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  • chadthevon1 chadthevon1 Aug 11, 2005 12:42 AM Flag

    Down the line

    Does anyone know what this company has planned for the time after they've sold all the houses in the Bolsa Chica project? What will they do with the money they earn from that project and what are the future earning prospects like once they've exhausted this plot of land?

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    • It will be a happy day in 2006 when they report $6.50/shr in Q1, and $7 for the remainder of the year---$13 for 2006 and $12 in 2007 & 2008. I see dividends boys & girls. Big dividends. They also have 100 acres on the Huntington Mesa that will come on line in 2008 where they can build 600+ homes and the land is owned outright. This could add another $20/shr in earnings plus the ongoing homebuilding business. They have to pay dividends or buy another business as they will be floating in cash.

    • On August 12, 2004, an agreement to sell a 103-acre parcel of the Bolsa Chica Mesa known as the "Lower Bench" to the State's Wildlife Conservation Board ("WCB") for $65 million was approved by the WCB. The sale remains subject to shareholder approval at the Company's August 11, 2005 Annual Meeting and the issuance of the CDP prior to the outside closing date of December 31, 2005. If the proposed sale is completed, WCB's purchase of the property will be funded with bond proceeds authorized by voter-approved Proposition 50, which was passed in November 2002. The Company currently expects to satisfy the conditions for issuance of the CDP by the end of 2005; however, there can be no assurances that the CDP will be issued by December 31, 2005 or that the sale will ever be completed.

      The Company has active homebuilding projects in the Inland Empire area of Riverside and San Bernardino Counties; Lancaster in Los Angeles County; and Rancho Santa Fe in San Diego County. The Company is also continuing to pursue other land development and lot acquisition opportunities throughout Southern California. The Company has been increasing its lot inventory during 2004 and the first half of 2005, completing acquisitions of 265 single-family residential lots during 2004, and acquiring an additional 255 lots during the first half of 2005.

      The tight supply of new homes in Southern California has resulted in significant home price increases over the last five years. As a result, the affordability of new homes has been declining and could jeopardize future demand. Southern California, including the Inland Empire, has experienced significant population and job growth in the past decade. While continued population growth and demand for new homes are expected to continue, there can be no assurance that economic, demographic or other factors will not slow, diminish or cause such growth or demand to diminish or cease.

      The Company is a residential land development and homebuilding company operating in Southern California. The Company's principal subsidiaries are Signal Landmark and Hearthside Homes, Inc. Signal Landmark owns 208 acres on the Bolsa Chica mesa, along with an additional 100 acres on a mesa south of the Bolsa Chica wetlands. Hearthside Homes has delivered over 1,700 homes to families throughout Southern California over the last ten years.

      Prohibition Against Becoming a 5% Stockholder
      and No Further Acquisitions by Current 5% or Greater Stockholders
      Unless the Company has previously consented in writing (i) no stockholder holding less than 5% of the outstanding shares of Common Stock may acquire additional shares of Common Stock in an amount that would take such holder to 5% or more; and (ii) no current 5% or greater stockholder may acquire any additional shares. The foregoing prohibition is contained in the Company's charter documents, in order to preserve the tax benefits of the Company's $170 million of net operating loss carryovers ("NOLs"). All acquisitions of the Company's Common Stock in violation of its charter prohibitions are null and void, and the Company is empowered to effectively rescind such acquisitions. The Company may entertain requests for permission to exceed the limitations on stock acquisitions in the future if the Company's board of directors determines that such acquisitions would not jeopardize the Company's ability to preserve and use its NOLs.