EXHIBIT 99.1
Investor and Media Contact: Ernest Scheidemann
(239) 498-8318
ernestscheidemann@wcicommunities.com
FOR IMMEDIATE RELEASE
WCI Reports First Quarter 2008 Results
First Quarter Financial Highlights:
| • | | Net loss: $84.1 million |
| • | | Basic and diluted EPS: loss of $2.00 |
| • | | Revenues: $137.1 million – down 59.5% |
| • | | Gross new orders: 335 (up 6%); Net new orders: 183 (down 22.8%) |
| • | | Backlog at March 31, 2008: $202.8 million |
| • | | Net cash provided by operating activities: $67.4 million |
Bonita Springs, FL (May 7, 2008) – WCI Communities, Inc. (NYSE: WCI), a leading builder of traditional and tower residences in highly amenitized lifestyle communities, today reported its results for the first quarter of 2008. For the three months ended March 31, 2008, WCI reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007, while diluted earnings per share (EPS) declined to a loss of $2.00 versus a loss of $0.38 in the same period a year ago. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million.
“We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic”, said Jerry Starkey, President and CEO. “In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium
1
for “to-be-built” homes”, Starkey continued. “Beyond the seasonal lift in Florida, there are no signs that demand has firmed - many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt.”
Traditional Homebuilding
First quarter 2008 revenues for Traditional Homebuilding, including lot sales, fell 56.7% to $92.7 million from $214.2 million for the first quarter of 2007. The company closed 170 homes compared with 306 for the same period a year ago. Florida revenues totaled $73.9 million, or 79.7%, of total Traditional Homebuilding revenues during the first quarter of 2008 versus $137.3 million, or 64.1%, for the first quarter of 2007. Revenues from WCI’s Northeast Division accounted for 13.0% of Traditional Homebuilding revenues during the first quarter of 2008 versus 27.7% during the same period a year ago and the company’s Mid-Atlantic Division accounted for 7.7% and 8.2% for the first quarters of 2008 and 2007, respectively.
Gross margin as a percentage of revenue for Traditional Homebuilding decreased to 0.4% for the first quarter of 2008 from 16.6% a year ago. The year-over-year decrease was due to lower margins achieved on the sale of finished spec inventory and also due to $6.9 million of impairment charges during the first quarter of 2008, which were primarily related to backlog orders that cancelled and as a result were marked down to the values of comparable units as they were returned to inventory. Excluding the impact of the impairment charge, the gross margin was 7.8%. Spec home closings accounted for 82% of the closings during the quarter and produced an average gross margin percentage of revenue of 4.7%.
For the first quarter of 2008, the number of gross and net orders declined 22.7% and 41.4%, respectively. The value of Traditional Homebuilding gross orders declined 44.6% to $117.7 million while the value of net orders dropped 60.7% to $62.5 million. Cancellations during the quarter totaled 92 units, up from 60 units during the same period a year ago. The average price for Traditional Homebuilding gross orders for the first quarter of 2008 fell 28.3% to $501,000 compared with $699,000 for the first quarter of 2007, due to mix changes, lower prices, and a higher percentage of discounts during the quarter — approximately 20% compared to approximately 12% on orders in the same period a year ago. The company’s total Traditional Homebuilding spec inventory at the end of the quarter, completed and in-process and including models, was 460 versus 610 at the end of the fourth quarter of 2007.
2
Traditional Homebuilding backlog at March 31, 2008 was $165.9 million, down 73.7% from $631.3 million at the end of the first quarter of 2007. The average projected gross margin in backlog at the end of the quarter was approximately 14.0%.
Tower Homebuilding
For the three months ended March 31, 2008, revenues in Tower Homebuilding decreased 95.6% to $3.3 million from $74.0 million for the same period a year ago. A total of 56 Tower units were closed during the quarter from our inventory of completed and unsold units representing $50.5 million of revenue. In addition, $4.4 million of revenue resulted from backlog units still under construction using the percentage of completion method, and $3.8 million resulted from retained deposits from defaults. Lastly, 52 units previously accounted for under the percentage of completion method defaulted during the period resulting in revenue reversals of $55.4 million which offset the revenue amounts discussed above. Only one tower was under construction and recognizing revenue during the first quarter of 2008 compared to 11 towers under construction and recognizing revenue during the first quarter of 2007.
Tower Homebuilding gross margin as a percentage of revenue was negative for the quarter due to the impact of defaulted units, default reserve increases and other cost adjustments, compared to 1.1% for the three months ended March 31, 2007. Gross margin from spec closings during the quarter totaled $9.1 million, or 19.0%, which was offset by the impact of a reversal of $14.0 million of gross margin from defaulting units. During each quarter, the company reviews the revenue and cost estimates for each tower under construction and makes adjustments to reflect actual increases or decreases in current and expected future revenues and costs. For the first quarter of 2008, $10.9 million of net unfavorable adjustments to estimates were made related to completed towers and towers under construction, which were recorded as additional costs of sales for the quarter. These adjustments consisted of a $2.3 million increase in the tower default reserve to absorb the effect of current period defaults in excess of those previously reserved for, and to account for higher expected defaults at One Bal Harbour – Hotel and at The Watermark, and $8.6 million of other cost adjustments, about $6.3 million of which related to The Watermark tower project and the balance to other projects.
Tower Homebuilding gross and net orders for the first quarter of 2008 totaled 100 and 40 respectively, versus 12 and negative seven in the first quarter of 2007. Tower Homebuilding backlog at March 31, 2008 totaled $36.9 million, a 76.9% decrease from the $159.4 million backlog at March 31, 2007.
3
Real Estate Services
Revenues for the Real Estate Services Division for the first quarter of 2008 were $17.3 million, a 32.3% decrease from the $25.6 million recorded for the same period a year ago. The decline was primarily due to the continued slow market for new and resale homes during the quarter. Transactions for Prudential Florida WCI Realty declined 15.8% over the same period a year ago. Gross margin as a percentage of revenue for the period was 1.3% compared with 8.2% in the first quarter of 2007.
Other Income and Expense
Revenues for the Amenities Division for the first quarter 2008 were $22.6 million, which was equal to revenue for the same period a year ago. Gross margin as a percent of revenue increased to 12.4% for the first quarter of 2008 versus 5.3% in the first quarter of 2007.
Other income and expense in the first quarter included a $9.5 million non-cash mark-to-market charge on the interest rate swap agreement that the company entered into in December 2005 to hedge against interest rate fluctuations on its senior variable rate bank debt.
Selling, general, and administrative expenses including real estate taxes (SG&A) declined $7.4 million to $39.5 million for the first quarter, versus $46.9 million a year ago, due to cost reductions in salaries and benefits, as well as reductions in sales and marketing expenses. As a percentage of revenue, SG&A increased to 28.8%, up from 13.9% in the first quarter of the previous year largely due to lower revenues including the impact of revenue reversals from the 52 tower unit defaults discussed above, which lowered overall revenue by $55.4 million.
Interest incurred was $35.9 million for the first quarter of 2008 compared to $35.4 million in the first quarter of 2007, which was an increase of 1.4%. Although average loan balances were lower in the first quarter of 2008 and would have resulted in lower interest incurred, higher interest rates on variable rate bank debt more than offset the improvement from lower loan balances. Net interest expense of $30.5 million for the quarter was $14.1 million or 86.4% higher than the first quarter of 2007 primarily due to less interest capitalized as fewer projects are under development.
4
Income tax expense was $0.2 million for the first quarter of 2008 compared to a benefit of $10.5 million for the same period last year. The income tax benefit generated through the company’s operating loss in the first quarter of 2008 would have been approximately $26.0 million; however, pursuant to FAS 109, the company was required to fully reserve against this benefit as all recognizable tax benefit under current tax law was recorded at December 31, 2007.
Cash Flow/Financial Position/Balance Sheet
For the three months ended March 31, 2008, net cash generated from operating and investing activities totaled $66.4 million compared with $94.6 million in the same period a year ago.
The company amended its senior secured tower construction facility (the “Tower Loan”) on March 17, 2008. The amendments provide for consistencies with the governing provisions of, as well as cross collateralization on a subordinate basis with the Term Loan and Revolving Credit Facility. In addition, the amendment also restricts the company from requesting future advances from the Tower Loan, which is consistent with the Company’s de-leveraging strategy and the upcoming maturity of the facility in December 2008.
The ratio of net debt to net capitalization increased to 83.3% compared with 65.5% at March 31, 2007 and increased from 80.5% at December 31, 2007. As of March 31, 2008, excluding $53.4 million in letters of credit, we had approximately $192.4 million available commitments under our senior secured credit facility which was further limited by borrowing base availability which was an estimated $115.0 million at March 31, 2008, plus $48.5 million of cash and cash equivalents. Due to our strategy of selling unsold completed inventory, the impact of impairments to our inventory, and the impact of significant reductions in inventory additions, our borrowing capacity may be limited by the availability determined through our borrowing base as calculated under the loan agreement, which is currently less than the available loan commitments. In addition, our lenders are currently obtaining appraisals on our properties in the borrowing base, and should the appraisals reflect values less than expected, our borrowing base capacity would be further limited, potentially resulting in the loss of additional borrowing capacity and / or mandatory prepayment obligations.
5
Other Items
During the first quarter we commenced closings at The Watermark in North Bergen, NJ which is comprised of 206 condominium homes. Thirty three units have closed and the remaining backlog is comprised of 126 units. During the quarter, we entered into an agreement with the State of New Jersey Department of Community Affairs that requires us to offer rescission rights to 16 individual purchasers if certain conditions are not met, and additionally to other contract purchasers if the company is not ready, willing and able to close title to the condominium residences by May 26, 2008, through no fault of the contract purchaser. Of the 16 individual purchasers, one purchaser has expressed intent to close and deposits in the aggregate amount of approximately $2.9 million have been or will be refunded to the remaining fifteen purchasers. These units are not included in the 126 unit backlog. As of May 6, 2008, the company does not have certificates of occupancy for 43 of the 126 units in backlog. In the event that some or all of the certificates of occupancy are not received before May 26, 2008 in order to schedule the units for closings, then the company may be required to offer rescission and a refund of deposits to some or all of these purchasers. Although no assurances can be made, the Company believes that it will obtain certificates of occupancy for a portion or all of these 43 units in advance of May 26, 2008. The aggregate contracted values are approximately $48.7 million and the aggregate deposits are approximately $9.7 million associated with these 43 units.
Conference Call
WCI will conduct a conference call today at 1:00 PM ET in conjunction with this release. The call will be broadcast live athttp://www.wcicommunities.com in the Investor Relations area or can be accessed by telephone at (877) 454-8253 and asking for the WCI Communities conference call, reference code 46005393. A replay will be available after the call for at least the next 3 months on the company’s website and for 36 hours by dialing (800) 642-1687 and entering conference code 46005393. A slide presentation will accompany the call and can be accessed on the company’s website in the Investor Relations section.
About WCI
WCI Communities, Inc., named America’s Best Builder in 2004 by the National Association of Home Builders and Builder Magazine, has been creating amenity-rich, master-planned lifestyle communities since 1946. Florida-based WCI caters to primary, retirement, and second-home buyers in Florida, New York, New Jersey, Connecticut, Maryland and Virginia. The Company offers traditional and tower home choices with prices from the high-$100,000s to more than $10 million and features a wide array of recreational amenities in its communities. In addition to homebuilding, WCI generates revenues from its Prudential Florida WCI Realty Division, and title businesses, and its recreational amenities, as well as through land sales and joint ventures. The Company currently owns and controls developable land on which the Company plans to build over 15,000 traditional and tower homes.
6
###
For more information about WCI and its residential communities visit
www.wcicommunities.com
Click here to join our email list:http://www.b2i.us/irpass.asp?BzID=631&to=ea&s=0
Forward-Looking Statement
Certain information included herein and in other company reports, Securities and Exchange Commission filings, statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about the company’s anticipated operating results, financial resources, ability to acquire land, ability to sell homes and properties, ability to deliver homes from backlog, and ability to secure materials and subcontractors. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other company reports, filings, statements and presentations. These risks and uncertainties include WCI’s ability to compete as a going concern in real estate markets where we conduct business; WCI’s ability to pay principal and interest on its current and future debts; WCI’s ability to amend its bank agreements and obtain waivers as needed from time to time to obtain covenant relief and to avoid bank defaults during the market downturn; WCI’s ability to maintain or increase historical revenues and profit margins; WCI’s ability to collect contract receivables from buyers purchasing homes as investments; the availability and cost of land in desirable areas in its geographic markets and our ability to expand successfully into those areas; WCI’s ability to obtain necessary permits and approvals for the development of its lands; the availability of capital to WCI and our ability to effect growth strategies successfully; availability of labor and materials and material increases in insurance, labor and material costs; increases in interest rates and availability of mortgage financing; the ability of prospective residential buyers to obtain mortgage financing due to tightening credit markets, appraisal problems or other factors; increases in construction and homeowner insurance and availability of insurance, the continuing negative buyer sentiment and erosion of consumer confidence; the negative impact of claims for contract rescission or increasing cancellation rates by contract purchasers; the negative impact if certain Watermark purchasers elect to rescind their contracts to the extent they are entitled to any rescission rights; adverse legislation or regulations; adverse legal proceedings; the ability to retain employees; changes in generally accepted accounting principles; natural disasters; adverse weather conditions; and changes in general economic, real estate and business conditions and other factors over which the company has little or no control. If one or more of the assumptions underlying our forward-looking statements proves incorrect, then the company’s actual results, performance or achievements could differ materially from those expressed in, or implied by the forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on our forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.
7
WCI Communities, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
| | | | | | | | |
| | | March 31,
2008 | | | December 31,
2007 | |
Assets | | | | | | | | |
| | |
Cash and cash equivalents | | $ | 48,518 | | | $ | 188,821 | |
Contracts receivable | | | 203,053 | | | | 358,327 | |
Real estate inventories | | | 1,839,469 | | | | 1,848,309 | |
Property and equipment | | | 232,027 | | | | 236,429 | |
Other assets | | | 257,602 | | | | 259,345 | |
| | | | | | | | |
Total assets | | $ | 2,580,669 | | | $ | 2,891,231 | |
| | | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | |
| | |
Accounts payable, accruals and other liabilities | | $ | 519,874 | | | $ | 547,597 | |
| | | | | | | | |
Debt obligations: | | | | | | | | |
Senior revolving credit facility | | | 457,650 | | | | 545,975 | |
Senior term note | | | 243,750 | | | | 262,500 | |
Mortgages and notes payable | | | 207,790 | | | | 300,125 | |
Senior subordinated notes | | | 525,000 | | | | 525,000 | |
Junior subordinated notes | | | 165,000 | | | | 165,000 | |
Contingent convertible senior subordinated notes | | | 125,000 | | | | 125,000 | |
| | | | | | | | |
Total debt obligations | | | 1,724,190 | | | | 1,923,600 | |
| | | | | | | | |
Total shareholders’ equity | | | 336,605 | | | | 420,034 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 2,580,669 | | | $ | 2,891,231 | |
| | | | | | | | |
Other Balance Sheet Data | | | | | | | | |
Debt | | $ | 1,724,190 | | | $ | 1,923,600 | |
Shareholders’ equity | | | 336,605 | | | | 420,034 | |
| | | | | | | | |
Capitalization | | $ | 2,060,795 | | | $ | 2,343,634 | |
| | | | | | | | |
Ratio of debt to capitalization | | | 83.7 | % | | | 82.1 | % |
| | |
Debt, net of cash and cash equivalents | | $ | 1,675,672 | | | $ | 1,734,779 | |
Shareholders’ equity | | | 336,605 | | | | 420,034 | |
| | | | | | | | |
Capitalization, net of cash and cash equivalents | | $ | 2,012,277 | | | $ | 2,154,813 | |
| | | | | | | | |
Ratio of net debt to net capitalization | | | 83.3 | % | | | 80.5 | % |
| | |
Shareholders’ equity per share | | $ | 7.98 | | | $ | 9.97 | |
8
WCI Communities, Inc.
Selected Revenues and Earnings Information
(Dollars in thousands, except per share data)
| | | | | | | | |
| | | For the three months ended
March 31, | |
| | | 2008 | | | 2007 | |
REVENUES | | | | | | | | |
Homebuilding: | | | | | | | | |
Homes | | $ | 91,098 | | | $ | 214,073 | |
Lots | | | 1,621 | | | | 136 | |
| | | | | | | | |
Total traditional | | | 92,719 | | | | 214,209 | |
Towers | | | 3,262 | | | | 73,985 | |
| | | | | | | | |
Total homebuilding | | | 95,981 | | | | 288,194 | |
| | |
Real estate services | | | 17,341 | | | | 25,621 | |
Amenity membership and operations | | | 22,563 | | | | 22,585 | |
Land sales | | | — | | | | — | |
Other | | | 1,166 | | | | 1,767 | |
| | | | | | | | |
Total revenues | | | 137,051 | | | | 338,167 | |
| | | | | | | | |
GROSS MARGIN | | | | | | | | |
Homebuilding: | | | | | | | | |
Homes | | | (332 | ) | | | 35,536 | |
Lots | | | 736 | | | | (12 | ) |
| | | | | | | | |
Total traditional | | | 404 | | | | 35,524 | |
Towers | | | (4,695 | ) | | | 836 | |
| | | | | | | | |
Total homebuilding | | | (4,291 | ) | | | 36,360 | |
| | |
Real estate services | | | 228 | | | | 2,102 | |
Amenity membership and operations | | | 2,790 | | | | 1,189 | |
Land sales | | | (101 | ) | | | (69 | ) |
Other | | | 266 | | | | 72 | |
| | | | | | | | |
Total gross margin | | | (1,108 | ) | | | 39,654 | |
| | | | | | | | |
OTHER INCOME AND EXPENSES | | | | | | | | |
Equity in losses (earnings) from joint ventures | | | 54 | | | | (786 | ) |
Other income | | | (2,005 | ) | | | (488 | ) |
Market valuation on interest rate swap | | | 9,505 | | | | — | |
Hurricane recoveries | | | — | | | | (1,513 | ) |
Selling, general and administrative, including real estate taxes, net | | | 39,504 | | | | 46,904 | |
Depreciation and amortization | | | 4,955 | | | | 5,655 | |
Interest expense, net | | | 30,495 | | | | 16,364 | |
| | | | | | | | |
Loss from continuing operations before minority interests and income taxes | | | (83,616 | ) | | | (26,482 | ) |
Minority interests | | | (245 | ) | | | (593 | ) |
Income tax expense (benefit) | | | 238 | | | | (10,471 | ) |
| | | | | | | | |
Loss from continuing operations | | | (84,099 | ) | | | (16,604 | ) |
Income from discontinued operations, net of tax | | | — | | | | 793 | |
| | | | | | | | |
Net loss | | $ | (84,099 | ) | | $ | (15,811 | ) |
| | | | | | | | |
(LOSS) EARNINGS PER SHARE: | | | | | | | | |
Basic: | | | | | | | | |
From continuing operations | | $ | (2.00 | ) | | $ | (0.40 | ) |
From discontinued operations | | | — | | | | 0.02 | |
| | | | | | | | |
| | $ | (2.00 | ) | | $ | (0.38 | ) |
| | | | | | | | |
Diluted: | | | | | | | | |
From continuing operations | | $ | (2.00 | ) | | $ | (0.40 | ) |
From discontinued operations | | | — | | | | 0.02 | |
| | | | | | | | |
| | $ | (2.00 | ) | | $ | (0.38 | ) |
| | | | | | | | |
WEIGHTED AVERAGE NUMBER OF SHARES | | | | | | | | |
Basic | | | 42,148 | | | | 41,920 | |
Diluted | | | 42,148 | | | | 41,920 | |
OPERATING DATA | | | | | | | | |
Interest incurred | | $ | 35,891 | | | $ | 35,389 | |
Interest included in cost of sales | | $ | 5,829 | | | $ | 13,775 | |
9
WCI Communities, Inc.
Homebuilding Operational Data
(Dollars in thousands)
| | | | | | | | |
| | | For the three months ended
March 31, | |
| | | 2008 | | | 2007 | |
Combined Traditional and Tower Homebuilding | | | | | | | | |
Homes Closed (Units)* | | | 309 | | | | 560 | |
| | |
Gross New Orders (Units) | | | 335 | | | | 316 | |
Gross Contract Values of New Orders | | $ | 204,782 | | | $ | 233,989 | |
| | |
Net New Orders (Units) | | | 183 | | | | 237 | |
Net Contract Values of New Orders | | $ | 78,318 | | | $ | 156,102 | |
| | |
Average Selling Price Per New Order, Gross | | $ | 611 | | | $ | 740 | |
| | |
Traditional Homebuilding | | | | | | | | |
Homes Closed (Units) | | | | | | | | |
Florida | | | 140 | | | | 183 | |
Northeast U.S. | | | 25 | | | | 110 | |
Mid-Atlantic U.S. | | | 5 | | | | 13 | |
| | | | | | | | |
Total | | | 170 | | | | 306 | |
| | | | | | | | |
Revenues, excluding lot revenues | | | | | | | | |
Florida | | $ | 72,243 | | | $ | 137,214 | |
Northeast U.S. | | | 11,862 | | | | 59,269 | |
Mid-Atlantic U.S. | | | 6,993 | | | | 17,590 | |
| | | | | | | | |
Total | | $ | 91,098 | | | $ | 214,073 | |
| | | | | | | | |
Average Selling Price Per Home Closed | | | | | | | | |
Florida | | $ | 516 | | | $ | 750 | |
Northeast U.S. | | | 474 | | | | 539 | |
Mid-Atlantic U.S. | | | 1,399 | | | | 1,353 | |
| | | | | | | | |
Total | | $ | 536 | | | $ | 700 | |
| | | | | | | | |
Gross New Orders (Units) | | | | | | | | |
Florida | | | 203 | | | | 215 | |
Northeast U.S. | | | 25 | | | | 60 | |
Mid-Atlantic U.S. | | | 7 | | | | 29 | |
| | | | | | | | |
Total | | | 235 | | | | 304 | |
| | | | | | | | |
Cancellations (Units) | | | | | | | | |
Florida | | | (71 | ) | | | (48 | ) |
Northeast U.S. | | | (20 | ) | | | (9 | ) |
Mid-Atlantic U.S. | | | (1 | ) | | | (3 | ) |
| | | | | | | | |
Total | | | (92 | ) | | | (60 | ) |
| | | | | | | | |
Net New Orders (Units) | | | | | | | | |
Florida | | | 132 | | | | 167 | |
Northeast U.S. | | | 5 | | | | 51 | |
Mid-Atlantic U.S. | | | 6 | | | | 26 | |
| | | | | | | | |
Total | | | 143 | | | | 244 | |
| | | | | | | | |
Gross Contract Values of New Orders | | | | | | | | |
Florida | | $ | 95,096 | | | $ | 143,068 | |
Northeast U.S. | | | 13,417 | | | | 35,792 | |
Mid-Atlantic U.S. | | | 9,204 | | | | 33,506 | |
| | | | | | | | |
Total | | $ | 117,717 | | | $ | 212,366 | |
| | | | | | | | |
Contract Values of Cancellations | | | | | | | | |
Florida | | $ | (43,650 | ) | | $ | (43,865 | ) |
Northeast U.S. | | | (10,742 | ) | | | (5,046 | ) |
Mid-Atlantic U.S. | | | (830 | ) | | | (4,523 | ) |
| | | | | | | | |
Total | | $ | (55,222 | ) | | $ | (53,434 | ) |
| | | | | | | | |
Net Contract Values of New Orders | | | | | | | | |
Florida | | $ | 51,446 | | | $ | 99,203 | |
Northeast U.S. | | | 2,675 | | | | 30,746 | |
Mid-Atlantic U.S. | | | 8,374 | | | | 28,983 | |
| | | | | | | | |
Total | | $ | 62,495 | | | $ | 158,932 | |
| | | | | | | | |
Gross Average Selling Price Per New Order | | | | | | | | |
Florida | | $ | 468 | | | $ | 665 | |
Northeast U.S. | | | 537 | | | | 597 | |
Mid-Atlantic U.S. | | | 1,315 | | | | 1,155 | |
| | | | | | | | |
Total | | $ | 501 | | | $ | 699 | |
| | | | | | | | |
10
| | | | | | | | |
| Tower Homebuilding | | | | | | | | |
Homes Closed (Units) | | | | | | | | |
Florida | | | 130 | | | | 254 | |
Northeast U.S | | | 9 | | | | — | |
| | | | | | | | |
Total | | | 139 | | | | 254 | |
| | | | | | | | |
Revenues | | | | | | | | |
Florida | | $ | 950 | | | $ | 55,434 | |
Northeast U.S. | | | 2,312 | | | | 18,551 | |
| | | | | | | | |
Total | | $ | 3,262 | | | $ | 73,985 | |
| | | | | | | | |
Gross New Orders (Units) | | | | | | | | |
Florida | | | 97 | | | | 11 | |
Northeast U.S. | | | 3 | | | | 1 | |
| | | | | | | | |
Total | | | 100 | | | | 12 | |
| | | | | | | | |
Cancellations/Defaults (Units) | | | | | | | | |
Florida | | | (56 | ) | | | (17 | ) |
Northeast U.S. | | | (4 | ) | | | (2 | ) |
| | | | �� | | | | |
Total | | | (60 | ) | | | (19 | ) |
| | | | | | | | |
Net New Orders (Units) | | | | | | | | |
Florida | | | 41 | | | | (6 | ) |
Northeast U.S. | | | (1 | ) | | | (1 | ) |
| | | | | | | | |
Total | | | 40 | | | | (7 | ) |
| | | | | | | | |
Gross Contract Values of New Orders | | | | | | | | |
Florida | | $ | 83,556 | | | $ | 20,510 | |
Northeast U.S. | | | 3,509 | | | | 1,113 | |
| | | | | | | | |
Total | | $ | 87,065 | | | $ | 21,623 | |
| | | | | | | | |
Contract Values of Cancellations/Defaults | | | | | | | | |
Florida | | $ | (67,767 | ) | | $ | (22,846 | ) |
Northeast U.S. | | | (3,475 | ) | | | (1,607 | ) |
| | | | | | | | |
Total | | $ | (71,242 | ) | | $ | (24,453 | ) |
| | | | | | | | |
Net Contract Values of New Orders | | | | | | | | |
Florida | | $ | 15,789 | | | $ | (2,336 | ) |
Northeast U.S. | | | 34 | | | | (494 | ) |
| | | | | | | | |
Total | | $ | 15,823 | | | $ | (2,830 | ) |
| | | | | | | | |
Gross Average Selling Price Per New Order | | | | | | | | |
Florida | | $ | 861 | | | $ | 1,865 | |
Northeast U.S. | | | 1,170 | | | | 1,113 | |
| | | | | | | | |
Total | | $ | 871 | | | $ | 1,802 | |
| | | | | | | | |
Towers under construction recognizing revenue during the quarter | | | 1 | | | | 11 | |
| |
| | | March 31, | |
| | | 2008 | | | 2007 | |
Combined Traditional and Tower Homebuilding | | | | | | | | |
Aggregate Backlog Contract Values, Traditional and Tower Homebuilding | | $ | 202,762 | | | $ | 790,685 | |
| | |
Traditional Homebuilding | | | | | | | | |
Backlog (Units) | | | 290 | | | | 808 | |
| | |
Backlog Contract Values | | $ | 165,871 | | | $ | 631,265 | |
| | |
Tower Homebuilding | | | | | | | | |
Cumulative Units in Backlog | | | 353 | | | | 1,036 | |
| | |
Cumulative Contract Values | | $ | 375,290 | | | $ | 1,255,648 | |
| | |
Less: Cumulative Revenues Recognized | | | (338,399 | ) | | | (1,096,228 | ) |
| | | | | | | | |
Backlog Contract Values | | $ | 36,891 | | | $ | 159,420 | |
| | | | | | | | |
| * | The Company uses the percentage of completion method to recognize revenue on sold tower units. Accordingly, the closing of tower homes corresponds with the collection of contracts receivable. |
11
WCI Communities, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
| | | | | | | | |
| | | For the three months ended
March 31, | |
| | | 2008 | | | 2007 | |
Cash flows from operating activities: | | | | | | | | |
Net loss | | $ | (84,099 | ) | | $ | (15,811 | ) |
Asset impairment losses and land acquisition termination costs | | | 6,769 | | | | 1,059 | |
Decrease (Increase) in real estate inventories | | | 1,400 | | | | (2,647 | ) |
Decrease in contracts receivable | | | 155,274 | | | | 199,001 | |
Decrease in customer deposits | | | (34,159 | ) | | | (56,084 | ) |
(Increase) Decrease in restricted cash | | | (1,861 | ) | | | 15,930 | |
Decrease in accounts payable and other liabilities | | | (1,740 | ) | | | (40,379 | ) |
All other | | | 25,846 | | | | 1,349 | |
| | | | | | | | |
Net cash provided by operating activities | | | 67,430 | | | | 102,418 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Additions to property and equipment, net | | | (1,024 | ) | | | (7,749 | ) |
Other | | | (50 | ) | | | (37 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (1,074 | ) | | | (7,786 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Net repayments under debt obligations | | | (199,424 | ) | | | (96,880 | ) |
All other | | | (7,235 | ) | | | (3,651 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (206,659 | ) | | | (100,531 | ) |
| | | | | | | | |
Net decrease in cash and cash equivalents | | $ | (140,303 | ) | | $ | (5,899 | ) |
| | | | | | | | |
12
WCI Communities, Inc.
Reconciliation of Gross Margin
(Dollars in thousands)
| | | | | | | | |
| | | For the three months ended
March 31, | |
| | | 2008 | | | 2007 | |
| Traditional Homebuilding | | | | | | | | |
| | |
Revenue | | $ | 92,719 | | | $ | 214,209 | |
| | | | | | | | |
Gross margin | | | 404 | | | | 35,524 | |
Add back impairment & other write-offs | | | 6,866 | | | | 557 | |
| | | | | | | | |
Gross margin excluding impairment | | $ | 7,270 | | | $ | 36,081 | |
| | | | | | | | |
Gross margin % as reported | | | 0.4 | % | | | 16.6 | % |
Gross margin % excluding impairment & other write-offs | | | 7.8 | % | | | 16.8 | % |
13
Summary of Land Controlled
March 31, 2008
| | | | | | | | | | | | | | | | | |
Region | | Remaining
Planned
Units | | Units in
Backlog as
of 3/31/08 | | Value in
Backlog as
of 3/31/08 | | | Spec
Units
in WIP | | Finished
Spec and
Model
Units | | Total
Units
Remaining | | %
Owned | |
| Traditional Homebuilding (Including Lots) | | | | | | | | | | | | | | | | | |
Florida | | | | | | | | | | | | | | | | | |
Miami / Ft. Lauderdale | | 1,009 | | 52 | | $ | 36.5 | | | 7 | | 157 | | 793 | | 100 | % |
Naples / Ft. Myers | | 4,542 | | 80 | | | 37.4 | | | 39 | | 41 | | 4,382 | | 100 | % |
Palm Beach / Indian River | | 162 | | 3 | | | 5.7 | | | 2 | | 11 | | 146 | | 100 | % |
Palm Coast / Jacksonville | | 22 | | 4 | | | 2.1 | | | 2 | | 16 | | — | | 100 | % |
Perdido Key | | 83 | | — | | | — | | | — | | 12 | | 71 | | 100 | % |
Tampa / Sarasota | | 2,718 | | 57 | | | 30.6 | | | 2 | | 112 | | 2,547 | | 71 | % |
Mid-Atlantic | | 360 | | 9 | | | 12.2 | | | 1 | | 22 | | 328 | | 86 | % |
Northeast | | 1,481 | | 88 | | | 44.3 | | | 5 | | 31 | | 1,357 | | 100 | % |
| | | | | | | | | | | | | | | | | |
| Traditional Homebuilding Total | | 10,377 | | 293 | | | 168.7 | | | 58 | | 402 | | 9,624 | | 92 | % |
| | | | | | | |
| Tower Homebuilding | | | | | | | | | | | | | | | | | |
Florida | | | | | | | | | | | | | | | | | |
Miami / Ft. Lauderdale | | 778 | | 152 | | | 12.0 | | | 77 | | 52 | | 497 | | 100 | % |
Naples / Ft. Myers | | 839 | | 24 | | | 14.5 | | | — | | 118 | | 697 | | 100 | % |
Palm Beach / Indian River | | 187 | | 1 | | | (0.0 | ) | | — | | 40 | | 146 | | 100 | % |
Palm Coast / Jacksonville | | 281 | | 2 | | | — | | | — | | 21 | | 258 | | 100 | % |
Perdido Key | | 1,499 | | 4 | | | 1.6 | | | — | | 79 | | 1,416 | | 100 | % |
Tampa / Sarasota | | 663 | | 3 | | | 2.2 | | | — | | 31 | | 629 | | 100 | % |
Mid-Atlantic | | 284 | | — | | | — | | | — | | — | | 284 | | 100 | % |
Northeast | | 471 | | 167 | | | 6.6 | | | 30 | | — | | 274 | | 42 | % |
| | | | | | | | | | | | | | | | | |
| Tower Homebuilding Total | | 5,002 | | 353 | | | 36.9 | | | 107 | | 341 | | 4,201 | | 95 | % |
| | | | | | | |
| Total Homebuilding | | | | | | | | | | | | | | | | | |
Florida | | | | | | | | | | | | | | | | | |
Miami / Ft. Lauderdale | | 1,787 | | 204 | | | 48.5 | | | 84 | | 209 | | 1,290 | | 100 | % |
Naples / Ft. Myers | | 5,381 | | 104 | | | 51.9 | | | 39 | | 159 | | 5,079 | | 100 | % |
Palm Beach / Indian River | | 349 | | 4 | | | 5.7 | | | 2 | | 51 | | 292 | | 100 | % |
Palm Coast / Jacksonville | | 303 | | 6 | | | 2.1 | | | 2 | | 37 | | 258 | | 100 | % |
Perdido Key | | 1,582 | | 4 | | | 1.6 | | | — | | 91 | | 1,487 | | 100 | % |
Tampa / Sarasota | | 3,381 | | 60 | | | 32.8 | | | 2 | | 143 | | 3,176 | | 76 | % |
Mid-Atlantic | | 644 | | 9 | | | 12.2 | | | 1 | | 22 | | 612 | | 92 | % |
Northeast | | 1,952 | | 255 | | | 50.9 | | | 35 | | 31 | | 1,631 | | 86 | % |
| | | | | | | | | | | | | | | | | |
| Total Homebuilding Total | | 15,379 | | 646 | | | 205.6 | | | 165 | | 743 | | 13,825 | | 93 | % |
| | | | | | | | | | | | | | | | | |
Remaining Planned Units
March 31, 2008
| | | | | | |
| | | Owned | | Optioned | | Total
Controlled |
Traditional Homebuilding | | 9,529 | | 848 | | 10,377 |
Tower Homebuilding | | 4,728 | | 274 | | 5,002 |
| | | | | | |
Total Homebuilding | | 14,257 | | 1,122 | | 15,379 |
| | | | | | |
14
