NEWPORT BEACH, Calif., Nov. 11, 1999 (PRIMEZONE) -- 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.
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.
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 3 Months the 9 Months
Ended Sept. 30, Ended Sept. 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.
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
Sept. 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.
THE PRESLEY COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per common share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 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.
THE PRESLEY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands except number of
shares and par value per share)
Sept.30, Dec. 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 Sept. 30,1999
and Dec. 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 percent
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 Sept.30, 1999 and
Dec. 31, 1998, respectively 104 104
Additional paid-in capital 120,955 116,667
Accumulated deficit
from Jan 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.
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
September 30,
1999 1998
--------- ---------
EBIT $ 11,297 $ 11,472
Amortization of Non-Cash Costs to
Cost of Sales, excluding interest
amortized to cost of sales 22,294 21,202
Depreciation and amortization 331 289
--------- ---------
EBITDA $ 33,922 $ 32,963
--------- ---------
Development expenditures:
Lot and amenity development $ (8,974) $ (14,383)
Land acquisitions 897 (8,837)
Net change in housing inventory 5,936 (3,161)
Investment in unconsolidated
joint ventures 5,783 (25)
--------- ---------
Total development expenditures 3,642 (26,406)
--------- ---------
EBITDA after development expenditures $ 37,563 $ 6,557
Interest expensed and amortized to
cost of sales:
Interest incurred $ 5,899 $ 7,652
Less capitalized interest (5,016) (5,472)
--------- ---------
Interest expensed 883 2,180
Amortization of capitalized
interest included in
cost of sales 5,384 6,392
--------- ---------
Total interest expensed
and amortized to cost of
sales $ 6,267 $ 8,572
--------- ---------
Interest incurred $ 5,899 $ 7,652
--------- ---------
EBITDA/Interest incurred 5.75x 4.31x
--------- ---------
Nine Months Ended
September 30,
1999 1998
--------- ---------
EBIT $ 40,468 $ 26,121
Amortization of Non-Cash Costs
to Cost of Sales, excluding
interest amortized to cost of sales 67,826 65,698
Depreciation and amortization 879 811
--------- ---------
EBITDA $109,172 $ 92,630
--------- ---------
Development expenditures:
Lot and amenity development $ (28,293) $ (35,186)
Land acquisitions (38,219) (23,181)
Net change in housing inventory 3,277 (30,300)
Investment in unconsolidated
joint ventures 6,196 15,571
--------- ---------
Total development expenditures (57,039) (73,096)
--------- ---------
EBITDA after development expenditures $ 52,133 $ 19,534
--------- ---------
Interest expensed and amortized to
cost of sales:
Interest incurred $ 17,645 $ 24,308
Less capitalized interest (13,091) (17,235)
--------- ---------
Interest expensed 4,554 7,073
Amortization of capitalized
interest included in
cost of sales 18,536 18,196
--------- ---------
Total interest expensed
and amortized to cost of sales $ 23,090 $ 25,269
--------- ---------
Interest incurred $ 17,645 $ 24,308
--------- ---------
EBITDA/Interest incurred 6.19x 3.81x
--------- ---------
CONTACT: Investor Relations
W. Douglass Harris
The Presley Companies
949-640-6400
Media Relations
Steven D. Stern
Pondel/Wilkinson Group
310-207-9300