WCI Releases Fourth Quarter and Full Year 2006 Earnings




 Financial Highlights:

 * Full year 2006 net income: $9.0 million
 * Full year 2006 diluted EPS: $0.21
 * Full year 2006 figures include $139.5 million of pre-tax
   asset impairments & write-offs
 * Full-year 2006 diluted EPS before impairments and write-downs:
   $2.16

 * Fourth quarter net income: loss of $64.6 million
 * Fourth quarter diluted EPS: loss of $1.52
 * Fourth quarter figures include $118.3 million of pre-tax asset
   impairments & write-offs
 * Fourth quarter diluted EPS before impairments and write-offs:
   $0.18
 * 2006 year-end backlog: $911.2 million vs. $2.05 billion in
   2005

 * Projected 2007 cash flow from operations of approximately
   $1 billion
 * Projected year-end 2007 net debt to capital ratio of
   approximately 50%

BONITA SPRINGS, Fla., Feb. 27, 2007 (PRIME NEWSWIRE) -- WCI Communities, Inc. (NYSE:WCI), a leading builder of traditional and tower residences in highly amenitized lifestyle communities, today reported its results for the fourth quarter and full year ended December 31, 2006. For the twelve months ended December 31, 2006, net income fell to $9.0 million compared with $186.2 million in 2005, while diluted earnings per share (EPS) declined to $0.21 from $4.00 a year ago. If $139.5 million in pre-tax charges for asset impairments and land acquisition termination costs (collectively "Write-offs") were excluded, EPS would have approximated $2.16. Revenues for 2006 totaled $2.05 billion vs. $2.60 billion a year ago. Overall company gross margin for 2006 equaled 12.2% or 19.0% before Write-offs. In 2005, the total company gross margin was 23.0%.

For the fourth quarter, the company reported a net loss of $64.6 million compared with net income of $54.6 million for the fourth quarter of 2005. Diluted EPS for the quarter was a net loss of $1.52 versus net income of $1.20 in the same period a year ago. Net income and EPS before Write-offs of $118.3 million totaled $6.6 million and $0.18, respectively. Revenues for the fourth quarter of 2006 decreased to $526.3 million as compared with $843.4 million in the fourth quarter of 2005 as the result of lower sales during 2006, contract cancellations and defaults. Overall company gross margin as a percentage of revenue for the fourth quarter of 2006 was negative. Excluding Write-offs, company gross margin as a percentage of revenue for the fourth quarter of 2006 was 14.4% versus 22.9% in the fourth quarter of 2005.

"The past year was extremely challenging as consumer sentiment became progressively more negative leading to a severe decrease in demand and ultimately a sharp spike in cancellations and defaults," said Jerry Starkey, President and CEO of WCI Communities. "Rising inventories of unsold new and existing homes in all of our markets led to greater use of incentives and discounts thereby reducing margins in all WCI markets."

"During the fourth quarter, we recorded real estate inventory impairment losses totaling $91.4 million. At one community in Southwest Florida, a revised product and marketing plan introduced earlier in the year failed to produce sales as expected, which led us to conclude that additional pricing reductions were needed, which resulted in an impairment charge of approximately $84.9 million. The remaining inventory impairment charges related to price reductions implemented at various communities to sell out remaining finished inventory. Additionally, we re-evaluated all remaining contracted options to purchase additional land or lots and wrote off a total of $26.9 million during the quarter reflecting forfeited deposits, pre-acquisition costs, and estimated future payments for projects previously pursued that no longer make economic sense in today's housing market. In aggregate, the fourth quarter Write-offs of $118.3 million significantly reduced our fourth quarter and full year earnings."

Starkey continued, "Our Florida markets, which account for approximately 85% of our business, experienced the greatest slowdown during 2006. While traffic in Florida increased sequentially in January 2007 as compared to December 2006, it was nevertheless about 35% lower than January of 2006. Year-to-date 2007, we have seen a drop in Florida's Traditional Homebuilding cancellation rate, which has moved down to our historical average of 20%. Traffic always tends to pick up this time of the year in Florida and it is too early to gauge demand trends."

"Our principle business focus in 2007 is on maximizing cash flow, reducing debt, and improving our financial flexibility. We expect to generate approximately $1 billion of cash flow from operations during 2007. While all aspects of our business will contribute to this cash flow objective, completing and closing nine towers during the year is the primary driver. We expect around $1 billion in collections from the closing of those nine towers and from the closing of the remaining sold units from three towers that were completed in December 2006. The default rate for towers that closed during 2006, and particularly during the fourth quarter, was higher than our estimate and historical average, but generally lower than many analyst and investors predicted. Taking into consideration our recent tower closing experience and the individual locations and mix of sold units, we estimate that our tower defaults during 2007 will range from 8% to 10% in aggregate. As we close towers and collect the receivables, we expect to reduce our debt significantly, and ultimately lower our net debt to capital by year-end 2007 to about 50% from our year-end 2006 level of 66%. During 2006, we significantly reduced our overhead in response to lower demand and in 2007 we continue to focus on reducing construction costs, achieving additional operating efficiencies, and will sharply reduce spending on land and land improvement."

Earlier this month, the company announced the retention of Goldman Sachs to assist the Board and senior management in a thorough review of WCI's business plans, capital structure, and growth prospects, with the objective of enhancing value for all shareholders. Starkey added, "We are fully engaged with Goldman Sachs in the process to identify and evaluate a range of strategic alternatives most likely to increase shareholder value."

For the year ended December 31, 2006, the aggregate value of Traditional and Tower Homebuilding gross orders declined 55.9% to $1.05 billion over the same period a year ago while net orders declined 71.0% to $653.8 million. The number of gross unit orders declined 54.6% to 1,371, with net unit orders dropping 70.5% to 815. For the full year 2006, the average price of Traditional and Tower Homebuilding net orders combined averaged $802,000, slightly down from last year's average of $815,000, reflecting a smaller percentage of tower orders in the overall mix as well as mix changes in Traditional Homebuilding orders, including a higher contribution from the company's Northeast Division. The aggregate value and number of new Traditional and Tower Homebuilding net orders for the fourth quarter were negative, due to cancellations and defaults of 276 outnumbering gross orders of 262. The company's combined Traditional and Tower Homebuilding year-end backlog was $911.2 million, down 55.6% from the $2.05 billion reported a year earlier.

Traditional Homebuilding

For the year ended December 31, 2006, Traditional Homebuilding revenues declined 8.3% to $1.11 billion from $1.21 billion for 2005. The company closed 1,577 homes compared with 2,346 for the same period a year ago. Gross margin as a percentage of revenue totaled 10.8% for 2006. Excluding Write-offs, gross margin as a percent of revenue was 21.7% as compared with 18.5% for 2005.

Fourth quarter 2006 revenues in the Traditional Homebuilding Division were $349.5 million, down 21.0% from the $442.6 million posted in the fourth quarter of 2005 primarily because approximately 22% of contract purchasers scheduled to close defaulted this quarter, compared to an approximate 1% default rate in the fourth quarter of 2005. Fourth quarter unit deliveries totaled 434 compared with 859 during the same period last year. Gross margin as a percent of revenue was negative for the quarter, due to a total of $113.2 million of Write-offs. Absent these charges, gross margin as a percent of revenue equaled 18.9% versus 20.7% in the fourth quarter of 2005.

For 2006, the number of gross orders in the Traditional Homebuilding Division totaled 1,260 compared with 2,051 for 2005, while the number of net orders dropped to 750 from 1,795. The average sales price for Traditional Homebuilding orders for 2006 was $738,000 compared with $675,000 in 2005. The traditional home cancellation rate for the year was 40.5% compared to a long-term average cancellation rate of around 20%. Traditional Homebuilding gross orders for the fourth quarter 2006 totaled 257 units and were almost entirely offset by 249 cancellations, including 187 defaults of units in backlog scheduled for Q4 2006 settlement, resulting in only eight net orders for the period. Traditional Homebuilding backlog ended the year at $682.6 million, compared to year-end 2005 backlog of $1.19 billion.

Tower Homebuilding

For 2006, revenues in the Tower Homebuilding Division fell 29.9% to $729.5 million from $1.04 billion a year ago, as 14 towers were completed during the year and no new towers were started. Gross margin as a percentage of revenue declined to 19.2% from 26.0% in 2005, due principally to cost adjustments related to finished towers or towers under construction during the year, as well as higher interest charges due to longer tower construction cycles.

Fourth quarter 2006 revenues for the Tower Homebuilding Division declined 63.6% to $123.4 million from $339.3 million in the fourth quarter of 2005. No new towers began recognition of revenue during the quarter. Overall, 17 towers were under construction and recognizing revenue during the quarter compared with 25 in the same period a year ago. During each quarter, the company reviews the cost estimates for each tower under construction and makes adjustments to reflect actual increases or decreases in current and expected future costs. Unfavorable adjustments booked for the fourth quarter of 2006 for towers that were completed or are under construction totaled $21.5 million, including an $11.3 million increase in the default reserve for future tower closings to approximately 8% of sold units versus our prior expectation of 5%. Longer tower construction cycles resulted in $8.4 million of expected incremental interest and insurance costs. Due primarily to these adjustments during the period, gross margin as a percentage of revenue decreased to 7.9% from 27.1% in the same period last year.

Tower Homebuilding gross orders for 2006 decreased to 111 from the 968 recorded in 2005, while net orders were 65 and 966 for 2006 and 2005, respectively. The number of defaults for the year totaled 46 out of 713 units expected to close. In addition, as of the date of this release, 17 sold units in buildings that were recently completed have not yet closed. The company has reserved for 12 defaults of those 17 remaining units, which if realized, would result in a default rate of 8.1% for the year. The average sales price for Tower Homebuilding units sold in 2006 was $1.5 million compared with $1.1 million in 2005. The net number of new tower orders for the quarter was negative 22, as defaults of 27 outnumbered gross new orders of five. For the quarter, there were 27 defaults recorded out of 302 expected to close. The default rate would be 12.9% if the 12 defaults reserved for actually defaulted. Tower Homebuilding backlog at the end of 2006 totaled $228.6 as compared with $857.9 million at the end of 2005.

Real Estate Services

For the year ended December 31, 2006, Real Estate Services Division revenues totaled $109.4 million, down 30.2% from the $156.7 million recorded for the year ended December 31, 2005. Gross margin as a percentage of revenue over the period decreased to 5.0% from 15.5% in the same period a year ago, due to the drop in transaction volume as a result of the slowdown in the housing market.

Fourth quarter 2006 Real Estate Services Division revenues totaled $22.3 million, down 20.9% from $28.2 million recorded for the fourth quarter of 2005. Fourth quarter 2006 gross margin as a percentage of revenue was negative versus 7.4% in the same period a year ago. The decline in revenues and gross margin percentage experienced in the fourth quarter of 2006 versus the prior year was also due to a drop in transaction volume.

Other Items

The Amenities Division experienced a loss of $7.8 million for the full year 2006, and a loss of $6.4 for the fourth quarter versus a loss of $3.8 million for 2005 and a slight gain in the fourth quarter of 2005. Both 2006 periods were affected by asset impairment charges totaling $4.5 million due to the inability to realize planned revenue in a 22-unit marina that was constructed in conjunction with a Palm Beach tower.

Land sale revenues for 2006 totaled $11.7 million, including revenues of $4.2 million in the fourth quarter, compared with revenues of $110.3 million and $9.4 million, respectively, for the full year and fourth quarter periods of 2005. Gross margin as a percentage of revenue for land sales equaled 57.8% and 48.8% for the full year 2006 and fourth quarter, respectively, versus 76.6% and 77.3% in the year earlier periods.

Other income and hurricane recoveries, net of expenses, for 2006 totaled $12.8 million, including $1.1 million in the fourth quarter. In 2005, the items totaled $6.5 million for the year and resulted in a $801,000 loss for the fourth quarter of that year, due to hurricane costs. Interest expense for the year ended December 31, 2006 was $35.6 million compared with $35.8 million in 2005 and fourth quarter interest expense increased to $16.5 million from $10.8 million in the same period a year ago.

Selling, general, and administrative expenses, including real estate taxes, (SG&A) as a percentage of revenue for 2006 was 9.4%, up from 8.3% in 2005. For the fourth quarter of 2006, SG&A was 8.5%, compared with 7.2% in the fourth quarter of the previous year, although SG&A dollars declined $16.0 million versus the year-ago period, as the company's cost reduction efforts began to be realized.

The effective tax rate for year ended December 31, 2006 was 5.7% versus 39.1% in 2005. The reduction in the effective tax rate for 2006 was primarily due to a recurring manufacturing tax credit and recognition of approximately $3 million in tax benefits from tax positions asserted in prior year tax returns on which the statute of limitations has expired. The company expects its tax rate going forward to approximate 39%.

Cash Flow/Financial Position/Balance Sheet

For the year ended December 31, 2006, net cash used in operating activities, including the purchase and development of real estate inventories, totaled $489.6 million compared with cash used in operating activities of $8.9 million in the same period a year ago. Excluding land purchases of approximately $54.9 million, operating activities used net cash flow of approximately $434.7 million.

Total liquidity, measured as the sum of cash plus available capacity under the unsecured revolving facility, totaled approximately $468.1 million at December 31, 2006 based upon the maximum amount available to borrow under the company's senior unsecured revolving credit facility of $930 million. The ratio of net debt to net capitalization of was 66.3% compared with 55.1% at December 31, 2005. The company expects the ratio to decline to approximately 50.0% by the end of 2007, as tower closings are expected to generate approximately $1.0 billion, reducing total company debt by a similar amount.

Capped Call Options to Repurchase WCI Stock

During the fourth quarter of 2006, the company invested $25.7 million of equity in capped call options that give it the right to repurchase up to 5,000,000 shares of WCI common stock at an average price of $13.63. The company may choose to settle the derivative contracts in cash, in which case it would receive payment of the difference between the share price at the maturity date and an average exercise price of $13.63. The exercise price would rise dollar-for-dollar once the cap, averaging $25.55, is reached. Settlement is required to occur at the maturity date of one year from the derivative contract dates, which range between mid-September and mid-October 2007. Under certain circumstances, the derivative contracts may be unwound in advance of the maturity date. If the company elects to unwind the capped call option contracts, provided that the share price is above the exercise price, the company would receive a cash amount determined by a calculation that takes into account the spread between the share price and the exercise price and the length of time between termination and maturity of the contracts. Based upon the closing price of $21.68 on February 23, 2007, the estimated value if unwound would be approximately $34.5 million.

Conference Call

WCI will conduct a conference call today at 9:30 AM EST in conjunction with this release. The call will be broadcast live at http://www.wcicommunities.com in the Investor Relations area or can be accessed by telephone at (303) 262-2194 and asking for the WCI Communities conference call. A replay will be available after the call for a period of 36 hours by dialing (303) 590-3000 and entering conference code 11083834. The replay will also be available on the company's website. A slide presentation will accompany the call and can be accessed on the company's website in the Investor Relations section.

About WCI

WCI Communities, Inc., named America's Best Builder in 2004 by the National Association of Home Builders and Builder Magazine, has been creating amenity-rich, master-planned lifestyle communities since 1946. Florida-based WCI caters to primary, retirement, and second-home buyers in Florida, New York, New Jersey, Connecticut, Maryland and Virginia. The company offers traditional and tower home choices with prices from the high-$100,000s to more than $10 million and features a wide array of recreational amenities in its communities. In addition to homebuilding, WCI generates revenues from its Prudential Florida WCI Realty Division and its recreational amenities, as well as through land sales and joint ventures. The company currently owns and controls developable land on which the company plans to build about 20,000 traditional and tower homes.

For more information about WCI and its residential communities, visit www.wcicommunities.com

The WCI Communities, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=3018

Certain information included herein and in other company reports, Securities and Exchange Commission filings, statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about the company's anticipated operating results, financial resources, ability to acquire land, ability to sell homes and properties, ability to deliver homes from backlog, and ability to secure materials and subcontractors. Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other company reports, filings, statements and presentations. These risks and uncertainties include WCI's ability to compete in real estate markets where we conduct business; the availability and cost of land in desirable areas in its geographic markets and elsewhere and our ability to expand successfully into those areas; WCI's ability to obtain necessary permits and approvals for the development of its lands; the availability of capital to WCI and our ability to effect growth strategies successfully; WCI's ability to pay principal and interest on its current and future debts; WCI's ability to comply with outstanding debt agreements/covenants; S&P and/or Moody's downgrades; WCI's ability to maintain or increase historical revenues and profit margins; availability of labor and materials and material increases in labor and material costs; increases in interest rates and availability of mortgage financing; the level of consumer confidence; increased customer cancellations or defaults; adverse legislation or regulations; unanticipated litigation or legal proceedings; changes in accounting rules, including changes in percentage of completion accounting; natural disasters; lack of visibility in the marketplace and inability to gauge timing of market turnarounds; and changes in general economic, real estate and business conditions. If one or more of the assumptions underlying our forward-looking statements proves incorrect, then the company's actual results, performance or achievements could differ materially from those expressed in, or implied by the forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on our forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.



                         WCI Communities, Inc.
                 Condensed Consolidated Balance Sheets
                        (Dollars in thousands)

                                            December 31,   December 31,
                                                2006           2005
                                            ------------   ------------
 Assets

 Cash and cash equivalents                   $   41,876     $   52,584
 Contracts receivable                         1,269,549      1,123,509
 Real estate inventories                      1,955,793      1,687,852
 Property and equipment                         274,720        208,205
 Other assets                                   289,921        409,256
                                             ----------     ----------

 Total assets                                $3,831,859     $3,481,406
                                             ==========     ==========
 Liabilities and Shareholders' Equity

 Accounts payable, accruals and other
  liabilities                                $  862,353     $1,070,047
                                             ----------     ----------
 Debt obligations:
   Senior unsecured credit facility             503,846         94,050
   Senior unsecured term note                   300,000        300,000
   Mortgages and notes payable                  363,261        203,214
   Senior subordinated notes                    525,000        530,473
   Junior subordinated notes                    165,000        100,000
   Contingent convertible senior
    subordinated notes                          125,000        125,000
                                             ----------     ----------
     Total debt obligations                   1,982,107      1,352,737
                                             ----------     ----------

 Total shareholders' equity                     987,399      1,058,622
                                             ----------     ----------

 Total liabilities and shareholders'
  equity                                     $3,831,859     $3,481,406
                                             ==========     ==========


 Other Balance Sheet Data
 Debt                                        $1,982,107     $1,352,737
 Shareholders' equity                           987,399      1,058,622
                                             ----------     ----------
 Capitalization                              $2,969,506     $2,411,359
                                             ==========     ==========
 Ratio of debt to capitalization                   66.7%          56.1%

 Debt, net of cash and cash equivalents      $1,940,231     $1,300,153
 Shareholders' equity                           987,399      1,058,622
                                             ----------     ----------
 Capitalization, net of cash and cash
  equivalents                                $2,927,630     $2,358,775
                                             ==========     ==========
 Ratio of net debt to net capitalization           66.3%          55.1%

 Shareholders' equity per share              $    23.57     $    23.86


                         WCI Communities, Inc.
              Selected Revenues and Earnings Information
             (Dollars in thousands, except per share data)

                              For the                  For the
                        three months ended        twelve months ended
                            December 31,             December 31,
                      ----------------------    ----------------------
                         2006        2005          2006        2005
                      ----------  ----------    ----------  ----------
 REVENUES
   Homebuilding:
     Homes            $  330,855  $  440,952    $1,068,393  $1,181,678
     Lots                 18,619       1,633        38,093      31,328
                      ----------  ----------    ----------  ----------
   Total traditional     349,474     442,585     1,106,486   1,213,006
     Towers              123,363     339,312       729,516   1,035,747
                      ----------  ----------    ----------  ----------
   Total homebuilding    472,837     781,897     1,836,002   2,248,753

   Real estate services   22,339      28,226       109,421     156,740
   Amenity membership
    and operations        24,995      21,804        88,528      78,618
   Land sales              4,221       9,431        11,739     110,330
   Other                   1,883       2,046         8,008       7,369
                      ----------  ----------    ----------  ----------
       Total revenues    526,275     843,404     2,053,698   2,601,810
                      ----------  ----------    ----------  ----------


 GROSS MARGIN
   Homebuilding:
     Homes               (48,369)     91,221       113,339     215,959
     Lots                  1,270         463         6,402       8,628
                      ----------  ----------    ----------  ----------
   Total traditional     (47,099)     91,684       119,741     224,587
     Towers                9,711      91,952       139,816     269,255
                      ----------  ----------    ----------  ----------
   Total homebuilding    (37,388)    183,636       259,557     493,842

   Real estate services     (494)      2,091         5,431      24,271
   Amenity membership
    and operations        (6,354)         25        (7,821)     (3,795)
   Land sales              2,060       7,292         6,789      84,513
   Other                    (245)       (251)      (13,578)       (112)
                      ----------  ----------    ----------  ----------
       Total gross
        margin (a)       (42,421)    192,793       250,378     598,719
                      ----------  ----------    ----------  ----------


 OTHER INCOME AND
  EXPENSES
   Equity in
    (earnings) losses
    from joint
    ventures                (211)        558           603       1,386
   Other income             (917)     (5,887)       (6,165)    (10,804)
   Hurricane
    (recoveries)
    costs, net              (211)      6,688        (6,646)      4,324
   Selling, general
    and administrative,
    including real
    estate taxes, net     44,507      60,509       193,218     215,632
   Depreciation and
    amortization           5,882       4,354        24,592      16,037
   Interest expense, 
    net                   16,497      10,800        35,600      35,816
   Expenses related
    to early
    repayment of debt         --      21,872           455      26,167
                      ----------  ----------    ----------  ----------
   (Loss) income
    before minority
    interests and
    income taxes        (107,968)     93,899         8,721     310,161
   Minority interests       (579)      2,563          (837)      4,537
   Income tax
    (benefit) expense    (42,827)     36,777           544     119,474
                      ----------  ----------    ----------  ----------
       Net (loss)
        income        $  (64,562) $   54,559    $    9,014  $  186,150
                      ==========  ==========    ==========  ==========


 (LOSS) EARNINGS PER
  SHARE
   Basic              $    (1.55) $     1.23    $     0.21  $     4.15
   Diluted            $    (1.52) $     1.20    $     0.21  $     4.00

 WEIGHTED AVERAGE
  NUMBER OF SHARES
   Basic                  41,766      44,330        42,629      44,805
   Diluted                42,421      45,486        43,449      46,579

 OPERATING DATA
   Interest incurred,
    excluding
    warehouse credit
    facility          $   38,621  $   30,456    $  128,964  $  106,859
   Interest included
    in cost of sales  $   23,566  $   26,847    $   74,030  $   73,070

 Note
 (a) Total gross margin for the three and twelve months ended
     December 31, 2006 includes asset impairment charges and land
     acquisition termination costs of $118,281 and $139,519
     respectively.


                         WCI Communities, Inc.
                      Non-GAAP Financial Measures
             (Dollars in thousands, except per share data)

                                For the                 For the
                          three months ended      twelve months ended
                              December 31,             December 31,
                         ---------------------    --------------------
                           2006        2005         2006       2005
                         ---------   ---------    ---------  ---------
 Gross Margin
  Reconciliation
   Total gross
    margin - as
    reported             $ (42,421)  $ 192,793    $ 250,378  $ 598,719
     Add: Asset
      impairments           91,418          --       98,156         --
     Add: Land
      acquisition
      termination
      costs                 26,863          --       41,363         --
                         ---------   ---------    ---------  ---------
   Total gross margin
    excluding asset
    impairment and
    land acquisition
    termination
    charges              $  75,860   $ 192,793    $ 389,897  $ 598,719

 Net Income
  Reconciliation
   (Loss) income
    before income
    taxes - as
    reported             $(107,389)  $  91,336    $   9,558  $ 305,624
     Add: Asset
      impairments           91,418          --       98,156         --
     Add: Land
      acquisition
      termination
      costs                 26,863          --       41,363         --
                         ---------   ---------    ---------  ---------
   Income before
    income taxes
    excluding asset
    impairment and
    land acquisition
    termination
    charges                 10,892      91,336      149,077    305,624
     Adjusted income
      tax expense           (4,264)    (36,881)     (58,364)  (123,411)
                         ---------   ---------    ---------  ---------
   Net income
    excluding asset
    impairment and
    land acquisition
    termination
    charges              $   6,628   $  54,455    $  90,713  $ 182,213
                         =========   =========    =========  =========
 Diluted Earnings
  Per Share
  Reconciliation
   Diluted Earnings
    Per Share - as
    reported             $   (1.52)  $    1.20    $    0.21  $    4.00
     Add: Asset
      impairments             1.31          --         1.37         --
     Add: Land
      acquisition
      termination
      costs                   0.39          --         0.58         --
                         ---------   ---------    ---------  ---------
   Diluted Earnings
    Per Share -
    excluding asset
    impairment and
    land acquisition
    termination
    charges              $    0.18   $    1.20    $    2.16  $    4.00
                         =========   =========    =========  =========

   Weighted Average
    Number of Shares
     Diluted                42,421      45,486       43,449     46,579

 Reconciliation of
  EBITDA and Other
  Non-Cash Items
   (Loss) income
    before income
    taxes - as
    reported             $(107,389)  $  91,336    $   9,558  $ 305,624
     Add: Interest
      expense, net          16,497      10,800      35,600      35,816
     Add: Interest
      expense
      included in
      cost of sales         23,566      26,847       74,030     73,070
     Add: Depreciation
      and amortization       5,882       4,354       24,592     16,037
     Add: Asset
      impairment
      charges               91,418          --       98,156         --
     Add: Land
      acquisition
      termination
      charges               26,863          --       41,363         --
     Add: Expenses
      related to
      early repayment
      of debt                   --      21,872          455     26,167
                         ---------   ---------    ---------  ---------
   EBITDA                $  56,837   $ 155,209    $ 283,754  $ 456,714
                         =========   =========    =========  =========


 Earnings before interest expense, income taxes, depreciation and
 amortization (EBITDA) is not a generally accepted accounting
 principle (GAAP) financial statement measurement. EBITDA should not
 be considered an alternative to cash flows from operations determined
 in accordance with GAAP as a measure of liquidity. The Company's
 management believes that EBITDA is an indication of the Company's
 ability to generate funds from operations that are available to pay
 principal and interest on debt obligations and to meet other cash
 needs.


 Gross margin, net income and diluted earnings per share before asset
 impairment and land acquisition termination charges are non-GAAP
 financial statement measures.  The Company's management believes
 that providing these captions excluding these charges provides
 financial statement users with meaningful information that is
 relevant to the Company's ongoing operations.


                         WCI Communities, Inc.
            Condensed Consolidated Statements of Cash Flows
                        (Dollars in thousands)

                                                       For the 
                                                 twelve months ended
                                                     December 31,
                                                ----------------------
                                                   2006         2005
                                                ---------    ---------
 Cash flows from operating activities:
   Net income                                   $   9,014    $ 186,150
   Asset impairment and land acquisition
    termination charges                           121,516           --
   Increase in real estate inventories           (372,669)     (58,288)
   Increase in contracts receivable              (146,040)    (365,103)
   (Decrease) increase in customer deposits      (106,332)      70,227
   Decrease in restricted cash                     65,815       51,591
   (Decrease) increase in accounts payable
    and other liabilities                         (46,269)      27,076
   Other                                          (14,644)      79,403
                                                ----------------------
 Net cash used in operating activities           (489,609)      (8,944)
                                                ---------    ---------

 Cash flows from investing activities:
   Net cash paid for acquisition                       --     (136,558)
   Additions to property and equipment, net       (41,178)     (50,049)
   Other                                           (5,852)      22,715
                                                ---------    ---------
 Net cash used in investing activities            (47,030)    (163,892)
                                                ---------    ---------

 Cash flows from financing activities:
   Net borrowings under debt obligations          630,501      184,230
   Other                                         (104,570)     (20,802)
                                                ---------    ---------
 Net cash provided by financing activities        525,931      163,428
                                                ---------    ---------

 Net decrease in cash and cash equivalents      $ (10,708)   $  (9,408)
                                                =========    =========


                         WCI Communities, Inc.
                     Homebuilding Operational Data
                        (Dollars in thousands)

                              For the                  For the
                         three months ended       twelve months ended
                            December 31,             December 31,
                        --------------------    ----------------------
                          2006       2005          2006        2005
                        ---------  ---------    ----------  ----------
 Combined Traditional
  and Tower
  Homebuilding
 ----------------------
   Homes Closed
    (Units)(a)                668      1,026         2,215       2,909
   Net New Orders (Units)     (14)       334           815       2,761
   Net Contract Values
    of New Orders       $ (39,432) $ 321,921    $  653,783  $2,250,591
   Average Selling
    Price Per New
    Order, Net                 NM  $     964    $      802  $      815

 Traditional
  Homebuilding
 -------------
   Homes Closed (Units)
     Florida                  362        695         1,312       1,916
     Northeast U.S.            33        103           152         293
     Mid-Atlantic U.S.         39         61           113         137
                        ---------  ---------    ----------  ----------
       Total                  434        859         1,577       2,346
                        ---------  ---------    ----------  ----------

   Revenues, excluding
    lot revenues
     Florida            $ 260,874  $ 304,053    $  845,141  $  852,565
     Northeast U.S.        21,437     60,163        85,426     171,588
     Mid-Atlantic U.S.     48,544     76,736       137,826     157,525
                        ---------  ---------    ----------  ----------
       Total            $ 330,855  $ 440,952    $1,068,393  $1,181,678
                        ---------  ---------    ----------  ----------

   Average Selling
    Price Per Home
    Closed
     Florida            $     721  $     437    $      644  $      445
     Northeast U.S.           650        584           562         586
     Mid-Atlantic U.S.      1,245      1,258         1,220       1,150
                        ---------  ---------    ----------  ----------
       Total            $     762  $     513    $      677  $      504
                        ---------  ---------    ----------  ----------

   Gross New Orders
    (Units)
     Florida                  207        195           902       1,736
     Northeast U.S.            35         38           288         209
     Mid-Atlantic U.S.         15         21            70         106
                        ---------  ---------    ----------  ----------
       Total                  257        254         1,260       2,051
                        ---------  ---------    ----------  ----------

   Cancellations
    (Units)
     Florida                 (232)       (33)         (437)       (201)
     Northeast U.S.           (12)        (8)          (44)        (49)
     Mid-Atlantic U.S.         (5)        (1)          (29)         (6)
                        ---------  ---------    ----------  ----------
       Total                 (249)       (42)         (510)       (256)
                        ---------  ---------    ----------  ----------

   Net New Orders
    (Units)
     Florida                  (25)       162           465       1,535
     Northeast U.S.            23         30           244         160
     Mid-Atlantic U.S.         10         20            41         100
                        ---------  ---------    ----------  ----------
       Total                    8        212           750       1,795
                        ---------  ---------    ----------  ----------

   Gross Contract
    Values of New
    Orders
     Florida            $ 127,665  $ 157,427    $  658,744  $1,085,313
     Northeast U.S.        21,553     21,471       153,158     121,808
     Mid-Atlantic U.S.     16,789     27,560        89,677     135,836
                        ---------  ---------    ----------  ----------
       Total            $ 166,007  $ 206,458    $  901,579  $1,342,957
                        ---------  ---------    ----------  ----------

   Contract Values of
    Cancellations
     Florida            $(166,329) $ (20,271)   $ (288,871) $ (100,803)
     Northeast U.S.        (7,088)    (4,577)      (22,854)    (23,998)
     Mid-Atlantic U.S.     (4,292)      (994)      (36,231)     (6,625)
                        ---------  ---------    ----------  ----------
       Total            $(177,709) $ (25,842)   $ (347,956) $ (131,426)
                        ---------  ---------    ----------  ----------

   Net Contract Values
    of New Orders
     Florida            $ (38,664) $ 137,156    $  369,873  $  984,510
     Northeast U.S.        14,465     16,894       130,304      97,810
     Mid-Atlantic U.S.     12,497     26,566        53,446     129,211
                        ---------  ---------    ----------  ----------
       Total            $ (11,702) $ 180,616    $  553,623  $1,211,531
                        ---------  ---------    ----------  ----------

   Gross Average
    Selling Price Per
    New Order
     Florida            $     617  $     807    $      730  $      625
     Northeast U.S.           616        565           532         583
     Mid-Atlantic U.S.      1,119      1,312         1,281       1,281
                        ---------  ---------    ----------  ----------
       Total            $     646  $     813    $      716  $      655
                        ---------  ---------    ----------  ----------

  Tower Homebuilding
  ------------------
   Homes Closed (Units)
     Florida                  234        167           638         563
                        ---------  ---------    ----------  ----------
       Total                  234        167           638         563
                        ---------  ---------    ----------  ----------

   Revenues
     Florida            $  99,108  $ 291,077    $  671,425  $  987,512
     Northeast U.S.        24,255     48,235        58,091      48,235
                        ---------  ---------    ----------  ----------
       Total            $ 123,363  $ 339,312    $  729,516  $1,035,747
                        ---------  ---------    ----------  ----------
   Gross New Orders
    (Units)
     Florida                    5        111           104         797
     Northeast U.S.            --         12             7         171
                        ---------  ---------    ----------  ----------
       Total                    5        123           111         968
                        ---------  ---------    ----------  ----------

   Defaults (Units)
     Florida                  (26)        (1)          (45)         (2)
     Northeast U.S.            (1)        --            (1)         --
                        ---------  ---------    ----------  ----------
       Total                  (27)        (1)          (46)         (2)
                        ---------  ---------    ----------  ----------
   Net New Orders
    (Units)
     Florida                  (21)       110            59         795
     Northeast U.S.            (1)        12             6         171
                        ---------  ---------    ----------  ----------
       Total                  (22)       122            65         966
                        ---------  ---------    ----------  ----------

   Gross Contract
    Values of New
    Orders
     Florida            $   5,374  $ 129,048    $  134,520  $  879,149
     Northeast U.S.            --     13,307        12,153     161,906
                        ---------  ---------    ----------  ----------
       Total            $   5,374  $ 142,355    $  146,673  $1,041,055
                        ---------  ---------    ----------  ----------

   Contract Values of
    Defaults
     Florida            $ (31,479) $  (1,050)   $  (44,888) $   (1,995)
     Northeast U.S.        (1,625)        --        (1,625)         --
                        ---------  ---------    ----------  ----------
       Total            $ (33,104) $  (1,050)   $  (46,513) $   (1,995)
                        ---------  ---------    ----------  ----------

   Net Contract Values
    of New Orders
     Florida            $ (26,105) $ 127,998    $   89,632  $  877,154
     Northeast U.S.        (1,625)    13,307        10,528     161,906
                        ---------  ---------    ----------  ----------
       Total            $ (27,730) $ 141,305    $  100,160  $1,039,060
                        ---------  ---------    ----------  ----------

   Gross Average
    Selling Price Per
    New Order
     Florida            $   1,075  $   1,163    $    1,293  $    1,103
     Northeast U.S.            NM  $   1,109    $    1,736  $      947
                        ---------  ---------    ----------  ----------
       Total            $   1,075  $   1,157    $    1,321  $    1,075
                        ---------  ---------    ----------  ----------

   Towers under
    construction
    recognizing
    revenue during the
    period                     17         25            24          29

                                        December 31,
                                  ------------------------
                                     2006          2005
                                  ----------    ----------
 Combined Traditional
  and Tower Homebuilding
 -----------------------
   Aggregate Backlog
    Contract Values,
    Traditional and
    Tower Homebuilding            $  911,156    $2,049,377

 Traditional Homebuilding
 ------------------------
   Backlog (Units)                       870         1,697
   Backlog Contract Values        $  682,577    $1,191,439


 Tower Homebuilding
 ------------------
   Cumulative Units in
    Backlog                            1,297         1,870
   Cumulative Contract
    Values                        $1,521,420    $1,987,107
   Less: Cumulative
    Revenues Recognized           (1,292,841)   (1,129,169)
                                  ----------    ----------
   Backlog Contract
    Values                        $  228,579    $  857,938
                                  ==========    ==========


 (a) The Company uses the percentage of completion method to recognize
     revenue on sold tower units.  Accordingly, the closing of tower
     homes corresponds with the collection of contracts receivable.

 NM: Data not meaningful


                       2006 Tower Profile (as of 2/23/07)

                
                          Proj. 
                 No. of  Sell-out    %        %      Average   HUD
                 Units    Value    Sold   Complete   Deposit  Bldg(b)
 ---------------------------------------------------------------------
 Closed to Date
 Anchorage at
  Jupiter Yacht
  Club              34     $32M    100%     100%        20%      No
 Commodore at
  Jupiter Yacht
  Club              22     $21M    100%     100%        20%      No
 San Andres at
  Lost Key          45     $28M    100%     100%        18%      No
 Serano at
  Hammock Bay      116     $68M    100%     100%        20%      No
 Navona at The
  Colony           100     $61M    100%     100%        20%     Yes
 Santo Amaro at
  Lost Key          45     $27M     96%     100%        18%      No
 LaSalbadora at
  Lost Key          45     $26M     73%     100%        17%      No
 One Singer
  Island            15     $47M     80%     100%        20%      No
 Casa at
  Castella
  (The Colony)      24     $25M     38%     100%        16%     Yes
 Mansion at
  Castella
  (The Colony)      24     $26M     58%     100%        15%     Yes
 Villa at
  Castella
  (The Colony)      24     $26M     42%     100%        17%     Yes
 Costa Verano at
  Jacksonville
  Beach            100     $95M     95%      97%        20%      No
 Tuscany at
  Hammock Dunes     64     $82M     86%     100%        20%      No
 Mosaic at
  Miami Beach       91    $124M     99%     100%        20%      No
 ---------------------------------------------------------------------
   Totals          749    $688M     91%     100%        19%
 =====================================================================
 Under
  Construction
 Resort at
  Singer Island
  Condo             66    $106M     97%      96%        20%     Yes
 Resort at
  Singer Island
  Condo/Hotel(a)   229    $152M    100%      95%        20%     Yes
 Lesina at
  Hammock Bay      116    $130M     64%      94%        19%     Yes
 The Galia at
  Lost Key
  Marina            70     $50M     56%      94%        19%      No
 Le Jardin at
  Hammock Dunes     26     $67M     69%      82%        18%      No
 San Anton at
  Lost Key          54     $38M     78%      92%        19%      No
 One Bal Harbour
  Condo            185    $377M    100%      94%        19%     Yes
 One Bal Harbour
  Condo/Hotel(a)   115    $111M    100%      96%        20%     Yes
 Castillo at
  Westshore         80     $81M     90%      86%        18%     Yes
 The Watermark(c)  206    $233M     86%      62%        10%     Yes
 Florencia at
  The Colony       116    $123M     78%      79%        19%     Yes
 Oceanside B       186    $237M     63%      59%        18%     Yes
 ---------------------------------------------------------------------
   Totals        1,449  $1,705M     84%      86%        18%
 =====================================================================


                                               Expected       
                    Contract      Start        Closing      
                      Date        Date          Date(d)       
 -------------------------------------------------------
 Closed to Date
 Anchorage at
  Jupiter Yacht
  Club               2Q 2004     2Q 2004        Jan-06         
 Commodore at
  Jupiter Yacht
  Club               2Q 2004     2Q 2004        Jan-06         
 San Andres at
  Lost Key           4Q 2004     4Q 2004        Feb-06         
 Serano at
  Hammock Bay        4Q 2004     3Q 2004        Apr-06         
 Navona at The
  Colony             2Q 2004     2Q 2004        May-06         
 Santo Amaro at
  Lost Key           4Q 2004     4Q 2004        Jun-06         
 LaSalbadora at
  Lost Key           4Q 2004     4Q 2004        Aug-06         
 One Singer
  Island             2Q 2004     3Q 2004        Nov-06         
 Casa at
  Castella
  (The Colony)       3Q 2004     1Q 2005        Nov-06         
 Mansion at
  Castella
  (The Colony)       1Q 2005     1Q 2005        Nov-06         
 Villa at
  Castella
  (The Colony)       2Q 2005     1Q 2005        Nov-06         
 Costa Verano at
  Jacksonville
  Beach              3Q 2004     3Q 2004        Dec-06        
 Tuscany at
  Hammock Dunes      4Q 2004     2Q 2005        Dec-06         
 Mosaic at
  Miami Beach        3Q 2004     4Q 2004        Dec-06         
 -------------------------------------------------------
 Totals
 =======================================================
 Under
  Construction
 Resort at
  Singer Island
  Condo              3Q 2004     3Q 2004        Mar-07         
 Resort at
  Singer Island
  Condo/Hotel(a)     3Q 2004     3Q 2004        Mar-07         
 Lesina at
  Hammock Bay        2Q 2005     3Q 2005     Mar - Apr 07     
 The Galia at
  Lost Key
  Marina             4Q 2005     4Q 2005     Mar - Apr 07      
 Le Jardin at
  Hammock Dunes      4Q 2005     4Q 2005     May - Jun 07     
 San Anton at
  Lost Key           2Q 2005     3Q 2005     May - Jun 07      
 One Bal Harbour 
  Condo              4Q 2003     2Q 2004     Jun - Jul 07      
 One Bal Harbour
  Condo/Hotel(a)     4Q 2004     2Q 2004     Jun - Jul 07     
 Castillo at
  Westshore          3Q 2005     4Q 2005     Jun - Jul 07      
 The Watermark(c)    2Q 2005     3Q 2005    Sept - Oct 07      
 Florencia at
  The Colony         3Q 2005     3Q 2005     Oct - Nov 07     
 Oceanside B         3Q 2005     4Q 2005     Feb - Mar 08     
 --------------------------------------------------------
 Totals
 ========================================================

 (a) Does not count as a separate tower
 (b) In the event of a default in a HUD building, the company may
     retain no more than 15% of the total purchase price of the unit.
     Any additional deposit must be returned to the buyer.
 (c) An additional 10% is due when the tower is topped off.
 (d) Expected closing date based on current construction schedule.


                      Summary of Land Controlled
                          December 31, 2006
                                                               Finished
                   Remaining  Units in     Value in     Spec   Spec and
                   Planned   Backlog as   Backlog as    Units    Model
 Region             Units    of 12/31/06  of 12/31/06   in WIP   Units
 ---------------------------------------------------------------------
 Traditional
  Homebuilding
  (Including Lots)
  Florida
   Miami /
    Ft. Lauderdale   2,065       302       $280.6        48        79
   Naples /
    Ft. Myers        4,213       109         72.8       118       105
   Palm Beach /
    Indian River       560        16         13.8        10        23
   Palm Coast /
    Jacksonville        25         1          1.1        13        11
   Perdido Key         114        --           --        11         1
   Tampa /
    Sarasota         4,653       180        147.6        54       128
  Mid-Atlantic         306        30         47.4        16        31
  Northeast          2,114       232        119.3        20        24
 ---------------------------------------------------------------------
 Traditional
  Homebuilding
  Total             14,050       870        682.6       290       402

 Tower Homebuilding
  Florida
   Miami /
    Ft. Lauderdale   1,272       454         90.1        68         2
   Naples /
    Ft. Myers        1,021       164         21.9        68        41
   Palm Beach /
    Indian River       587       293         11.4         2         3
   Palm Coast /
    Jacksonville       591        56         26.9        13         9
   Perdido Key       1,554        81          2.0        43        14
   Tampa /
    Sarasota           652        72         10.1         8        --
  Mid-Atlantic         278        --           --        --        --
  Northeast            480       177         66.1        29        --
 ---------------------------------------------------------------------
 Tower Homebuilding
  Total              6,435     1,297        228.5       231        69

 Total Homebuilding
  Florida
   Miami /
    Ft. Lauderdale   3,337       756        370.7       116        81
   Naples /
    Ft. Myers        5,234       273         94.7       186       146
   Palm Beach /
    Indian River     1,147       309         25.2        12        26
   Palm Coast /
    Jacksonville       616        57         28.1        21        20
   Perdido Key       1,668        81          2.0        54        15
   Tampa /
    Sarasota         5,305       252        157.7        62       128
  Mid-Atlantic         584        30         47.4        16        31
  Northeast          2,594       409        185.4        49        24
 ---------------------------------------------------------------------
 Total Homebuilding
  Total             20,485     2,167        911.1       521       471
 =====================================================================

                                     Total
                                     Units             %
 Region                             Remaining        Owned
 ---------------------------------------------------------
 Traditional Homebuilding
  (Including Lots)
  Florida
   Miami / Ft. Lauderdale            1,636            100%
   Naples / Ft. Myers                3,881            100%
   Palm Beach / Indian River           511            100%
   Palm Coast / Jacksonville            --            100%
   Perdido Key                         102            100%
   Tampa / Sarasota                  4,291             83%
  Mid-Atlantic                         229            100%
  Northeast                          1,838             76%
 ---------------------------------------------------------
 Traditional Homebuilding Total     12,488             91%

 Tower Homebuilding
  Florida
   Miami / Ft. Lauderdale              748             87%
   Naples / Ft. Myers                  748            100%
   Palm Beach / Indian River           289             61%
   Palm Coast / Jacksonville           513            100%
   Perdido Key                       1,416            100%
   Tampa / Sarasota                    572             75%
  Mid-Atlantic                         278            100%
  Northeast                            274             43%
 ---------------------------------------------------------
 Tower Homebuilding Total            4,838             87%

 Total Homebuilding
  Florida
   Miami / Ft. Lauderdale            2,384             95%
   Naples / Ft. Myers                4,629            100%
   Palm Beach / Indian River           800             80%
   Palm Coast / Jacksonville           518            100%
   Perdido Key                       1,518            100%
   Tampa / Sarasota                  4,863             82%
  Mid-Atlantic                         507            100%
  Northeast                          2,112             70%
 ---------------------------------------------------------
 Total Homebuilding Total           17,326             90%
 =========================================================

               Remaining Planned Units
                 December 31, 2006
                                           Total
                     Owned  Optioned   Controlled
 Traditional
  Homebuilding      12,754     1,296       14,050
 Tower
  Homebuilding       5,606       829        6,435
 ------------------------------------------------
 Total
  Homebuilding      18,360     2,125       20,485
 ================================================


            

Coordonnées