Exhibit 99.1
| Contact: | Investor Relations |
WILLIAM LYON HOMES REPORTS REVISED
FOURTH QUARTER AND FULL YEAR 2008 RESULTS
NEWPORT BEACH, CA—March 30, 2009—William Lyon Homes today reported revised fourth quarter and full year 2008 results. The revised results reflect an increase of $7,584,000 in the net loss for the quarter ended December 31, 2008 to $30,806,000 from $23,222,000 as previously reported in the Company’s earnings release dated March 4, 2009, and an increase of $7,584,000 in the net loss for the year ended December 31, 2008 to $111,638,000 from $104,054,000 as previously reported in the Company’s earnings release dated March 4, 2009. The revision resulted from a determination by management of the Company on March 24, 2009 that the Company would be unable to successfully re-negotiate the terms of a land purchase contract with the seller for the purchase of the remaining lots on terms that would make the purchase economically viable for the Company to proceed. Accordingly, as of December 31, 2008, the Company wrote-off its deposit of $5,728,000 for this land purchase (included in cost of sales – lots, land and other) and also incurred an additional impairment loss on this project of $1,856,000 (included in impairment loss on real estate assets). The revised fourth quarter and full year 2008 results included below reflect these adjustments. In addition, these adjustments are appropriately reflected in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K which has been filed with the Securities and Exchange Commission on March 30, 2009.
Financial Highlights
2008 Fourth Quarter
| | • | | Net new home orders of 168, down 53% |
| | • | | New home deliveries of 408, down 49% |
| | • | | Consolidated operating revenue of $146.4 million, down 67% |
| | • | | Homebuilding gross margins of $13.7 million, down 61% |
| | • | | Homebuilding gross margin percentage of 9.9%, up 40 basis points |
| | • | | Gain on retirement of debt of $54.0 million |
| | • | | Impairment loss on real estate assets of $67.3 million |
| | • | | Impairment loss on goodwill of $5.9 million |
| | • | | Net loss of $30.8 million |
2008 Full Year
| | • | | Net new home orders of 1,221, down 34% |
| | • | | New home deliveries of 1,260, down 42% |
| | • | | Consolidated operating revenue of $526.1 million, down 52% |
| | • | | Homebuilding gross margins of $29.2 million, down 77% |
| | • | | Homebuilding gross margin percentage of 6.2%, down 670 basis points |
| | • | | Gain on retirement of debt of $54.0 million |
| | • | | Impairment loss on real estate assets of $135.3 million |
| | • | | Impairment loss on goodwill of $5.9 million |
| | • | | Net loss of $111.6 million |
William Lyon Homes today reported a net loss of $30,806,000 for the fourth quarter ended December 31, 2008, as compared to a net loss of $185,940,000 for the comparable period a year ago. Consolidated operating revenue decreased 67% to $146,384,000 for the quarter ended December 31, 2008, as compared to $445,984,000 for the comparable period a year ago. Operating revenue from home sales decreased 63% to $137,695,000 for the quarter ended December 31, 2008, as compared to $370,705,000 for the comparable period a year ago.
For the year ended December 31, 2008, the Company reported a net loss of $111,638,000, as compared to a net loss of $349,408,000 for the comparable period a year ago. Consolidated operating revenue decreased 52% to $526,078,000 for the year ended December 31, 2008, as compared to $1,105,357,000 for the comparable period a year ago. Operating revenue from home sales decreased 53% to $468,452,000 for the year ended December 31, 2008, as compared to $1,002,549,000 for the comparable period a year ago.
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The Company incurred impairment losses on real estate assets of $67,283,000 and $84,454,000 for the three months ended December 31, 2008 and 2007, respectively, and $135,311,000 and $231,120,000 for the twelve months ended December 31, 2008 and 2007, respectively. The impairments were primarily attributable to slower than anticipated home sales and lower than anticipated net revenue due to the continuing severely depressed conditions in the homebuilding markets in which the Company operates. As a result, the future undiscounted cash flows estimated to be generated were determined to be less than the carrying amount of the assets. Accordingly, the real estate assets were written-down to their estimated fair value.
In October 2008, the Company purchased, in a limited number of privately negotiated transactions, $71,900,000 principal amount of its outstanding 7 5/8% Senior Notes, 10 3/4% Senior Notes and 7 1/2% Senior Notes at a cost of $16,718,000, plus accrued interest. The net gain resulting from this purchase, after giving effect to amortization of related deferred loan costs, was $54,044,000. The gain was recognized in the fourth quarter 2008 financial statements. Upon settlement of the transactions, the Company authorized these Senior Notes to be cancelled.
The amount paid for business acquisitions over the net fair value of assets acquired and liabilities assumed is reflected as goodwill. The Company reviews goodwill for impairment on an annual basis or when indicators of impairment exist. Evaluating goodwill for impairment involves the determination of the fair value of the Company’s reporting units in which the Company has recorded goodwill. Inherent in the determination of fair value are judgments and assumptions, including the interpretation of current economic conditions and market valuations. Due to continued deterioration in market conditions, the Company recorded an impairment charge on goodwill of $5,896,000 during the year ended December 31, 2008.
The Company’s combined results including joint ventures were as follows: The number of homes closed for the three months ended December 31, 2008 was 408, down 49% as compared to 797 for the three months ended December 31, 2007. The number of homes closed for the year ended December 31, 2008 was 1,260, a decrease of 42% as compared to 2,182 for the year ended December 31, 2007. The Company’s backlog of homes sold but not closed was 240 at December 31, 2008, down 14% from 279 at December 31, 2007. The Company’s dollar amount of backlog of homes sold but not closed at December 31, 2008, was $80,750,000, down 25% from $107,893,000 at December 31, 2007. The cancellation rate of buyers who contracted to buy a home but did not close escrow was approximately 28% during 2008 and 33% during 2007.
Net new home orders for the three months ended December 31, 2008 were 168, a decrease of 53% as compared to 359 for the three months ended December 31, 2007. Net new home orders for the year ended December 31, 2008 were 1,221, a decrease of 34% as compared to 1,855 for the year ended December 31, 2007. The average number of sales locations was 44 for the year ended December 31, 2008, a decrease of 23% as compared to 57 for the year ended December 31, 2007.
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During the fourth quarter of 2008, the average sales price of homes (including joint ventures) was $337,500, down 27% as compared to $465,100 for the comparable period a year ago. For the year ended December 31, 2008, the average sales price of homes (including joint ventures) was $371,800, down 19% as compared to $459,500 for the year ended December 31, 2007. The lower average sales price was primarily due to (1) price depreciation in certain markets resulting from the slowing of new orders and competitive pricing pressures and (2) a change in product mix.
For the quarter ended December 31, 2008, the Company’s homebuilding gross margin percentage increased to 9.9% from 9.5% for the quarter ended December 31, 2007. For the year ended December 31, 2008, the Company’s homebuilding gross margin percentage decreased to 6.2% from 12.9% for the year ended December 31, 2007. These lower gross margin percentages were primarily due to a decrease in average sales prices, the earlier close out of projects with higher gross margins and a shift in product mix.
In 2008 and 2007, the Company has taken actions to reduce its overall cost structure and improve operating efficiencies by reducing its Company-wide headcount. In connection with these reductions, certain operating divisions have been consolidated to centralize operations and achieve additional operating efficiencies.
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 year ended December 31, 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 were no longer available to the Company.
Effective on January 1, 2008, the Company and its shareholders made a revocation of the “S” corporation election. As a result of this revocation, the Company will be taxed as a “C” corporation. The shareholders will not be able to elect “S” corporation status for at least five years. The revocation of the “S” corporation election will allow taxable losses generated in 2008 to be
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carried back to the 2006 “C” corporation year. As a result of the change in tax status, the Company recorded a deferred tax asset (refund receivable) and related income tax benefit of $41,602,000 as of January 1, 2008. The recorded deferred tax asset reflects the tax refund for the carry back of the 2008 tax loss to 2006. The Company filed its 2008 federal tax return in early January 2009 and received the tax refund on January 28, 2009. In addition, as of January 1, 2008, the Company has unused built-in losses of $19,414,000, which are available to offset future income and expire in 2010 and 2011. The Company’s ability to utilize the foregoing tax benefits will depend upon the amount of its future taxable income and may be limited under certain circumstances.
Selected financial and operating information for the Company, including joint ventures, is set forth in greater detail in a schedule attached to this release.
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 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.
5
WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | |
| | | 2008 | | | 2007 | |
| | | Wholly-
Owned | | | Joint
Ventures | | | Consolidated
Total | | | Wholly-
Owned | | | Joint
Ventures | | | Consolidated
Total | |
Selected Financial Information | | | | | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 378 | | | | 30 | | | | 408 | | | | 734 | | | | 63 | | | | 797 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Home sales revenue | | $ | 127,954 | | | $ | 9,741 | | | $ | 137,695 | | | $ | 345,640 | | | $ | 25,065 | | | $ | 370,705 | |
Cost of sales | | | (115,197 | ) | | | (8,803 | ) | | | (124,000 | ) | | | (316,375 | ) | | | (19,209 | ) | | | (335,584 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 12,757 | | | $ | 938 | | | $ | 13,695 | | | $ | 29,265 | | | $ | 5,856 | | | $ | 35,121 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin percentage | | | 10.0 | % | | | 9.6 | % | | | 9.9 | % | | | 8.5 | % | | | 23.4 | % | | | 9.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 272 | | | | 30 | | | | 302 | | | | 538 | | | | 63 | | | | 601 | |
Arizona | | | 45 | | | | — | | | | 45 | | | | 106 | | | | — | | | | 106 | |
Nevada | | | 61 | | | | — | | | | 61 | | | | 90 | | | | — | | | | 90 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 378 | | | | 30 | | | | 408 | | | | 734 | | | | 63 | | | | 797 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 374,700 | | | $ | 324,700 | | | $ | 369,700 | | | $ | 539,700 | | | $ | 397,900 | | | $ | 524,800 | |
Arizona | | | 210,400 | | | | — | | | | 210,400 | | | | 250,800 | | | | — | | | | 250,800 | |
Nevada | | | 271,600 | | | | — | | | | 271,600 | | | | 319,100 | | | | — | | | | 319,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 338,500 | | | $ | 324,700 | | | $ | 337,500 | | | $ | 470,900 | | | $ | 397,900 | | | $ | 465,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 106 | | | | 5 | | | | 111 | | | | 242 | | | | 16 | | | | 258 | |
Arizona | | | 20 | | | | — | | | | 20 | | | | 35 | | | | — | | | | 35 | |
Nevada | | | 37 | | | | — | | | | 37 | | | | 66 | | | | — | | | | 66 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 163 | | | | 5 | | | | 168 | | | | 343 | | | | 16 | | | | 359 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average number of sales locations during period | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 18 | | | | 2 | | | | 20 | | | | 44 | | | | 5 | | | | 49 | |
Arizona | | | 4 | | | | — | | | | 4 | | | | 4 | | | | — | | | | 4 | |
Nevada | | | 11 | | | | — | | | | 11 | | | | 11 | | | | — | | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 33 | | | | 2 | | | | 35 | | | | 59 | | | | 5 | | | | 64 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | | As of December 31, |
| | | 2008 | | 2007 |
| | | Wholly-
Owned | | Joint
Ventures | | Consolidated
Total | | Wholly-
Owned | | Joint
Ventures | | Consolidated
Total |
Backlog of homes sold but not closed at end of period | | | | | | | | | | | | | | | | | | |
California | | | 176 | | | 6 | | | 182 | | | 168 | | | 17 | | | 185 |
Arizona | | | 34 | | | — | | | 34 | | | 67 | | | — | | | 67 |
Nevada | | | 24 | | | — | | | 24 | | | 27 | | | — | | | 27 |
| | | | | | | | | | | | | | | | | | |
Total | | | 234 | | | 6 | | | 240 | | | 262 | | | 17 | | | 279 |
| | | | | | | | | | | | | | | | | | |
Dollar amount of homes sold but not closed at end of period (in thousands) | | | | | | | | | | | | | | | | | | |
California | | $ | 66,846 | | $ | 1,888 | | $ | 68,734 | | $ | 80,310 | | $ | 5,156 | | $ | 85,466 |
Arizona | | | 6,177 | | | — | | | 6,177 | | | 15,627 | | | — | | | 15,627 |
Nevada | | | 5,839 | | | — | | | 5,839 | | | 6,800 | | | — | | | 6,800 |
| | | | | | | | | | | | | | | | | | |
Total | | $ | 78,862 | | $ | 1,888 | | $ | 80,750 | | $ | 102,737 | | $ | 5,156 | | $ | 107,893 |
| | | | | | | | | | | | | | | | | | |
Lots controlled at end of period | | | | | | | | | | | | | | | | | | |
Owned lots | | | | | | | | | | | | | | | | | | |
California | | | 2,017 | | | 756 | | | 2,773 | | | 3,428 | | | 914 | | | 4,342 |
Arizona | | | 5,993 | | | — | | | 5,993 | | | 4,481 | | | 1,745 | | | 6,226 |
Nevada | | | 2,839 | | | — | | | 2,839 | | | 3,056 | | | — | | | 3,056 |
| | | | | | | | | | | | | | | | | | |
Total | | | 10,849 | | | 756 | | | 11,605 | | | 10,965 | | | 2,659 | | | 13,624 |
| | | | | | | | | | | | | | | | | | |
Optioned lots (1) | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 406 | | | | | | | | | 534 |
Arizona | | | | | | | | | 321 | | | | | | | | | 303 |
Nevada | | | | | | | | | — | | | | | | | | | — |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | 727 | | | | | | | | | 837 |
| | | | | | | | | | | | | | | | | | |
Total lots controlled | | | | | | | | | | | | | | | | | | |
California | | | | | | | | | 3,179 | | | | | | | | | 4,876 |
Arizona | | | | | | | | | 6,314 | | | | | | | | | 6,529 |
Nevada | | | | | | | | | 2,839 | | | | | | | | | 3,056 |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | 12,332 | | | | | | | | | 14,461 |
| | | | | | | | | | | | | | | | | | |
| (1) | Optioned lots may be purchased as wholly-owned projects or by newly formed joint ventures. |
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WILLIAM LYON HOMES
SELECTED FINANCIAL AND OPERATING INFORMATION
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31, | |
| | | 2008 | | | 2007 | |
| | | Wholly-
Owned | | | Joint
Ventures | | | Consolidated
Total | | | Wholly-
Owned | | | Joint
Ventures | | | Consolidated
Total | |
Selected Financial Information | | | | | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | |
Homes closed | | | 1,196 | | | | 64 | | | | 1,260 | | | | 1,963 | | | | 219 | | | | 2,182 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Home sales revenue | | $ | 446,115 | | | $ | 22,337 | | | $ | 468,452 | | | $ | 910,728 | | | $ | 91,821 | | | $ | 1,002,549 | |
Cost of sales | | | (418,253 | ) | | | (21,023 | ) | | | (439,276 | ) | | | (803,749 | ) | | | (69,479 | ) | | | (873,228 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin | | $ | 27,862 | | | $ | 1,314 | | | $ | 29,176 | | | $ | 106,979 | | | $ | 22,342 | | | $ | 129,321 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross margin percentage | | | 6.2 | % | | | 5.9 | % | | | 6.2 | % | | | 11.7 | % | | | 24.3 | % | | | 12.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of homes closed | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 763 | | | | 64 | | | | 827 | | | | 1,276 | | | | 219 | | | | 1,495 | |
Arizona | | | 216 | | | | — | | | | 216 | | | | 420 | | | | — | | | | 420 | |
Nevada | | | 217 | | | | — | | | | 217 | | | | 267 | | | | — | | | | 267 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1,196 | | | | 64 | | | | 1,260 | | | | 1,963 | | | | 219 | | | | 2,182 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average sales price | | | | | | | | | | | | | | | | | | | | | | | | |
California | | $ | 443,700 | | | $ | 349,000 | | | $ | 436,400 | | | $ | 554,300 | | | $ | 419,300 | | | $ | 534,500 | |
Arizona | | | 227,700 | | | | — | | | | 227,700 | | | | 273,600 | | | | — | | | | 273,600 | |
Nevada | | | 268,900 | | | | — | | | | 268,900 | | | | 331,700 | | | | — | | | | 331,700 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 373,000 | | | $ | 349,000 | | | $ | 371,800 | | | $ | 463,900 | | | $ | 419,300 | | | $ | 459,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Number of net new home orders | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 764 | | | | 60 | | | | 824 | | | | 1,141 | | | | 184 | | | | 1,325 | |
Arizona | | | 183 | | | | — | | | | 183 | | | | 296 | | | | — | | | | 296 | |
Nevada | | | 214 | | | | — | | | | 214 | | | | 234 | | | | — | | | | 234 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1,161 | | | | 60 | | | | 1,221 | | | | 1,671 | | | | 184 | | | | 1,855 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average number of sales locations during period | | | | | | | | | | | | | | | | | | | | | | | | |
California | | | 26 | | | | 3 | | | | 29 | | | | 36 | | | | 6 | | | | 42 | |
Arizona | | | 4 | | | | — | | | | 4 | | | | 5 | | | | — | | | | 5 | |
Nevada | | | 11 | | | | — | | | | 11 | | | | 10 | | | | — | | | | 10 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 41 | | | | 3 | | | | 44 | | | | 51 | | | | 6 | | | | 57 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
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WILLIAM LYON HOMES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Operating revenue | | | | | | | | | | | | | | | | |
Home sales | | $ | 137,695 | | | $ | 370,705 | | | $ | 468,452 | | | $ | 1,002,549 | |
Lots, land and other sales | | | — | | | | 75,279 | | | | 39,512 | | | | 102,808 | |
Construction services | | | 8,689 | | | | — | | | | 18,114 | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 146,384 | | | | 445,984 | | | | 526,078 | | | | 1,105,357 | |
| | | | | | | | | | | | | | | | |
Operating costs | | | | | | | | | | | | | | | | |
Cost of sales - homes | | | (124,000 | ) | | | (335,584 | ) | | | (439,276 | ) | | | (873,228 | ) |
Cost of sales - lots, land and other | | | (6,701 | ) | | | (179,982 | ) | | | (47,599 | ) | | | (205,603 | ) |
Impairment loss on real estate assets | | | (67,283 | ) | | | (84,454 | ) | | | (135,311 | ) | | | (231,120 | ) |
Impairment loss on goodwill | | | (5,896 | ) | | | — | | | | (5,896 | ) | | | — | |
Construction services | | | (7,302 | ) | | | — | | | | (15,431 | ) | | | — | |
Sales and marketing | | | (9,651 | ) | | | (21,116 | ) | | | (40,441 | ) | | | (66,703 | ) |
General and administrative | | | (7,773 | ) | | | (7,085 | ) | | | (27,645 | ) | | | (37,472 | ) |
Other | | | (2,456 | ) | | | (385 | ) | | | (4,461 | ) | | | (903 | ) |
| | | | | | | | | | | | | | | | |
| | | (231,062 | ) | | | (628,606 | ) | | | (716,060 | ) | | | (1,415,029 | ) |
| | | | | | | | | | | | | | | | |
Equity in (loss) income of unconsolidated joint ventures | | | (2,251 | ) | | | 602 | | | | (3,877 | ) | | | 304 | |
| | | | | | | | | | | | | | | | |
Minority equity in loss (income) of consolidated entities | | | 9,359 | | | | (1,144 | ) | | | 10,446 | | | | (11,126 | ) |
| | | | | | | | | | | | | | | | |
Operating loss | | | (77,570 | ) | | | (183,164 | ) | | | (183,413 | ) | | | (320,494 | ) |
Gain on retirement of debt | | | 54,044 | | | | — | | | | 54,044 | | | | — | |
Interest expense, net of amounts capitalized | | | (8,044 | ) | | | — | | | | (24,440 | ) | | | — | |
Other income (expense), net | | | 764 | | | | (292 | ) | | | 579 | | | | 3,744 | |
| | | | | | | | | | | | | | | | |
Loss before benefit (provision) for income taxes | | | (30,806 | ) | | | (183,456 | ) | | | (153,230 | ) | | | (316,750 | ) |
Benefit (provision) for income taxes | | | — | | | | (2,484 | ) | | | 41,592 | | | | (32,658 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | $ | (30,806 | ) | | $ | (185,940 | ) | | $ | (111,638 | ) | | $ | (349,408 | ) |
| | | | | | | | | | | | | | | | |
9
WILLIAM LYON HOMES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of shares and par value per share)
| | | | | | |
| | | December 31, |
| | | 2008 | | 2007 |
| | | (unaudited) | | |
| ASSETS | | | | | | |
Cash and cash equivalents | | $ | 67,017 | | $ | 73,197 |
Restricted cash | | | 5,079 | | | — |
Receivables | | | 29,985 | | | 39,613 |
Income tax refunds receivable | | | 46,696 | | | 5,654 |
Real estate inventories | | | | | | |
Owned | | | 754,489 | | | 1,061,660 |
Not owned | | | 107,763 | | | 144,265 |
Investments in and advances to unconsolidated joint ventures | | | 2,769 | | | 4,671 |
Property and equipment, less accumulated depreciation of $14,124 and $12,093 at December 31, 2008 and 2007, respectively | | | 14,403 | | | 16,092 |
Deferred loan costs | | | 6,264 | | | 9,645 |
Goodwill | | | — | | | 5,896 |
Other assets | | | 10,378 | | | 14,635 |
| | | | | | |
| | $ | 1,044,843 | | $ | 1,375,328 |
| | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Accounts payable | | $ | 16,331 | | $ | 40,890 |
Accrued expenses | | | 62,987 | | | 67,786 |
Liabilities from inventories not owned | | | 80,079 | | | 113,395 |
Notes payable | | | 194,629 | | | 266,932 |
7 5/8% Senior Notes due December 15, 2012 | | | 133,800 | | | 150,000 |
10 3/4% Senior Notes due April 1, 2013 | | | 218,176 | | | 247,553 |
7 1/2% Senior Notes due February 15, 2014 | | | 124,300 | | | 150,000 |
| | | | | | |
| | | 830,302 | | | 1,036,556 |
| | | | | | |
Minority interest in consolidated entities | | | 43,416 | | | 56,009 |
| | | | | | |
Stockholders’ equity | | | | | | |
Common stock, par value $0.01 per share; 3,000 shares authorized; 1,000 shares outstanding at December 31, 2008 and 2007 | | | — | | | — |
Additional paid-in capital | | | 48,867 | | | 48,867 |
Retained earnings | | | 122,258 | | | 233,896 |
| | | | | | |
| | | 171,125 | | | 282,763 |
| | | | | | |
| | $ | 1,044,843 | | $ | 1,375,328 |
| | | | | | |
10
WILLIAM LYON HOMES
SUPPLEMENTAL FINANCIAL INFORMATION
SELECTED FINANCIAL DATA (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | | | | | | | | Last Twelve | |
| | | Three Months Ended
December 31, | | | Months Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net loss | | $ | (30,806 | ) | | $ | (185,940 | ) | | $ | (111,638 | ) | | $ | (349,408 | ) |
Net cash provided by operating activities | | $ | 36,933 | | | $ | 229,087 | | | $ | 80,413 | | | $ | 134,513 | |
Interest incurred | | $ | 15,003 | | | $ | 20,268 | | | $ | 66,748 | | | $ | 76,497 | |
Adjusted EBITDA (1) | | $ | 9,958 | | | $ | (70,521 | ) | | $ | 3,191 | | | $ | (26,233 | ) |
Ratio of adjusted EBITDA to interest incurred | | | | | | | | | | | 0.05 | x | | | — | |
Balance Sheet Data
| | | | | | | | |
| | | December 31, | |
| | | 2008 | | | 2007 | |
Stockholders’ equity | | $ | 171,125 | | | $ | 282,763 | |
Total debt | | | 670,905 | | | | 814,485 | |
| | | | | | | | |
Total book capitalization | | $ | 842,030 | | | $ | 1,097,248 | |
| | | | | | | | |
Ratio of debt to total book capitalization | | | 79.7 | % | | | 74.2 | % |
Ratio of debt to total book capitalization (net of cash) | | | 77.9 | % | | | 72.4 | % |
Ratio of debt to LTM adjusted EBITDA | | | 210.25 | x | | | — | |
Ratio of debt to LTM adjusted EBITDA (net of cash) | | | 189.25 | x | | | — | |
(1) | Adjusted EBITDA means net 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) gain on retirement of debt, (vi) depreciation and amortization and (vii) 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 accounting principles generally accepted in the United States. 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 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 |
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| | 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 to adjusted EBITDA is provided as follows: |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Last Twelve | |
| | | Three Months Ended | | | Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net loss | | $ | (30,806 | ) | | $ | (185,940 | ) | | $ | (111,638 | ) | | $ | (349,408 | ) |
(Benefit) provision for income taxes | | | — | | | | 2,484 | | | | (41,592 | ) | | | 32,658 | |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 15,003 | | | | 20,268 | | | | 66,748 | | | | 76,497 | |
Interest capitalized | | | (6,959 | ) | | | (20,268 | ) | | | (42,308 | ) | | | (76,497 | ) |
Amortization of capitalized interest included in cost of sales | | | 10,792 | | | | 28,478 | | | | 37,907 | | | | 57,241 | |
Non-cash impairment charges | | | 73,179 | | | | 84,454 | | | | 141,207 | | | | 231,120 | |
Gain on retirement of debt | | | (54,044 | ) | | | — | | | | (54,044 | ) | | | — | |
Depreciation and amortization | | | 542 | | | | 605 | | | | 2,218 | | | | 2,460 | |
Cash distributions of income from unconsolidated joint ventures | | | — | | | | — | | | | 816 | | | | — | |
Equity in loss (income) of unconsolidated joint ventures | | | 2,251 | | | | (602 | ) | | | 3,877 | | | | (304 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 9,958 | | | $ | (70,521 | ) | | $ | 3,191 | | | $ | (26,233 | ) |
| | | | | | | | | | | | | | | | |
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A reconciliation of net cash provided by operating activities to adjusted EBITDA is provided as follows:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Last Twelve
Months Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net cash provided by operating activities | | $ | 36,933 | | | $ | 229,087 | | | $ | 80,413 | | | $ | 134,513 | |
Interest expense: | | | | | | | | | | | | | | | | |
Interest incurred | | | 15,003 | | | | 20,268 | | | | 66,748 | | | | 76,497 | |
Interest capitalized | | | (6,959 | ) | | | (20,268 | ) | | | (42,308 | ) | | | (76,497 | ) |
Amortization of capitalized interest included in cost of sales | | | 10,792 | | | | 28,478 | | | | 37,907 | | | | 57,241 | |
Minority equity in loss (income) of consolidated entities | | | 9,359 | | | | (1,144 | ) | | | 10,446 | | | | (11,126 | ) |
Net changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Restricted cash | | | 79 | | | | — | | | | 5,079 | | | | — | |
Receivables | | | 5,282 | | | | 6,793 | | | | (10,178 | ) | | | (81,365 | ) |
Real estate inventories - owned | | | (67,935 | ) | | | (330,294 | ) | | | (167,516 | ) | | | (174,318 | ) |
Deferred loan costs | | | (413 | ) | | | (751 | ) | | | (2,501 | ) | | | (1,613 | ) |
Other assets | | | 2,682 | | | | (10,591 | ) | | | (4,257 | ) | | | (3,113 | ) |
Accounts payable | | | (1,233 | ) | | | 8,150 | | | | 24,559 | | | | 9,469 | |
Accrued expenses | | | 6,368 | | | | (249 | ) | | | 4,799 | | | | 44,079 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 9,958 | | | $ | (70,521 | ) | | $ | 3,191 | | | $ | (26,233 | ) |
| | | | | | | | | | | | | | | | |
13
