William Lyon Homes (WLH) 8-K William Lyon Homes Reports Fourth Quarter and Full Year 2013 Results

Exhibit 99.1

WILLIAM LYON HOMES REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS

2013 Fourth Quarter Highlights (Comparison to 2012 Fourth Quarter)

• Net income available to common stockholders of $116.7 million, or $3.64 per diluted share

• Diluted earnings per share of $0.66, or net income of $21.1 million, excluding $95.6 million deferred tax asset valuation allowance reversal

• Operating income of $29.4 million, up more than 11 times

• Consolidated operating revenue of $209.4 million, up 90%

• Home sales revenue of $182.9 million, up 85%

• Homebuilding gross margin of $45.3 million, up 158%

• Homebuilding gross margin percentage of 24.8%, up 700 basis points

• Adjusted homebuilding gross margin percentage of 30.9%, up 140 basis points

• New home deliveries of 391 homes, up 21%

• Average sales price (ASP) of new homes delivered of $467,700, up 53%

• Net new home orders of 292, up 28%

• Dollar value of net new home orders of $170.5 million, up 165%

• Average sales locations of 31, up 63%

• Dollar amount of backlog of homes sold but not closed of $199.5 million, up 73%

• SG&A percentage of 11.7%, down 580 basis points

• Adjusted EBITDA of $42.4 million, an increase of 121%

2013 Full Year Highlights (Comparison to 2012 Full Year)

• Net income available to common stockholders of $127.6 million, or $4.95 per diluted share

• Diluted earnings per share of $1.24, or net income of $32.0 million, excluding $95.6 million deferred tax asset valuation allowance reversal

• Operating income of $55.9 million, up more than 28 times

• Consolidated operating revenue of $572.5 million, up 44%

• Home sales revenue of $521.3 million, up 100%

• Homebuilding gross margin of $115.8 million, up 166%

• Homebuilding gross margin percentage of 22.2%, up 560 basis points

• Adjusted homebuilding gross margin percentage of 28.3%, up 240 basis points

• New home deliveries of 1,360 homes, up 43%

• Average sales price (ASP) of new homes delivered of $383,300, up 39%

• Net new home orders of 1,322, up 17%

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• Average sales locations of 25, up 39%

• SG&A percentage of 12.8%, down 450 basis points

• Adjusted EBITDA of $88.9 million, an increase of 184%

NEWPORT BEACH, CA—February 14, 2014--- William Lyon Homes (NYSE: WLH), a leading homebuilder in the Western U.S., announced results for its fourth quarter and full year ended December 31, 2013. Net income available to common stockholders was $116.7 million, or $3.64 per diluted share in the fourth quarter of 2013, compared to net loss available to common stockholders of $2.2 million, or $(0.15) per diluted share in the year-ago period. Excluding the $95.6 million reversal of the deferred tax asset valuation allowance, diluted earnings per share were $0.66 in the fourth quarter of 2013.

“We are extremely pleased with our fourth quarter results, as home sales revenue increased 85%, deliveries improved 21%, gross margin percentage grew 700 basis points to 24.8% and operating income improved to $29.4 million, up more than 11 times, each compared to the year ago period,” said William H. Lyon, Chief Executive Officer. “In addition, we are pleased to report a reversal of a substantial portion of the valuation allowance on our deferred tax assets of $95.6 million.”

Mr. Lyon added, “Since executing a successful IPO in May 2013, we have reported three consecutive quarters of net income, recording $21.1 million of net income during the fourth quarter, excluding the benefit from the reversal of the valuation allowance on our deferred tax assets.”

2013 Fourth Quarter Operating Results

Home sales revenue increased 85% to $182.9 million for the quarter, as compared to $98.6 million in the year-ago period. The increase in home sales revenue was due to a 21% increase in deliveries coupled with a 53% increase in the average sales price of homes delivered, versus the year-ago period. The increase in fourth quarter deliveries was driven by a 13% increase in the number of homes in backlog at the beginning of the quarter compared to the year-ago period and a backlog conversion rate of 84%.

Homebuilding gross margins were 24.8% during the fourth quarter of 2013, up approximately 700 basis points over the year-ago period, and up 120 basis points sequentially from the third quarter of 2013. Adjusted homebuilding gross margins were 30.9% during the fourth quarter of 2013, as compared to 29.5% in the year-ago period. The improvement in margins was driven by the increase in average sales price on homes delivered, where same-store average sales price was up 35%, year-over-year.

Net new home orders for the fourth quarter ended December 31, 2013 were 292, up 28% from 229 in the year-ago period. The dollar value of orders was $170.5 million during the quarter, an increase of 165%, from $64.4 million in the prior year period. As of December 31, 2013, backlog units totaled

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368, a 9% decrease compared to 406 units as of December 31, 2012. The dollar value of homes in backlog rose to $199.5 million, a 73% increase over $115.4 million as of December 31, 2012. Average sales price of homes in backlog increased to $542,200 as of December 31, 2013, a 91% increase from $284,400 at December 31, 2012.

Matthew R. Zaist, President and Chief Operating Officer commented, “During the fourth quarter, we continued to see healthy demand across our key markets, especially in California, where our fourth quarter net orders were up almost threefold from the prior year and 10% higher than the third quarter of this year. We also had a strong month of December, recording more orders, companywide, than in each of October and November. Our gross margins were 24.8% in the fourth quarter, the highest since the first quarter of 2006, and up 700 basis points from the prior year. In addition, the average sales price of homes in backlog have climbed to $542,200 at the end of the quarter, which is a 16% increase over our average sales price from homes closed during the quarter of $467,700.”

Operating income improved to $29.4 million during the fourth quarter of 2013 from $2.5 million in the year-ago period. Adjusted EBITDA improved by 121% to $42.4 million during the fourth quarter of 2013, as compared to adjusted EBITDA of $19.1 million in the year-ago period.

Mr. Zaist continued, “In 2013, we achieved several goals toward our growth strategy, increasing our total lot count by 16%, with particular focus on our California and Colorado markets, where lots owned and controlled grew 77% and 72%, respectively. We invested $254.8 million in land acquisition and increased our community count during the year from 23 open communities at the end of 2012, to 32 communities by the end of the 2013.”

Mr. Lyon concluded, “As we look back on 2013, we doubled our home sales revenue to $521.3 million, delivered 1,360 homes, and improved operating income more than 28 times to $55.9 million. Today we have a well-established operating platform in place with an experienced management team, an excellent reputation for delivering high-quality homes and a strong land supply in attractive real estate markets in the western region of the country.”

Balance Sheet Update

At quarter end, cash, cash equivalents and restricted cash totaled $172.5 million and total debt was $469.4 million, as compared to cash, cash equivalents and restricted cash of $71.9 million and total debt of $338.2 at December 31, 2012. Total owned real estate inventories were $671.8 million, as compared to $421.6 million at December 31, 2012, an increase of 59%. Total equity was $450.8 million, as compared to $72.1 million at December 31, 2012, up over 6 times. Total debt to capital was 51.0% at December 31, 2013 compared to 70.2% at December 31, 2012, and net debt to net book

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capitalization was 39.7% at December 31, 2013, as compared to 65.0% at December 31, 2012.

Conference Call

William Lyon Homes will host a conference call to discuss these results today, Friday, February 14, 2014, at 9:00 a.m. Pacific Time. The call will be available via both telephone at (866) 578-5771 or (617) 213-8055, passcode #81494026, and through the Company’s website at www.lyonhomes.com in the Investor Relations section of the site. A replay of the call will be available through March 14, 2014 by dialing (888) 286-8010 or (617) 801-6888, passcode #78485469. A webcast replay of the call will also be available on the Company’s website approximately two hours after broadcast.

About William Lyon Homes

Headquartered in Newport Beach, California, the Company is primarily engaged in the design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada and Colorado. Its core markets include Orange County, Los Angeles, San Diego, the San Francisco Bay Area, Phoenix, Las Vegas, Denver and Fort Collins. The Company has a distinguished legacy of more than 57 years of homebuilding operations, over which time it has sold in excess of 76,000 homes. The Company markets and sells its homes under the William Lyon Homes brand in all of its markets except for Colorado, where the Company operates under the Village Homes brand.

Financial data included herein for 2012 includes Colorado operations from December 7, 2012 (date of acquisition) through December 31, 2012. There was a full period of operations in the Company’s Colorado division for the three and twelve months ended December 31, 2013; however, period-over-period comparisons for Colorado are not meaningful (“N/M”) as indicated in the comparative tables in the schedules attached to this release.

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, limitations on the Company’s ability to utilize its tax attributes, limitations on the Company’s ability to reverse any remaining portion of its valuation allowance with respect to its deferred tax assets, 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.

As a result of the consummation of the Prepackaged Joint Plan of Reorganization on February 25, 2012, the Company

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adopted Fresh Start Accounting in accordance with Accounting Standards Codification No. 852, Reorganizations. Accordingly, the financial statement information prior to February 25, 2012 is not comparable with the financial statement information for periods on and after February 25, 2012. Any reference hereinafter to the “Successor” reflects the operations of the Company post-emergence from February 25, 2012 through December 31, 2013 and any reference to the “Predecessor” refers to the operations of the Company pre-emergence prior to February 25, 2012. Any reference to the “Combined Total” reflects the operations of the Company in both the Predecessor and Successor periods.

Investor/Media Contacts:

Larry Clark

Financial Profiles, Inc.

(310) 622-8223

WLH@finprofiles.com

Lisa Mueller

Financial Profiles, Inc.

(310) 622-8231

WLH@finprofiles.com

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WILLIAM LYON HOMES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except number of shares and per share data)

(unaudited)

	Three Months Ended December 31, 2013			Three Months Ended December 31, 2012
Operating revenue
Home sales	$	182,876		$	98,633
Lots, land and other sales		15,444			4,200
Construction services		11,094			7,352
		209,414			110,185
Operating costs
Cost of sales — homes		(137,564	)		(81,048	)
Cost of sales — lots, land and other		(11,854	)		(1,811	)
Construction services		(8,126	)		(6,355	)
Sales and marketing		(8,620	)		(5,093	)
General and administrative		(12,754	)		(12,170	)
Amortization of intangible assets		(681	)		(723	)
Other		(420	)		(507	)
		(180,019	)		(107,707	)
Operating income		29,395			2,478
Interest expense, net of amounts capitalized		-			(1,800	)
Loss on extinguishment of debt		-			(2,367	)
Other income, net		253			1,032
Income before reorganization items		29,648			(657	)
Reorganization items, net		-			(631	)
Income (loss) before benefit for income taxes		29,648			(1,288	)
Benefit for income taxes		88,668			-
Net income (loss)		118,316			(1,288	)
Less: Net (income) loss attributable to noncontrolling interests		(1,592	)		40
Net income (loss) attributable to William Lyon Homes		116,724			(1,248	)
Preferred stock dividends		-			(946	)
Net income (loss) available to common stockholders	$	116,724		$	(2,194	)
Income (loss) per common share:
Basic	$	3.77		$	(0.15	)
Diluted	$	3.64		$	(0.15	)
Weighted average common shares outstanding:
Basic		30,987,546			14,316,390
Diluted		32,058,724			14,316,390

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WILLIAM LYON HOMES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except number of shares and per share data)

(unaudited)

	Successor						Predecessor
	Year Ended December 31, 2013			Period from February 25 through December 31, 2012			Period from January 1 through February 24, 2012
	(unaudited)
Operating revenue
Home sales	$	521,310		$	244,610		$	16,687
Lots, land and other sales		18,692			104,325			-
Construction services		32,533			23,825			8,883
		572,535			372,760			25,570
Operating costs
Cost of sales —homes		(405,496	)		(203,203	)		(14,598	)
Cost of sales — lots, land and other		(14,692	)		(94,786	)		-
Construction services		(25,598	)		(21,416	)		(8,223	)
Sales and marketing		(26,102	)		(13,928	)		(1,944	)
General and administrative		(40,770	)		(26,095	)		(3,302	)
Amortization of intangible assets		(1,854	)		(5,757	)		-
Other		(2,166	)		(2,909	)		(187	)
		(516,678	)		(368,094	)		(28,254	)
Operating income (loss)		55,857			4,666			(2,684	)
Interest expense, net of amounts capitalized		(2,602	)		(9,127	)		(2,507	)
Loss on extinguishment of debt		-			(1,392	)		-
Other income, net		510			1,528			230
Income (loss) before reorganization items		53,765			(4,325	)		(4,961	)
Reorganization items, net		(464	)		(2,525	)		233,458
Income (loss) before (provision) benefit for income taxes		53,301			(6,850	)		228,497
Benefit (provision) for income taxes		82,302			(11	)		-
Net income (loss)		135,603			(6,861	)		228,497
Less: Net income attributable to noncontrolling interests		(6,471	)		(1,998	)		(114	)
Net income (loss) attributable to William Lyon Homes		129,132			(8,859	)		228,383
Preferred stock dividends		(1,528	)		(2,743	)		-
Net income (loss) available to common stockholders	$	127,604		$	(11,602	)	$	228,383
Income (loss) per common share:
Basic	$	5.16		$	(0.93	)	$	228,383
Diluted	$	4.95		$	(0.93	)	$	228,383
Weighted average common shares outstanding:
Basic		24,736,841			12,489,435			1,000
Diluted		25,796,197			12,489,435			1,000

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WILLIAM LYON HOMES

CONSOLIDATED BALANCE SHEETS

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

	Successor
	December 31, 2013		December 31, 2012
	(unaudited)
ASSETS
Cash and cash equivalents	$	171,672	$	71,075
Restricted cash		854		853
Receivables		20,839		14,789
Real estate inventories
Owned		671,790		421,630
Not owned		12,960		39,029
Deferred loan costs, net		9,575		7,036
Goodwill		14,209		14,209
Intangibles, net of accumulated amortization of $7,611 and $5,757 as of December 31, 2013 and 2012, respectively		2,765		4,620
Deferred income taxes, net, including valuation allowance of $3,959 and $200,048 at December 31, 2013 and 2012, respectively		95,580		-
Other assets, net		10,167		7,906
Total assets	$	1,010,411	$	581,147
LIABILITIES AND EQUITY
Accounts payable	$	17,099	$	18,735
Accrued expenses		60,203		41,770
Liabilities from inventories not owned		12,960		39,029
Notes payable		38,060		13,248
8 1/2% Senior Notes due November 15, 2020, including premium of $6,295 and zero at December 31, 2013 and 2012, respectively		431,295		325,000
		559,617		437,782
Commitments and contingencies
Redeemable convertible preferred stock:
Redeemable convertible preferred stock, par value $0.01 per share; zero and 80,000,000 shares authorized; zero and 77,005,744 shares issued and outstanding at December 31, 2013 and 2012, respectively		-		71,246
Equity:
William Lyon Homes stockholders’ equity
Preferred stock, par value $0.01 per share; 10,000,000 and no shares issued and outstanding at December 31, 2013 and 2012, respectively		-		-
Common stock, Class A, par value $0.01 per share; 150,000,000 and 41,212,121 shares authorized; 27,622,283 and 8,499,558 shares issued, 27,216,813 and 8,499,558 shares outstanding at December 31, 2013 and 2012, respectively		276		85
Common stock, Class B, par value $0.01 per share; 30,000,000 and 6,060,606 shares authorized; 3,813,844 and 3,813,844 shares issued and outstanding at December 31, 2013 and 2012, respectively		38		38
Common stock, Class C, par value $0.01 per share; zero and 14,545,455 shares authorized; zero and 1,941,859 shares issued and outstanding at December 31, 2013 and 2012, respectively		-		20
Common stock, Class D, par value $0.01 per share; zero and 3,636,364 shares authorized; zero and 302,945 shares outstanding at December 31, 2013 and 2012, respectively		-		3
Additional paid-in capital		311,863		74,168
Retained earnings/(accumulated deficit)		116,002		(11,602	)
Total William Lyon Homes stockholders’ equity		428,179		62,712
Noncontrolling interests		22,615		9,407
Total equity		450,794		72,119
Total liabilities and equity	$	1,010,411	$	581,147

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WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION

(unaudited)

	Three Months Ended December 31,
	2013		2012
	Consolidated Total		Consolidated Total		Percentage % Change
Selected Financial Information
(dollars in thousands)
Homes closed		391		323		21%
Home sales revenue	$	182,876	$	98,633		85%
Cost of sales (excluding interest)		(126,440)		(69,520)		82%
Adjusted homebuilding gross margin (1)	$	56,436	$	29,113		94%
Adjusted homebuilding gross margin percentage (1)		30.9%		29.5%		5%
Interest in cost of sales		(11,124)		(11,528)		(4%)
Gross margin	$	45,312	$	17,585		158%
Gross margin percentage		24.8%		17.8%		39%
Number of homes closed
Southern California		160		106		51%
Northern California		28		67		(58%)
Arizona		102		81		26%
Nevada		74		56		32%
Colorado		27		13		108%
Total		391		323		21%
Average sales price of homes closed
Southern California	$	691,300	$	412,000		68%
Northern California		427,500		303,700		41%
Arizona		266,800		196,100		36%
Nevada		293,600		237,500		24%
Colorado		420,500		418,200		1%
Total	$	467,700	$	305,400		53%
Number of net new home orders
Southern California		151		43		251%
Northern California		31		23		35%
Arizona		38		91		(58%)
Nevada		49		63		(22%)
Colorado		23		9		156%
Total		292		229		28%
Average number of sales locations during period
Southern California		11		4		175%
Northern California		3		3		0%
Arizona		6		5		20%
Nevada		7		6		17%
Colorado		4		1		300%
Total		31		19		63%

(1) Adjusted homebuilding gross margin is a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. It is used by management in evaluating operating performance and in making strategic decisions regarding sales pricing, construction and development pace, product mix and other operating decisions. We believe this information is meaningful as it isolates the impact that interest has on homebuilding gross margin and allows investors to make better comparisons with our competitors.

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WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION

(unaudited)

	Year Ended December 31,
	2013		2012
	Consolidated Total		Combined Total		Percentage % Change
Selected Financial Information
(dollars in thousands)
Homes closed		1,360		950		43%
Home sales revenue	$	521,310	$	261,297		100%
Cost of sales (excluding interest)		(373,643)		(193,713)		93%
Adjusted homebuilding gross margin (1)	$	147,667	$	67,584		118%
Adjusted homebuilding gross margin percentage (1)		28.3%		25.9%		10%
Interest in cost of sales		(31,853)		(24,088)		32%
Gross margin		115,814		43,496		166%
Gross margin percentage		22.2%		16.6%		33%
Number of homes closed
Southern California		324		241		34%
Northern California		127		185		(31%)
Arizona		448		318		41%
Nevada		291		193		51%
Colorado		170		13		1208%
Total		1,360		950		43%
Average sales price
Southern California	$	662,200	$	437,000		52%
Northern California		377,400		316,000		19%
Arizona		246,400		164,500		50%
Nevada		268,500		206,200		30%
Colorado		413,400		418,200		(1%)
Total	$	383,300	$	275,100		39%
Number of net new home orders
Southern California		461		251		84%
Northern California		136		188		(28%)
Arizona		339		415		(18%)
Nevada		271		268		1%
Colorado		115		9		1178%
Total		1,322		1,131		17%
Average number of sales locations during period
Southern California		7		6		17%
Northern California		2		3		(33%)
Arizona		6		3		100%
Nevada		6		6		0%
Colorado		4		-		N/M
Total		25		18		39%

(1) Adjusted homebuilding gross margin is a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. It is used by management in evaluating operating performance and in making strategic decisions regarding sales pricing, construction and development pace, product mix and other operating decisions. We believe this information is meaningful as it isolates the impact that interest has on homebuilding gross margin and allows investors to make better comparisons with our competitors.

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WILLIAM LYON HOMES

SELECTED FINANCIAL AND OPERATING INFORMATION

(unaudited)

	As of December 31,
	2013		2012
	Consolidated Total		Consolidated Total		Percentage % Change
Backlog of homes sold but not closed at end of period
Southern California		169		32		428%
Northern California		37		28		32%
Arizona		63		172		(63%)
Nevada		72		92		(22%)
Colorado		27		82		(67%)
Total		368		406		(9%)
Dollar amount of homes sold but not closed at end of period (in thousands)
Southern California	$	115,933	$	15,640		641%
Northern California		15,241		8,948		70%
Arizona		17,676		37,287		(53%)
Nevada		37,514		20,487		83%
Colorado		13,159		33,087		(60%)
Total	$	199,523	$	115,449		73%
Lots owned and controlled at end of period
Lots owned
Southern California		1,018		1,114		(9%)
Northern California		917		259		254%
Arizona		5,376		6,082		(12%)
Nevada		2,828		2,884		(2%)
Colorado		762		254		200%
Total		10,901		10,593		3%
Lots controlled
Southern California		1,200		96		1150%
Northern California		653		674		(3%)
Arizona		210		-		N/M
Nevada		285		-		N/M
Colorado		498		479		4%
Total		2,846		1,249		128%
Total lots owned and controlled
Southern California		2,218		1,210		83%
Northern California		1,570		933		68%
Arizona		5,586		6,082		(8%)
Nevada		3,113		2,884		8%
Colorado		1,260		733		72%
Total		13,747		11,842		16%

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WILLIAM LYON HOMES

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited)

	Successor											Predecessor
	Three Months Ended December 31, 2013		Three Months Ended December 31, 2012			Year Ended December 31, 2013			Period from February 25 through December 31, 2012			Period from January 1 through February 24, 2012
Net income (loss) attributable to William Lyon Homes	$	116,724	$	(1,248	)	$	129,132		$	(8,859	)	$	228,383
Net cash (used in) provided by operating activities						$	(174,533	)	$	49,993		$	(17,321	)
Interest incurred	$	9,365	$	8,191		$	31,875		$	30,526		$	7,145
Adjusted EBITDA (1)	$	42,378	$	19,137		$	88,878		$	39,781		$	(8,435	)
Adjusted EBITDA Margin		20.2%		17.4%			15.5%			10.7%			(33.0%	)
Ratio of adjusted EBITDA to interest incurred		4.53		2.34			2.79			1.30			(1.18	)

Balance Sheet Data

	Successor
	December 31, 2013		December 31, 2012
Cash, cash equivalents and restricted cash	$	172,526	$	71,928
Redeemable convertible preferred stock		-		71,246
Total William Lyon Homes stockholders’ equity		428,179		62,712
Noncontrolling interest		22,615		9,407
Total debt		469,355		338,248
Total book capitalization	$	920,149	$	481,613
Ratio of debt to total book capitalization		51.0%		70.2%
Ratio of debt to total book capitalization (net of cash)		39.7%		65.0%

(1) Adjusted EBITDA means net income (loss) attributable to William Lyon Homes plus (i) provision for income taxes, (ii) interest expense, (iii) amortization of capitalized interest included in cost of sales, (iv) stock based compensation, (v) loss on sale of fixed assets, (vi) gain on retirement of debt, (vii) non-cash reorganization items and (viii) depreciation and amortization. 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 (“U.S. GAAP”). Adjusted EBITDA is presented herein because 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 indicator of a company’s operating performance. Adjusted EBITDA should not be considered as an alternative for net (loss) 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 attributable to William Lyon Homes to adjusted EBITDA is provided as follows:

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William Lyon Homes

Page 13

	Successor													Predecessor
	Three Months Ended December 31, 2013			Three Months Ended December 31, 2012				Year Ended December 31, 2013			Period from February 25 through December 31, 2012			Period from January 1 through February 24, 2012
Net income (loss) attributable to William Lyon Homes	$	116,724		$	(1,248	)		$	129,132		$	(8,859	)	$	228,383
Benefit from income taxes		(88,668	)		-				(82,302	)		-			-
Interest expense
Interest incurred		9,365			8,191				31,875			30,526			7,145
Interest capitalized		(9,365	)		(6,391	)			(29,273	)		(21,399	)		(4,638	)
Amortization of capitalized interest included in cost of sales		11,124			11,528		��		31,853			27,791			1,360
Stock based compensation		1,587			3,699				3,794			3,699			-
Loss on sale of fixed asset		-			-				4			-			-
Loss on extinguishment of debt		-			2,367				-			1,392			-
Non-cash reorganization items		-			-				-			-			(241,271	)
Depreciation and amortization		1,611			991				3,795			6,631			586
Adjusted EBITDA	$	42,378		$	19,137			$	88,878		$	39,781		$	(8,435	)