NEWPORT BEACH, Calif.,Nov. 10, 1998 (PRIMEZONE) -- The Presley Companies (NYSE: PDC) today reported net income for the third quarter ended September 30, 1998 of $3,299,000, or $0.06 per share, on sales of $89,509,000, as compared with a net loss of ($3,200,000), or ($0.06) per share, on sales of $68,349,000 for the comparable period a year ago. Sales of homes were $89,319,000 for the quarter ended September 30, 1998, up 32 percent from $67,583,000 for the comparable period a year ago.
For the nine months ended September 30, 1998, the Company reported net income of $1,214,000, or $0.02 per share, on sales of $236,517,000, as compared with a net loss of ($82,228,000), or ($1.58) per share, on sales of $233,710,000 for the comparable period a year ago. The net income for the nine months ended September 30, 1998 includes an extraordinary gain from retirement of debt of $522,000 after applicable income taxes. The net loss for the nine months ended September 30, 1997 included a non-cash charge of $74,000,000 as a result of the recognition of impairment losses on certain of the Company's real estate assets.
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, __________________ __________________ 1998 1997 1998 1997 ____ ____ ____ ____ Number of homes sold Company 507 419 1,587 1,296 Unconsolidated joint ventures 42 - 123 - ___ ___ _____ _____ 549 419 1,710 1,296 ___ ___ _____ _____ ___ ___ _____ _____ Number of homes closed Company 474 357 1,206 1,186 Unconsolidated joint ventures 20 - 22 - ___ ___ _____ _____ 494 357 1,228 1,186 ___ ___ _____ _____ ___ ___ _____ _____ Backlog of homes sold but not closed at end of period Company 777 392 777 392 Unconsolidated joint ventures 108 - 108 - ___ ___ ___ ___ 885 392 885 392 ___ ___ ___ ___ ___ ___ ___ ___
Net new home orders for the quarter ended September 30, 1998 increased 31 percent to 549 units from 419 a year ago. For the third quarter of 1998, net new orders decreased 12 percent to 549 from 622 units in the second quarter of 1998. The number of homes closed in the third quarter of 1998 increased 38 percent to 494 from 357 in the third quarter of 1997. The backlog of homes sold as of September 30, 1998 was 885, up 126 percent from 392 units a year earlier, and up 7 percent from 830 units at June 30, 1998.
The dollar amount of backlog of homes sold but not closed as of September 30, 1998 was $222,790,000, as compared to $81,258,000 as of September 30, 1997 and $204,409,000 as of June 30, 1998. The Company's inventory of completed and unsold homes as of September 30, 1998 has decreased by 35 percent to 26 units from 40 units as of June 30, 1998.
The improvement in net new homes orders, closings and backlog for the third quarter of 1998 as compared with the third quarter of 1997 is primarily the result of improved market conditions in substantially all of the Company's markets and additional sales locations as a result of new land acquisitions. At September 30, 1998, the Company had 47 sales locations as compared to 43 sales locations at September 30, 1997.
The Company also reported that for purposes of the Indenture governing its Senior Notes, EBITDA (earnings before interest, taxes, depreciation and amortization) was $32,963,000 for the third quarter of 1998 as compared to $24,379,000 for the third quarter of 1997. EBITDA coverage of interest incurred for the three months ended September 30, 1998 was 4.31, as compared to 3.00 for the three months ended September 30, 1997. EBITDA after development expenditures amounted to $6,557,000 for the third quarter of 1998 as compared to $2,921,000 for the third quarter of 1997.
The Presley Companies is one of the 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 45,000 homes and currently has 47 sales locations. 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.
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, __________________ _________________ 1998 1997 1998 1997 ____ ____ ____ ____ Sales Homes $ 89,319 $ 67,583 $225,592 $223,234 Lots, land and other 190 766 10,925 10,476 ______ ______ _______ _______ 89,509 68,349 236,517 233,710 ______ ______ _______ _______ Operating costs Cost of sales - homes (75,197) (59,737) (194,194) (200,679) Cost of sales - lots, land and other (1,227) (913) (11,378) (9,983) Impairment loss on real estate assets - - - (74,000) Sales and marketing (5,385) (5,191) (15,180) (15,826) General and administrative (3,188) (3,686) (10,144) (12,047) _____ _____ ______ ______ (84,997) (69,527) (230,896) (312,535) ______ ______ _______ _______ Operating income (loss) 4,512 (1,178) 5,621 (78,825) Income from unconsolidated joint ventures 501 - 346 - Interest expense, net of amounts capitalized (2,180) (2,237) (7,073) (5,001) Other income, net 669 215 1,638 1,598 _____ _____ _____ _____ Income (loss) before income taxes and extraordinary item 3,502 (3,200) 532 (82,228) (Provision) credit for income taxes (203) - 160 - _____ _____ _____ _____ Income (loss) before extraordinary item 3,299 (3,200) 692 (82,228) Extraordinary item - gain from retirement of debt, net of applicable income taxes of $363 - - 522 - _____ _____ _____ _____ Net income (loss) $ 3,299 $ (3,200) $ 1,214 $(82,228) _____ _____ _____ _____ _____ _____ _____ _____ Basic and diluted earnings per common share Before extraordinary item $ 0.06 $ (0.06) $ 0.01 $ (1.58) Extraordinary item - - 0.01 - _____ _____ _____ _____ After extraordinary item $ 0.06 $ (0.06) $ 0.02 $ (1.58) _____ _____ _____ _____ _____ _____ _____ _____ THE PRESLEY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and par value per share) September 30, December 31, 1998 1997 ____________ ___________ (unaudited) ASSETS Cash and cash equivalents $ 7,260 $ 4,569 Receivables 10,520 8,652 Real estate inventories 207,219 255,472 Investments in and advances to unconsolidated joint ventures 23,161 7,077 Property and equipment, less accumulated depreciation of $3,154 and $2,339 at September 30, 1998 and December 31, 1997, respectively 3,303 3,613 Deferred loan costs 4,045 3,266 Other assets 3,678 2,595 _______ _______ $259,186 $285,244 _______ _______ _______ _______ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Accounts payable $ 20,497 $ 12,854 Accrued expenses 17,427 23,136 Notes payable 65,526 74,935 121/2% Senior Notes due 2001 160,000 180,000 _______ _______ 263,450 290,925 Stockholders' equity (deficit) Common stock: Series A common stock, par value $.01 per share; 100,000,000 shares authorized; 34,792,732 issued and outstanding at September 30, 1998 and 17,838,535 issued and outstanding at December 31, 1997, respectively 348 178 Series B restricted voting convertible common stock, par value $.01 per share; 50,000,000 shares authorized; 17,402,946 shares issued and outstanding at September 30, 1998 and 34,357,143 issued and outstanding at December 31, 1997, respectively 174 344 Additional paid-in capital 114,802 114,599 Accumulated deficit from January 1, 1994 (119,588) (120,802) _______ _______ (4,264) (5,681) _______ _______ $259,186 $285,244 _______ _______ _______ _______ 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, __________________ ________________ 1998 1997 1998 1997 ____ ____ ____ ____ EBIT $ 11,472 $ 5,189 $ 26,121 $ 13,564 Amortization of Non-Cash Costs to Cost of Sales, excluding interest amortized to cost of sales 21,202 19,012 65,698 72,082 Depreciation and amortization 289 178 811 546 ______ ______ ______ ______ EBITDA $ 32,963 $ 24,379 $ 92,630 $ 86,192 ______ ______ ______ ______ ______ ______ ______ ______ Development expenditures: Lot and amenity development $(14,383) $(13,818) $(35,186) $(41,284) Land acquisitions (8,837) (7,238) (23,181) (30,144) Net change in housing inventory (3,161) (402) (30,300) 9,135 Investment in unconsolidated joint ventures (25) - 15,571 - ______ ______ ______ ______ Total development expenditures (26,406) (21,458) (73,096) (62,293) ______ ______ ______ ______ EBITDA after development expenditures $ 6,557 $ 2,921 $ 19,534 $ 23,899 ______ ______ ______ ______ ______ ______ ______ ______ Interest expensed and amortized to cost of sales: Interest incurred $ 7,652 $ 8,119 $ 24,308 $ 23,566 Less capitalized interest (5,472) (5,992) (17,235) (18,865) ______ ______ ______ ______ Interest expensed 2,180 2,127 7,073 4,701 Amortization of capitalized interest included in cost of sales 6,392 6,187 18,196 16,142 ______ ______ ______ ______ Total interest expensed and amortized to cost of sales $ 8,572 $ 8,314 $ 25,269 $ 20,843 ______ ______ ______ ______ ______ ______ ______ ______ Interest incurred $ 7,652 $ 8,119 $ 24,308 $ 23,566 ______ ______ ______ ______ ______ ______ ______ ______ EBITDA/Interest incurred 4.31x 3.00x 3.81x 3.66x ______ ______ ______ ______ ______ ______ ______ ______ (1) The impairment loss on real estate assets was not included in calculating EBIT for 1997. -0- Contact: Investor Relations W. Douglass Harris The Presley Companies (949) 640-6400 or Media Relations Stern and Co. (310) 442-8414