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Comstock Homebuilding Companies, Inc. Provides Results for 2008 and Update on Operations

03/31/2009

RESTON, VA, Mar 31, 2009 (MARKET WIRE via COMTEX) -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or the "Company") today released audited financial results for 2008, information regarding the status of its delisting and a general update on operations.

Results of Operations

On March 31, 2009 the Company filed its 2008 Form 10-K with the Securities and Exchange Commission. For the twelve months ending December 31, 2008 the company generated the following results of operations:

                                                   Twelve Months Ended
                                                       December 31,
                                                --------------------------
(dollars in 000s except per share)                  2008          2007
                                                ------------  ------------
Total revenue                                   $     46,662  $    266,159
Impairments & write-offs                              18,022        78,264
Gross profit                                         (10,634)      (57,414)
Operating loss                                       (32,719)      (92,085)
Gain on troubled debt restructuring                   12,851             -
Net loss                                             (17,058)      (87,510)
Diluted earnings per share                      $      (0.98) $      (5.42)
The Company reported the following summary balance sheet information for
December 31, 2008:
                                                 December 31,  December 31,
(dollars in 000s except per share)                  2008          2007
                                                ------------  ------------
Cash and cash equivalents                       $      5,977  $      6,822
Real estate held for sale                            129,542       203,860
Notes payable                                        102,829       171,214
Shareholder equity                                    30,525        46,519
Book value per share                            $       1.66  $       2.61

The Company also announced that in connection with their unqualified opinion regarding the Company's 2008 audit, the Company's independent registered public accounting firm, PricewaterhouseCoopers, indicated their belief that declining market conditions create substantial doubt that the Company would continue operating throughout 2009 as a going concern. As such, PricewaterhouseCoopers included a Going Concern opinion along with its 2008 audit report.

Status of Delisting

The Company disclosed that on March 23, 2009 the Company received a notice from NASDAQ indicating that NASDAQ had elected to once again extend its suspension of the bid-price and market value of publicly held shares requirements until July 20, 2009. As such, the Company's delisting deadline was automatically extended. The Company now has until on or about October 13, 2009 to regain compliance with the NASDAQ bid-price requirements and until on or about November 8, 2009 to regain compliance with the NASDAQ market value of publically held shares requirements.

Update on Operations and Cash Resources

The Company disclosed that sales during the first quarter remained weak as general economic conditions in its three primary markets continued to generate low levels of consumer demand for new home sales. The Company reported that it projected 23 net new orders during the first quarter of 2009 representing approximately $7.4 million in net new order revenue. The Company projected that it will deliver 13 homes during the first quarter representing homebuilding revenue of approximately $5.7 million.

During the first quarter of 2009 the Company sold 7 units at its Eclipse project representing $4.4 million of new order revenue. As of March 31, 2009 the Company had sold a total of 371 of the 465 units at its Eclipse project. Of the remaining 94 unsold units, 63 units were being rented. The rented units are generating approximately $133,000 per month of gross rental income to help cover the cost of operating the project.

The Company reported that its unrestricted cash balance as of March 31, 2009 was projected to be approximately $3.0 million with an additional $3.0 million of restricted cash which is being held as collateral in connection with a letter of credit issued by Wachovia Bank related to a discontinued captive general liability insurance policy. The Company is working to try to secure the release of the restricted cash. In connection with its limited liquidity the Company has elected not to make the March 31, 2009 interest payment due on its senior unsecured debt to JP Morgan Ventures. The amount of the interest payment due is approximately $218,000.

The Company also announced that it is working on multiple strategic plans aimed at generating unrestricted cash flow to shore up its balance sheet and secure its ability to continue operating. These strategies include further restructuring of the Company's debts with its lenders as well as aggressive and non-conventional approaches to bulk selling inventory units. The Company warned that if unsuccessful in its efforts to generate free cash flow and restructure its debts with its lenders, the Company may be forced to seek bankruptcy protection while it reorganizes.

"The challenges currently facing the home building industry and the economy are unprecedented," said Christopher Clemente, Comstock's Chairman and Chief Executive Officer. "The absolute lack of capital available to homebuilders is not only contributing to the downward spiral of the real estate market, it is costing this country hundreds of thousands of jobs and is causing an untold loss of wealth. While we applaud the federal government's effort to stimulate the economy we believe that the approach is flawed, as it has to date overlooked one of the most meaningful contributors to the U.S. economic engine -- the homebuilding industry. As the government uses vast resources to prop up Wall Street, 'Main Street' is crumbling. In spite of these overwhelming obstacles, we remain committed to doing everything possible to reach amicable arrangements with our lenders, generate free cash flow from our existing assets and continue in our effort to stabilize the long term viability of this company."

About Comstock Homebuilding Companies, Inc.



Comstock Homebuilding Companies, Inc. is a publically traded real estate enterprise with a focus on a variety of affordably priced, for-sale residential products. The company currently operates as Comstock Homes in the Washington, D.C.; Raleigh, NC; and Atlanta, GA markets. Comstock trades on Nasdaq as CHCI. For more information please visit www.comstockhomebuilding.com.

Cautionary Statement

This release may contain "forward-looking" statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the Company's Form 10-K as filed with the Securities and Exchange Commission on March 31, 2009. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

INCOME STATEMENT                           Twelve Months Ended December 31,
                                           -------------------------------
                                             2008       2007       2006
                                           ---------  ---------  ---------
Revenues
   Revenue - homebuilding                  $  44,097  $ 232,805  $ 240,093
   Revenue - other                             2,565     33,354      5,788
                                           ---------  ---------  ---------
Total revenue                                 46,662    266,159    245,881
Expenses
   Cost of sales - homebuilding               39,246    211,068    211,408
   Cost of sales - other                          28     34,241      5,249
   Impairments and write-offs                 18,022     78,264     57,426
   Selling, general and administrative        16,400     34,671     37,500
   Interest, real estate taxes and indirect
    costs related to inactive projects         5,685          -          -
                                           ---------  ---------  ---------
Operating loss                               (32,719)   (92,085)   (65,702)
Loss (Gain) on troubled debt restructuring   (12,851)         -          -
Other income, net                             (2,850)    (1,886)    (1,487)
                                           ---------  ---------  ---------
Loss before minority interest                (17,018)   (90,199)   (64,215)
Minority interest                                 (8)      (137)        15
                                           ---------  ---------  ---------
Loss before equity in loss earnings of
 real estate partnership                     (17,010)   (90,062)   (64,230)
Equity in loss of real estate partnership          -          -       (135)
                                           ---------  ---------  ---------
Total pre tax loss                           (17,010)   (90,062)   (64,365)
Income taxes expense (benefit)                    48     (2,552)   (24,520)
                                           ---------  ---------  ---------
Net loss                                   $ (17,058) $ (87,510) $ (39,845)
                                           =========  =========  =========
Basic loss per share                       $   (0.98) $   (5.42) $   (2.63)
Basic weighted average shares outstanding     17,462     16,140     15,148
                                           =========  =========  =========
Diluted loss per share                     $   (0.98) $   (5.42) $   (2.63)
Diluted weighted average shares outstanding   17,462     16,140     15,148
                                           =========  =========  =========
BALANCE SHEET                                   December 31,  December 31,
                                                    2008          2007
                                                ------------  ------------
ASSETS
  Cash and cash equivalents                     $      5,977  $      6,822
  Restricted cash                                      3,859         4,985
  Receivables                                              -           370
  Due from related parties                                 -            92
  Real estate held for development and sale          129,542       203,860
  Inventory not owned - variable interest
   entities                                           19,250        19,250
  Property, plant and equipment, net                     829         1,539
  Other assets                                         1,402        22,058
                                                ------------  ------------
    TOTAL ASSETS                                $    160,859  $    258,976
                                                ============  ============
LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable and accrued liabilities      $      8,232  $     21,962
  Obligations related to inventory not owned          19,050        19,050
  Notes payable                                       84,563       135,367
  Unsecured debt                                      18,266        35,847
                                                ------------  ------------
    TOTAL LIABILITIES                                130,111       212,226
                                                ------------  ------------
  Commitments and contingencies
  Minority interest                                      223           231
                                                ------------  ------------
SHAREHOLDERS' EQUITY
  Class A common stock, $0.01 par value,
   77,266,500 shares authorized, 15,608,438 and
   15,120,955 issued and outstanding,
   respectively                                          156           151
  Class B common stock, $0.01 par value,
   2,733,500 shares authorized, 2,733,500
   issued and outstanding                                 27            27
  Additional paid-in capital                         157,058       155,998
  Treasury stock, at cost (391,400 Class A
   common stock)                                      (2,439)       (2,439)
  Accumulated deficit                               (124,277)     (107,219)
                                                ------------  ------------
    TOTAL SHAREHOLDERS' EQUITY                        30,525        46,519
                                                ------------  ------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $    160,859  $    258,976
                                                ============  ============

Contact:
Bruce Labovitz
Email Contact
703.230.1131


SOURCE: Comstock Homebuilding Companies, Inc.

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