Exhibit 99.1
| | |
Contact: | | Investor Relations |
| | W. Douglass Harris |
| | William Lyon Homes |
| | (949) 833-3600 |
WILLIAM LYON HOMES REPORTS THIRD QUARTER 2006 RESULTS
Financial Highlights
| | • | | Net new home orders of 501, down 40% from 834 in the third quarter of 2005 |
| | • | | Backlog of homes sold but not closed at September 30, 2006 of 1,040, down 55% from 2,299 at September 30, 2005 |
| | • | | Dollar backlog of homes sold but not closed at September 30, 2006 of $517,811,000, down 57% from $1,210,356,000 at September 30, 2005 |
| | • | | Homes closed of 600, down 8% from 650 in the third quarter of 2005 |
| | • | | Operating revenue from home sales of $303.7 million, down 15% from $358.8 million in the third quarter of 2005 |
| | • | | Homebuilding gross margin of $62.5 million, down 30% from $89.7 million in the third quarter of 2005 |
| | • | | Homebuilding gross margin percentage of 20.6%, down 440 basis points from 25.0% in the third quarter of 2005 |
| | • | | Impairment loss on real estate assets of $14.0 million in the third quarter of 2006 |
| | • | | Net income of $10.5 million, down 72% from $38.1 million in the third quarter of 2005 |
NEWPORT BEACH, CA—November 9, 2006—William Lyon Homes (the “Company”) today reported that net income for the third quarter ended September 30, 2006 decreased 72% to $10,502,000, as compared to net income of $38,083,000 for the comparable period a year ago. Consolidated operating revenue decreased 17% to $311,248,000 for the quarter ended September 30, 2006, as compared to $376,331,000 for the comparable period a year ago.
The Company reported that net income for the nine months ended September 30, 2006 decreased 35% to $67,097,000, as compared to net income of $102,676,000 for the comparable period a year ago. Consolidated operating revenue decreased slightly to $1,026,883,000 for the nine months ended September 30, 2006, as compared with $1,030,502,000 for the comparable period a year ago.
Operating revenue for the three months ended September 30, 2006 and 2005 included $7,540,000 and $17,580,000, respectively, from the sales of land resulting in gross profit of approximately $1,678,000 and $7,525,000, respectively. Operating revenue for the nine months ended September 30, 2006 and 2005 included $9,170,000 and $64,972,000, respectively, from the sales of land resulting in gross profit of approximately $540,000 and $31,080,000, respectively.
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 has continued into 2006.
The Company incurred an impairment loss on real estate assets of $14,025,000 for the third quarter of 2006. The impairment was primarily attributable to slower than anticipated home sales and lower than anticipated net revenue due to softening market conditions. Accordingly, the real estate assets were written-down to their estimated fair value. In addition, during the third quarter of 2006, costs of approximately $3,528,000 were incurred related to the abandonment and write-off of project pre-acquisition costs and land option deposits for certain of the Company’s potential projects.
Net new home orders for the three months ended September 30, 2006 decreased 40% to 501 homes, compared to 834 homes for the three months ended September 30, 2005. The average number of sales locations during the three months ended September 30, 2006 was 55, up 31% from 42 during the three months ended September 30, 2005. The Company’s number of new home orders per average sales location decreased to 9.1 for the three months ended September 30, 2006, as compared to 19.9 for the three months ended September 30, 2005. Net new home orders for the nine months ended September 30, 2006 were 1,698 homes, down 41% from
2
2,861 homes for the nine months ended September 30, 2005. The average number of sales locations during the nine months ended September 30, 2006 was 51, up 24% from 41 during the nine months ended September 30, 2005. The Company’s number of new home orders per average sales location decreased to 33.3 for the nine months ended September 30, 2006, as compared to 69.8 for the nine months ended September 30, 2005.
The Company’s cancellation rate for the three months ended September 30, 2006 was 39%, compared to 15% for the three months ended September 30, 2005. The Company’s cancellation rate for the nine months ended September 30, 2006 was 33%, compared to 13% for the nine months ended September 30, 2005.
The number of homes closed in the three months ended September 30, 2006 was 600 homes, down 8% from 650 homes closed in the three months ended September 30, 2005. The number of homes closed for the nine months ended September 30, 2006 was 1,949, up 13% from 1,728 homes closed in the nine months ended September 30, 2005.
At September 30, 2006, the backlog of homes sold but not closed totaled 1,040 homes, down 55% from 2,299 homes at September 30, 2005. At September 30, 2006, the dollar amount of backlog of homes sold but not closed totaled $517,811,000, down 57% from $1,210,356,000 at September 30, 2005, and down 9% from $566,589,000 at June 30, 2006.
Selected financial and operating information for the Company including joint ventures is set forth in greater detail in a schedule attached to this release.
On May 18, 2006, General William Lyon, Chairman and Chief Executive Officer, announced the completion of his tender offer to purchase all of the outstanding shares of the common stock of the Company not already owned by him for $109.00 net per share in cash. The shares tendered in the offer, together with the shares already owned by General Lyon, The William Harwell Lyon 1987 Trust and The William Harwell Lyon Separate Property Trust, represented over 90% of the outstanding shares of the Company, which were sufficient to enable General Lyon to effect a short-form merger with the Company under Delaware law.
3
On July 26, 2006, General Lyon announced that on July 25, 2006, WLH Acquisition Corp., a corporation owned by General Lyon, The William Harwell Lyon 1987 Trust and The William Harwell Lyon Separate Property Trust, was merged with and into the Company, with the Company continuing as the surviving corporation of the merger. At the effective time of the merger, each outstanding share of the Company’s common stock (except for shares owned by WLH Acquisition Corp.) was cancelled and converted into the right to receive $109.00 per share in cash, without interest, which is the same consideration that was paid for shares of the Company in the tender offer by General Lyon.
Prior to the completion of the merger, General Lyon and the two trusts contributed all the shares of the Company owned by them, which constituted more than 90% of the outstanding shares, to WLH Acquisition Corp. WLH Acquisition Corp. was then merged with and into the Company pursuant to the short-form merger provisions of Delaware law. Prior to the merger, the Company had cancelled and retired 1,275,000 shares of its common stock which had been repurchased and were being held in the treasury. After the merger, the Company’s capital structure consists of common stock, par value $.01 per share, 3,000 shares authorized, and 1,000 shares outstanding. The Company will continue as a privately held company, wholly owned by General Lyon and the two trusts.
The Company will hold a conference call on Friday, November 10, 2006 at 10:00 a.m. Pacific Time to discuss the third quarter 2006 earnings results. The dial-in number is (866) 831-6291 (enter passcode number 57736672). Participants may call in beginning at 9:45 a.m. Pacific Time. 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 November 10, 2006 at 1:00 p.m. Pacific Time through midnight on December 1, 2006. The dial-in number for the replay is (888) 286-8010 (enter passcode number 66980577). 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 single-family detached and attached homes in California, Arizona and Nevada and at September 30, 2006 had 54 sales locations. 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 website atwww.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 September 30, | |
| | | 2006 | | | 2005 | |
| | | Wholly-Owned | | | Joint
Ventures | | | Consolidated
Total | | | Wholly-Owned | | | Joint
Ventures | | | Consolidated
Total | |
Selected Financial Information (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 564 | | | | 36 | | | | 600 | | | | 524 | | | | 126 | | | | 650 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Home sales revenue | | $ | 290,349 | | | $ | 13,359 | | | $ | 303,708 | | | $ | 278,525 | | | $ | 80,226 | | | $ | 358,751 | |
Cost of sales | | | (231,817 | ) | | | (9,420 | ) | | | (241,237 | ) | | | (210,757 | ) | | | (58,251 | ) | | | (269,008 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 58,532 | | | $ | 3,939 | | | $ | 62,471 | | | $ | 67,768 | | | $ | 21,975 | | | $ | 89,743 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin percentage | | | 20.2 | % | | | 29.5 | % | | | 20.6 | % | | | 24.3 | % | | | 27.4 | % | | | 25.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 284 | | | | 36 | | | | 320 | | | | 261 | | | | 126 | | | | 387 | |
Arizona | | | 144 | | | | — | | | | 144 | | | | 140 | | | | — | | | | 140 | |
Nevada | | | 136 | | | | — | | | | 136 | | | | 123 | | | | — | | | | 123 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 564 | | | | 36 | | | | 600 | | | | 524 | | | | 126 | | | | 650 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 670,100 | | | $ | 371,100 | | | $ | 636,500 | | | $ | 726,300 | | | $ | 636,700 | | | $ | 697,200 | |
Arizona | | | 336,500 | | | | — | | | | 336,500 | | | | 327,300 | | | | — | | | | 327,300 | |
Nevada | | | 379,200 | | | | — | | | | 379,200 | | | | 350,700 | | | | — | | | | 350,700 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 514,800 | | | $ | 371,100 | | | $ | 506,200 | | | $ | 531,500 | | | $ | 636,700 | | | $ | 551,900 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 317 | | | | 54 | | | | 371 | | | | 403 | | | | 120 | | | | 523 | |
Arizona | | | 61 | | | | — | | | | 61 | | | | 118 | | | | — | | | | 118 | |
Nevada | | | 69 | | | | — | | | | 69 | | | | 193 | | | | — | | | | 193 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 447 | | | | 54 | | | | 501 | | | | 714 | | | | 120 | | | | 834 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average number of sales locations during period | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 31 | | | | 6 | | | | 37 | | | | 22 | | | | 7 | | | | 29 | |
Arizona | | | 6 | | | | — | | | | 6 | | | | 5 | | | | — | | | | 5 | |
Nevada | | | 12 | | | | — | | | | 12 | | | | 8 | | | | — | | | | 8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 49 | | | | 6 | | | | 55 | | | | 35 | | | | 7 | | | | 42 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
6
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | | As of September 30, |
| | | 2006 | | 2005 |
| | | Wholly-Owned | | Joint
Ventures | | Consolidated
Total | | Wholly-Owned | | Joint
Ventures | | Consolidated
Total |
Backlog of homes sold but not closed at end of period | | | | | | | | | | | | | | | | | | |
California | | | 508 | | | 88 | | | 596 | | | 1,102 | | | 408 | | | 1,510 |
Arizona | | | 363 | | | — | | | 363 | | | 499 | | | — | | | 499 |
Nevada | | | 81 | | | — | | | 81 | | | 290 | | | — | | | 290 |
| | | | | | | | | | | | | | | | | | |
Total | | | 952 | | | 88 | | | 1,040 | | | 1,891 | | | 408 | | | 2,299 |
| | | | | | | | | | | | | | | | | | |
Dollar amount of homes sold but not closed at end of period (in thousands) | | | | | | | | | | | | | | | | | | |
California | | $ | 352,832 | | $ | 37,453 | | $ | 390,285 | | $ | 720,999 | | $ | 213,302 | | $ | 934,301 |
Arizona | | | 99,470 | | | — | | | 99,470 | | | 174,487 | | | — | | | 174,487 |
Nevada | | | 28,056 | | | — | | | 28,056 | | | 101,568 | | | — | | | 101,568 |
| | | | | | | | | | | | | | | | | | |
Total | | $ | 480,358 | | $ | 37,453 | | $ | 517,811 | | $ | 997,054 | | $ | 213,302 | | $ | 1,210,356 |
| | | | | | | | | | | | | | | | | | |
Lots controlled at end of period
Owned lots | | | | | | | | | | | | | | | | | | |
California | | | 4,586 | | | 637 | | | 5,223 | | | 4,516 | | | 1,636 | | | 6,152 |
Arizona | | | 4,189 | | | 2,567 | | | 6,756 | | | 3,657 | | | 367 | | | 4,024 |
Nevada | | | 1,362 | | | — | | | 1,362 | | | 1,517 | | | — | | | 1,517 |
| | | | | | | | | | | | | | | | | | |
Total | | | 10,137 | | | 3,204 | | | 13,341 | | | 9,690 | | | 2,003 | | | 11,693 |
| | | | | | | | | | | | | | | | | | |
Optioned lots (1) | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 3,171 | | | | | | | | | 3,296 |
Arizona | | | | | | | | | 3,442 | | | | | | | | | 6,329 |
Nevada | | | | | | | | | 1,983 | | | | | | | | | 2,044 |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | 8,596 | | | | | | | | | 11,669 |
| | | | | | | | | | | | | | | | | | |
Total lots controlled | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 8,394 | | | | | | | | | 9,448 |
Arizona | | | | | | | | | 10,198 | | | | | | | | | 10,353 |
Nevada | | | | | | | | | 3,345 | | | | | | | | | 3,561 |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | 21,937 | | | | | | | | | 23,362 |
| | | | | | | | | | | | | | | | | | |
| (1) | Optioned lots may be purchased by the Company as wholly-owned projects or may be purchased by newly formed joint ventures. |
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | |
| | | 2006 | | | 2005 | |
| | | Wholly-Owned | | | Joint
Ventures | | | Consolidated
Total | | | Wholly-Owned | | | Joint
Ventures | | | Consolidated
Total | |
Selected Financial Information (dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 1,709 | | | | 240 | | | | 1,949 | | | | 1,386 | | | | 342 | | | | 1,728 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Home sales revenue | | $ | 909,774 | | | $ | 107,939 | | | $ | 1,017,713 | | | $ | 743,341 | | | $ | 222,189 | | | $ | 965,530 | |
Cost of sales | | | (709,329 | ) | | | (75,006 | ) | | | (784,335 | ) | | | (549,656 | ) | | | (161,286 | ) | | | (710,942 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 200,445 | | | $ | 32,933 | | | $ | 233,378 | | | $ | 193,685 | | | $ | 60,903 | | | $ | 254,588 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin percentage | | | 22.0 | % | | | 30.5 | % | | | 22.9 | % | | | 26.1 | % | | | 27.4 | % | | | 26.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 962 | | | | 240 | | | | 1,202 | | | | 592 | | | | 342 | | | | 934 | |
Arizona | | | 376 | | | | — | | | | 376 | | | | 437 | | | | — | | | | 437 | |
Nevada | | | 371 | | | | — | | | | 371 | | | | 357 | | | | — | | | | 357 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1,709 | | | | 240 | | | | 1,949 | | | | 1,386 | | | | 342 | | | | 1,728 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 650,900 | | | $ | 449,700 | | | $ | 610,700 | | | $ | 807,100 | | | $ | 649,700 | | | $ | 749,500 | |
Arizona | | | 374,600 | | | | — | | | | 374,600 | | | | 301,900 | | | | — | | | | 301,900 | |
Nevada | | | 384,900 | | | | — | | | | 384,900 | | | | 374,200 | | | | — | | | | 374,200 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 532,300 | | | $ | 449,700 | | | $ | 522,200 | | | $ | 536,300 | | | $ | 649,700 | | | $ | 558,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 847 | | | | 220 | | | | 1,067 | | | | 1,337 | | | | 505 | | | | 1,842 | |
Arizona | | | 343 | | | | — | | | | 343 | | | | 454 | | | | — | | | | 454 | |
Nevada | | | 288 | | | | — | | | | 288 | | | | 565 | | | | — | | | | 565 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1,478 | | | | 220 | | | | 1,698 | | | | 2,356 | | | | 505 | | | | 2,861 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average number of sales locations during period | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 27 | | | | 6 | | | | 33 | | | | 19 | | | | 8 | | | | 27 | |
Arizona | | | 6 | | | | — | | | | 6 | | | | 6 | | | | — | | | | 6 | |
Nevada | | | 12 | | | | — | | | | 12 | | | | 8 | | | | — | | | | 8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 45 | | | | 6 | | | | 51 | | | | 33 | | | | 8 | | | | 41 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
8
WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Operating revenue | | | | | | | | | | | | | | | | |
Home sales | | $ | 303,708 | | | $ | 358,751 | | | $ | 1,017,713 | | | $ | 965,530 | |
Lots, land and other sales | | | 7,540 | | | | 17,580 | | | | 9,170 | | | | 64,972 | |
| | | | | | | | | | | | | | | | |
| | | 311,248 | | | | 376,331 | | | | 1,026,883 | | | | 1,030,502 | |
| | | | | | | | | | | | | | | | |
Operating costs | | | | | | | | | | | | | | | | |
Cost of sales - homes | | | (241,237 | ) | | | (269,008 | ) | | | (784,335 | ) | | | (710,942 | ) |
Cost of sales - lots, land and other | | | (5,862 | ) | | | (10,055 | ) | | | (8,630 | ) | | | (33,892 | ) |
Impairment loss on real estate assets | | | (14,025 | ) | | | — | | | | (14,025 | ) | | | — | |
Sales and marketing | | | (17,933 | ) | | | (12,440 | ) | | | (47,836 | ) | | | (36,837 | ) |
General and administrative | | | (12,892 | ) | | | (21,476 | ) | | | (49,313 | ) | | | (62,880 | ) |
Other | | | (803 | ) | | | (574 | ) | | | (2,290 | ) | | | (1,782 | ) |
| | | | | | | | | | | | | | | | |
| | | (292,752 | ) | | | (313,553 | ) | | | (906,429 | ) | | | (846,333 | ) |
| | | | | | | | | | | | | | | | |
Equity in income (loss) of unconsolidated joint ventures | | | (221 | ) | | | 4,672 | | | | 3,398 | | | | 4,513 | |
| | | | | | | | | | | | | | | | |
Minority equity in income of consolidated entities | | | (1,340 | ) | | | (5,073 | ) | | | (12,878 | ) | | | (17,032 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | | 16,935 | | | | 62,377 | | | | 110,974 | | | | 171,650 | |
Financial advisory expenses | | | (42 | ) | | | — | | | | (3,142 | ) | | | (2,191 | ) |
Other income, net | | | 874 | | | | 570 | | | | 3,035 | | | | 253 | |
| | | | | | | | | | | | | | | | |
Income before provision for income taxes | | | 17,767 | | | | 62,947 | | | | 110,867 | | | | 169,712 | |
Provision for income taxes | | | (7,265 | ) | | | (24,864 | ) | | | (43,770 | ) | | | (67,036 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 10,502 | | | $ | 38,083 | | | $ | 67,097 | | | $ | 102,676 | |
| | | | | | | | | | | | | | | | |
9
WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
| | | | | | |
| | | September 30,
2006 | | December 31,
2005 |
| | | (unaudited) | | |
| ASSETS | | | | | | |
Cash and cash equivalents | | $ | 22,176 | | $ | 52,369 |
Receivables | | | 39,027 | | | 143,481 |
Real estate inventories | | | 1,651,298 | | | 1,419,248 |
Investments in and advances to unconsolidated joint ventures | | | 1,736 | | | 397 |
Property and equipment, less accumulated depreciation of $11,793 and $9,936 at September 30, 2006 and December 31, 2005, respectively | | | 18,300 | | | 18,553 |
Deferred loan costs | | | 11,022 | | | 12,323 |
Goodwill | | | 5,896 | | | 5,896 |
Other assets | | | 40,440 | | | 38,735 |
| | | | | | |
| | $ | 1,789,895 | | $ | 1,691,002 |
| | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Accounts payable | | $ | 62,567 | | $ | 67,326 |
Accrued expenses | | | 110,145 | | | 181,068 |
Notes payable | | | 338,242 | | | 125,619 |
7 5/8 % Senior Notes due December 15, 2012 | | | 150,000 | | | 150,000 |
10 3/4% Senior Notes due April 1, 2013 | | | 247,139 | | | 246,917 |
7 1/2% Senior Notes due February 15, 2014 | | | 150,000 | | | 150,000 |
| | | | | | |
| | | 1,058,093 | | | 920,930 |
| | | | | | |
Minority interest in consolidated entities | | | 117,700 | | | 227,178 |
| | | | | | |
Stockholders’ equity | | | | | | |
Common stock, par value $.01 per share; 3,000 shares authorized; 1,000 shares outstanding at September 30, 2006; 30,000,000 shares authorized; 8,652,067 shares issued and outstanding December 31, 2005; 1,275,000 shares issued and held in treasury at December 31, 2005 | | | — | | | 86 |
Additional paid-in capital | | | 39,601 | | | 35,404 |
Retained earnings | | | 574,501 | | | 507,404 |
| | | | | | |
| | | 614,102 | | | 542,894 |
| | | | | | |
| | $ | 1,789,895 | | $ | 1,691,002 |
| | | | | | |
10
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA (dollars in thousands):
| | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Last Twelve Months
Ended September 30, | |
| | | 2006 | | | 2005 | | | 2006 | | 2005 | |
Net income | | $ | 10,502 | | | $ | 38,083 | | | $ | 155,052 | | $ | 182,831 | |
Net cash (used in) provided by operating activities | | $ | (19,713 | ) | | $ | (138,181 | ) | | $ | 143,987 | | $ | (28,108 | ) |
Interest incurred | | $ | 21,834 | | | $ | 19,612 | | | $ | 82,178 | | $ | 67,020 | |
Adjusted EBITDA (1) | | $ | 44,808 | | | $ | 73,857 | | | $ | 334,468 | | $ | 357,350 | |
Ratio of adjusted EBITDA to interest incurred | | | | | | | | | | | 4.07x | | | 5.33x | |
Balance Sheet Data
| | | | | | | | |
| | | September 30, | |
| | | 2006 | | | 2005 | |
Stockholders’ equity | | $ | 614,102 | | | $ | 453,094 | |
Total debt | | | 885,381 | | | | 789,020 | |
| | | | | | | | |
Total book capitalization | | $ | 1,499,483 | | | $ | 1,242,114 | |
| | | | | | | | |
Ratio of debt to total book capitalization | | | 59.0 | % | | | 73.0 | % |
Ratio of debt to total book capitalization (net of cash) | | | 58.4 | % | | | 71.7 | % |
Ratio of debt to LTM Adjusted EBITDA | | | 2.65 | x | | | 2.21 | x |
Ratio of debt to LTM Adjusted EBITDA (net of cash) | | | 2.58 | x | | | 2.07 | 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) non-cash impairment charges, (v) depreciation and amortization and (vi) 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 U.S. 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 and (“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 |
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| | 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
September 30, | | | Last Twelve Months
Ended September 30, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Net income | | $ | 10,502 | | | $ | 38,083 | | | $ | 155,052 | | | $ | 182,831 | |
Provision for income taxes | | | 7,265 | | | | 24,864 | | | | 100,883 | | | | 120,045 | |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 21,834 | | | | 19,612 | | | | 82,178 | | | | 67,020 | |
Interest capitalized | | | (21,834 | ) | | | (19,612 | ) | | | (82,178 | ) | | | (67,020 | ) |
Amortization of capitalized interest in cost of sales | | | 12,166 | | | | 12,253 | | | | 58,171 | | | | 53,867 | |
Non-cash impairment charges | | | 14,025 | | | | — | | | | 18,625 | | | | — | |
Depreciation and amortization | | | 629 | | | | 556 | | | | 2,389 | | | | 2,099 | |
Cash distributions of income from unconsolidated joint ventures | | | — | | | | 2,773 | | | | 2,534 | | | | 2,773 | |
Equity in (income) loss of unconsolidated joint ventures | | | 221 | | | | (4,672 | ) | | | (3,186 | ) | | | (4,265 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 44,808 | | | $ | 73,857 | | | $ | 334,468 | | | $ | 357,350 | |
| | | | | | | | | | | | | | | | |
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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, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Net cash (used in) provided by operating activities | | $ | (19,713 | ) | | $ | (138,181 | ) | | $ | 143,987 | | | $ | (28,108 | ) |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 21,834 | | | | 19,612 | | | | 82,178 | | | | 67,020 | |
Interest capitalized | | | (21,834 | ) | | | (19,612 | ) | | | (82,178 | ) | | | (67,020 | ) |
Amortization of capitalized interest in cost of sales | | | 12,166 | | | | 12,253 | | | | 58,171 | | | | 53,867 | |
Income tax refunds credited to additional paid-in capital | | | — | | | | — | | | | (3,675 | ) | | | — | |
Minority equity in income of consolidated entities | | | (1,340 | ) | | | (5,073 | ) | | | (33,417 | ) | | | (41,923 | ) |
Net changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Receivables | | | (2,889 | ) | | | 1,311 | | | | 3,288 | | | | 7,592 | |
Real estate inventories | | | 39,318 | | | | 203,732 | | | | 36,971 | | | | 273,753 | |
Deferred loan costs | | | (631 | ) | | | (248 | ) | | | (1,997 | ) | | | (346 | ) |
Other assets | | | 906 | | | | 3,103 | | | | 11,045 | | | | 12,396 | |
Accounts payable | | | 13,346 | | | | (12,022 | ) | | | 2,847 | | | | (7,787 | ) |
Accrued expenses | | | 3,645 | | | | 8,982 | | | | 117,248 | | | | 87,906 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 44,808 | | | $ | 73,857 | | | $ | 334,468 | | | $ | 357,350 | |
| | | | | | | | | | | | | | | | |
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