Full Year 2007 Financial Highlights: -- Net loss: $578.5 million -- Diluted EPS: loss of $13.77 -- Figures include $412.2 million of pre-tax asset impairments and write-offs -- Figures include $150.1 million of Deferred Tax Asset Valuation Reserve recorded in the fourth quarter Fourth Quarter 2007 Financial Highlights -- Net loss: $459.8 million -- Basic and diluted EPS: loss of $10.93 -- Recorded pre-tax impairments and write-offs of $339.2 million -- Recorded Deferred Tax Asset Valuation Reserve of $150.1 million -- Revenues: $191.6 million - down 63.5% -- Gross new orders: $70.5 million - down 58.9% -- Backlog at December 31, 2007: $211.9 million
BONITA SPRINGS, Fla., March 17, 2008 (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, 2007. For the twelve months ended December 31, 2007, the net loss was $578.5 million compared with net income of $9.0 million in 2006 and diluted earnings per share (EPS) declined to a loss of $13.77 compared to $0.21 a year ago. Revenues for 2007 totaled $936.4 million vs. $2.04 billion for 2006. Overall company gross margin for 2007 was -32.7% or 3.1% before asset impairments and land acquisition termination included in cost of sales. In 2006, the total company gross margin was 12.2% or 19.0% before asset impairments and land acquisition termination costs.
For the three months ended December 31, 2007, WCI reported a net loss of $459.8 million, compared with a net loss of $64.6 million in the fourth quarter of 2006. Diluted earnings per share (EPS) was a loss of $10.93, compared to a loss of $1.55 for the same period a year ago. Revenues for the fourth quarter of 2007 were $191.6 million, compared with $524.0 million for the fourth quarter of 2006, a 63.4% decrease. Of this revenue decrease, $51.4 million was due to reversal of Tower Homebuilding revenue related to 35 defaults recorded this quarter.
Company gross margin for the fourth quarter of 2007 was negative $297.7 million versus a negative $43.6 million for the fourth quarter of 2006, a decrease of $254.1 million. Of this decrease, real estate inventory impairment charges and write-offs totaled $268.9 million, the reversal of $38.4 million of previously recognized gross margin related to one Florida tower that is nearing completion due to the discontinuance of percentage of completion for that project (further described below), unfavorable adjustments of tower cost estimates totaled $12.6 million, and $7.0 million was due to reversal of Tower Homebuilding gross margin related to defaults and default reserves recorded this quarter. Excluding all of these items, Company gross margin would have totaled $29.2 million ($-297.7 million as reported plus $268.9 million, $38.4 million, $12.6 million, and $7.0 million), or 12.0% of $243.0 million of revenue before effect of the recorded contract defaults ($191.6 million as reported plus $51.4 million cited in the prior paragraph).
"During the fourth quarter we commenced closings at One Bal Harbour which is comprised of 185 luxury condominiums and 115 luxury hotel condominium suites. To date, we have closed 85% or 157 of the condominiums and 42% or 48 of the hotel condominium suites sold. The five star hotel operated by Regent opened on March 1st and we hope its opening will facilitate closings and stimulate new sales of any defaulted units," said Jerry Starkey, President and CEO of WCI Communities.
In the fourth quarter, we wrote down our traditional and tower inventory to reflect impairments caused by expected lower prices and slower absorption in some product lines, and also wrote down certain amenities, goodwill and other assets which together resulted in impairment charges totaling $339.2 million. In addition, we reversed all of the margin associated with the Oceanside tower project in Pompano Beach, Florida based on the determination that the project no longer qualified for percentage of completion accounting due to the continued deterioration in the Florida market and the resulting uncertainty related to the closing of units under contract. This resulted in cost of goods sold increases and earnings reversals, which had a negative impact on our financial performance during the period. The backlog of 317 traditional homes as of December 31, 2007 is mostly expected to close in 2008.
For the three months ended December 31, 2007, gross new orders totaled 171 units, a decline of 34.7% compared to the same quarter in 2006, with a value for the fourth quarter of 2007 of $70.5 million, down 58.9% from 2006. Due largely to the reversal of orders upon recording tower defaults, aggregate net orders were a negative $157.7 million for this quarter, while the number of net unit orders declined to negative 52 compared to negative 14 for the fourth quarter 2006.
At December 31, 2007, the Company recorded a $150.1 million after-tax non-cash valuation allowance against its deferred tax assets related to the application of FAS 109. The FAS 109 charge was for GAAP purposes only. For tax purposes, the tax deductions associated with the Company's deferred tax assets may be carried forward for 20 years. This accounting determination resulted in a $3.2 million tax expense in the fourth quarter and an $81.2 million benefit for the full year.
Traditional Homebuilding
Fourth quarter 2007 revenues for Traditional Homebuilding, including lot sales, fell 53.6% to $162.2 million from $349.5 million for the fourth quarter of 2006. The Company closed 257 homes compared with 434 for the same period a year ago. Florida revenues totaled $115.5 million, or 71.2% of total Traditional Homebuilding revenues, versus $279.5 million, or 80.0%, for the fourth quarter of 2006. Revenues from WCI's Northeast Division accounted for 19.5% of Traditional Homebuilding revenues during the fourth quarter of 2007 vs. 6.1% during the same period a year ago and the Company's Mid-Atlantic Division accounted for 9.3% and 13.9% of revenues for the fourth quarters of 2007 and 2006, respectively. Gross margin as a percentage of revenue for Traditional Homebuilding totaled -62.6% for the fourth quarter of 2007, down from -13.5% in the same period a year ago, due in large part to the impairment charges of $126.6 million recorded this quarter to reflect lower anticipated selling prices and slower absorption on traditional homes and the utilization of significant discounts and incentives to sell finished spec inventory. Excluding impairments, gross margin as a percent of revenue for the fourth quarter would have been 15.5%.
For the twelve month period ended December 31, 2007, Traditional Homebuilding revenues decreased 35.6% to $712.4 million. The Company closed 992 homes in 2007 compared with 1,577 in 2006. Gross margin as a percentage of revenue declined to -7.2% in 2007 vs. 10.8% in 2006. Excluding impairments of $149.6 million, gross margin as a percent of revenue would have been 13.8%. The average price of traditional homes closed year to date was $702,000 in 2007 compared to $677,000 in 2006.
For the fourth quarter of 2007, the number of gross and net orders declined 33.5% and 312.5%, respectively. The value of Traditional Homebuilding gross orders declined 50.7% to $81.8 million and the value of net orders dropped $83.3 million to negative $95.0 million. The cancellation rate for the fourth quarter of 2007 was 109.9%, compared to 96.9% in the fourth quarter of 2006. Cancellations during the quarter totaled 188 on 171 gross orders, down from 249 on 257 gross orders during the same period in 2006. The average price for Traditional Homebuilding gross orders for the fourth quarter of 2007 declined 25.9% to $478,000 compared with $646,000 for the fourth quarter of 2006, due to product mix changes and a higher percentage of discounts and incentives during the quarter (approximately 19.0% compared to approximately 9.0% on orders in the same period a year ago). As of December 31, 2007, unsold finished or under construction homes totaled 610 units, an increase of 42 units from September 30, 2007, reflecting increases from gross sales net of defaults and cancellations during the quarter.
Tower Homebuilding
For the three months ended December 31, 2007, Tower Homebuilding reported negative revenue of $3.9 million as compared to revenue of $123.4 million for the same period a year ago, primarily due to the reversal of revenue during the quarter related to defaulted tower contracts, as well as a decrease in the number of towers under construction this quarter and limited progression of building percentage of completion among the towers under construction. There were 3 towers with a total projected sell-out value of $887.7 million under construction during the quarter compared with 17 towers, with a projected total sellout value of $2.1 billion under construction and recognizing revenue during the fourth quarter 2006. Tower Homebuilding also reported a negative gross margin of $164.8 million for the fourth quarter of 2007, due principally to $121.4 million in impairment charges, $38.4 million reversal of gross margin related to the Oceanside project, $7.0 million reversal of gross margin related to defaulted tower contracts. In addition, 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. For the fourth quarter of 2007, $12.6 million of unfavorable adjustments were made related to towers recently completed or under construction. These adjustments included additional construction costs as a result of design revisions, additional estimated interest costs associated with longer tower construction cycles, increases in building insurance costs, and discounts and incentives anticipated in future periods given the difficult market conditions.
For the twelve months ended December 31, 2007, revenues in Tower Homebuilding fell 95.1% to $35.4 million as the decrease in the number and value of towers under construction and the decrease in gross new tower orders was magnified by the reversal of revenue associated with contract defaults. Gross margin as a percentage of revenue turned negative from 19.2% in the same period last year, due principally to the impairment charges, the reversal of gross margin related to the Oceanside project, the reversal of revenue and gross margin on defaulted units and the cost adjustments referenced above.
Tower Homebuilding net orders for the fourth quarter of 2007 were negative 35 as a result of zero gross new orders and 35 defaults recorded during the quarter. For the twelve months ended December 31, 2007, 665 units were delivered in the eight completed buildings. Tower Homebuilding backlog at December 31, 2007 totaled $20.4 million, compared with $228.6 million at December 31, 2006. For the balance of 2008, two towers, containing 392 units, of which 293 are sold, are expected to deliver units to buyers. The Watermark in North Bergen, New Jersey and Oceanside in Pompano Beach, Florida are expected to begin closing units in March and April, respectively.
Real Estate Services
Revenues for the Real Estate Services Division for the fourth quarter 2007 were $18.0 million, a 19.3% decrease from the $22.3 million recorded for the same period a year ago. The decline was primarily due to the slowing market for new and resale homes during the quarter. Gross margin as a percentage of revenue for the period was a negative 13.1% compared with a negative 2.2% in the fourth quarter 2006.
For the twelve-month period ended December 31, 2007, revenues in the Real Estate Services Division totaled $91.8 million, down 16.1% from the $109.4 million recorded for the twelve months ended December 31, 2006. Gross margin as a percentage of revenue over the period decreased to 2.6% from 5.0% in the same period a year ago as the steps taken by these operations to reduce overhead and increase efficiency in the current market environment have not yet taken full effect.
Other Items
Revenues for the Amenities Division for the fourth quarter 2007 were $13.7 million, a 39.8% decrease from the $22.7 million recorded in the same period a year ago. Gross margin totaled a loss of $28.0 million for the fourth quarter 2007 versus a loss of $7.5 million in the fourth quarter of 2006. The gross margin in the fourth quarter was negatively impacted by $19.8 million of impairment charges on four equity golf clubs.
Land sale revenues for the fourth quarter 2007 totaled $0.2 million compared with $4.2 million for the fourth quarter of 2006. Land sale gross margin was negative $1.0 million due to an impairment charge of $1.1 million on land held for sale. Absent this charge, gross margin for the fourth quarter would have been $0.1 million or 65.5%, compared to $2.1 million or 48.8% for the fourth quarter of 2006. For the twelve month period ended December 31, 2007, land sale revenues totaled $18.1 million compared with $11.7 million for the same period last year. Land sale gross margin was 52.4% compared to 57.8% for the same period last year.
Other income for the fourth quarter of 2007 totaled a loss of $77.4 million versus $1.4 million for the fourth quarter of 2006. The 2007 amount included $59.5 million of impairment charges to goodwill representing the entire amount of the Florida, Northeast and Mid-Atlantic homebuilding goodwill assets, $10.7 million of impairments in investments in joint ventures, a $6.9 million market valuation adjustment related to an interest rate swap agreement, and $2.4 million gain from the settlement of claims related to a hurricane in 2004.
Selling, general, and administrative expenses including real estate taxes (SG&A) totaled $45.6 million for the fourth quarter 2007, up $1.1 million, or 2.6%, from the fourth quarter of 2006. For the twelve months ended December 31, 2007, SG&A of $187.0 million was 3.2% lower than the total for the same period last year. SG&A includes charges of approximately $2.9 million to cover severance costs associated with workforce reductions during the quarter. Similar charges were incurred during the prior quarters of 2007. Real estate tax expense was $0.7 million higher for the quarter and $7.5 million higher for the twelve month period than the same periods last year due to higher assessments on finished units and less capitalization of these payments. These increased expenses have had the effect of offsetting savings from overhead reductions and other efficiency initiatives implemented during 2007.
Net interest expense of $34.0 million for the quarter and $91.0 million for the twelve month period, compared to $16.5 million and $35.6 million, respectively in 2006, primarily due to less interest capitalized as fewer projects are under development and, to a lesser degree, higher interest incurred as a result of greater debt balances in the first part of the year and increases in interest rates.
Cash Flow/Financial Position
For the twelve months ended December 31, 2007, cash flow from operating activities and investing activities totaled $229.0 million ($197.9 million from operating activities and $31.1 million from investing activities), compared with cash used of $536.6 million ($489.6 million used in operations and $47.0 million used for investing activities) in the same period a year ago.
For the quarter ended December 31, 2007, we were not able to comply with the modified Fixed Charge Coverage covenant under the Senior Secured Revolving Credit Facility and the Term Loan Agreement. As a result, on January 16, 2008, WCI amended its Senior Secured Revolving Credit Agreement (Credit Facility), the Term Loan Agreement (Term Loan) to provide additional financial flexibility, including modifications to the Adjusted Tangible Net Worth, Leverage Ratio, Fixed Charge Coverage covenants and suspension of the Unsold Units in Production covenant. As of December 31, 2007, the balance on the Credit Facility was $546.0 million, the balance on the Term Loan was $262.5 million, and the balance on the $390 million Revolving Tower Construction Loan Agreement (Tower Facility) was $292.0 million.
For the year ended December 31, 2007, we also were not able to comply with the requirement under the Credit Facility, the Term Loan and the Tower Facility to provide annual financial statements accompanied by an opinion from our independent auditors not subject to any "going concern" or like qualification. However, the lenders in each of the three facilities subsequently provided the Company with a waiver of this requirement. In addition, the Tower Facility was amended to limit future draws under the agreement based on anticipated pay off of the facility as it approaches maturity in December of 2008 as well as to accommodate the inter-creditor agreements with the Credit Facility and the Term Loan consistent with the January 2008 amendments referenced above.
Total liquidity, measured as the sum of cash plus available capacity under the Credit Facility, totaled approximately $342.8 million at December 31, 2007. In addition, letters of credit of $53.7 million were outstanding as of December 31, 2007.
Conference Call
WCI will conduct a conference call today at 3:00 p.m. EDT in conjunction with this news release. The call will be broadcast live at http://www.wcicommunities.com in the Investor Relations area or can be accessed by telephone at (877) 454-8253 and asking for the WCI Communities conference call referencing code 37790680. A replay will be available after the call for a period of 36 hours by dialing (800) 642-1687 and entering conference code 37790680. 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 title businesses, 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 over 18,500 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.primenewswire.com/newsroom/prs/?pkgid=3018
Forward-looking statements:
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 as a going concern in real estate markets where we conduct business; WCI's ability to pay principal and interest on its current and future debts; WCI's ability to amend its bank agreements and obtain waivers as needed from time to time to obtain covenant relief and to avoid bank defaults during the market downturn; WCI's ability to maintain or increase historical revenues and profit margins; WCI's ability to collect contract receivables from buyers purchasing homes as investments; the availability and cost of land in desirable areas in its geographic markets 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; availability of labor and materials and material increases in insurance, labor and material costs; increases in interest rates and availability of mortgage financing; the ability of prospective residential buyers to obtain mortgage financing due to tightening credit markets, appraisal problems or other factors; increases in construction and homeowner insurance and availability of insurance, the continuing negative buyer sentiment and erosion of consumer confidence; the negative impact of claims for contract rescission or increasing cancellation rates by contract purchasers; adverse legislation or regulations; adverse legal proceedings; the ability to retain employees; changes in generally accepted accounting principles; natural disasters; adverse weather conditions; and changes in general economic, real estate and business conditions and other factors over which the company has little or no control. 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, 2007 2006 ------------ ------------ Assets Cash and cash equivalents $ 188,821 $ 41,876 Contracts receivable 358,327 1,269,549 Real estate inventories 1,848,309 1,955,793 Property and equipment 236,429 274,720 Other assets 259,345 289,921 ------------ ------------ Total assets $ 2,891,231 $ 3,831,859 ============ ============ Liabilities and Shareholders' Equity Accounts payable, accruals and other liabilities $ 547,597 $ 862,353 ------------ ------------ Debt obligations: Senior revolving credit facility 545,975 503,846 Senior term note 262,500 300,000 Mortgages and notes payable 300,125 363,261 Senior subordinated notes 525,000 525,000 Junior subordinated notes 165,000 165,000 Contingent convertible senior subordinated notes 125,000 125,000 ------------ ------------ Total debt obligations 1,923,600 1,982,107 ------------ ------------ Total shareholders' equity 420,034 987,399 ------------ ------------ Total liabilities and shareholders' equity $ 2,891,231 $ 3,831,859 ============ =========== Other Balance Sheet Data Debt $ 1,923,600 $ 1,982,107 Shareholders' equity 420,034 987,399 ------------ ------------ Capitalization $ 2,343,634 $ 2,969,506 ============ ============ Ratio of debt to capitalization 82.1% 66.7% Debt, net of cash and cash equivalents $ 1,734,779 $ 1,940,231 Shareholders' equity 420,034 987,399 ------------ ------------ Capitalization, net of cash and cash equivalents $ 2,154,813 $ 2,927,630 ============ ============ Ratio of net debt to net capitalization 80.5% 66.3% Shareholders' equity per share $ 9.97 $ 23.57 WCI Communities, Inc. Selected Revenues and Earnings Information (Dollars in thousands, except per share data) For the three For the twelve months ended months ended December 31, December 31, ---------------------- ---------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- REVENUES Homebuilding: Homes $ 159,095 $ 330,855 $ 695,936 $1,068,393 Lots 3,115 18,619 16,444 38,093 ---------- ---------- ---------- ---------- Total traditional 162,210 349,474 712,380 1,106,486 Towers (3,941) 123,363 35,385 729,516 ---------- ---------- ---------- ---------- Total homebuilding 158,269 472,837 747,765 1,836,002 Real estate services 18,031 22,339 91,840 109,421 Amenity membership and operations 13,656 22,680 72,133 79,415 Land sales 212 4,221 18,146 11,739 Other 1,421 1,883 6,492 8,008 ---------- ---------- ---------- ---------- Total revenues 191,589 523,960 936,376 2,044,585 ---------- ---------- ---------- ---------- GROSS MARGIN Homebuilding: Homes (95,797) (48,369) (50,048) 113,339 Lots (5,769) 1,270 (1,224) 6,402 ---------- ---------- ---------- ---------- Total traditional (101,566) (47,099) (51,272) 119,741 Towers (164,844) 9,711 (237,377) 139,816 ---------- ---------- ---------- ---------- Total homebuilding (266,410) (37,388) (288,649) 259,557 Real estate services (2,364) (494) 2,404 5,431 Amenity membership and operations (27,978) (7,509) (29,348) (12,548) Land sales (1,015) 2,060 9,513 6,789 Other 74 (245) 246 (13,578) ---------- ---------- ---------- ---------- Total gross margin (297,693) (43,576) (305,834) 245,651 ---------- ---------- ---------- ---------- OTHER INCOME AND EXPENSES Equity in losses (earnings) from joint ventures (45) (211) (488) 603 Other income 2,301 (917) (219) (6,165) Impairment of investments in joint ventures 10,748 -- 10,748 -- Market valuation on interest rate swaps 6,892 -- 8,756 -- Hurricane recoveries (2,366) (211) (7,759) (6,646) Selling, general and administrative, including real estate taxes, net 45,647 44,506 186,986 193,218 Depreciation and amortization 5,387 5,882 22,011 24,592 Interest expense, net 33,982 16,497 90,982 35,600 Goodwill impairments 59,534 -- 59,534 -- Expenses related to early repayment of debt and related amendments 4,123 -- 7,705 455 ---------- ---------- ---------- ---------- (Loss) income from continuing operations before minority interests and income taxes (463,896) (109,122) (684,090) 3,994 Minority interests 5,857 579 8,345 837 Income tax (benefit) expense 3,181 (43,276) (81,235) (1,304) ---------- ---------- ---------- ---------- (Loss) income from continuing operations (461,220) (65,267) (594,510) 6,135 Income from discontinued operations, net of tax 4 705 1,191 2,879 Gain on sale of discontinued operations, net of tax 1,435 -- 14,788 -- ---------- ---------- ---------- ---------- Net (loss) income $ (459,781) $ (64,562) $ (578,531) $ 9,014 ========== ========== ========== ========== (LOSS) EARNINGS PER SHARE: Basic: From continuing operations $ (10.96) $ (1.56) $ (14.15) $ 0.14 From discontinued operations 0.03 0.01 0.38 0.07 ---------- ---------- ---------- ---------- $ (10.93) $ (1.55) $ (13.77) $ 0.21 ========== ========== ========== ========== Diluted: From continuing operations $ (10.96) $ (1.56) $ (14.15) $ 0.14 From discontinued operations 0.03 0.01 0.38 0.07 ---------- ---------- ---------- ---------- $ (10.93) $ (1.55) $ (13.77) $ 0.21 ========== ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES Basic 42,064 41,766 42,001 42,629 Diluted 42,064 41,766 42,001 43,449 OPERATING DATA Interest incurred $ 41,805 $ 38,621 $ 149,346 $ 128,964 Interest included in cost of sales $ 7,587 $ 23,566 $ 36,218 $ 74,030 WCI Communities, Inc. Condensed Consolidated Statements of Cash Flows (Dollars in thousands) For the twelve months ended December 31, -------------------------- 2007 2006 ---------- ---------- Cash flows from operating activities: Net (loss) income $ (578,531) $ 9,014 Asset impairment losses and land acquisition termination costs 341,904 121,516 Increase in real estate inventories (210,113) (372,669) Decrease (Increase) in contracts receivable 911,222 (146,040) Decrease in customer deposits (173,949) (106,332) Decrease in restricted cash 21,675 65,815 Decrease in accounts payable and other liabilities (121,749) (46,269) All other 7,427 (14,644) ---------- ---------- Net cash provided by (used in) operating activities 197,886 (489,609) ---------- ---------- Cash flows from investing activities: Additions to property and equipment, net (24,481) (41,178) Proceeds from sale of property and equipment 55,160 -- Other 376 (5,852) ---------- ---------- Net cash provided by (used in) investing activities 31,055 (47,030) ---------- ---------- Cash flows from financing activities: Net (repayments) borrowings under debt obligations (59,534) 630,501 All other (22,462) (104,570) ---------- ---------- Net cash (used in) provided by financing activities (81,996) 525,931 ---------- ---------- Net increase (decrease) in cash and cash equivalents $ 146,945 $ (10,708) ========== ========== WCI Communities, Inc. Homebuilding Operational Data (Dollars in thousands) For the three For the twelve months ended months ended December 31, December 31, ---------------------- ---------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- Combined Traditional and Tower Homebuilding ------------------------ Homes Closed (Units)* 422 668 1,657 2,215 Net New Orders (Units) (52) (14) 259 815 Net Contract Values of New Orders $ (157,708) $ (39,432) $ (6,816) $ 653,783 Average Selling Price Per New Order, Gross $ 412 $ 654 $ 666 $ 765 Traditional Homebuilding $ 478 $ 646 $ 652 $ 716 Tower Homebuilding NM $ 1,075 $ 1,044 $ 1,321 Traditional Homebuilding -------------- Homes Closed (Units) Florida 187 362 671 1,312 Northeast U.S. 55 33 255 152 Mid-Atlantic U.S. 15 39 66 113 ---------- ---------- ---------- ---------- Total 257 434 992 1,577 ---------- ---------- ---------- ---------- Revenues, excluding lot revenues Florida $ 112,385 $ 260,874 $ 475,704 $ 845,141 Northeast U.S. 31,622 21,437 141,012 85,426 Mid-Atlantic U.S. 15,088 48,544 79,220 137,826 ---------- ---------- ---------- ---------- Total $ 159,095 $ 330,855 $ 695,936 $1,068,393 ---------- ---------- ---------- ---------- Average Selling Price Per Home Closed Florida $ 601 $ 721 $ 709 $ 644 Northeast U.S. 575 650 553 562 Mid-Atlantic U.S. 1,006 1,245 1,200 1,220 ---------- ---------- ---------- ---------- Total $ 619 $ 762 $ 702 $ 677 ---------- ---------- ---------- ---------- Gross New Orders (Units) Florida 143 207 633 902 Northeast U.S. 22 35 170 288 Mid-Atlantic U.S. 6 15 66 70 ---------- ---------- ---------- ---------- Total 171 257 869 1,260 ---------- ---------- ---------- ---------- Cancellations (Units) Florida (172) (232) (369) (437) Northeast U.S. (7) (12) (39) (44) Mid-Atlantic U.S. (9) (5) (22) (29) ---------- ---------- ---------- ---------- Total (188) (249) (430) (510) ---------- ---------- ---------- ---------- Net New Orders (Units) Florida (29) (25) 264 465 Northeast U.S. 15 23 131 244 Mid-Atlantic U.S. (3) 10 44 41 ---------- ---------- ---------- ---------- Total (17) 8 439 750 ---------- ---------- ---------- ---------- Gross Contract Values of New Orders Florida $ 62,263 $ 127,665 $ 398,029 $ 658,744 Northeast U.S. 10,773 21,553 95,379 153,158 Mid-Atlantic U.S. 8,776 16,789 73,514 89,677 ---------- ---------- ---------- ---------- Total $ 81,812 $ 166,007 $ 566,922 $ 901,579 ---------- ---------- ---------- ---------- Contract Values of Cancellations Florida $ (159,064) $ (166,329) $ (321,697) $ (288,871) Northeast U.S. (3,544) (7,088) (20,729) (22,854) Mid-Atlantic U.S. (14,197) (4,292) (31,761) (36,231) ---------- ---------- ---------- ---------- Total $ (176,805) $ (177,709) $ (374,187) $ (347,956) ---------- ---------- ---------- ---------- Net Contract Values of New Orders Florida $ (96,801) $ (38,664) $ 76,332 $ 369,873 Northeast U.S. 7,229 14,465 74,650 130,304 Mid-Atlantic U.S. (5,421) 12,497 41,753 53,446 ---------- ---------- ---------- ---------- Total $ (94,993) $ (11,702) $ 192,735 $ 553,623 ---------- ---------- ---------- ---------- Gross Average Selling Price Per New Order Florida $ 435 $ 617 $ 629 $ 730 Northeast U.S. 490 616 561 532 Mid-Atlantic U.S. 1,463 1,119 1,114 1,281 ---------- ---------- ---------- ---------- Total $ 478 $ 646 $ 652 $ 716 ---------- ---------- ---------- ---------- Tower Homebuilding ------------------ Homes Closed (Units) Florida 165 234 665 638 ---------- ---------- ---------- ---------- Total 165 234 665 638 ---------- ---------- ---------- ---------- Revenues Florida $ (14,798) $ 99,108 $ (22,241) $ 671,425 Northeast U.S. 10,857 24,255 57,626 58,091 ---------- ---------- ---------- ---------- Total $ (3,941) $ 123,363 $ 35,385 $ 729,516 ---------- ---------- ---------- ---------- Gross New Orders (Units) ** Florida (1) 5 26 104 Northeast U.S. 1 -- 5 7 ---------- ---------- ---------- ---------- Total -- 5 31 111 ---------- ---------- ---------- ---------- Defaults (Units) Florida (33) (26) (206) (45) Northeast U.S. (2) (1) (5) (1) ---------- ---------- ---------- ---------- Total (35) (27) (211) (46) ---------- ---------- ---------- ---------- Net New Orders (Units) Florida (34) (21) (180) 59 Northeast U.S. (1) (1) -- 6 ---------- ---------- ---------- ---------- Total (35) (22) (180) 65 ---------- ---------- ---------- ---------- Gross Contract Values of New Orders Florida $ (12,258) $ 5,374 $ 26,746 $ 134,520 Northeast U.S. 935 -- 5,603 12,153 ---------- ---------- ---------- ---------- Total $ (11,323) $ 5,374 $ 32,349 $ 146,673 ---------- ---------- ---------- ---------- Contract Values of Defaults Florida $ (48,057) $ (31,479) $ (226,919) $ (44,888) Northeast U.S. (3,335) (1,625) (4,981) (1,625) ---------- ---------- ---------- ---------- Total $ (51,392) $ (33,104) $ (231,900) $ (46,513) ---------- ---------- ---------- ---------- Net Contract Values of New Orders Florida $ (60,315) $ (26,105) $ (200,173) $ 89,632 Northeast U.S. (2,400) (1,625) 622 10,528 ---------- ---------- ---------- ---------- Total $ (62,715) $ (27,730) $ (199,551) $ 100,160 ---------- ---------- ---------- ---------- Gross Average Selling Price Per New Order Florida $ 12,258 $ 1,075 $ 1,029 $ 1,293 Northeast U.S. 935 NM $ 1,121 $ 1,736 ---------- ---------- ---------- ---------- Total NM $ 1,075 $ 1,044 $ 1,321 ---------- ---------- ---------- ---------- Towers under construction recognizing revenue during the period 11 24 December 31, ------------------------ 2007 2006 ---------- ----------- Combined Traditional and Tower Homebuilding ----------------------- Aggregate Backlog Contract Values, Traditional and Tower Homebuilding $ 211,935 $ 911,156 Traditional Homebuilding ------------- Backlog (Units) 317 870 Backlog Contract Values $ 191,544 $ 682,577 Tower Homebuilding ------------------ Cumulative Units in Backlog 452 1,297 Cumulative Contract Values $ 521,809 $1,521,420 Less: Cumulative Revenues Recognized (501,418) (1,292,841) ---------- ---------- Backlog Contract Values $ 20,391 $ 228,579 ========== ========== Combined Traditional and Tower Homebuilding ----------------------- Gross New Orders (Units) 171 262 900 1,371 Gross Contract Values of New Orders $ 70,489 $ 171,381 $ 599,271 $1,048,252 Net New Orders (Units) (52) (14) 259 815 Net Contract Values of New Orders $ (157,708) $ (39,432) $ (6,816) $ 653,783 * 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. ** Gross new orders includes 11 developer rescissions at Arezzo. *** NM = Not meaningful WCI Communities, Inc. Reconciliation of Gross Margin (Dollars in thousands) For the three For the twelve months ended months ended December 31, December 31, ---------------------- ---------------------- 2007 2006 2007 2006 ---------- ---------- ---------- ---------- Traditional Homebuilding ------------------------ Revenue $ 162,210 $ 349,474 $ 712,380 $1,106,486 ---------- ---------- ---------- ---------- Gross margin (101,566) (47,099) (51,272) 119,741 Add back impairment 126,643 116,291 149,634 126,005 ---------- ---------- ---------- ---------- Gross margin excluding impairment $ 25,077 $ 69,192 $ 98,362 $ 245,746 ---------- ---------- ---------- ---------- Gross margin % as reported -62.6% -13.5% -7.2% 10.8% Gross margin % excluding impairment 15.5% 19.8% 13.8% 22.2% Summary of Land Controlled December 31, 2007 Remaining Units in Value in Spec Planned Backlog as Backlog as Units Region Units of 12/31/07 of 12/31/07 in WIP Traditional Homebuilding (Including Lots) Florida Miami/Ft. Lauderdale 1,185 49 $ 42.2 31 Naples/Ft. Myers 4,507 97 50.3 63 Palm Beach/Indian River 165 2 4.8 3 Palm Coast/Jacksonville 23 -- -- 11 Perdido Key 83 -- -- -- Tampa/Sarasota 2,792 55 32.0 7 Mid-Atlantic 353 8 10.7 -- Northeast 1,506 108 53.4 20 --------------------------------------------------------------------- Traditional Homebuilding Total 10,614 319 193.3 135 Tower Homebuilding Florida Miami/Ft. Lauderdale 844 267 9.8 70 Naples/Ft. Myers 1,156 2 1.9 -- Palm Beach/Indian River 190 1 (0.0) -- Palm Coast/Jacksonville 283 2 -- -- Perdido Key 1,504 2 -- -- Tampa/Sarasota 664 1 -- -- Mid-Atlantic 284 -- -- -- Northeast 480 177 8.7 29 --------------------------------------------------------------------- Tower Homebuilding Total 5,405 452 20.4 99 Total Homebuilding Florida Miami/Ft. Lauderdale 2,029 316 51.9 101 Naples/Ft. Myers 5,663 99 52.2 63 Palm Beach/Indian River 355 3 4.8 3 Palm Coast/Jacksonville 306 2 -- 11 Perdido Key 1,587 2 -- -- Tampa / Sarasota 3,456 56 32.0 7 Mid-Atlantic 637 8 10.7 -- Northeast 1,986 285 62.1 49 --------------------------------------------------------------------- Total Homebuilding Total 16,019 771 213.7 234 ===================================================================== Finished Spec and Total Model Units % Region Units Remaining Owned Traditional Homebuilding (Including Lots) Florida Miami/Ft. Lauderdale 186 919 100% Naples/Ft. Myers 55 4,292 100% Palm Beach/Indian River 12 148 100% Palm Coast/Jacksonville 12 -- 100% Perdido Key 12 71 100% Tampa/Sarasota 150 2,580 71% Mid-Atlantic 27 318 84% Northeast 22 1,356 100% --------------------------------------------------------------------- Traditional Homebuilding Total 476 9,684 92% Tower Homebuilding Florida Miami/Ft. Lauderdale 23 484 100% Naples/Ft. Myers 180 974 100% Palm Beach/Indian River 43 146 100% Palm Coast/Jacksonville 24 257 100% Perdido Key 86 1,416 100% Tampa/Sarasota 34 629 100% Mid-Atlantic -- 284 100% Northeast -- 274 43% --------------------------------------------------------------------- Tower Homebuilding Total 390 4,464 95% Total Homebuilding Florida Miami/Ft. Lauderdale 209 1,403 100% Naples/Ft. Myers 235 5,266 100% Palm Beach/Indian River 55 294 100% Palm Coast/Jacksonville 36 257 100% Perdido Key 98 1,487 100% Tampa / Sarasota 184 3,209 77% Mid-Atlantic 27 602 91% Northeast 22 1,630 86% --------------------------------------------------------------------- Total Homebuilding Total 866 14,148 93% ===================================================================== Remaining Planned Units December 31, 2007 Total Owned Optioned Controlled Traditional Homebuilding 9,761 853 10,614 Tower Homebuilding 5,131 274 5,405 ---------------------------------------------------------- Total Homebuilding 14,892 1,127 16,019 ==========================================================