Presley Cos. Loses $75 Million in Quarter

Struggling home builder The Presley Cos. posted a $75-million loss in the second quarter after writing down the value of some of its land holdings in the East San Francisco Bay area and the Inland Empire.

Presley lost $75.5 million in the quarter ending June 30, after taking the $74-million charge related to three weakly performing planned communities. A year earlier the company posted net income of $367,000, or 1 cent per share.

“The market has declined,” Presley Chief Executive Wade Cable said. “From the end of last year to the middle of this year, we have been unable to sell homes for the same prices.”

The company said last week that it was closing two division offices in slumping areas and laying off an undisclosed number of staff.

Sales increased 15% to $97.6 million in the second quarter from $82.2 million last year, mainly because of increased land sales--not increased home sales. In fact, the company said closings in the second quarter were down 5% to 467 units from 490 units the same period last year. And the backlog of homes sold but not closed also declined 37% to 330 from 526 a year earlier.

Cable blamed the drop in new home orders and closings on the build-out or virtual completion of several of Presley’s older communities. The company had 14 communities selling in the second quarter instead of the 26 selling last year.

The company also warned that it could take another financial hit next month, if its net worth remains below $60 million. Under the terms of its loan agreement, it must offer to buy back $20 million worth of the company notes plus accrued interest. Cable contends the company’s operations will not be affected by this expense.

“We are continuing to buy land and continuing to grow the company in hopes that it will become profitable,” he said.

For the six-month period, the company lost $79 million, or $1.51 a share, compared with a net loss of $2 million, or 4 cents a share, a year earlier. Sales increased to $165.3 million from $143.3 million.