 616 | ||||||||||||||||||
Arizona | 123 | — | 123 | 74 | — | 74 | ||||||||||||||||||
Nevada | 167 | — | 167 | 78 | — | 78 | ||||||||||||||||||
Total | 759 | 189 | 948 | 478 | 290 | 768 | ||||||||||||||||||
Average number of sales | ||||||||||||||||||||||||
California | 18 | 8 | 26 | 15 | 11 | 26 | ||||||||||||||||||
Arizona | 7 | — | 7 | 6 | — | 6 | ||||||||||||||||||
Nevada | 6 | — | 6 | 4 | — | 4 | ||||||||||||||||||
Total | 31 | 8 | 39 | 25 | 11 | 36 | ||||||||||||||||||
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)
(unaudited)
| As of June 30, | ||||||||||||||||||
| 2003 | 2002 | |||||||||||||||||
| Consolidated | Unconsolidated Joint Ventures | Combined Total | Consolidated | Unconsolidated Joint Ventures | Combined Total | |||||||||||||
Backlog of homes sold but not closed at end of period | ||||||||||||||||||
California | 758 | 275 | 1,033 | 584 | 429 | 1,013 | ||||||||||||
Arizona | 234 | — | 234 | 151 | — | 151 | ||||||||||||
Nevada | 240 | — | 240 | 114 | — | 114 | ||||||||||||
Total | 1,232 | 275 | 1,507 | 849 | 429 | 1,278 | ||||||||||||
Dollar amount of homes sold but not closed at end of period (in thousands) | ||||||||||||||||||
California | $ | 327,235 | $ | 126,143 | $ | 453,378 | $ | 226,033 | $ | 194,578 | $ | 420,611 | ||||||
Arizona | 45,884 | — | 45,884 | 32,423 | — | 32,423 | ||||||||||||
Nevada | 68,590 | — | 68,590 | 39,907 | — | 39,907 | ||||||||||||
Total | $ | 441,709 | $ | 126,143 | $ | 567,852 | $ | 298,363 | $ | 194,578 | $ | 492,941 | ||||||
Lots controlled at end of period | ||||||||||||||||||
Owned lots | ||||||||||||||||||
California | 2,406 | 1,447 | 3,853 | 1,855 | 1,644 | 3,499 | ||||||||||||
Arizona | 988 | — | 988 | 852 | — | 852 | ||||||||||||
Nevada | 1,623 | — | 1,623 | 1,269 | — | 1,269 | ||||||||||||
Total | 5,017 | 1,447 | 6,464 | 3,976 | 1,644 | 5,620 | ||||||||||||
Optioned lots (1) | ||||||||||||||||||
California | 4,060 | 2,201 | ||||||||||||||||
Arizona | 3,981 | 4,337 | ||||||||||||||||
Nevada | 26 | 66 | ||||||||||||||||
Total | 8,067 | 6,604 | ||||||||||||||||
Total lots controlled | ||||||||||||||||||
California | 7,913 | 5,700 | ||||||||||||||||
Arizona | 4,969 | 5,189 | ||||||||||||||||
Nevada | 1,649 | 1,335 | ||||||||||||||||
Total | 14,531 | 12,224 | ||||||||||||||||
(1) Optioned lots may be purchased as consolidated projects or by newly formed unconsolidated joint ventures.
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2003 | 2002 | |||||||||||||||||||||||
| Unconsolidated | Unconsolidated | |||||||||||||||||||||||
| Joint | Combined | Joint | Combined | |||||||||||||||||||||
| Consolidated | Ventures | Total | Consolidated | Ventures | Total | |||||||||||||||||||
Selected Financial Information (dollars in thousands) | ||||||||||||||||||||||||
Homes closed | 552 | 273 | 825 | 713 | 254 | 967 | ||||||||||||||||||
Home sales revenue | $ | 210,104 | $ | 139,339 | $ | 349,443 | $ | 217,035 | $ | 117,311 | $ | 334,346 | ||||||||||||
Cost of sales | (173,817 | ) | (107,677 | ) | (281,494 | ) | (187,121 | ) | (99,981 | ) | (287,102 | ) | ||||||||||||
Gross margin | $ | 36,287 | $ | 31,662 | $ | 67,949 | $ | 29,914 | $ | 17,330 | $ | 47,244 | ||||||||||||
Gross margin percentage | 17.3 | % | 22.7 | % | 19.4 | % | 13.8 | % | 14.8 | % | 14.1 | % | ||||||||||||
Number of homes closed | ||||||||||||||||||||||||
California | 247 | 273 | 520 | 392 | 254 | 646 | ||||||||||||||||||
Arizona | 124 | — | 124 | 126 | — | 126 | ||||||||||||||||||
Nevada | 181 | — | 181 | 195 | — | 195 | ||||||||||||||||||
Total | 552 | 273 | 825 | 713 | 254 | 967 | ||||||||||||||||||
Average sales price | ||||||||||||||||||||||||
California | $ | 518,600 | $ | 510,400 | $ | 514,300 | $ | 365,200 | $ | 461,900 | $ | 403,200 | ||||||||||||
Arizona | 229,700 | — | 229,700 | 202,600 | — | 202,600 | ||||||||||||||||||
Nevada | 295,700 | — | 295,700 | 247,900 | — | 247,900 | ||||||||||||||||||
Total | $ | 380,600 | $ | 510,400 | $ | 423,600 | $ | 304,400 | $ | 461,900 | $ | 345,800 | ||||||||||||
Number of net new home orders | ||||||||||||||||||||||||
California | 805 | 353 | 1,158 | 777 | 586 | 1,363 | ||||||||||||||||||
Arizona | 221 | — | 221 | 159 | — | 159 | ||||||||||||||||||
Nevada | 326 | — | 326 | 181 | — | 181 | ||||||||||||||||||
Total | 1,352 | 353 | 1,705 | 1,117 | 586 | 1,703 | ||||||||||||||||||
Average number of sales locations during period | ||||||||||||||||||||||||
California | 17 | 8 | 25 | 16 | 12 | 28 | ||||||||||||||||||
Arizona | 6 | — | 6 | 7 | — | 7 | ||||||||||||||||||
Nevada | 6 | — | 6 | 5 | — | 5 | ||||||||||||||||||
Total | 29 | 8 | 37 | 28 | 12 | 40 | ||||||||||||||||||
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WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per common share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Operating revenue | ||||||||||||||||
Home sales | $ | 139,681 | $ | 126,886 | $ | 210,104 | $ | 217,035 | ||||||||
Lots, land and other sales | 17,000 | 531 | 17,000 | 531 | ||||||||||||
Management fees | 2,053 | 2,038 | 4,091 | 3,554 | ||||||||||||
| 158,734 | 129,455 | 231,195 | 221,120 | |||||||||||||
Operating costs | ||||||||||||||||
Cost of sales—homes | (115,444 | ) | (110,027 | ) | (173,817 | ) | (187,121 | ) | ||||||||
Cost of sales—lots, land and other | (10,779 | ) | (678 | ) | (10,802 | ) | (869 | ) | ||||||||
Sales and marketing | (6,222 | ) | (5,207 | ) | (10,298 | ) | (9,905 | ) | ||||||||
General and administrative | (11,327 | ) | (7,643 | ) | (21,166 | ) | (15,596 | ) | ||||||||
| (143,772 | ) | (123,555 | ) | (216,083 | ) | (213,491 | ) | |||||||||
Equity in income of unconsolidated joint ventures | 7,605 | 3,603 | 15,076 | 5,508 | ||||||||||||
Operating income | 22,567 | 9,503 | 30,188 | 13,137 | ||||||||||||
Other income, net | 757 | 355 | 1,397 | 511 | ||||||||||||
Minority equity in income of consolidated joint ventures | 12 | — | 12 | — | ||||||||||||
Income before provision for income taxes | 23,336 | 9,858 | 31,597 | 13,648 | ||||||||||||
Provision for income taxes | (9,544 | ) | (2,826 | ) | (12,923 | ) | (3,503 | ) | ||||||||
Net income | $ | 13,792 | $ | 7,032 | $ | 18,674 | $ | 10,145 | ||||||||
Earnings per common share | ||||||||||||||||
Basic | $ | 1.40 | $ | 0.68 | $ | 1.91 | $ | 0.97 | ||||||||
Diluted | $ | 1.38 | $ | 0.66 | $ | 1.87 | $ | 0.95 | ||||||||
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WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
| June 30, | December 31, | |||||
| 2003 | 2002 | |||||
| (unaudited) | ||||||
ASSETS | ||||||
Cash and cash equivalents | $ | 11,078 | $ | 16,694 | ||
Receivables | 16,184 | 28,734 | ||||
Real estate inventories | 688,274 | 491,952 | ||||
Investments in and advances to unconsolidated joint ventures | 55,936 | 65,404 | ||||
Property and equipment, less accumulated depreciation of $6,068 and $5,435 at June 30, 2003 and December 31, 2002, respectively | 1,733 | 2,131 | ||||
Deferred loan costs | 9,174 | 1,341 | ||||
Goodwill | 5,896 | 5,896 | ||||
Other assets | 7,341 | 5,429 | ||||
| $ | 795,616 | $ | 617,581 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Accounts payable | $ | 50,895 | $ | 34,881 | ||
Accrued expenses | 61,259 | 54,312 | ||||
Notes payable | 138,913 | 195,786 | ||||
10¾% Senior Notes due April 1, 2013 | 246,295 | — | ||||
12½% Senior Notes due July 1, 2003 | — | 70,279 | ||||
| 497,362 | 355,258 | |||||
Minority interest in consolidated joint ventures | 96,512 | 80,647 | ||||
Stockholders’ equity | ||||||
Common stock, par value $.01 per share; 30,000,000 shares authorized; 9,887,341 and 9,728,747 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively | 99 | 97 | ||||
Additional paid-in capital | 109,982 | 108,592 | ||||
Retained earnings | 91,661 | 72,987 | ||||
| 201,742 | 181,676 | |||||
| $ | 795,616 | $ | 617,581 | |||
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WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
UNCONSOLIDATED JOINT VENTURE INFORMATION
The Company and certain of its subsidiaries are general partners or members in joint ventures involved in the development and sale of residential projects. The financial statements of such joint ventures in which the Company has a 50% or less voting or economic interest (thus are not controlled by the Company) and which were created prior to February 1, 2003, are not consolidated with the Company’s financial statements. The Company’s investments in unconsolidated joint ventures are accounted for using the equity method. Condensed combined statements of income for these joint ventures for the three and six months ended June 30, 2003 and 2002 are summarized as follows:
CONDENSED COMBINED STATEMENTS OF INCOME
(dollars in thousands)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Operating revenue | ||||||||||||||||
Home sales | $ | 69,978 | $ | 67,353 | $ | 139,339 | $ | 117,311 | ||||||||
Land sale | 8,440 | — | 8,440 | 17,079 | ||||||||||||
| 78,418 | 67,353 | 147,779 | 134,390 | |||||||||||||
Operating costs | ||||||||||||||||
Cost of sales—homes | (53,884 | ) | (57,005 | ) | (107,677 | ) | (99,981 | ) | ||||||||
Cost of sales—land | (8,132 | ) | — | (8,132 | ) | (13,542 | ) | |||||||||
Sales and marketing | (2,052 | ) | (2,300 | ) | (4,095 | ) | (4,731 | ) | ||||||||
Operating income | 14,350 | 8,048 | 27,875 | 16,136 | ||||||||||||
Other income (expense), net | (409 | ) | 17 | (200 | ) | (30 | ) | |||||||||
Net income | $ | 13,941 | $ | 8,065 | $ | 27,675 | $ | 16,106 | ||||||||
Allocation to owners | ||||||||||||||||
William Lyon Homes | $ | 7,605 | $ | 3,603 | $ | 15,076 | $ | 5,508 | ||||||||
Others | 6,336 | 4,462 | 12,599 | 10,598 | ||||||||||||
| $ | 13,941 | $ | 8,065 | $ | 27,675 | $ | 16,106 | |||||||||
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WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA (dollars in thousands except per share data):
Three Months Ended June 30, | Last Twelve Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Net income | $ | 13,792 | $ | 7,032 | $ | 58,040 | $ | 42,124 | ||||||||
Net cash used in operating activities | $ | (84,167 | ) | $ | (30,028 | ) | $ | (83,117 | ) | $ | (37,665 | ) | ||||
Interest incurred | $ | 12,383 | $ | 5,599 | $ | 37,762 | $ | 21,966 | ||||||||
EBITDA (1) | $ | 33,413 | $ | 17,706 | $ | 106,003 | $ | 73,155 | ||||||||
Ratio of EBITDA to interest incurred | 2.81x | 3.33x | ||||||||||||||
Balance Sheet Data
| ||||||||||||||||
| June 30, | ||||||||||||||||
| 2003 | 2002 | |||||||||||||||
Stockholders’ equity per share | $ | 20.40 | $ | 15.09 | ||||||||||||
Stockholders’ equity | $ | 201,742 | $ | 155,752 | ||||||||||||
Total debt | 385,208 | 309,074 | ||||||||||||||
Total book capitalization | $ | 586,950 | $ | 464,826 | ||||||||||||
Ratio of debt to total book capitalization | 65.6% | 66.5% | ||||||||||||||
Ratio of debt to total book capitalization (net of cash) | 65.0% | 65.5% | ||||||||||||||
Ratio of debt to EBITDA | 3.63x | 4.22x | ||||||||||||||
Ratio of debt to EBITDA (net of cash) | 3.53x | 4.03x | ||||||||||||||
| (1) | EBITDA means net income plus (i) provision for income taxes, (ii) interest expense, (iii) amortization of capitalized interest included in cost of sales, (iv) depreciation and amortization and (v) cash distributions of income from unconsolidated joint ventures less equity in income of unconsolidated joint ventures. Other companies may calculate EBITDA differently. EBITDA is not a financial measure prepared in accordance with generally accepted accounting principles. EBITDA is presented herein because it is a component of certain covenants in the Indenture governing the Company’s 10¾% Senior Notes (“Indenture”). In addition, management believes the presentation of EBITDA provides useful information to the Company’s investors regarding the Company’s financial condition and results of operations because EBITDA is a widely utilized financial indicator of a company’s ability to service and/or incur debt. The calculations of EBITDA below are presented in accordance with the requirements of the Indenture. EBITDA should not be considered as an alternative for net income, cash flows from operating activities |
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and other consolidated income or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. A reconciliation of net income to EBITDA is provided as follows:
Three Months Ended June 30, | Last Twelve Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Net income | $ | 13,792 | $ | 7,032 | $ | 58,040 | $ | 42,124 | ||||||||
Provision for income taxes | 9,544 | 2,826 | 27,690 | 7,501 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest incurred | 12,383 | 5,599 | 37,762 | 21,966 | ||||||||||||
Interest capitalized | (12,383 | ) | (5,599 | ) | (37,762 | ) | (21,966 | ) | ||||||||
Amortization of capitalized interest in cost of sales | 5,038 | 5,424 | 26,892 | 22,403 | ||||||||||||
Depreciation and amortization | 280 | 314 | 1,370 | 1,853 | ||||||||||||
Cash distributions of income from unconsolidated joint ventures | 12,364 | 5,713 | 29,327 | 19,867 | ||||||||||||
Equity in income of unconsolidated joint ventures | (7,605 | ) | (3,603 | ) | (37,316 | ) | (20,593 | ) | ||||||||
EBITDA | $ | 33,413 | $ | 17,706 | $ | 106,003 | $ | 73,155 | ||||||||
A reconciliation of net cash used in operating activities to EBITDA is provided as follows:
Three Months Ended June 30, | Last Twelve Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Net cash used in operating activities | $ | (84,167 | ) | $ | (30,028 | ) | $ | (83,117 | ) | $ | (37,665 | ) | ||||
Interest expense: | ||||||||||||||||
Interest incurred | 12,383 | 5,599 | 37,762 | 21,966 | ||||||||||||
Interest capitalized | (12,383 | ) | (5,599 | ) | (37,762 | ) | (21,966 | ) | ||||||||
Amortization of capitalized interest in cost of sales | 5,038 | 5,424 | 26,892 | 22,403 | ||||||||||||
Cash distributions of income from unconsolidated joint ventures | 12,364 | 5,713 | 29,327 | 19,867 | ||||||||||||
Minority equity in income of consolidated joint ventures | 12 | — | 12 | — | ||||||||||||
Net changes in operating assets and liabilities: | ||||||||||||||||
Receivables | 4,153 | 1,534 | 9,844 | (2,809 | ) | |||||||||||
Real estate inventories | 118,741 | 30,642 | 135,299 | 57,183 | ||||||||||||
Deferred loan costs | 714 | (191 | ) | 6,682 | (806 | ) | ||||||||||
Other assets | 121 | 12,423 | (1,721 | ) | 14,795 | |||||||||||
Accounts payable | (16,160 | ) | (1,843 | ) | (15,651 | ) | (1,628 | ) | ||||||||
Accrued expenses | (7,403 | ) | (5,968 | ) | (1,564 | ) | 1,815 | |||||||||
EBITDA | $ | 33,413 | $ | 17,706 | $ | 106,003 | $ | 73,155 | ||||||||
12
