Exhibit 99.1
Contact: | Investor Relations | |
W. Douglass Harris | ||
William Lyon Homes | ||
(949) 833-3600 |
WILLIAM LYON HOMES REPORTS THIRD QUARTER 2005 RESULTS
Financial Highlights
• | Net new home orders of 834, up 27% from 659 in the third quarter of 2004 |
• | Record backlog of homes sold but not closed at September 30, 2005 of 2,299, up 22% from 1,883 at September 30, 2004 and representing the highest backlog for any quarter-end in the Company’s history. |
• | Record dollar backlog of homes sold but not closed at September 30, 2005 of $1,210,356,000, up 16% from $1,042,572,000 at September 30, 2004 and representing the highest backlog for any quarter-end in the Company’s history. |
• | Homes closed of 650, down 25% from 864 in the third quarter of 2004 |
• | Operating revenue from home sales of $358.8 million, down 24% from $474.3 million in the third quarter of 2004 |
• | Operating revenue from lots, land and other sales of $17.6 million as compared to $0.6 million in the third quarter of 2004 |
• | Consolidated operating revenue of $376.3 million, down 21% from $475.0 million in the third quarter of 2004 |
• | Homebuilding gross margin of $89.7 million, down 29% from $125.7 million in the third quarter of 2004 |
• | Homebuilding gross margin percentage of 25.0%, down 150 basis points from 26.5% in the third quarter of 2004 |
• | Lots, land and other gross margin of $7.5 million as compared to $(0.2) million in the third quarter of 2004 |
• | Net income of $38.1 million, down 15% from $44.9 million in the third quarter of 2004 |
• | Diluted earnings per share of $4.39, down 3% from $4.51 in the third quarter of 2004 (based on weighted average shares outstanding of 8,677,410 in the 2005 period as compared to 9,965,762 in the 2004 period) |
NEWPORT BEACH, CA---November 9, 2005---William Lyon Homes (NYSE: WLS) today reported that net income for the third quarter ended September 30, 2005 decreased 15% to $38,083,000, or $4.39 per diluted share, as compared to net income of $44,937,000, or $4.51 per diluted share, for the comparable period a year ago. Consolidated operating revenue decreased 21% to $376,331,000 for the quarter ended September 30, 2005, as compared to $474,950,000 for the comparable period a year ago.
The Company reported that net income for the nine months ended September 30, 2005 increased 12% to $102,676,000, or $11.85 per diluted share, as compared to net income of $91,494,000, or $9.22 per diluted share, for the comparable period a year ago. Consolidated operating revenue decreased 7% to $1,030,502,000 for the nine months ended September 30, 2005, as compared with $1,113,981,000 for the comparable period a year ago.
Operating revenue for the three months ended September 30, 2005 and 2004 included $17,580,000 and $628,000, respectively, from the sales of land resulting in gross profit (loss) of approximately $7,525,000 and $(157,000), respectively. Operating revenue for the nine months ended September 30, 2005 and 2004 included $64,972,000 and $18,051,000, respectively, from the sales of land resulting in gross profit of approximately $31,080,000 and $3,440,000, respectively.
Net new home orders for the three months ended September 30, 2005 increased 27% to 834 homes, compared to 659 homes for the three months ended September 30, 2004. The average number of sales locations during the three months ended September 30, 2005 was 42, up 5% from 40 during the three months ended September 30, 2004. The Company’s number of new home orders per average sales location increased to 19.9 for the three months ended September 30, 2005, as compared to 16.5 for the three months ended September 30, 2004. Net new home orders for the nine months ended September 30, 2005 were 2,861 homes, down slightly from 2,878 homes for the nine months ended September 30, 2004. The average number of sales locations during the nine months ended September 30, 2005 was 41, down 5% from 43 during the nine months ended September 30, 2004. The Company’s number of new home orders per average sales location increased to 69.8 for the nine months ended September 30, 2005, as compared to 66.9 for the nine months ended September 30, 2004.
The number of homes closed in the three months ended September 30, 2005 was 650 homes, down 25% from 864 homes closed in the three months ended September 30, 2004. The number of homes closed for the nine months ended September 30, 2005 was 1,728, down 24% from 2,261 homes closed in the nine months ended September 30, 2004.
2
At September 30, 2005, the backlog of homes sold but not closed totaled 2,299 homes, a record for any quarter-end in the Company’s history, up 22% from 1,883 homes at September 30, 2004. At September 30, 2005, the dollar amount of backlog of homes sold but not closed totaled $1,210,356,000, a record for any quarter-end in the Company’s history, up 16% from $1,042,572,000 at September 30, 2004, and up 8% from $1,125,579,000 at June 30, 2005.
Selected financial and operating information for the Company including joint ventures is set forth in greater detail in a schedule attached to this release.
General William Lyon, Chairman and Chief Executive Officer, stated: “While the Company’s net income for the quarter ended September 30, 2005 was down approximately 15% from the comparable prior period as a result of reduced closings and lower gross margins, nevertheless the results for the quarter exceeded our expectations and our business plan for the quarter.”
General Lyon added: “We had anticipated that our closings for the quarter would fall short of the closings for the comparable prior period as a result of a reduction in the average number of sales locations in the first half of 2005 as compared to the first half of 2004, resulting in a lack of available product to sell.”
General Lyon further stated: “Our results for the quarter were also negatively impacted by a reduction of 150 basis points in our gross margin percentages for the quarter ended September 30, 2005 as compared to the quarter ended September 30, 2004 primarily due to the earlier close out of projects with higher average gross margins and a shift in product mix.”
Wade H. Cable, President and Chief Operating Officer, stated: “As we have previously indicated, we are continuing our focus on increasing the number of sales locations in the geographic markets in which we operate. While we ended 2004 with only 37 active sales locations, we now expect to open 35 new locations this year resulting in 47 active sales locations by the end of 2005.”
General Lyon concluded: “As we enter the fourth quarter, I am pleased by the 27% increase in the number of net new home orders to 834 for the third quarter of 2005 as compared to 659 for the third quarter of 2004. In addition, our backlog of homes sold but not closed at September 30, 2005 increased 22% to 2,299 homes with a dollar value of $1,210,356,000, both records for any quarter in the Company’s history.”
3
For the full year 2005, the Company continues to target deliveries at approximately 3,200, including consolidated joint ventures, which will result in total revenues in excess of $1.8 billion. However, as the Company has previously stated, a significant portion of the Company’s anticipated deliveries for the fourth quarter are expected to occur in the second half of the quarter. Because of the uncertainty of the timing of these deliveries and certain land sales in the fourth quarter of 2005, the Company continues to estimate that its full year 2005 earnings will be in a broad range of between $17.75 and $20.00 per share on a diluted basis.
The Company will hold a conference call on Thursday, November 10, 2005 at 11:00 a.m. Pacific Time to discuss the third quarter 2005 earnings results. The dial-in number is (866) 770-7129 (enter passcode number 11061305). Participants may call in beginning at 10:45 a.m. Pacific Time. In addition, the call will be broadcast from William Lyon Homes’ website at www.lyonhomes.com in the “Investor Relations” section of the site. The call will be recorded and replayed beginning on November 10, 2005 at 1:00 p.m. Pacific Time through midnight on December 2, 2005. The dial-in number for the replay is (888) 286-8010 (enter passcode number 82369476). Replays of the call will also be available on the Company’s website approximately two hours after broadcast.
William Lyon Homes is primarily engaged in the design, construction and sales of new single-family detached and attached homes in California, Arizona and Nevada. 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 conditions, 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.
4
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
Three Months Ended September 30, | ||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||
Wholly-Owned | Joint Ventures | Consolidated Total | Wholly-Owned | Joint Ventures | Consolidated Total | |||||||||||||||||||
Selected Financial Information | ||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Homes closed | 524 | 126 | 650 | 574 | 290 | 864 | ||||||||||||||||||
Home sales revenue | $ | 278,525 | $ | 80,226 | $ | 358,751 | $ | 321,091 | $ | 153,231 | $ | 474,322 | ||||||||||||
Cost of sales | (210,757 | ) | (58,251 | ) | (269,008 | ) | (238,765 | ) | (109,841 | ) | (348,606 | ) | ||||||||||||
Gross margin | $ | 67,768 | $ | 21,975 | $ | 89,743 | $ | 82,326 | $ | 43,390 | $ | 125,716 | ||||||||||||
Gross margin percentage | 24.3 | % | 27.4 | % | 25.0 | % | 25.6 | % | 28.3 | % | 26.5 | % | ||||||||||||
Number of homes closed | ||||||||||||||||||||||||
California | 261 | 126 | 387 | 338 | 290 | 628 | ||||||||||||||||||
Arizona | 140 | — | 140 | 97 | — | 97 | ||||||||||||||||||
Nevada | 123 | — | 123 | 139 | — | 139 | ||||||||||||||||||
Total | 524 | 126 | 650 | 574 | 290 | 864 | ||||||||||||||||||
Average sales price | ||||||||||||||||||||||||
California | $ | 726,300 | $ | 636,700 | $ | 697,200 | $ | 737,000 | $ | 528,400 | $ | 640,900 | ||||||||||||
Arizona | 327,300 | — | 327,300 | 269,200 | — | 269,200 | ||||||||||||||||||
Nevada | 350,700 | — | 350,700 | 329,900 | — | 329,400 | ||||||||||||||||||
Total | $ | 531,500 | $ | 636,700 | $ | 551,900 | $ | 559,400 | $ | 528,400 | $ | 549,000 | ||||||||||||
Number of net new home orders | ||||||||||||||||||||||||
California | 403 | 120 | 523 | 159 | 159 | 318 | ||||||||||||||||||
Arizona | 118 | — | 118 | 192 | — | 192 | ||||||||||||||||||
Nevada | 193 | — | 193 | 149 | — | 149 | ||||||||||||||||||
Total | 714 | 120 | 834 | 500 | 159 | 659 | ||||||||||||||||||
Average number of sales locations during period | ||||||||||||||||||||||||
California | 22 | 7 | 29 | 15 | 11 | 26 | ||||||||||||||||||
Arizona | 5 | — | 5 | 7 | — | 7 | ||||||||||||||||||
Nevada | 8 | — | 8 | 7 | — | 7 | ||||||||||||||||||
Total | 35 | 7 | 42 | 29 | 11 | 40 | ||||||||||||||||||
5
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)
(unaudited)
As of September 30, | ||||||||||||||||||
2005 | 2004 | |||||||||||||||||
Wholly-Owned | Joint Ventures | Consolidated Total | Wholly-Owned | Joint Ventures | Consolidated Total | |||||||||||||
Backlog of homes sold but not closed at end of period | ||||||||||||||||||
California | 1,102 | 408 | 1,510 | 587 | 535 | 1,122 | ||||||||||||
Arizona | 499 | — | 499 | 518 | — | 518 | ||||||||||||
Nevada | 290 | — | 290 | 243 | — | 243 | ||||||||||||
Total | 1,891 | 408 | 2,299 | 1,348 | 535 | 1,883 | ||||||||||||
Dollar amount of homes sold but not closed at end of period (in thousands) | ||||||||||||||||||
California | $ | 720,999 | $ | 213,302 | $ | 934,301 | $ | 494,028 | $ | 316,187 | $ | 810,215 | ||||||
Arizona | 174,487 | — | 174,487 | 137,967 | — | 137,967 | ||||||||||||
Nevada | 101,568 | — | 101,568 | 94,390 | — | 94,390 | ||||||||||||
Total | $ | 997,054 | $ | 213,302 | $ | 1,210,356 | $ | 726,385 | $ | 316,187 | $ | 1,042,572 | ||||||
Lots controlled at end of period | ||||||||||||||||||
Owned lots | ||||||||||||||||||
California | 4,516 | 1,636 | 6,152 | 2,659 | 1,786 | 4,445 | ||||||||||||
Arizona | 3,657 | 367 | 4,024 | 4,069 | — | 4,069 | ||||||||||||
Nevada | 1,517 | — | 1,517 | 1,256 | — | 1,256 | ||||||||||||
Total | 9,690 | 2,003 | 11,693 | 7,984 | 1,786 | 9,770 | ||||||||||||
Optioned lots (1) | ||||||||||||||||||
California | 3,296 | 4,817 | ||||||||||||||||
Arizona | 6,329 | 4,038 | ||||||||||||||||
Nevada | 2,044 | 1,411 | ||||||||||||||||
Total | 11,669 | 10,266 | ||||||||||||||||
Total lots controlled | ||||||||||||||||||
California | 9,448 | 9,262 | ||||||||||||||||
Arizona | 10,353 | 8,107 | ||||||||||||||||
Nevada | 3,561 | 2,667 | ||||||||||||||||
Total | 23,362 | 20,036 | ||||||||||||||||
(1) | Optioned lots may be purchased by the Company as wholly-owned projects or may be purchased by newly formed joint ventures. |
6
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
Nine Months Ended September 30, | ||||||||||||||||||||||||
2005 | 2004 | |||||||||||||||||||||||
Wholly-Owned | Joint Ventures | Consolidated Total | Wholly-Owned | Joint Ventures | Consolidated Total | |||||||||||||||||||
Selected Financial Information | ||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Homes closed | 1,386 | 342 | 1,728 | 1,674 | 587 | 2,261 | ||||||||||||||||||
Home sales revenue | $ | 743,341 | $ | 222,189 | $ | 965,530 | $ | 799,783 | $ | 296,237 | $ | 1,095,930 | ||||||||||||
Cost of sales | (549,656 | ) | (161,286 | ) | (710,942 | ) | (612,958 | ) | (218,912 | ) | (831,870 | ) | ||||||||||||
Gross margin | $ | 193,685 | $ | 60,903 | $ | 254,588 | $ | 186,825 | $ | 77,325 | $ | 264,060 | ||||||||||||
Gross margin percentage | 26.1 | % | 27.4 | % | 26.4 | % | 23.4 | % | 26.1 | % | 24.1 | % | ||||||||||||
Number of homes closed | ||||||||||||||||||||||||
California | 592 | 342 | 934 | 899 | 587 | 1,486 | ||||||||||||||||||
Arizona | 437 | — | 437 | 266 | — | 266 | ||||||||||||||||||
Nevada | 357 | — | 357 | 509 | — | 509 | ||||||||||||||||||
Total | 1,386 | 342 | 1,728 | 1,674 | 587 | 2,261 | ||||||||||||||||||
Average sales price | ||||||||||||||||||||||||
California | $ | 807,100 | $ | 649,700 | $ | 749,500 | $ | 644,600 | $ | 504,500 | $ | 589,200 | ||||||||||||
Arizona | 301,900 | — | 301,900 | 237,300 | — | 237,300 | ||||||||||||||||||
Nevada | 374,200 | — | 374,200 | 308,800 | — | 308,800 | ||||||||||||||||||
Total | $ | 536,300 | $ | 649,700 | $ | 558,800 | $ | 477,800 | $ | 504,500 | $ | 484,700 | ||||||||||||
Number of net new home orders | ||||||||||||||||||||||||
California | 1,337 | 505 | 1,842 | 974 | 808 | 1,782 | ||||||||||||||||||
Arizona | 454 | — | 454 | 577 | — | 577 | ||||||||||||||||||
Nevada | 565 | — | 565 | 519 | — | 519 | ||||||||||||||||||
Total | 2,356 | 505 | 2,861 | 2,070 | 808 | 2,878 | ||||||||||||||||||
Average number of sales locations during period | ||||||||||||||||||||||||
California | 19 | 8 | 27 | 18 | 12 | �� | 30 | |||||||||||||||||
Arizona | 6 | — | 6 | 6 | — | 6 | ||||||||||||||||||
Nevada | 8 | — | 8 | 7 | — | 7 | ||||||||||||||||||
Total | 33 | 8 | 41 | 31 | 12 | 43 | ||||||||||||||||||
7
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per common share amounts)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Operating revenue | ||||||||||||||||
Home sales | $ | 358,751 | $ | 474,322 | $ | 965,530 | $ | 1,095,930 | ||||||||
Lots, land and other sales | 17,580 | 628 | 64,972 | 18,051 | ||||||||||||
376,331 | 474,950 | 1,030,502 | 1,113,981 | |||||||||||||
Operating costs | ||||||||||||||||
Cost of sales - homes | (269,008 | ) | (348,606 | ) | (710,942 | ) | (831,870 | ) | ||||||||
Cost of sales - lots, land and other | (10,055 | ) | (785 | ) | (33,892 | ) | (14,611 | ) | ||||||||
Sales and marketing | (12,440 | ) | (14,273 | ) | (36,837 | ) | (37,565 | ) | ||||||||
General and administrative | (21,476 | ) | (23,536 | ) | (62,880 | ) | (54,254 | ) | ||||||||
Other | (574 | ) | (658 | ) | (1,782 | ) | (1,425 | ) | ||||||||
(313,553 | ) | (387,858 | ) | (846,333 | ) | (939,725 | ) | |||||||||
Equity in income (loss) of unconsolidated joint ventures | 4,672 | (268 | ) | 4,513 | (451 | ) | ||||||||||
Minority equity in income of consolidated entities | (5,073 | ) | (13,858 | ) | (17,032 | ) | (24,770 | ) | ||||||||
Operating income | 62,377 | 72,966 | 171,650 | 149,035 | ||||||||||||
Financial advisory expenses | — | — | (2,191 | ) | — | |||||||||||
Other income, net | 570 | 1,244 | 253 | 2,949 | ||||||||||||
Income before provision for income taxes | 62,947 | 74,210 | 169,712 | 151,984 | ||||||||||||
Provision for income taxes | (24,864 | ) | (29,273 | ) | (67,036 | ) | (60,490 | ) | ||||||||
Net income | $ | 38,083 | $ | 44,937 | $ | 102,676 | $ | 91,494 | ||||||||
Earnings per common share | ||||||||||||||||
Basic | $ | 4.41 | $ | 4.54 | $ | 11.91 | $ | 9.29 | ||||||||
Diluted | $ | 4.39 | $ | 4.51 | $ | 11.85 | $ | 9.22 | ||||||||
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WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
September 30, 2005 | December 31, 2004 | |||||
(unaudited) | ||||||
ASSETS | ||||||
Cash and cash equivalents | $ | 33,328 | $ | 96,074 | ||
Receivables | 35,739 | 39,302 | ||||
Real estate inventories | 1,575,889 | 1,059,173 | ||||
Investments in and advances to unconsolidated joint ventures | 463 | 17,911 | ||||
Property and equipment, less accumulated depreciation of $9,404 and $7,844 at September 30, 2005 and December 31, 2004, respectively | 18,627 | 18,066 | ||||
Deferred loan costs | 13,019 | 13,982 | ||||
Goodwill | 5,896 | 5,896 | ||||
Other assets | 29,395 | 24,158 | ||||
$ | 1,712,356 | $ | 1,274,562 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Accounts payable | $ | 65,414 | $ | 39,364 | ||
Accrued expenses | 128,357 | 150,774 | ||||
Notes payable | 242,173 | 48,571 | ||||
7 5/8% Senior Notes due December 15, 2012 | 150,000 | 150,000 | ||||
10 3/4% Senior Notes due April 1, 2013 | 246,847 | 246,648 | ||||
7 1/2% Senior Notes due February 15, 2014 | 150,000 | 150,000 | ||||
982,791 | 785,357 | |||||
Minority interest in consolidated entities | 276,471 | 142,096 | ||||
Stockholders’ equity | ||||||
Common stock, par value $.01 per share; 30,000,000 shares authorized; 8,652,067 and 8,616,236 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively; 1,275,000 shares issued and held in treasury at September 30, 2005 and December 31, 2004, respectively | 86 | 86 | ||||
Additional paid-in capital | 33,559 | 30,250 | ||||
Retained earnings | 419,449 | 316,773 | ||||
453,094 | 347,109 | |||||
$ | 1,712,356 | $ | 1,274,562 | |||
9
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 consolidated financial statements of the Company include the accounts of the Company, all majority-owned and controlled subsidiaries and certain joint ventures which have been determined to be variable interest entities in which the Company is considered the primary beneficiary. The financial statements of joint ventures which have not been determined to be variable interest entities in which the Company is considered the primary beneficiary 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 nine months ended September 30, 2005 and 2004 are summarized as follows:
CONDENSED COMBINED STATEMENTS OF INCOME
(dollars in thousands)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Operating revenue | ||||||||||||||||
Land sales | $ | 26,091 | $ | — | $ | 26,091 | $ | — | ||||||||
Operating costs | ||||||||||||||||
Cost of sales — land | (23,338 | ) | — | (23,338 | ) | — | ||||||||||
Sales and marketing | (284 | ) | (51 | ) | (284 | ) | (72 | ) | ||||||||
General and administrative | (2 | ) | (4 | ) | (16 | ) | (12 | ) | ||||||||
Other | (354 | ) | (236 | ) | (985 | ) | (245 | ) | ||||||||
(23,978 | ) | (291 | ) | (24,623 | ) | (329 | ) | |||||||||
Equity in income (loss) of unconsolidated joint ventures | 18,102 | (244 | ) | 19,498 | (572 | ) | ||||||||||
Net income (loss) | $ | 20,215 | $ | (535 | ) | $ | 20,966 | $ | (901 | ) | ||||||
Allocation to owners | ||||||||||||||||
William Lyon Homes | $ | 10,108 | $ | (268 | ) | $ | 10,483 | $ | (451 | ) | ||||||
Others | 10,107 | (267 | ) | 10,483 | (450 | ) | ||||||||||
$ | 20,215 | $ | (535 | ) | $ | 20,966 | $ | (901 | ) | |||||||
10
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA (dollars in thousands except per share data):
Three Months Ended September 30, | Last Twelve Months Ended September 30, | ||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||
Net income | $ | 38,083 | $ | 44,937 | $ | 182,831 | $ | 130,090 | |||||||
Net cash (used in) provided by operating activities | $ | (138,181 | ) | $ | 66,984 | $ | (28,108 | ) | $ | (85,184 | ) | ||||
Interest incurred (1) | $ | 19,612 | $ | 15,936 | $ | 67,020 | $ | 58,129 | |||||||
Adjusted EBITDA (2) | $ | 73,857 | $ | 91,256 | $ | 357,350 | $ | 284,192 | |||||||
Ratio of adjusted EBITDA to interest incurred | 5.33 | x | 4.89 | x |
(1) | Interest incurred for the three and twelve months ended September 30, 2005 includes $79,000 and $1,287,000, respectively, of interest related to debt of consolidated entities which totaled $16,203,000 at September 30, 2005, due to the adoption of Financial Accounting Standards Board Interpretation No. 46,Consolidation of Variable Interest Entities, as amended. |
(2) | Adjusted 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 adjusted EBITDA differently. Adjusted EBITDA is not a financial measure prepared in accordance with generally accepted accounting principles. Adjusted EBITDA is presented herein because it is a component of certain covenants in the indentures governing the Company’s 10 3/4% Senior Notes, 7 1/2% Senior Notes and 7 5/8% Senior Notes (“Indentures”). In addition, management believes the presentation of adjusted EBITDA provides useful information to the Company’s investors regarding the Company’s financial condition and results of operations because adjusted EBITDA is a widely utilized financial indicator of a company’s ability to service and/or incur debt. The calculations of adjusted EBITDA below are presented in accordance with the requirements of the Indentures. Adjusted EBITDA should not be considered as an alternative for net income, cash flows from operating activities 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 adjusted EBITDA is provided as follows: |
11
Three Months Ended September 30, | Last Twelve Months Ended September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Net income | $ | 38,083 | $ | 44,937 | $ | 182,831 | $ | 130,090 | ||||||||
Provision for income taxes | 24,864 | 29,273 | 120,045 | 89,848 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest incurred | 19,612 | 15,936 | 67,020 | 58,128 | ||||||||||||
Interest capitalized | (19,612 | ) | (15,936 | ) | (67,020 | ) | (58,128 | ) | ||||||||
Amortization of capitalized interest in cost of sales | 12,253 | 16,442 | 53,867 | 60,659 | ||||||||||||
Depreciation and amortization | 556 | 336 | 2,099 | 1,002 | ||||||||||||
Cash distributions of income from unconsolidated joint ventures | 2,773 | — | 2,773 | 13,644 | ||||||||||||
Equity in (income) loss of unconsolidated joint ventures | (4,672 | ) | 268 | (4,265 | ) | (11,051 | ) | |||||||||
Adjusted EBITDA | $ | 73,857 | $ | 91,256 | $ | 357,350 | $ | 284,192 | ||||||||
A reconciliation of net cash (used in) provided by operating activities to Adjusted EBITDA is provided as follows:
Three Months Ended September 30, | Last Twelve Months Ended September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Net cash (used in) provided by operating activities | $ | (138,181 | ) | $ | 66,984 | $ | (28,108 | ) | $ | (85,184 | ) | |||||
Interest expense: | ||||||||||||||||
Interest incurred | 19,612 | 15,936 | 67,020 | 58,129 | ||||||||||||
Interest capitalized | (19,612 | ) | (15,936 | ) | (67,020 | ) | (58,129 | ) | ||||||||
Amortization of capitalized interest in cost of sales | 12,253 | 16,442 | 53,867 | 60,659 | ||||||||||||
Minority equity in income of consolidated entities | (5,073 | ) | (13,858 | ) | (41,923 | ) | (25,246 | ) | ||||||||
Net changes in operating assets and liabilities: | ||||||||||||||||
Receivables | 1,311 | (4,192 | ) | 7,592 | 2,911 | |||||||||||
Real estate inventories | 203,732 | 16,032 | 273,753 | 262,412 | ||||||||||||
Deferred loan costs | (248 | ) | 6 | (346 | ) | 519 | ||||||||||
Other assets | 3,103 | (1,368 | ) | 12,396 | (1,877 | ) | ||||||||||
Accounts payable | (12,022 | ) | 386 | (7,787 | ) | 3,773 | ||||||||||
Accrued expenses | 8,982 | 10,824 | 87,906 | 66,225 | ||||||||||||
Adjusted EBITDA | $ | 73,857 | $ | 91,256 | $ | 357,350 | $ | 284,192 | ||||||||
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