NEWPORT BEACH, Calif., Feb. 17, 1999 (PRIMEZONE) -- The Presley Companies (NYSE: PDC) today reported net income for the fourth quarter ended December 31, 1998 of $8,640,000, or $0.17 per share, on sales of $131,765,000, as compared with a net loss of ($7,666,000), or ($0.15) per share, on sales of $96,232,000 for the comparable period a year ago. Sales of homes were $122,760,000 for the quarter ended December 31, 1998, up 46 percent from $84,098,000 for the comparable period a year ago. The net income for the quarter ended December 31, 1998 includes an extraordinary gain from retirement of debt of $2,219,000, after giving effect to income taxes and amortization of related deferred loan costs.
For the year ended December 31, 1998, the Company reported net income of $9,855,000, or $0.19 per share, on sales of $368,282,000, as compared with a net loss of ($89,894,000), or ($1.72) per share, on sales of $329,942,000 for the comparable period a year ago. The net income for the year ended December 31, 1998 includes an extraordinary gain from retirement of debt of $2,741,000, after giving effect to income taxes and amortization of related deferred loan costs. The net loss for the year ended December 31, 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 Year Ended December 31, Ended December 31, 1998 1997 1998 1997 Number of homes sold Company 350 422 1,937 1,718 Unconsolidated joint ventures 79 - 202 - 429 422 2,139 1,718 Number of homes closed Company 628 411 1,834 1,597 Unconsolidated joint ventures 69 - 91 - 697 411 1,925 1,597 Backlog of homes sold but not closed at end of period Company 499 403 499 403 Unconsolidated joint ventures 118 - 118 - 617 403 617 403
Net new home orders for the quarter ended December 31, 1998 increased 2 percent to 429 units from 422 a year ago. For the fourth quarter of 1998, net new orders decreased 22 percent to 429 from 549 units in the third quarter of 1998. The number of homes closed in the fourth quarter of 1998 increased 70 percent to 697 from 411 in the fourth quarter of 1997. The backlog of homes sold as of December 31, 1998 was 617, up 53 percent from 403 units a year earlier, and down 30 percent from 885 units at September 30, 1998.
The dollar amount of backlog of homes sold but not closed as of December 31, 1998 was $165,100,000, as compared to $84,600,000 as of December 31, 1997 and $222,800,000 as of September 30, 1998. The Company's inventory of completed and unsold homes as of December 31, 1998 has increased by 92 percent to 50 units from 26 units as of September 30, 1998.
The improvement in net new homes orders, closings and backlog for the fourth quarter of 1998 as compared with the fourth 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 December 31, 1998, the Company had 46 sales locations as compared to 40 sales locations at December 31, 1997.
The Company also reported that for purposes of the Indenture governing its Senior Notes, EBITDA (earnings before interest, taxes, depreciation and amortization) was $50,119,000 for the fourth quarter of 1998 as compared to $40,686,000 for the fourth quarter of 1997. EBITDA coverage of interest incurred for the three months ended December 31, 1998 was 6.99, as compared to 4.70 for the three months ended December 31, 1997. EBITDA after development expenditures amounted to $44,644,000 for the fourth quarter of 1998 as compared to $9,218,000 for the fourth 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 47,000 homes and currently has 46 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 Year Ended December 31, December 31, 1998 1997 1998 1997 Sales Homes $122,760 $ 84,098 $348,352 $307,332 Lots, land and other 9,005 12,134 19,930 22,610 131,765 96,232 368,282 329,942 Operating costs Cost of sales - homes (103,588) (77,621) (297,781) (278,299) Cost of sales - lots, land and other (9,614) (13,918) (20,992) (23,902) Impairment loss on real estate assets - - - (74,000) Sales and marketing (6,283) (6,452) (21,463) (22,279) General and administrative (5,821) (3,949) (15,965) (15,996) (125,306) (101,940) (356,201) (414,476) Operating income (loss) 6,459 (5,708) 12,081 (84,534) Income from unconsolidated joint ventures 3,153 - 3,499 - Interest expense, net of amounts capitalized (2,141) (2,812) (9,214) (7,812) Financial advisory expenses (1,286) - (1,286) - Other income, net 1,587 854 3,225 2,452 Income (loss) before income taxes and extraordinary item 7,772 (7,666) 8,305 (89,894) Provision for income taxes (1,351) - (1,191) - Income (loss) before extraordinary item 6,421 (7,666) 7,114 (89,894) Extraordinary item - gain from retirement of debt, net of applicable income taxes 2,219 - 2,741 - Net income (loss) $ 8,640 $ (7,666) $ 9,855 $(89,894) Basic and diluted earnings per common share Before extraordinary item $ 0.13 $ (0.15) $ 0.14 $ (1.72) Extraordinary item 0.04 - 0.05 - After extraordinary item $ 0.17 $ (0.15) $ 0.19 $ (1.72) THE PRESLEY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands except number of shares and par value per share) December 31, December 31, 1998 1997 (unaudited) ASSETS Cash and cash equivalents $ 23,955 $ 4,569 Receivables 8,613 8,652 Real estate inventories 174,502 255,472 Investments in and advances to unconsolidated joint ventures 30,462 7,077 Property and equipment, less accumulated depreciation of $3,156 and $2,339 at December 31, 1998 and 1997, respectively 2,912 3,613 Deferred loan costs 3,381 3,266 Other assets 2,579 2,595 $246,404 $285,244 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 17,364 $ 12,854 Accrued expenses 27,823 23,136 Notes payable 55,393 74,935 121/2% Senior Notes due 2001 140,000 180,000 240,580 290,925 Stockholders' equity Common stock: Series A common stock, par value $.01 per share; 100,000,000 shares authorized; 34,792,732 and 17,838,535 shares issued and outstanding at December 31, 1998 and 1997, respectively 348 178 Series B restricted voting convertible common stock, par value $.01 per share; 50,000,000 shares authorized; 17,402,946 and 34,357,143 shares issued and outstanding at December 31, 1998 and 1997, respectively 174 344 Additional paid-in capital 116,249 114,599 Accumulated deficit from January 1, 1994 (110,947) (120,802) 5,824 (5,681) $246,404 $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 Year Ended December 31, December 31, 1998 1997 1998 1997 EBIT (1) $ 18,647 $ 2,686 $ 44,768 $ 16,250 Amortization of Non-Cash Costs to Cost of Sales, excluding interest amortized to cost of sales 31,243 37,747 96,941 109,829 Depreciation and amortization 229 253 1,040 799 EBITDA $ 50,119 $ 40,686 $142,749 $126,878 Development expenditures: Lot and amenity development $(12,768) $(17,153) $ (47,954) $(58,437) Land acquisitions (7,186) (8,191) (30,367) (38,335) Net change in housing inventory 18,278 830 (12,022) 9,965 Investments in unconsolidated joint ventures (3,799) (6,954) 11,772 (6,954) Total development expenditures (5,475) (31,468) (78,571) (93,761) EBITDA after development expenditures $ 44,644 $ 9,218 $ 64,178 $ 33,117 Interest expensed and amortized to cost of sales: Interest incurred $ 7,167 $ 8,652 $ 31,474 $ 32,218 Less capitalized interest (5,027) (5,840) (22,261) (24,705) Interest expensed 2,140 2,812 9,213 7,513 Amortization of capitalized interest included in cost of sales 9,703 7,618 27,899 23,760 Total interest expensed and amortized to cost of sales $ 11,843 $ 10,430 $ 37,112 $ 31,273 Interest incurred $ 7,167 $ 8,652 $ 31,474 $ 32,218 EBITDA/Interest incurred 6.99x 4.70x 4.54x 3.94x
(1) The impairment loss on real estate assets was not included in calculating EBIT for the year ended December 31, 1997.