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EXHIBIT 99.2
Contact: Investor Relations Media Relations
W. Douglass Harris Steven D. Stern
The Presley Companies Pondel/Wilkinson Group
(949) 640-6400 (310) 207-9300
THE PRESLEY COMPANIES REPORTS COMPLETION OF MERGER WITH
AND INTO WHOLLY-OWNED SUBSIDIARY
THE PRESLEY COMPANIES REPORTS THIRD QUARTER NET INCOME
OF $10,720,000, OR $1.03 PER SHARE
NEWPORT BEACH, CA---November 11, 1999---The Presley Companies ("Presley" or the
"Company") (NYSE: PDC) today announced that effective at 12:01 a.m. (New York
Time) on Thursday, November 11, 1999, the merger of its former parent, The
Presley Companies ("Old Presley") with and into Presley Merger Sub, Inc. was
completed. In the merger, Presley Merger Sub, Inc. was the surviving corporation
and was renamed "The Presley Companies" at the effective time. Also, at the
effective time, each share of Old Presley's Series A Common Stock and Series B
Common Stock was converted into the right to receive 0.2 share of the Common
Stock, par value $.01 per share, of the surviving corporation, The Presley
Companies (formerly named "Presley Merger Sub, Inc."). Beginning on November 11,
1999, the Common Stock of the surviving corporation commenced trading on the New
York Stock Exchange under the symbol "PDC".
Shares issued in the merger are subject to certain transfer restrictions. These
restrictions are similar to those adopted by several other public companies and
are intended to help preserve Presley's substantial net operating loss
carryforwards for use in offsetting future taxable income. In general, these
restrictions will prohibit, without the prior approval of the Board of
Directors, the direct or indirect disposition or acquisition of any stock of the
surviving corporation by or to any holder who owns or would so own upon the
acquisition (either directly or through the tax attribution rules) 5% or more of
the surviving corporation's stock. The transfer restrictions are contained in
Article VIII of the Certificate of Incorporation and all stock certificates
issued by Presley will contain a legend that summarizes the transfer
restrictions.
The merger was completed after the November 5, 1999 acquisition of substantially
all of the assets and the assumption of substantially all of the liabilities of
William Lyon Homes, Inc. The merger will not otherwise result in any change in
the consolidated financial condition, business or assets of the Company.
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Presley will shortly be mailing to all of its stockholders instructions
regarding the surrender of their stock certificates representing shares of Old
Presley by means of a letter of transmittal. Until those stock certificates are
surrendered in accordance with the prescribed procedure, Presley will not issue
replacement certificates representing the shares of Presley into which a
stockholder's shares of Old Presley have been converted in the merger. Further,
no transfer will be effected on the transfer books of Presley unless and until
the stock certificates of Old Presley that previously represented the shares
presented for transfer have been surrendered in accordance with the prescribed
procedure. In addition, although Presley has no immediate plans for any
dividends or distributions on its stock, if it declares any dividends or
distributions in the future, a stockholder will not receive any amount with
respect to such stockholder's shares prior to the surrender, in accordance with
the prescribed procedure, of the applicable parent corporation stock
certificates. Further, no interest will accrue or be payable with respect to any
such dividends or distributions retained in respect of those shares.
The common stock and earnings per share information included herein reflects
adjustments for all periods presented for the retroactive effect of the merger
as described above and the conversion of each share of previously outstanding
Series A Common Stock and Series B Common Stock into 0.2 shares of Common Stock
of the surviving corporation.
Presley today reported net income for the third quarter ended September 30, 1999
of $10,720,000, or $1.03 per share, on sales of $88,363,000, as compared with
net income of $3,299,000, or $0.32 per share, on sales of $89,509,000 for the
comparable period a year ago. Sales of homes were $87,630,000 for the quarter
ended September 30, 1999, down 2 percent from $89,319,000 for the comparable
period a year ago. Sales of lots and land were $733,000 for the quarter ended
September 30, 1999, as compared with $190,000 for the quarter ended September
30, 1998.
For the nine months ended September 30, 1999, the Company reported net income of
$25,593,000, or $2.45 per share, on sales of $266,375,000, as compared with a
net income of $1,214,000, or $0.12 per share, on sales of $236,517,000 for the
comparable period a year ago. Sales of homes were $261,686,000 for the nine
months ended September 30, 1999, up 16 percent from $225,592,000 for the
comparable period a year ago. Sales of lots and land were $4,689,000 for the
nine months ended September 30, 1999, as compared with $10,925,000 for the nine
months ended September 30, 1998. The results for the nine months ended September
30, 1999 included an extraordinary gain from the retirement of debt of
$1,789,000, or $0.17 per share, after applicable income taxes, as compared with
$522,000, or $0.05 per share, after applicable income taxes, for the comparable
period a year ago.
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Homes sold, closed and in backlog for the Company and its unconsolidated joint
ventures as of and for the periods presented are as follows:
As of and for As of and for
the Three Months the Nine Months
Ended September 30, Ended September 30,
--------------------------------------------
1999 1998 1999 1998
------ ------ -------- --------
Number of homes sold
Company 337 507 1,275 1,587
Unconsolidated joint ventures 110 42 431 123
------ ------ -------- --------
Combined total 447 549 1,706 1,710
====== ====== ======== ========
Number of homes closed
Company 441 474 1,280 1,206
Unconsolidated joint ventures 144 20 356 22
------ ------ -------- --------
Combined total 585 494 1,636 1,228
====== ====== ======== ========
Backlog of homes sold but not closed at
end of period
Company 484 777 484 777
Unconsolidated joint ventures 203 108 203 108
------ ------ -------- --------
Combined total 687 885 687 885
====== ====== ======== ========
Dollar amount of backlog of homes sold but not
closed at end of period (in millions):
Company $ 97.7 $168.2 $ 97.7 $ 168.2
Unconsolidated joint ventures 81.8 54.6 81.8 54.6
------ ------ -------- --------
Combined total $179.5 $222.8 $ 179.5 $ 222.8
====== ====== ======== ========
Net new home orders for the quarter ended September 30, 1999 decreased 19
percent to 447 units from 549 units a year ago. For the third quarter of 1999,
net new home orders decreased 26 percent to 447 units from 605 units in the
second quarter of 1999. The number of homes closed in the third quarter of 1999
was up 18 percent to 585 from 494 in the third quarter of 1998. The backlog of
homes sold as of September 30, 1999 was 687, down 22 percent from 885 units a
year earlier, and down 17 percent from 825 units at June 30, 1999.
The dollar amount of backlog of homes sold but not closed as of September 30,
1999 was $179,500,000, as compared with $222,800,000 as of September 30, 1998
and $215,700,000 as of June 30, 1999.
The decrease in net new home orders for the three months ended September 30,
1999 as compared to the three months ended September 30, 1998 is primarily the
result of a decrease in the number of sales locations to 38 at September 30,
1999 from 47 at September 30, 1998. The increase in number of homes closed for
the three and nine month periods of 1999 as compared with 1998 is primarily the
result of improved market conditions in substantially all of the Company's
markets.
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As previously announced, on November 5, 1999, the Company completed the
acquisition of substantially all of the assets of William Lyon Homes, Inc. If
the acquisition had been completed as of September 30, 1999, pro forma backlog
information as of September 30, 1999 would have been as follows:
Backlog of homes sold but not closed at
September 30, 1999
Presley combined total 687
William Lyon Homes, Inc. 354
--------
Combined pro forma total 1,041
========
Dollar amount of backlog of homes sold but
not closed at September 30, 1999 (in millions):
Presley combined total $ 179.5
William Lyon Homes, Inc. 91.7
--------
$ 271.2
========
Wade Cable, President and Chief Executive Officer, stated "As we look to the
exciting future combining the Presley and William Lyon Homes operations, I am
gratified to report the remarkable improvement in Presley's operations in the
last eighteen months. Presley has now reported profits for six consecutive
quarters; debt levels have been reduced from approximately $225 million at
September 30, 1998 to approximately $155 million at September 30, 1999 and
stockholders' equity has improved from a deficit of approximately $4 million at
September 30, 1998 to a positive balance of approximately $36 million at
September 30, 1999."
The Company also reported that for purposes of the Indenture governing its
Senior Notes, EBITDA (earnings before interest, taxes, depreciation and
amortization) was $33,922,000 for the third quarter of 1999 as compared to
$32,963,000 for the third quarter of 1998. EBITDA coverage of interest incurred
for the three months ended September 30, 1999 was 5.75, as compared to 4.31 for
the three months ended September 30, 1998. EBITDA after development expenditures
amounted to $37,563,000 for the third quarter of 1999 as compared to $6,557,000
for the third quarter of 1998.
The Presley Companies is one of California's oldest and largest homebuilders in
the Southwest with development communities in California, Arizona, New Mexico
and Nevada. Founded in 1956, The Presley Companies has built and sold more than
48,000 homes and as of September 30, 1999 has 38 sales locations. William Lyon
Homes, Inc. has 15 sales locations as of September 30, 1999. Presley's corporate
headquarters are located in Newport Beach, California.
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, changes in
interest rates and competition, as well as the other factors discussed in the
Company's reports filed with the Securities and Exchange Commission.
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THE PRESLEY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER COMMON SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
1999 1998 1999 1998
-------- --------- --------- ---------
Sales
Homes $ 87,630 $ 89,319 $ 261,686 $ 225,592
Lots, land and other 733 190 4,689 10,925
-------- --------- --------- ---------
88,363 89,509 266,375 236,517
-------- --------- --------- ---------
Operating costs
Cost of sales - homes (72,071) (75,197) (216,188) (194,194)
Cost of sales - lots, land and other (1,072) (1,227) (4,813) (11,378)
Sales and marketing (4,198) (5,385) (12,658) (15,180)
General and administrative (4,944) (3,188) (12,817) (10,144)
-------- --------- --------- ---------
(82,285) (84,997) (246,476) (230,896)
-------- --------- --------- ---------
Equity in income of unconsolidated
joint ventures 7,414 501 12,278 346
-------- --------- --------- ---------
Operating income 13,492 5,013 32,177 5,967
Interest expense, net of amounts capitalized (883) (2,180) (4,554) (7,073)
Financial advisory expenses (917) -- (2,197) --
Other income (expense), net 825 669 2,366 1,638
-------- --------- --------- ---------
Income before income taxes and
extraordinary item 12,517 3,502 27,792 532
(Provision) credit for income taxes (1,797) (203) (3,988) 160
-------- --------- --------- ---------
Income before extraordinary item 10,720 3,299 23,804 692
Extraordinary item - gain from retirement of
debt, net of applicable income taxes -- -- 1,789 522
-------- --------- --------- ---------
Net income $ 10,720 $ 3,299 $ 25,593 $ 1,214
======== ========= ========= =========
Basic and diluted earnings per common
share (1)
Before extraordinary item $ 1.03 $ 0.32 $ 2.28 $ 0.07
Extraordinary item -- -- 0.17 0.05
-------- --------- --------- ---------
After extraordinary item $ 1.03 $ 0.32 $ 2.45 $ 0.12
======== ========= ========= =========
(1) Reflects adjustment for all periods presented for the retroactive effect
of the merger with a wholly-owned subsidiary and the conversion of each
share of previously outstanding Series A and Series B Common Stock into
0.2 common shares of the surviving company.
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THE PRESLEY COMPANIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PAR VALUE PER SHARE)
September 30, December 31,
1999 1998
------------- ------------
(unaudited)
ASSETS
Cash and cash equivalents $ 7,223 $ 23,955
Receivables 17,087 8,613
Real estate inventories 164,777 174,502
Investments in and advances to unconsolidated
joint ventures 36,632 30,462
Property and equipment, less accumulated
depreciation of $4,023 and $3,156 at September 30,
1999 and December 31, 1998, respectively 2,259 2,912
Deferred loan costs 2,204 3,381
Other assets 5,325 2,579
--------- ---------
$ 235,507 $ 246,404
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 20,692 $ 17,364
Accrued expenses 23,839 27,823
Notes payable 35,271 55,393
12-1/2% Senior Notes due 2001 120,000 140,000
--------- ---------
199,802 240,580
--------- ---------
Stockholders' equity (1)
Common stock, par value $.01 per share;
30,000,000 shares authorized; 10,439,135
shares issued and outstanding at
September 30, 1999 and December 31, 1998,
respectively 104 104
Additional paid-in capital 120,955 116,667
Accumulated deficit from January 1, 1994 (85,354) (110,947)
--------- ---------
35,705 5,824
--------- ---------
$ 235,507 $ 246,404
========= =========
(1) Reflects adjustment for all periods presented for the retroactive effect
of the merger with a wholly-owned subsidiary and the conversion of each
share of previously outstanding Series A and Series B Common Stock into
0.2 common shares of the surviving company.
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THE PRESLEY COMPANIES
SUPPLEMENTAL FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
The following table sets forth certain selected unaudited financial data
regarding the Company's cash flow for the purposes of the Indenture governing
the Company's Senior Notes:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
1999 1998 1999 1998
-------- -------- --------- --------
EBIT $ 11,297 $ 11,472 $ 40,468 $ 26,121
Amortization of Non-Cash Costs to Cost of Sales,
excluding interest amortized to cost of sales 22,294 21,202 67,826 65,698
Depreciation and amortization 331 289 879 811
-------- -------- --------- --------
EBITDA $ 33,922 $ 32,963 $ 109,172 $ 92,630
======== ======== ========= ========
Development expenditures:
Lot and amenity development $ (8,974) $(14,383) $ (28,293) $(35,186)
Land acquisitions 897 (8,837) (38,219) (23,181)
Net change in housing inventory 5,936 (3,161) 3,277 (30,300)
Investment in unconsolidated joint ventures 5,783 (25) 6,196 15,571
-------- -------- --------- --------
Total development expenditures 3,642 (26,406) (57,039) (73,096)
-------- -------- --------- --------
EBITDA after development expenditures $ 37,563 $ 6,557 $ 52,133 $ 19,534
======== ======== ========= ========
Interest expensed and amortized to cost of sales:
Interest incurred $ 5,899 $ 7,652 $ 17,645 $ 24,308
Less capitalized interest (5,016) (5,472) (13,091) (17,235)
-------- -------- --------- --------
Interest expensed 883 2,180 4,554 7,073
Amortization of capitalized interest
included in cost of sales 5,384 6,392 18,536 18,196
-------- -------- --------- --------
Total interest expensed and amortized to
cost of sales $ 6,267 $ 8,572 $ 23,090 $ 25,269
======== ======== ========= ========
Interest incurred $ 5,899 $ 7,652 $ 17,645 $ 24,308
======== ======== ========= ========
EBITDA/Interest incurred 5.75x 4.31x 6.19x 3.81x
======== ======== ========= ========
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