William Lyon Homes (WLH) 8-K William Lyon Homes Reports Third Quarter 2007 Results

Exhibit 99.1

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Contact: Investor Relations

W. Douglass Harris

William Lyon Homes

(949) 833-3600

WILLIAM LYON HOMES REPORTS THIRD QUARTER 2007 RESULTS

Financial Highlights

• Net new home orders of 337, down 33% from 501 in the third quarter of 2006

• Homes closed of 416, down 31% from 600 in the third quarter of 2006

• Backlog of homes sold but not closed at September 30, 2007 of 717, down 31% from 1,040 at September 30, 2006

• Dollar backlog of homes sold but not closed at September 30, 2007 of $343.3 million, down 34% from $517.8 million at September 30, 2006

• Consolidated operating revenue from home sales of $182.2 million, down 40% from $303.7 million in the third quarter of 2006

• Homebuilding gross margin of $22.5 million, down 64% from $62.5 million in the third quarter of 2006

• Homebuilding gross margin percentage of 12.3%, down 830 basis points from 20.6% in the third quarter of 2006

• Impairment loss on real estate assets of $59.0 million in the third quarter of 2007

• Net loss of $60.0 million compared to net income of $10.5 million in the third quarter of 2006

NEWPORT BEACH, CA—November 8, 2007—William Lyon Homes today reported a net loss of $60,012,000 for the three months ended September 30, 2007, compared to net income of $10,502,000 for the comparable period a year ago. Consolidated operating revenue decreased 41% to $182,244,000 for the three months ended September 30, 2007 as compared to $311,248,000 for the comparable period a year ago.

The Company reported a pre-tax loss for the nine months ended September 30, 2007 of $133,294,000 compared to pre-tax income of $110,867,000 for the comparable period a year ago. Consolidated operating revenue decreased 36% to $659,373,000 for the nine months ended September 30, 2007, as compared with $1,026,883,000 for the comparable period a year ago.

Effective on January 1, 2007, the Company made an election in accordance with federal and state regulations to be taxed as an "S" corporation rather than a "C" corporation. Under this election, the Company's taxable income flows through to and is reported on the personal tax returns of its shareholders. The shareholders are responsible for paying the appropriate taxes based on this election. The Company does not pay any federal taxes under this election and is only required to pay certain state taxes, based on a rate of approximately 1.5% of taxable income. As a result of this election, the Company's provision for income taxes for the nine months ended September 30, 2007 included a reduction of deferred tax assets of $31,887,000 due to the elimination of any future tax benefit by the Company from such assets. In addition, unused recognized built-in losses in the amount of $19,414,000 are no longer available to the Company.

Operating revenue for the three months ended September 30, 2006 included $7,540,000 from the sales of land resulting in gross profit of approximately $1,678,000, with no comparable amount in the 2007 period. Operating revenue for the nine months ended September 30, 2007 and 2006 included $27,529,000 and $9,170,000, respectively, from the sales of land resulting in gross profit of approximately $1,908,000 and $540,000, respectively.

The Company incurred impairment losses on real estate assets of $59,001,000 and $146,666,000 for the three and nine months ended September 30, 2007, as compared to $14,025,000 for the three and nine months ended September 30, 2006. The impairments were 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.

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Net new home orders for the three months ended September 30, 2007 decreased 33% to 337 homes, compared to 501 homes for the three months ended September 30, 2006. The average number of sales locations during the three months ended September 30, 2007 was 57, up 3.6% from 55 during the three months ended September 30, 2006. The Company's number of new home orders per average sales location decreased to 5.9 for the three months ended September 30, 2007, as compared to 9.1 for the three months ended September 30, 2006. Net new home orders for the nine months ended September 30, 2007 were 1,496 homes, down 12% from 1,698 homes for the nine months ended September 30, 2006. The average number of sales locations during the nine months ended September 30, 2007 was 52, up slightly from 51 during the nine months ended September 30, 2006. The Company's number of new home orders per average sales location decreased to 28.8 for the nine months ended September 30, 2007, as compared to 33.3 for the nine months ended September 30, 2006.

The Company's cancellation rate for the three months ended September 30, 2007 was 42%, compared to 39% for the three months ended September 30, 2006. The Company's cancellation rate for the nine months ended September 30, 2007 was 32%, compared to 33% for the nine months ended September 30, 2006.

The number of homes closed in the three months ended September 30, 2007 was 416 homes, down 31% from 600 homes closed in the three months ended September 30, 2006. The number of homes closed for the nine months ended September 30, 2007 was 1,385, down 29% from 1,949 homes closed in the nine months ended September 30, 2006.

At September 30, 2007, the backlog of homes sold but not closed totaled 717 homes, down 31% from 1,040 homes at September 30, 2006. At September 30, 2007, the dollar amount of backlog of homes sold but not closed totaled $343,340,000, down 34% from $517,811,000 at September 30, 2006, and down 13% from $396,667,000 at June 30, 2007.

Selected financial and operating information for the Company including joint ventures is set forth in greater detail in a schedule attached to this release.

In November 2007, the Company took additional actions to reduce its overall cost structure and improve operating efficiencies by reducing its Company-wide headcount by approximately 134 positions, or 25%. Since the beginning of 2007, the Company-wide headcount has been reduced by approximately 226 positions, or 35%. In connection with these reductions, certain operating divisions are being consolidated to centralize operations and achieve additional operating efficiencies. The Company expects these actions to result in annualized cost savings of approximately $12,000,000.

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General William Lyon, Chairman and Chief Executive Officer stated "After careful consideration of current market conditions and the Company's overall operating structure, we made some difficult decisions to align our operations to a level consistent with our current and expected future lower levels of volume. We believe that these actions were necessary to protect our financial position".

The Company will hold a conference call on Friday, November 9, 2007 at 11:00 a.m. Pacific Time to discuss the third quarter 2007 earnings results. The dial-in number is (866) 700-6979 (enter passcode number 98235646). Participants may call in beginning at 10:45 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 9, 2007 at 1:00 p.m. Pacific Time through midnight on November 30, 2007. The dial-in number for the replay is (888) 286-8010 (enter passcode number 51469167). 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, 2007 had 60 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.

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.

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WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION

(unaudited)

	Three Months Ended September 30,
	2007									2006
	Wholly- Owned			Joint Ventures			Consolidated Total			Wholly- Owned			Joint Ventures			Consolidated Total
Selected Financial Information
(dollars in thousands)
Homes closed		375			41			416			564			36			600
Home sales revenue	$	166,634		$	15,610		$	182,244		$	290,349		$	13,359		$	303,708
Cost of sales		(147,463	)		(12,304	)		(159,767	)		(231,817	)		(9,420	)		(241,237	)
Gross margin	$	19,171		$	3,306		$	22,477		$	58,532		$	3,939		$	62,471
Gross margin percentage		11.5	%		21.2	%		12.3	%		20.2	%		29.5	%		20.6	%
Number of homes closed
California		234			41			275			284			36			320
Arizona		90			—			90			144			—			144
Nevada		51			—			51			136			—			136
Total		375			41			416			564			36			600
Average sales price
California	$	550,000		$	380,700		$	524,700		$	670,100		$	371,100		$	636,500
Arizona		249,800			–			249,800			336,500			—			336,500
Nevada		303,100			–			303,100			379,200			—			379,200
Total	$	444,400		$	380,700		$	438,100		$	514,800		$	371,100		$	506,200
Number of net new home orders
California		216			31			247			317			54			371
Arizona		62			—			62			61			—			61
Nevada		28			—			28			69			—			69
Total		306			31			337			447			54			501
Average number of sales locations during period
California		36			5			41			31			6			37
Arizona		5			—			5			6			—			6
Nevada		11			—			11			12			—			12
Total		52			5			57			49			6			55

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WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)

(unaudited)

	As of September 30,
	2007						2006
	Wholly- Owned		Joint Ventures		Consolidated Total		Wholly- Owned		Joint Ventures		Consolidated Total
Backlog of homes sold but not closed at end of period
California		464		64		528		508		88		596
Arizona		138		—		138		363		—		363
Nevada		51		—		51		81		—		81
Total		653		64		717		952		88		1,040
Dollar amount of homes sold but not closed at end of period (in thousands)
California	$	269,582	$	24,494	$	294,076	$	352,832	$	37,453	$	390,285
Arizona		32,195		—		32,195		99,470		—		99,470
Nevada		17,069		—		17,069		28,056		—		28,056
Total	$	318,846	$	24,494	$	343,340	$	480,358	$	37,453	$	517,811
Lots controlled at end of period
Owned lots
California		4,267		978		5,245		4,586		637		5,223
Arizona		4,587		1,745		6,332		4,189		2,567		6,756
Nevada		3,146		—		3,146		1,362		—		1,362
Total		12,000		2,723		14,723		10,137		3,204		13,341
Optioned lots (1)
California						1,122						3,171
Arizona						2,728						3,442
Nevada						—						1,983
Total						3,850						8,596
Total lots controlled
California						6,367						8,394
Arizona						9,060						10,198
Nevada						3,146						3,345
Total						18,573						21,937

(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,
	2007									2006
	Wholly- Owned			Joint Ventures			Consolidated Total			Wholly- Owned			Joint Ventures			Consolidated Total
Selected Financial Information
(dollars in thousands)
Homes closed		1,229			156			1,385			1,709			240			1,949
Home sales revenue	$	565,088		$	66,756		$	631,844		$	909,774		$	107,939		$	1,017,713
Cost of sales		(487,374	)		(50,270	)		(537,644	)		(709,329	)		(75,006	)		(784,335	)
Gross margin	$	77,714		$	16,486		$	94,200		$	200,445		$	32,933		$	233,378
Gross margin percentage		13.8	%		24.7	%		14.9	%		22.0	%		30.5	%		22.9	%
Number of homes closed
California		738			156			894			962			240			1,202
Arizona		314			—			314			376			—			376
Nevada		177			—			177			371			—			371
Total		1,229			156			1,385			1,709			240			1,949
Average sales price
California	$	564,900		$	427,900		$	541,000		$	650,900		$	449,700		$	610,700
Arizona		281,300			—			281,300			374,600			—			374,600
Nevada		338,100			—			338,100			384,900			—			384,900
Total	$	459,800		$	427,900		$	456,200		$	532,300		$	449,700		$	522,200
Number of net new home orders
California		899			168			1,067			847			220			1,067
Arizona		261			—			261			343			—			343
Nevada		168			—			168			288			—			288
Total		1,328			168			1,496			1,478			220			1,698
Average number of sales locations during period
California		31			6			37			27			6			33
Arizona		5			—			5			6			—			6
Nevada		10			—			10			12			—			12
Total		46			6			52			45			6			51

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WILLIAM LYON HOMES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Operating revenue
Home sales	$	182,244		$	303,708		$	631,844		$	1,017,713
Lots, land and other sales		—			7,540			27,529			9,170
		182,244			311,248			659,373			1,026,883
Operating costs
Cost of sales—homes		(159,767	)		(241,237	)		(537,644	)		(784,335	)
Cost of sales—lots, land and other		(854	)		(5,862	)		(25,621	)		(8,630	)
Impairment loss on real estate assets		(59,001	)		(14,025	)		(146,666	)		(14,025	)
Sales and marketing		(14,882	)		(17,933	)		(45,587	)		(47,836	)
General and administrative		(9,691	)		(12,892	)		(30,387	)		(49,313	)
Other		(407	)		(803	)		(518	)		(2,290	)
		(244,602	)		(292,752	)		(786,423	)		(906,429	)
Equity in income (loss) of unconsolidated joint ventures		316			(221	)		(298	)		3,398
Minority equity in income of consolidated entities		(764	)		(1,340	)		(9,982	)		(12,878	)
Operating (loss) income		(62,806	)		16,935			(137,330	)		110,974
Financial advisory expenses		—			(42	)		—			(3,142	)
Other income, net		1,494			874			4,036			3,035
(Loss) income before benefit (provision) for income taxes		(61,312	)		17,767			(133,294	)		110,867
Benefit (provision) for income taxes
Benefit (provision) for income taxes		1,300			(7,265	)		1,713			(43,770	)
Reduction of deferred tax assets as a result of election to be taxed as an "S" corporation for income tax purposes effective on January 1, 2007		—			—			(31,887	)		—
		1,300			(7,265	)		(30,174	)		(43,770	)
Net (loss) income	$	(60,012	)	$	10,502		$	(163,468	)	$	67,097

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WILLIAM LYON HOMES

CONSOLIDATED BALANCE SHEETS

(in thousands except number of shares and par value per share)

	September 30, 2007		December 31, 2006
	(unaudited)
ASSETS
Cash and cash equivalents	$	34,456	$	38,732
Receivables		38,474		119,491
Real estate inventories
Owned		1,488,538		1,431,753
Not owned		143,920		200,667
Investments in and advances to unconsolidated joint ventures		1,124		3,560
Property and equipment, less accumulated depreciation of $12,955 and $12,465 at September 30, 2007 and December 31, 2006, respectively		16,673		16,828
Deferred loan costs		10,396		11,258
Goodwill		5,896		5,896
Other assets		26,003		50,410
	$	1,765,480	$	1,878,595
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	49,042	$	48,592
Accrued expenses		65,830		111,871
Liabilities from inventories not owned		102,153		131,564
Notes payable		459,663		304,096
7 5/8% Senior Notes due December 15, 2012		150,000		150,000
10 3/4% Senior Notes due April 1, 2013		247,466		247,218
7 1/2% Senior Notes due February 15, 2014		150,000		150,000
		1,224,154		1,143,341
Minority interest in consolidated entities		72,623		109,859
Stockholders' equity
Common stock, par value $.01 per share; 3,000 shares authorized; 1,000 shares outstanding at September 30, 2007 and December 31, 2006, respectively		—		—
Additional paid-in capital		48,867		43,213
Retained earnings		419,836		582,182
		468,703		625,395
	$	1,765,480	$	1,878,595

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WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

SELECTED FINANCIAL DATA (dollars in thousands):

	Three Months Ended September 30,						Last Twelve Months Ended September 30,
	2007			2006			2007			2006
Net (loss) income	$	(60,012	)	$	10,502		$	(155,787	)	$	155,052
Net cash (used in) provided by operating activities	$	(59,226	)	$	(19,713	)	$	(4,023	)	$	143,987
Interest incurred	$	20,034		$	21,834		$	75,320		$	82,178
Adjusted EBITDA (1)	$	7,656		$	44,808		$	102,845		$	334,468
Ratio of adjusted EBITDA to interest incurred								1.37x			4.07x

Balance Sheet Data

	September 30,
	2007			2006
Stockholders' equity	$	468,703		$	614,102
Total debt		1,007,129			885,381
Total book capitalization	$	1,475,832		$	1,499,483
Ratio of debt to total book capitalization		68.2	%		59.0	%
Ratio of debt to total book capitalization (net of cash)		67.5	%		58.4	%
Ratio of debt to LTM Adjusted EBITDA		9.79	x		2.65	x
Ratio of debt to LTM Adjusted EBITDA (net of cash)		9.46	x		2.58	x

(1) Adjusted EBITDA means net (loss) income plus (i) (benefit) 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

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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 (loss) income to Adjusted EBITDA is provided as follows:

	Three Months Ended September 30,						Last Twelve Months Ended September 30,
	2007			2006			2007			2006
Net (loss) income	$	(60,012	)	$	10,502		$	(155,787	)	$	155,052
(Benefit) provision for income taxes		(1,300	)		7,265			35,335			100,883
Interest expense:
Interest incurred		20,034			21,834			75,320			82,178
Interest capitalized		(20,034	)		(21,834	)		(75,320	)		(82,178	)
Amortization of capitalized interest in cost of sales		9,664			12,166			47,780			58,171
Non-cash impairment charges		59,001			14,025			172,536			18,625
Depreciation and amortization		619			629			2,527			2,389
Cash distributions of income from unconsolidated joint ventures		—			—			—			2,534
Equity in (income) loss of unconsolidated joint ventures		(316	)		221			454			(3,186	)
Adjusted EBITDA	$	7,656		$	44,808		$	102,845		$	334,468

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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,
	2007			2006			2007			2006
Net cash (used in) provided by operating activities	$	(59,226	)	$	(19,713	)	$	(4,023	)	$	143,987
Interest expense:
Interest incurred		20,034			21,834			75,320			82,178
Interest capitalized		(20,034	)		(21,834	)		(75,320	)		(82,178	)
Amortization of capitalized interest in cost of sales		9,664			12,166			47,780			58,171
State income tax refund from pre-quasi built-in losses		—			—			—			(1,855	)
Federal income tax refund from pre-quasi built-in losses		—			—			—			(1,820	)
Minority equity in income of consolidated entities		(764	)		(1,340	)		(14,018	)		(33,417	)
Net changes in operating assets and liabilities:
Receivables		(7,567	)		(2,889	)		(7,694	)		3,288
Real estate inventories—owned		75,595			39,318			99,662			36,971
Real estate inventories—not owned		(7,399	)		—			(95,129	)		—
Deferred loan costs		45			(631	)		(626	)		(1,997	)
Other assets		613			906			17,448			11,045
Accounts payable		3,890			13,346			15,294			2,847
Accrued expenses		(7,195	)		3,645			44,151			117,248
Adjusted EBITDA	$	7,656		$	44,808		$	102,845		$	334,468

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