- Third quarter revenues of $11.4 million from 20 deliveries,
including seven Brightwater homes and 62 finished lots at one
inland project. - Gross operating profit of $1.6 million generated
primarily from a $1.0 million settlement of accrued seller profit
participation and $400,000 from seven Brightwater deliveries,
compared with $3.3 million of gross operating profit before
impairment charges for the comparable period of 2008. - Income
before income taxes of $3.5 million compared with a pre-tax loss of
$28.1 million in the comparable quarter of 2008 which reflected a
$29.1 million impairment charge. - Net loss of $18.1 million, or
$1.65 per share, reflects non-cash valuation allowances on deferred
tax assets aggregating $20.6 million and a $4.1 million pre-tax
gain on debt extinguishment, compared with a net loss of $21.1
million in third quarter of 2008, which reflects a $29.1 million
impairment charge partially offset by a $7.0 million income tax
benefit. IRVINE, Calif., Nov. 16 /PRNewswire-FirstCall/ --
California Coastal Communities, Inc. (NASDAQ:CALC) reported $1.6
million of gross operating profit for the quarter ended September
30, 2009 compared with $3.3 million of gross operating profit
before inland project impairment charges for the comparable period
of 2008. Income before income taxes was $3.5 million compared with
a pre-tax loss of $28.1 million in the comparable quarter of 2008
which reflected a $29.1 million impairment charge. Net loss for the
quarter was $18.1 million, or $1.65 per diluted share compared with
a net loss of $21.1 million or $1.94 per diluted share for the
third quarter of 2008. Results for the third quarter of 2009
reflect the delivery of 20 homes at the Company's homebuilding
projects in Southern California (including seven homes at its
Brightwater coastal development project) as well as $1.8 million of
land sales revenue from the sale of 62 finished lots and a $4.1
million pre-tax gain from cancellation of indebtedness income
related to the Beaumont project (discussed below), compared to
delivery of 17 homes in the third quarter of 2008 (including seven
Brightwater deliveries). Gross operating profit of $1.6 million in
the third quarter of 2009 was offset by net operating expenses of
$2.2 million, compared with $29.1 million of impairment charges and
$2.3 million of net operating expenses in the third quarter of
2008. On September 30, 2009, a subsidiary completed a sale of four
model homes and 62 finished lots for its Woodhaven project in
Beaumont, California for $2.3 million, thereby disposing of all
remaining assets of the project. The project lender accepted the
proceeds of the sale in full satisfaction of the $6.4 million of
outstanding debt and release of the related guaranty, therefore,
the Company recognized a $4.1 million pre-tax gain on debt
cancellation. The $20.6 million increase in valuation allowances on
deferred tax assets resulted from uncertainties regarding the
resolution of the Company's previously announced filing of
voluntary petitions for relief under chapter 11 in the United
States Bankruptcy Court and the Company's ability to utilize its
net operating losses in the future. The Company is working with
KeyBank and its lenders to restructure approximately $182 million
of indebtedness related to the Company's Brightwater development
project through the chapter 11 reorganization process.. The Company
and its subsidiaries continue to operate their business and manage
their properties as "debtors in possession." The Company has
obtained the bankruptcy court's approval of interim orders to,
among other things, continue to pay critical vendors with lien
rights, sell homes free and clear of all liens, use cash
collateral, honor homeowner warranties, meet payroll obligations
and provide employee benefits. An additional hearing is scheduled
before the Bankruptcy Court on December 9, 2009 to consider final
orders for, among other things, continued use of cash collateral,
selling homes free and clear of liens, honoring homeowner
warranties and continued use of the Company's existing cash
management system. Raymond J. Pacini, CEO of the Company commented:
"We are continuing to pursue a consensual restructuring of our debt
obligations with the loan syndicates and are hopeful that we will
be able to expeditiously develop a plan of reorganization that is
acceptable to a substantial majority of our lenders. We experienced
a significant increase in sales orders during the last five weeks
of the third quarter and hope to be able to maintain that momentum
going forward." The Company's 105-acre Brightwater project is
located in Huntington Beach, California near the corner of Pacific
Coast Highway and Warner Avenue, overlooking the Pacific Ocean and
the 1,300-acre Bolsa Chica Wetlands. It is the largest asset in the
Company's portfolio and, along with an adjacent five-acre parcel in
the process of entitlement, represents approximately 97% of real
estate inventories as of September 30, 2009. Due to the Company's
low carrying value in Brightwater, the project is currently
expected to generate gross margins of approximately 7%-28%,
depending on the size of the homes sold and other factors; however,
there can be no assurance that such margins will be realized. Third
quarter homebuilding revenues of $9.6 million reflect a $4.3
million decrease compared with third quarter 2008 revenues of $13.9
million. While the Company delivered three more homes in the third
quarter of 2009, the average sales price of homes delivered
decreased from $817,600 in the third quarter of 2008 to $480,000 in
the third quarter of 2009, primarily reflecting more inland home
deliveries (13 vs. 10) and the absence of deliveries of the larger
Cliffs and Breakers homes at Brightwater during the quarter,
compared with five Cliffs and Breakers deliveries in the third
quarter of 2008. Homebuilding gross margin before impairment
charges for the third quarter of 2009 was 17%, compared with 24% in
2008. The Company generated $1.7 million less in homebuilding gross
operating profit before impairment charges during the third quarter
of 2009 compared with 2008, primarily as a result of the absence of
Cliffs and Breakers deliveries and reduced margins for the Trails
homes delivered at Brightwater during the third quarter of 2009.
The Company delivered seven Trails homes at Brightwater which
generated a 7% gross margin and gross operating profit of $400,000,
compared with seven deliveries at Brightwater (including five
Cliffs and Breakers deliveries) in the third quarter of 2008 which
generated a 33% gross margin and gross operating profit of $3.2
million. During the third quarter of 2009, net new orders increased
50% to 21 homes compared with 14 homes during the second quarter of
2009, primarily reflecting increased net orders at Brightwater (15
vs. 6). Cancellations as a percentage of new orders were 5% during
the third quarter of 2009, compared with 33% during the second
quarter of 2009. Backlog as of September 30, 2009 increased to 17
homes compared with 16 homes as of June 30, 2009. The total value
of backlog increased 65% from $13.0 million last quarter to $21.4
million as of September 30, 2009 due to an increase in the number
of Brightwater homes in backlog (17 vs. 9), including six Cliffs
and Breakers homes as of September 30, 2009 compared with two
Cliffs and Breakers homes as of June 30, 2009. The average sales
price of homes in backlog increased from $812,000 to $1.3 million,
primarily reflecting the increase in Cliffs and Breakers homes in
backlog at September 30, 2009 compared with June 30, 2009. Backlog
as of September 30, 2009 decreased to 17 homes compared with 20
homes as of September 30, 2008. The total value of backlog
decreased 31% from $31.0 million a year ago to $21.4 million as of
September 30, 2009 due to fewer of the larger Brightwater homes
(The Cliffs and The Breakers) in backlog (six as of September 30,
2009, compared with 10 a year ago). The average sales price of
homes in backlog decreased from $1.5 million to $1.3 million,
primarily reflecting fewer Cliffs and Breakers homes in escrow at
September 30, 2009 compared with September 30, 2008. The Company's
standing inventory at its inland projects was reduced from eight
homes as of December 31, 2008 to no homes as of September 30, 2009
and total standing inventory as of September 30, 2009 consisted of
five Brightwater homes. The Company reported income before income
taxes of $22.9 million for the first nine months of 2009 compared
with a pre-tax loss of $34.4 million in the first nine months of
2008 which reflected a $29.1 million impairment charge. The Company
also reported a net loss of $14.2 million or $1.29 per diluted
share for the first nine months of 2009 compared to a net loss of
$24.9 million, or $2.28 per diluted share in the first nine months
of 2008. Results for the first nine months of 2009 reflect $24.8
million of pre-tax gains from income attributable to cancellation
of indebtedness in addition to $7.5 million of gross operating
profit before impairment charges from the delivery of 39 homes
(including 21 at Brightwater). Gross operating profit was offset by
real estate impairment charges of $3.2 million, net operating
expenses of $6.2 million and income tax expense of $37.1 million.
Income tax expense of $37.1 million includes $28.2 million of
non-cash valuation allowances on deferred tax assets. Selling,
general and administrative expenses decreased $1.4 million for the
first nine months of 2009 compared with the first nine months of
2008, reflecting a $1.0 million reduction in selling expenses
associated with communities which were active during the first nine
months of 2008 but had reduced or no activity in the current year,
an approximately $300,000 decrease in selling and marketing
expenses related to Brightwater, as well as reduced general and
administrative expenses resulting from headcount reductions. The
increase in other expense, net for the first nine months of 2009
compared with the comparable period of 2008 reflects the assignment
of a $700,000 receivable to a land seller who sold lots to our
subsidiary, in settlement of an obligation for accrued seller
profit participation. The results for the third quarter of 2009
continue to reflect the sustained downturn in the homebuilding
industry. The weakness in the housing market continues to reflect a
supply-demand imbalance and continued weakness in national credit
markets, particularly the availability of jumbo mortgages which are
typically necessary to purchase higher-end homes such as The Cliffs
and The Breakers. Potential homebuyers remain reluctant to purchase
homes due to low consumer confidence, the significant downturn in
economic activity and continuing job losses. Potential homebuyers
also remain concerned that home prices may continue to fall and
about their ability to sell existing homes at a perceived fair
price. While some positive signs appear to be emerging, such as
improvements in the stock market and reduced job losses, gradual
stabilization in the mortgage market, and recent increases in home
sales volumes for the smaller Trails and Sands homes at
Brightwater, the timing of a meaningful recovery in the housing
market or the broader economy remains uncertain. In view of present
circumstances, the Company believes that the weak demand it is
experiencing reflects the continued reluctance of many homebuyers
to make purchasing decisions until they are comfortable that home
price declines are near the bottom and economic conditions have
stabilized. The homebuilding downturn could continue during the
remainder of 2009 and perhaps beyond, and the Company's operations
may sustain periodic losses until the homebuilding industry and
economy show marked signs of improvement. The Company currently has
one active homebuilding community in Huntington Beach in Orange
County and one project in the entitlement stage on five acres in
Huntington Beach, as well as 73 lots in northern Los Angeles
County. As of September 30, 2009, the Company has an inventory of
430 owned lots, reduced by 37% compared with the 680 lots owned and
controlled a year ago. This decrease reflects 134 lots conveyed in
connection with the March 31, 2009 Hearthside Lane project
deed-in-lieu transaction and the September 30, 2009 short sale of
62 finished lots at the Woodhaven project, as well as home
deliveries and the absence of any lot acquisitions. The nature of
the Company's business is such that the number, location and
specific market conditions of active selling communities over any
given time period may cause significant fluctuations in operating
results from quarter-to-quarter and from year-to-year. The Company
is a residential land development and homebuilding company
operating in Southern California. The Company's principal
subsidiaries are Hearthside Homes which is a homebuilding company,
and Signal Landmark which owns 105 acres on the Bolsa Chica mesa
where sales commenced in August 2007 at the 356-home Brightwater
community. Hearthside Homes has delivered 2,200 homes to families
throughout Southern California since its formation in 1994. Safe
Harbor Statement under the Private Securities Litigation Reform Act
of 1995 Certain of the foregoing information contains
forward-looking statements that relate to future events or the
Company's future financial performance. These statements involve
known and unknown risks, uncertainties and other factors which may
cause the Company's actual results, performance or achievements to
be materially different from any future results, performances or
achievements expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue," or the negative of such terms
or other comparable terminology. These forward-looking statements
include, but are not limited to, statements about the Company's
plans, objectives, goals, expectations and intentions; the number
and types of homes and number of acres of land that the Company may
develop and sell; the timing and outcomes of court proceedings,
administrative proceedings or regulatory approvals; anticipated
cash flows or sales; and other statements contained herein that are
not historical facts. These statements also include but are not
limited to statements regarding: the impact, effect or eventual
result of the Company's recent voluntary bankruptcy filing under
chapter 11 of the Bankruptcy Code; the Company's platform for
continued growth; demographic trends driving long-term demand; the
outlook for the housing sector and the general economy, including
the relative impact of interest rates, jobs, land constraints,
demographic trends, and the availability of mortgage financing; the
employment outlook; housing market conditions in the markets in
which the Company operates; orders and backlog; the Company's lot
supply; the Company's expected earnings, home deliveries and
revenues; expected average home prices; the Company's expected
homebuilding gross margin percentage; anticipated buyer demand; and
expected home deliveries. Forward-looking statements are based on
current expectations or beliefs regarding future events or
circumstances, and you should not place undue reliance on these
statements. Such statements involve known and unknown risks,
uncertainties, assumptions and other factors - many of which are
out of the Company's control and difficult to forecast - that may
cause actual results to differ materially from those that may be
described or implied. Such factors include but are not limited to:
local and general economic and market conditions, including
consumer confidence, employment rates, interest rates, the cost and
availability of mortgage financing, and stock market, home and land
valuations; the impact on economic conditions of the national
credit market crisis, oil prices, recession and inflation,
terrorist attacks or the outbreak or escalation of armed conflict
involving the United States; the cost and availability of suitable
undeveloped land, building materials and labor; the cost and
availability of construction financing and corporate debt and
equity capital; the demand for residential real estate;
cancellations of purchase contracts by homebuyers; the cyclical and
competitive nature of the Company's business; governmental
regulation; including the impact of "slow growth" or similar
initiatives; delays in the land entitlement process, development,
construction, or the opening of new home communities; the
significant amount of the Company's debt and the impact of
restrictive covenants in its loan agreements; adverse weather
conditions and natural disasters such as earthquakes and wildfires;
environmental matters; future business decisions and the Company's
ability to successfully implement its operational, growth and other
strategies; litigation and warranty claims; and other risks. For a
further discussion of these and other risks and uncertainties
applicable to the Company's business, see the Company's Annual
Report on Form 10-K for the year ended December 31, 2008 and its
other future and past public filings with the Securities and
Exchange Commission ("SEC"), all of which may be obtained free of
charge through the website maintained by the SEC at
http://www.sec.gov/ or at the Company's website at
http://www.californiacoastalcommunities.com/. The Company assumes
no, and hereby disclaims any, obligation to update any of the
foregoing or any other forward-looking statements. The Company
nonetheless reserves the right to make such updates from time to
time by press release, periodic report or other method of public
disclosure without the need for specific reference to this press
release. No such update shall be deemed to indicate that other
statements not addressed by such update remain correct or create an
obligation to provide any other updates. ***TABLES FOLLOW***
CALIFORNIA COASTAL COMMUNITIES, INC. Selected Financial and
Operating Information ($ in millions, except per home data)
(unaudited) Three Months Ended Nine Months Ended September 30,
September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Homes
delivered 20 17 39 40 Home sales revenue $9.6 $13.9 $32.9 $29.3
Cost of sales 8.0 10.6 25.4 22.7 Loss on impairment of real estate
inventories -- 29.1 3.2 34.1 --- ---- --- ---- 8.0 39.7 28.6 56.8
--- ---- ---- ---- Gross operating (loss) profit $1.6 $(25.8) $4.3
$(27.5) ==== ====== ==== ====== Gross margin percentage before loss
on impairment 16.7% 23.7% 22.8% 22.5% ==== ==== ==== ==== PER HOME
DATA ------------- Average sales price (a) $480,000 $817,600
$843,600 $732,500 Average gross margin before loss on impairment
(a) $80,000 $194,100 $192,300 $165,000 NUMBER OF ACTIVE COMMUNITIES
1 4 1 4 ---------------------------- NET NEW ORDERS 21 14 48 55
-------------- LOT INVENTORY AND BACKLOG -------------------------
Backlog of homes sold, but not completed at end of period 16 11
Completed homes in inventory, and in escrow 1 9 --- --- Total
backlog 17 20 Completed homes in inventory, unsold 5 12 Entitled
lots owned at end of period (b) 408 648 --- --- Total homes and
lots 430 680 === === ESTIMATED VALUE OF BACKLOG
-------------------------- Backlog of homes sold, but not completed
at end of period $19.5 $26.6 Completed homes in inventory, and in
escrow 1.9 4.4 --- --- Total value of backlog $21.4 $31.0 =====
===== (a) Changes are primarily due to changes in product mix and
location. (b) Change in nine months ended September 30, 2009 is
primarily due to the conveyance of 134 finished lots at a
subsidiary's project in Corona which resulted from a deed-in-lieu
transaction completed during the first quarter of 2009 and the
September 30, 2009 sale of 62 finished lots at a subsidiary's
project in Beaumont. CALIFORNIA COASTAL COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per
share amounts) (unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ----
Revenues Homebuilding $9.6 $13.9 $32.9 $29.3 Land 1.8 -- 1.8 -- ---
--- --- --- 11.4 13.9 34.7 29.3 Costs of sales Homebuilding 8.0
10.6 25.4 22.7 Land 1.8 -- 1.8 -- Loss on impairment of real estate
inventories -- 29.1 3.2 34.1 --- ---- --- ---- 9.8 39.7 30.4 56.8
Gross operating (loss) profit 1.6 (25.8) 4.3 (27.5) Selling,
general and administrative expenses 1.1 1.5 3.6 5.0 Interest
expense -- .6 .8 .6 Income from unconsolidated joint ventures --
(.1) -- (.2) Gains on debt restructuring and extinguishment (4.1)
-- (24.8) --- Other expense, net 1.1 .3 1.8 1.5 --- --- --- ---
Income (loss) before income taxes 3.5 (28.1) 22.9 (34.4) Income tax
expense (benefit) (a) 21.6 (7.0) 37.1 (9.5) ---- ---- ---- ---- Net
loss $(18.1) $(21.1) $(14.2) $(24.9) ======= ======= =======
======= Net loss per common share: Basic and diluted $(1.65)
$(1.94) $(1.29) $(2.28) Common equivalent shares: Basic and diluted
11.0 10.9 11.0 10.9 (a) Income tax expense (benefit) for the three
and nine months ended September 30, 2009 reflects valuation
allowance on deferred tax assets of $20.6 million and $28.2
million, respectively. CALIFORNIA COASTAL COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts)
(unaudited) September 30, December 31, 2009 2008 ---- ---- ASSETS
Cash and cash equivalents $3.7 $2.3 Restricted cash 3.3 5.4 Real
estate inventories 248.5 260.7 Deferred tax assets -- 37.1 Other
assets, net 4.2 7.0 --- --- Total assets $259.7 $312.5 ======
====== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts
payable and accrued liabilities $3.3 $5.0 Senior secured project
revolver 81.7 74.4 Senior secured term loan 99.8 107.4 Model home
financing 22.5 22.5 Other project debt 2.2 38.9 Other liabilities
8.9 8.8 --- --- Total liabilities 218.4 257.0 Stockholders' equity
41.3 55.5 ---- ---- $259.7 $312.5 ====== ====== Shares outstanding
(a) 11.0 10.9 Stockholders' equity per common share (b) $3.75 $5.09
(a) Includes outstanding options for 17,500 common shares. (b) The
Company believes that stockholders' equity per common share, which
is computed by dividing stockholders' equity by common shares
outstanding at the end of each period, is a useful supplemental
measure of the strength of the Company's balance sheet and an
indicator of the historical carrying value of the Company's net
assets. DATASOURCE: California Coastal Communities, Inc. CONTACT:
Sandra G. Sciutto, Chief Financial Officer of California Coastal
Communities, Inc., +1-949-250-7783 Web Site:
http://www.californiacoastalcommunities.com/
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