EXHIBIT 99.1
| | |
| Contact: | | Investor Relations |
| | | W. Douglass Harris |
| | | William Lyon Homes |
| | | (949) 833-3600 |
WILLIAM LYON HOMES REPORTS RECORD
FOURTH QUARTER AND FULL YEAR 2005 NET INCOME
Financial Highlights
2005 Fourth Quarter
| | • | | Net income of $88.0 million, up 10% |
| | • | | Earnings per diluted share of $10.11, up 18% |
| | • | | Record new home deliveries of 1,468, up 21% |
| | • | | Consolidated operating revenue of $825.9 million, up 17% |
| | • | | Homebuilding gross margins of 23.5%, down 470 basis points |
| | • | | Gross profit from land sales of $35.5 million, up from $9.6 million |
2005 Full Year
| | • | | Net income of $190.6 million, up 11% |
| | • | | Earnings per diluted share of $21.98, up 25% |
| | • | | New home deliveries of 3,196, down 8% |
| | • | | Consolidated operating revenue of $1.856 billion, up 2% |
| | • | | Homebuilding gross margins of 25.1%, down 60 basis points |
| | • | | Gross profit from land sales of $66.5 million, up from $13.1 million |
| | • | | Year-end backlog of 1,291 homes valued at a record $691.6 million |
| | • | | Return on average stockholders’ equity of 45% |
NEWPORT BEACH, CA—March 1, 2006—William Lyon Homes (NYSE: WLS) today reported the Company’s 2005 fourth quarter and fiscal year operating results which were at record levels for any comparable periods in the Company’s history.
Net income for the fourth quarter ended December 31, 2005 increased 10% to $87,955,000, or $10.11 per diluted share, a record for any quarter in the Company’s history, as compared to net income of $80,155,000, or $8.58 per diluted share, for the comparable period a year ago. Consolidated operating revenue increased 17% to $825,881,000 for the quarter ended December 31, 2005, as compared to $707,866,000 for the comparable period a year ago.
For the year ended December 31, 2005, the Company reported record net income of $190,631,000, or $21.98 per diluted share, an increase of 11% as compared to net income of $171,649,000, or $17.55 per diluted share, for the comparable period a year ago. Consolidated operating revenue increased 2% to $1,856,383,000 for the year ended December 31, 2005, as compared with $1,821,847,000 for the comparable period a year ago.
Operating revenue for the three months ended December 31, 2005 and 2004 included $46,344,000 and $18,207,000, respectively, from the sales of land resulting in gross profit of approximately $35,462,000 and $9,645,000, respectively. Operating revenue for the years ended December 31, 2005 and 2004 included $111,316,000 and $36,258,000, respectively, from the sales of land resulting in gross profit of approximately $66,542,000 and $13,085,000, respectively. In accordance with the Company’s long established policy, and in the ordinary course of business, the Company continually evaluates land sales as market and business conditions warrant. In 2005, these significant land sales occurred in the Company’s Arizona and Southern California Divisions.
The Company’s combined results including joint ventures were as follows: The number of homes closed for the year ended December 31, 2005 was 3,196, a decrease of 8% as compared to 3,471 for the year ended December 31, 2004. The number of homes closed for the three months ended December 31, 2005 was 1,468, up 21% as compared to 1,210 for the three months ended December 31, 2004. The Company’s backlog of homes sold but not closed was 1,291 at December 31, 2005, a record for any fourth quarter in the Company’s history, and up 11% from 1,166 at December 31, 2004. The Company’s dollar amount of backlog of homes sold but not closed at December 31, 2005, was $691,627,000, up 11% from $623,578,000 at December 31, 2004. The cancellation rate of buyers who contracted to buy a home but did not close escrow was approximately 16% during 2005 and 17% during 2004.
Net new home orders for the three months ended December 31, 2005 were 460, a decrease of 7% as compared to 493 for the three months ended December 31, 2004. Net new home orders for the year ended December 31, 2005 were 3,321, a decrease of 2% as compared to 3,371 for the year ended December 31, 2004. The average number of sales locations was unchanged at 41 for the years ended December 31, 2005 and 2004.
2
During the fourth quarter of 2005, the average sales price of homes (including joint ventures) was $531,000, down 7% as compared to $570,000 for the comparable period a year ago. The lower average sales price reflects a change in product mix.
For the quarter ended December 31, 2005, the Company’s homebuilding gross margin percentage decreased to 23.5% from 28.2% for the quarter ended December 31, 2004. For the year ended December 31, 2005, the Company’s homebuilding gross margin percentage decreased to 25.1% from 25.7% for the year ended December 31, 2004. These lower gross margin percentages were primarily due to the earlier close out of projects with higher gross margins, a shift in product mix and increases in land costs which resulted in higher cost of sales when homes closed.
The reduction of 8% in new home deliveries in 2005 as compared to 2004 resulted primarily from a reduction in sales locations in the first half of 2005 as compared to 2004. The reduction of open sales locations in the first half of the year combined with the adverse weather conditions experienced in the first two months of 2005 delayed some of the Company’s construction schedules and ultimately negatively impacted the Company’s closings for the year.
In 2005, the Company was focused on increasing the number of sales locations in each of its markets and at December 31, 2005, the Company ended the year with 44 active sales locations as compared to 37 active sales locations at December 31, 2004. In 2006, the Company will continue its focus on increasing its sales locations in each of its markets.
During the last half of the fourth quarter of 2005, the Company began to experience some slowing in new orders in many of its markets, increases in cancellation rates and increasing pricing pressures from several of its competitors who initiated aggressive incentive and discounting programs.
This softening in the Company’s markets is continuing into 2006 as the Company’s orders have declined for the first eight weeks of 2006 by 31% over the comparable period in 2005. Cancellation rates have increased in this period in 2006 to 26% from 12% in the comparable period in 2005. The Company is also seeing increases in its standing and unsold completed inventory in 2006 as compared to 2005.
3
Based upon these changing market conditions, the Company is now targeting approximately 3,100 deliveries, including consolidated joint ventures, for the full year 2006, which will result in homebuilding revenue of approximately $1.65 billion. The Company has lowered its expectations for additional price appreciation in certain markets as well as factored in some additional incentives to move certain products, all of which have a negative impact on consolidated homebuilding gross margin percentage. The Company is currently projecting a homebuilding gross margin percentage of 22% for the full year 2006. Full year 2006 earnings are estimated to be in a range of between $14.00 and $15.00 per share on a diluted basis.
Selected financial and operating information for the Company, including joint ventures, is set forth in greater detail in a schedule attached to this release.
The Company will hold a conference call on Thursday, March 2, 2006 at 11:00 a.m. Pacific Time to discuss the fourth quarter and year end 2005 earnings results. The dial-in number is (866) 271-6130 (enter passcode number 55617682). 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 March 2, 2006 at 1:00 p.m. Pacific Time through midnight on March 24, 2006. The dial-in number for the replay is (888) 286-8010 (enter passcode number 59691124). 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. For more information about the Company and its new home developments, please visit the Company’s web-site at www.lyonhomes.com.
4
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.
5
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31,
| |
| | | 2005
| | | 2004
| |
| | | Wholly-
Owned
| | | Joint
Ventures
| | | Consolidated
Total
| | | Wholly-
Owned
| | | Joint
Ventures
| | | Consolidated
Total
| |
Selected Financial Information | | | | | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 1,122 | | | | 346 | | | | 1,468 | | | | 773 | | | | 437 | | | | 1,210 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Home sales revenue | | $ | 594,867 | | | $ | 184,670 | | | $ | 779,537 | | | $ | 446,494 | | | $ | 243,165 | | | $ | 689,659 | |
Cost of sales | | | (463,106 | ) | | | (132,979 | ) | | | (596,085 | ) | | | (328,267 | ) | | | (166,920 | ) | | | (495,187 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross margin | | $ | 131,761 | | | $ | 51,691 | | | $ | 183,452 | | | $ | 118,227 | | | $ | 76,245 | | | $ | 194,472 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross margin percentage | | | 22.1 | % | | | 28.0 | % | | | 23.5 | % | | | 26.5 | % | | | 31.4 | % | | | 28.2 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 723 | | | | 346 | | | | 1,069 | | | | 413 | | | | 437 | | | | 850 | |
Arizona | | | 191 | | | | — | | | | 191 | | | | 136 | | | | — | | | | 136 | |
Nevada | | | 208 | | | | — | | | | 208 | | | | 224 | | | | — | | | | 224 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 1,122 | | | | 346 | | | | 1,468 | | | | 773 | | | | 437 | | | | 1,210 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 625,800 | | | $ | 533,700 | | | $ | 596,000 | | | $ | 795,900 | | | $ | 556,400 | | | $ | 672,800 | |
Arizona | | | 366,500 | | | | — | | | | 366,500 | | | | 250,600 | | | | — | | | | 250,600 | |
Nevada | | | 348,100 | | | | — | | | | 348,100 | | | | 373,700 | | | | — | | | | 373,700 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | $ | 530,200 | | | $ | 533,700 | | | $ | 531,000 | | | $ | 577,600 | | | $ | 556,400 | | | $ | 570,000 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 229 | | | | 61 | | | | 290 | | | | 183 | | | | 147 | | | | 330 | |
Arizona | | | 88 | | | | — | | | | 88 | | | | 100 | | | | — | | | | 100 | |
Nevada | | | 82 | | | | — | | | | 82 | | | | 63 | | | | — | | | | 63 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 399 | | | | 61 | | | | 460 | | | | 346 | | | | 147 | | | | 493 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average number of sales locations during quarter | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 23 | | | | 7 | | | | 30 | | | | 14 | | | | 10 | | | | 24 | |
Arizona | | | 5 | | | | — | | | | 5 | | | | 6 | | | | — | | | | 6 | |
Nevada | | | 9 | | | | — | | | | 9 | | | | 7 | | | | — | | | | 7 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 37 | | | | 7 | | | | 44 | | | | 27 | | | | 10 | | | | 37 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
6
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | | As of December 31,
|
| | | 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 | | | 608 | | | 123 | | | 731 | | | 357 | | | 245 | | | 602 |
Arizona | | | 396 | | | — | | | 396 | | | 482 | | | — | | | 482 |
Nevada | | | 164 | | | — | | | 164 | | | 82 | | | — | | | 82 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total | | | 1,168 | | | 123 | | | 1,291 | | | 921 | | | 245 | | | 1,166 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Dollar amount of homes sold but not closed at end of period (in thousands) | | | | | | | | | | | | | | | | | | |
California | | $ | 427,103 | | $ | 64,354 | | $ | 491,457 | | $ | 292,298 | | $ | 160,280 | | $ | 452,578 |
Arizona | | | 141,132 | | | — | | | 141,132 | | | 136,815 | | | — | | | 136,815 |
Nevada | | | 59,038 | | | — | | | 59,038 | | | 34,185 | | | — | | | 34,185 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total | | $ | 627,273 | | $ | 64,354 | | $ | 691,627 | | $ | 463,298 | | $ | 160,280 | | $ | 623,578 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Lots controlled at end of period Owned lots | | | | | | | | | | | | | | | | | | |
California | | | 4,296 | | | 1,290 | | | 5,586 | | | 2,702 | | | 1,445 | | | 4,147 |
Arizona | | | 3,627 | | | 822 | | | 4,449 | | | 3,518 | | | — | | | 3,518 |
Nevada | | | 1,483 | | | — | | | 1,483 | | | 1,193 | | | — | | | 1,193 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total | | | 9,406 | | | 2,112 | | | 11,518 | | | 7,413 | | | 1,445 | | | 8,858 |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Optioned lots (1) | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 4,650 | | | | | | | | | 4,532 |
Arizona | | | | | | | | | 8,232 | | | | | | | | | 3,960 |
Nevada | | | | | | | | | 2,189 | | | | | | | | | 1,262 |
| | | | | | | | |
|
| | | | | | | |
|
|
Total | | | | | | | | | 15,071 | | | | | | | | | 9,754 |
| | | | | | | | |
|
| | | | | | | |
|
|
Total lots controlled | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 10,236 | | | | | | | | | 8,679 |
Arizona | | | | | | | | | 12,681 | | | | | | | | | 7,478 |
Nevada | | | | | | | | | 3,672 | | | | | | | | | 2,455 |
| | | | | | | | |
|
| | | | | | | |
|
|
Total | | | | | | | | | 26,589 | | | | | | | | | 18,612 |
| | | | | | | | |
|
| | | | | | | |
|
|
| (1) | Optioned lots may be purchased as wholly-owned projects or by newly formed joint ventures. |
7
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31,
| |
| | | 2005
| | | 2004
| |
| | | Wholly-
Owned
| | | Joint
Ventures
| | | Consolidated
Total
| | | Wholly-
Owned
| | | Joint
Ventures
| | | Consolidated
Total
| |
Selected Financial Information | | | | | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 2,508 | | | | 688 | | | | 3,196 | | | | 2,447 | | | | 1,024 | | | | 3,471 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Home sales revenue | | $ | 1,338,208 | | | $ | 406,859 | | | $ | 1,745,067 | | | $ | 1,246,277 | | | $ | 539,312 | | | $ | 1,785,589 | |
Cost of sales | | | (1,012,761 | ) | | | (294,266 | ) | | | (1,307,027 | ) | | | (941,225 | ) | | | (385,832 | ) | | | (1,327,057 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross margin | | $ | 325,447 | | | $ | 112,593 | | | $ | 438,040 | | | $ | 305,052 | | | $ | 153,480 | | | $ | 458,532 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross margin percentage | | | 24.3 | % | | | 27.7 | % | | | 25.1 | % | | | 24.5 | % | | | 28.5 | % | | | 25.7 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 1,315 | | | | 688 | | | | 2,003 | | | | 1,312 | | | | 1,024 | | | | 2,336 | |
Arizona | | | 628 | | | | — | | | | 628 | | | | 402 | | | | — | | | | 402 | |
Nevada | | | 565 | | | | — | | | | 565 | | | | 733 | | | | — | | | | 733 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 2,508 | | | | 688 | | | | 3,196 | | | | 2,447 | | | | 1,024 | | | | 3,471 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 707,400 | | | $ | 591,400 | | | $ | 667,600 | | | $ | 692,200 | | | $ | 526,700 | | | $ | 619,600 | |
Arizona | | | 321,500 | | | | — | | | | 321,500 | | | | 241,800 | | | | — | | | | 241,800 | |
Nevada | | | 364,600 | | | | — | | | | 364,600 | | | | 328,700 | | | | — | | | | 328,700 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | $ | 533,600 | | | $ | 591,400 | | | $ | 546,000 | | | $ | 509,300 | | | $ | 526,700 | | | $ | 514,400 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 1,566 | | | | 566 | | | | 2,132 | | | | 1,157 | | | | 955 | | | | 2,112 | |
Arizona | | | 542 | | | | — | | | | 542 | | | | 677 | | | | — | | | | 677 | |
Nevada | | | 647 | | | | — | | | | 647 | | | | 582 | | | | — | | | | 582 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 2,755 | | | | 566 | | | | 3,321 | | | | 2,416 | | | | 955 | | | | 3,371 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average number of sales locations during period | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 20 | | | | 8 | | | | 28 | | | | 17 | | | | 11 | | | | 28 | |
Arizona | | | 5 | | | | — | | | | 5 | | | | 6 | | | | — | | | | 6 | |
Nevada | | | 8 | | | | — | | | | 8 | | | | 7 | | | | — | | | | 7 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 33 | | | | 8 | | | | 41 | | | | 30 | | | | 11 | | | | 41 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
8
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per common share amounts)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Operating revenue | | | | | | | | | | | | | | | | |
Home sales | | $ | 779,537 | | | $ | 689,659 | | | $ | 1,745,067 | | | $ | 1,785,589 | |
Lots, land and other sales | | | 46,344 | | | | 18,207 | | | | 111,316 | | | | 36,258 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | 825,881 | | | | 707,866 | | | | 1,856,383 | | | | 1,821,847 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Operating costs | | | | | | | | | | | | | | | | |
Cost of sales - homes | | | (596,085 | ) | | | (495,187 | ) | | | (1,307,027 | ) | | | (1,327,057 | ) |
Cost of sales - lots, land and other | | | (10,882 | ) | | | (8,562 | ) | | | (44,774 | ) | | | (23,173 | ) |
Sales and marketing | | | (22,585 | ) | | | (21,227 | ) | | | (59,422 | ) | | | (58,792 | ) |
General and administrative | | | (27,165 | ) | | | (26,530 | ) | | | (90,045 | ) | | | (80,784 | ) |
Other | | | (5,268 | ) | | | (680 | ) | | | (7,050 | ) | | | (2,105 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | (661,985 | ) | | | (552,186 | ) | | | (1,508,318 | ) | | | (1,491,911 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Equity in (loss) income of unconsolidated joint ventures | | | (212 | ) | | | (248 | ) | | | 4,301 | | | | (699 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Minority equity in income of consolidated entities | | | (20,539 | ) | | | (24,891 | ) | | | (37,571 | ) | | | (49,661 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Operating income | | | 143,145 | | | | 130,541 | | | | 314,795 | | | | 279,576 | |
Financial advisory expenses | | | — | | | | — | | | | (2,191 | ) | | | — | |
Other income, net | | | 1,923 | | | | 2,623 | | | | 2,176 | | | | 5,572 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income before provision for income taxes | | | 145,068 | | | | 133,164 | | | | 314,780 | | | | 285,148 | |
Provision for income taxes | | | (57,113 | ) | | | (53,009 | ) | | | (124,149 | ) | | | (113,499 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income | | $ | 87,955 | | | $ | 80,155 | | | $ | 190,631 | | | $ | 171,649 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Earnings per common share | | | | | | | | | | | | | | | | |
Basic | | $ | 10.17 | | | $ | 8.65 | | | $ | 22.09 | | | $ | 17.69 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Diluted | | $ | 10.11 | | | $ | 8.58 | | | $ | 21.98 | | | $ | 17.55 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
9
WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
| | | | | | |
| | | December 31,
|
| | | 2005
| | 2004
|
| | | (unaudited) | | |
| ASSETS | | | | | | |
Cash and cash equivalents | | $ | 52,369 | | $ | 96,074 |
Receivables | | | 143,481 | | | 39,302 |
Real estate inventories | | | 1,419,248 | | | 1,059,173 |
Investments in and advances to unconsolidated joint ventures | | | 397 | | | 17,911 |
Property and equipment, less accumulated depreciation of $9,936 and $7,844 at December 31, 2005 and 2004, respectively | | | 18,553 | | | 18,066 |
Deferred loan costs | | | 12,323 | | | 13,982 |
Goodwill | | | 5,896 | | | 5,896 |
Other assets | | | 38,735 | | | 24,158 |
| | |
|
| |
|
|
| | | $ | 1,691,002 | | $ | 1,274,562 |
| | |
|
| |
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Accounts payable | | $ | 67,326 | | $ | 39,364 |
Accrued expenses | | | 181,068 | | | 150,774 |
Notes payable | | | 125,619 | | | 48,571 |
7 5/8% Senior Notes due December 15, 2012 | | | 150,000 | | | 150,000 |
10 3/4% Senior Notes due April 1, 2013 | | | 246,917 | | | 246,648 |
7 1/2% Senior Notes due February 15, 2014 | | | 150,000 | | | 150,000 |
| | |
|
| |
|
|
| | | | 920,930 | | | 785,357 |
| | |
|
| |
|
|
Minority interest in consolidated entities | | | 227,178 | | | 142,096 |
| | |
|
| |
|
|
Stockholders’ equity | | | | | | |
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 8,652,067 and 8,616,236 shares issued and outstanding at December 31, 2005 and 2004, respectively; 1,275,000 shares issued and held in treasury at December 31, 2005 and 2004 | | | 86 | | | 86 |
Additional paid-in capital | | | 35,404 | | | 30,250 |
Retained earnings | | | 507,404 | | | 316,773 |
| | |
|
| |
|
|
| | | | 542,894 | | | 347,109 |
| | |
|
| |
|
|
| | | $ | 1,691,002 | | $ | 1,274,562 |
| | |
|
| |
|
|
10
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA (dollars in thousands except per share data):
| | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | Last Twelve Months Ended
December 31,
| |
| | | 2005
| | 2004
| | 2005
| | | 2004
| |
Net income | | $ | 87,955 | | $ | 80,155 | | $ | 190,631 | | | $ | 171,649 | |
Net cash provided by (used in) operating activities | | $ | 229,392 | | $ | 245,818 | | $ | (44,534 | ) | | $ | 87,293 | |
Interest incurred | | $ | 21,096 | | $ | 14,908 | | $ | 73,208 | | | $ | 59,024 | |
Adjusted EBITDA (1) | | $ | 168,579 | | $ | 154,902 | | $ | 371,027 | | | $ | 349,845 | |
Ratio of adjusted EBITDA to interest incurred | | | | | | | | | 5.07 | x | | | 5.93 | x |
Balance Sheet Data
| | | | | | | | |
| | | December 31,
| |
| | | 2005
| | | 2004
| |
Stockholders’ equity per share | | $ | 62.75 | | | $ | 40.29 | |
Stockholders’ equity | | $ | 542,894 | | | $ | 347,109 | |
Total debt | | | 672,536 | | | | 595,219 | |
| | |
|
|
| |
|
|
|
Total book capitalization | | $ | 1,215,430 | | | $ | 972,328 | |
| | |
|
|
| |
|
|
|
Ratio of debt to total book capitalization | | | 55.3 | % | | | 63.2 | % |
Ratio of debt to total book capitalization (net of cash) | | | 53.3 | % | | | 59.0 | % |
Ratio of debt to LTM adjusted EBITDA | | | 1.81 | x | | | 1.70 | x |
Ratio of debt to LTM adjusted EBITDA (net of cash) | | | 1.67 | x | | | 1.43 | x |
| (1) | 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 7 5/8% Senior Notes, 10 3/4% Senior Notes and 7 1/2% 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 |
11
| | 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: |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Last Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Net income | | $ | 87,955 | | | $ | 80,155 | | | $ | 190,631 | | | $ | 171,649 | |
Provision for income taxes | | | 57,113 | | | | 53,009 | | | | 124,149 | | | | 113,499 | |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 21,096 | | | | 14,908 | | | | 73,208 | | | | 59,024 | |
Interest capitalized | | | (21,096 | ) | | | (14,908 | ) | | | (73,208 | ) | | | (59,024 | ) |
Amortization of capitalized interest in cost of sales | | | 22,832 | | | | 20,951 | | | | 55,748 | | | | 62,671 | |
Depreciation and amortization | | | 532 | | | | 539 | | | | 2,092 | | | | 1,327 | |
Cash distributions of income from unconsolidated joint ventures | | | (65 | ) | | | — | | | | 2,708 | | | | — | |
Equity in loss (income) of unconsolidated joint ventures | | | 212 | | | | 248 | | | | (4,301 | ) | | | 699 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Adjusted EBITDA | | $ | 168,579 | | | $ | 154,902 | | | $ | 371,027 | | | $ | 349,845 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
12
A reconciliation of net cash used in operating activities to adjusted EBITDA is provided as follows:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Last Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Net cash provided by (used in) operating activities | | $ | 229,392 | | | $ | 245,818 | | | $ | (44,534 | ) | | $ | 87,293 | |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 21,096 | | | | 14,908 | | | | 73,208 | | | | 59,024 | |
Interest capitalized | | | (21,096 | ) | | | (14,908 | ) | | | (73,208 | ) | | | (59,024 | ) |
Amortization of capitalized interest in cost of sales | | | 22,832 | | | | 20,951 | | | | 55,748 | | | | 62,671 | |
Non-cash impairment charge | | | (4,600 | ) | | | — | | | | (4,600 | ) | | | — | |
State income tax refund credited to additional paid-in capital | | | (1,845 | ) | | | — | | | | (1,845 | ) | | | — | |
Minority equity in (income) loss of consolidated entities | | | (20,539 | ) | | | (24,891 | ) | | | (37,571 | ) | | | (49,661 | ) |
Net changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Receivables | | | 107,742 | | | | 11,155 | | | | 104,179 | | | | (9,168 | ) |
Real estate inventories | | | (167,133 | ) | | | (125,620 | ) | | | 232,240 | | | | 195,340 | |
Deferred loan costs | | | (696 | ) | | | 617 | | | | (1,659 | ) | | | 1,004 | |
Other assets | | | 936 | | | | 7,159 | | | | 6,173 | | | | 5,122 | |
Accounts payable | | | (1,912 | ) | | | 18,263 | | | | (27,962 | ) | | | 2,612 | |
Accrued expenses | | | 4,402 | | | | 1,450 | | | | 90,858 | | | | 54,632 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Adjusted EBITDA | | $ | 168,579 | | | $ | 154,902 | | | $ | 371,027 | | | $ | 349,845 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
13
