Back to GetFilings.com



Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-9186

WCI COMMUNITIES, INC.

(Exact name of registrant as specified in its charter)

     
Delaware   59-2857021
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

24301 Walden Center Drive
Bonita Springs, Florida 34134
(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code) (239) 947-2600

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

         Yes (X)   No ( )

The number of shares outstanding of the issuer’s common stock, as of August 12, 2002 was 44,316,715.

 

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SENIOR UNSECURED REVOLVING CREDIT AGREEMENT
FORM OF SEVERANCE AGREEMENTS
FORM OF SEVERANCE AGREEMENT
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
CERITFICATION OF THE CHIEF FINANCIAL OFFICER

Table of Contents

WCI COMMUNITIES, INC.

Form 10-Q

For the Quarter Ended June 30, 2002

INDEX

         Part I. Financial Information

                 
            Page No.
           
Item 1.  
Financial Statements
        
       
Condensed Consolidated Balance Sheets June 30, 2002 (Unaudited) and December 31, 2001
     3  
       
Condensed Consolidated Statements of Income (Unaudited) For the Three and Six Months Ended June 30, 2002 and 2001
     4  
       
Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2002 and 2001
     5  
       
Notes to Condensed Consolidated Financial Statements (Unaudited)
     6  
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     18  
Item 3.  
Quantitative and Qualitative Disclosures About Market Risk
     25  
Part II.  
Other Information
        
Item 1.  
Legal Proceedings
     26  
Item 6.  
Exhibits and Reports on Form 8-K
     26  
SIGNATURE

2

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WCI COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

                         
            June 30,   December 31,
            2002   2001
           
 
            (Unaudited)        
       
Assets
                
Cash and cash equivalents
   $ 27,575     $ 57,993  
Restricted cash
     20,867       19,115  
Contracts receivable
     620,865       399,716  
Mortgage notes and accounts receivable
     40,816       58,774  
Real estate inventories
     907,313       774,443  
Property and equipment
     115,077       99,726  
Other assets
     130,046       124,361  
Other intangible assets
     8,348       8,460  
Goodwill
     28,821       28,604  
 
    
     
 
Total assets
   $ 1,899,728     $ 1,571,192  
 
    
     
 
     
Liabilities and Shareholders’ Equity
                
Accounts payable and other liabilities
   $ 275,133     $ 270,689  
Customer deposits
     215,409       162,561  
Community development district obligations
     36,168       36,286  
Senior secured credit facility
     —       250,000  
Senior unsecured credit facility
     146,460       —  
Senior subordinated notes
     554,667       354,936  
Mortgages and notes payable
     64,364       77,675  
 
    
     
 
 
     1,292,201       1,152,147  
 
    
     
 
Commitments and contingencies
                
Shareholders’ equity:
                
 
Common stock, $.01 par value; 100,000,000 shares authorized, 44,448,898 and 36,513,898 shares issued, respectively
     444       365  
 
Additional paid-in capital
     277,315       139,193  
 
Retained earnings
     332,699       282,739  
 
Treasury stock, at cost, 132,183 shares
     (795 )     (795 )
 
Accumulated other comprehensive loss
     (2,136 )     (2,457 )
 
    
     
 
   
Total shareholders’ equity
     607,527       419,045  
 
    
     
 
   
Total liabilities and shareholders’ equity
   $ 1,899,728     $ 1,571,192  
 
    
     
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

WCI COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(In thousands, except share data)
(unaudited)

                                         
            For the three months ended   For the six months ended
            June 30,   June 30,
           
 
            2002   2001   2002   2001
           
 
 
 
       
Revenues
                                
Homebuilding
   $ 253,920     $ 193,759     $ 442,041     $ 342,852  
Amenity membership and operations
     15,202       12,515       35,298       31,818  
Real estate services, land sales and other
     28,631       28,546       51,857       57,109  
 
    
     
     
     
 
   
Total revenues
     297,753       234,820       529,196       431,779  
 
    
     
     
     
 
     
Cost of Sales
                                
Homebuilding
     165,316       132,438       287,064       234,225  
Amenity membership and operations
     12,741       10,260       27,552       24,715  
Real estate services, land sales and other
     23,560       20,400       40,342       42,426  
 
    
     
     
     
 
     
Total costs of sales
   201,617       163,098       354,958       301,366  
 
    
     
     
     
 
   
Contribution margin
     96,136       71,722       174,238       130,413  
 
    
     
     
     
 
     
Other Expenses
                                
Selling, general, administrative and other
     27,445       23,793       59,325       48,315  
Interest expense, net
     10,325       12,650       21,186       25,322  
Real estate taxes, net
     2,050       1,986       4,446       3,232  
Depreciation
     1,998       1,137       3,911       2,217  
Amortization of intangible assets
     120       110       237       220  
Amortization of goodwill
     —       803       —       1,607  
 
    
     
     
     
 
   
Total other expenses
     41,938       40,479       89,105       80,913  
 
    
     
     
     
 
Income before income taxes and extraordinary items
     54,198       31,243       85,133       49,500  
Income tax expense
     (21,082 )     (12,529 )     (33,157 )     (19,852 )
 
    
     
     
     
 
Income before extraordinary items
     33,116       18,714       51,976       29,648  
Extraordinary items, net of tax
Net loss on early repayment of debt
     (2,016 )     (88 )     (2,016 )     (1,958 )
 
    
     
     
     
 
Net income
     31,100       18,626       49,960       27,690  
 
    
     
     
     
 
Other comprehensive (loss) gain, net of tax Cumulative effect of a change in accounting principle
     —       —       —       (746 )
 
Unrealized derivative (losses) gains
     (384 )     28       321       (1,371 )
 
    
     
     
     
 
Other comprehensive (loss) gain
     (384 )     28       321       (2,117 )
 
    
     
     
     
 
Comprehensive income
   $ 30,716     $ 18,654     $ 50,281     $ 25,573  
 
    
     
     
     
 
Earnings (loss) per share:
                                
Basic
Income before extraordinary item
   $ .75     $ .51     $ 1.26     $ .81  
 
Extraordinary item
     (.05 )     —       (.05 )     (.05 )
 
    
     
     
     
 
 
Net income
   $ .70     $ .51     $ 1.21     $ .76  
 
    
     
     
     
 
Diluted
Income before extraordinary item
   $ .72     $ .50     $ 1.21     $ .79  
 
Extraordinary item
     (.05 )     —       (.05 )     (.05 )
 
    
     
     
     
 
 
Net income
   $ .67     $ .50     $ 1.16     $ .74  
 
    
     
     
     
 
Weighted average number of shares
Basic
     44,316,715       36,381,715       41,247,930       36,381,715  
 
Diluted
     46,288,577       37,262,486       42,964,886       37,293,502  

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents

WCI COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

                     
        For the six months ended
        June 30,
       
        2002   2001
       
 
Cash flows from operating activities:
                
 
Net income
   $ 49,960     $ 27,690  
 
Adjustments to reconcile net income to net cash used in operating activities:
                
 
Net loss on early repayment of debt
     2,016       1,958  
 
Deferred income taxes
     5,891       7,833  
 
Depreciation and amortization
     5,765       5,950  
 
Earnings from investments in joint ventures
     (1,376 )     (1,179 )
 
(Contributions to) distributions from investments in joint ventures, net
     (1,145 )     288  
Changes in assets and liabilities:
                
 
Restricted cash
     (1,752 )     (2,309 )
 
Contracts receivable
     (221,149 )     (109,648 )
 
Accounts receivable
     16,685       2,371  
 
Real estate inventories
     (126,949 )     (139,386 )
 
Other assets
     (1,463 )     6,299  
 
Accounts payable and other liabilities
     157       (30,312 )
 
Customer deposits
     52,848       48,058  
 
    
     
 
   
Net cash used in operating activities
     (220,512 )     (182,387 )
 
    
     
 
Cash flows from investing activities:
                
 
Additions to mortgage notes receivable
     (888 )     (1,182 )
 
Proceeds from repayment of mortgage notes receivable
     2,161       3,975  
 
Additions to property and equipment, net
     (15,422 )     (12,677 )
 
    
     
 
   
Net cash used in investing activities
     (14,149 )     (9,884 )
 
    
     
 
Cash flows from financing activities:
                
 
Senior secured credit facility:
                
   
Net repayments on revolving line of credit
     —       (39,000 )
   
Repayments on term loan
     (250,000 )     —  
 
Net borrowings on senior unsecured credit facility
     146,460       —  
 
Proceeds from borrowings on mortgages and notes payable
     53,826       37,548  
 
Repayment of mortgages and notes payable
     (77,257 )     (59,706 )
 
Proceeds from issuance of senior subordinated notes
     200,000       355,250  
 
Repayment of subordinated notes
     —       (57,010 )
 
Debt issue costs
     (6,869 )     (11,629 )
 
Repayment of finance subsidiary debt
     —       (72,495 )
 
Net (reductions) borrowings on community development district obligations
     (118 )     17,375  
 
Net proceeds from issuance of common stock
     138,201       —  
 
Proceeds from exercise of stock options
     —       45  
 
    
     
 
   
Net cash provided by financing activities
     204,243       170,378  
 
    
     
 
Net decrease in cash and cash equivalents
     (30,418 )     (21,893 )
Cash and cash equivalents at beginning of year
     57,993       55,737  
 
    
     
 
Cash and cash equivalents at end of period
   $ 27,575     $ 33,844