Form 8-K WCI Communities, Inc. For: Nov 04

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM�8-K

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CURRENT REPORT

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November�4, 2014

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WCI Communities,�Inc.

(Exact name of registrant as specified in its charter)

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Delaware	�	001-36023	�	27-0472098
(State or other jurisdiction of incorporation)	�	(Commission File Number)	�	(IRS Employer Identification No.)

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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 or former address, if changed since last report)

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Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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�	Written communications pursuant to Rule�425 under the Securities Act (17�CFR�230.425)

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�	Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17�CFR�240.14a-12)

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�	Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17�CFR�240.14d-2(b))

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�	Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17�CFR�240.13e-4(c))

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Item�2.02

Results of Operations and Financial Condition.

On November�4, 2014, WCI Communities,�Inc. (the �Company�) issued a press release regarding its consolidated financial results as of and for the three and nine months ended September�30, 2014 (the �Earnings Release�).�The full text of the Earnings Release is furnished as Exhibit�99.1 to this Current Report on Form�8-K.

The information furnished under this Item�2.02 (including Exhibit�99.1) shall not be deemed �filed� for purposes of Section�18 of the Securities Exchange Act of 1934, as amended (the �Exchange Act�), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the �Securities Act�), or the Exchange Act, except as expressly set forth by specific reference in such a filing.

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Item�7.01

Regulation FD Disclosure.

In connection with the issuance of the Earnings Release, the Company is holding a public conference call and webcast on November�4, 2014 at 8:30�a.m. (Eastern Time) during which Keith E. Bass, President and Chief Executive Officer, and Russell Devendorf, Senior Vice President and Chief Financial Officer, will make the presentation attached as Exhibit�99.2 to this Current Report on Form 8-K.�Information regarding access to the conference call and webcast is set forth in the Earnings Release.

The information furnished under this Item�7.01 (including Exhibit�99.2) shall not be deemed �filed� for purposes of Section�18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

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Item�9.01

Financial Statements and Exhibits.

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(d)

Exhibits.

The exhibits listed below shall be deemed to be furnished and not �filed.�

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Exhibit Number	��	Description�of�Exhibit
99.1	��	Earnings press release issued by the Company on November�4, 2014.
99.2	��	Presentation of the Company on November�4, 2014.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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	�		�	WCI COMMUNITIES,�INC.
	�		�	/s/ Vivien N. Hastings
	�		�	Vivien N. Hastings
	�		�	Senior Vice President, Secretary and General Counsel
Date: November 4, 2014	�		�

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3

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INDEX TO EXHIBITS

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Exhibit Number	��	Description�of�Exhibit
99.1	��	Earnings press release issued by the Company on November�4, 2014.
99.2	��	Presentation of the Company on November�4, 2014.

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4

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Exhibit 99.1

WCI Communities Announces Third Quarter 2014 Results � New Orders Grow by 34%

Bonita Springs, Fla, November�4, 2014 � WCI Communities, Inc. (NYSE: WCIC), a lifestyle community developer and luxury homebuilder, today announced results for its third quarter ended September�30, 2014.

Third Quarter 2014 Highlights and Selected Comparisons to Third Quarter 2013

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New orders of 172, up 34.4%

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Contract value of new orders of $84.0 million, up 54.4%

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Average selling price per new order of $488,000, up 14.8%

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Deliveries of 146, up 3.5%

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Backlog units totaling 459, up 40.0%

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Backlog contract value of $252.3 million, up 63.6%

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Average selling price in backlog of $550,000, up 17.0%

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Adjusted gross margin from homes delivered of 28.6%

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Active selling neighborhood count of 30, up 25.0%

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Income from operations before income taxes of $4.6 million and earnings per diluted share of $0.12

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Contract cancellation rate of 6.5%

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Approximately 10,400 owned and controlled home sites, up 21%

Nine Months Ended September�30, 2014 Highlights and Selected Comparisons to Prior Year

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New orders of 572, up 37.8%

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Contract value of new orders of $278.8 million, up 52.1%

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Average selling price per new order of $487,000, up 10.2%

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Deliveries of 406, up 18.7%

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Revenues from homes delivered of $171.3 million, up 18.5%

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Selling, general and administrative (�SG&A�) expenses as a percentage of Homebuilding revenues improved by 130 basis points

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Income from operations before income taxes of $15.2 million

Management Comments

Keith Bass, the Company�s President and Chief Executive Officer commented, �The third quarter of 2014 represented another period of solid new order, average selling price and backlog growth for WCI. We continued to execute on our growth strategy, increasing our neighborhood counts, and positioning our future neighborhoods for success. Looking ahead, our fourth quarter is shaping up to be our most robust quarter of the year.� Mr.�Bass added, �We remain excited about the favorable demographic and economic fundamentals in Florida and believe we are well positioned to continue to capitalize on these positive trends.�

Third Quarter 2014 Results

New orders during the third quarter of 2014 increased 34.4% to 172 homes and the contract value of new orders was $84.0 million for the third quarter, an increase of 54.4% from the prior year period. The average selling price per unit of new orders was $488,000, representing an increase of 14.8% from the prior year period. Additionally, the active selling neighborhood count at quarter end increased by 25.0% to 30 neighborhoods compared to the end of the third quarter of 2013.

The Company generated total revenues of $89.7 million for the quarter ended September�30, 2014, an increase of $4.2 million, or 4.9%, compared to $85.5 million in the third quarter of 2013. Revenues grew across each business segment compared to the prior year period, with Homebuilding revenues up 2.6%, Real Estate Services revenues up 11.7% and Amenities revenues up 4.8%.

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The Company delivered 146 homes in the third quarter, an increase of 5 units, or 3.5% from the prior year period. The average selling price per home delivered during the three months ended September�30, 2014 was $427,000, which was consistent with $429,000 during the three months ended September�30, 2013. Adjusted gross margin from homes delivered, a non-GAAP financial measure, was 28.6% in the third quarter of 2014.

As of September�30, 2014, backlog contract value was $252.3 million, an increase of $98.1 million, or 63.6% from the prior year. The average selling price of backlog units was $550,000, an increase of 17.0% from the prior year. The increase in backlog contract value was due to the varying product mix and new order growth.

For the quarter ended September�30, 2014, income from operations before income taxes was $4.6 million, compared to $1.6 million in the prior year period. Net income attributable to common shareholders was $3.1 million, or $0.12 per diluted share, compared to a net loss of $17.0 million, or $0.71 per diluted share in the prior year period. The third quarter of 2014 included $1.7 million of income tax expense, whereas there was no income tax expense in the prior year period. The third quarter of 2013 included $19.0 million of preferred stock dividends and $5.1 million of expenses related to the early repayment of debt, neither of which recurred in the third quarter of 2014.

Conference Call

As previously announced, the Company will host a conference call to discuss third quarter 2014 results before the market opens on Tuesday, November�4, 2014 at 8:30 a.m. (ET). A slide presentation for the call will be available on the Investors section of the Company�s website at investors.WCICommunities.com. The conference call can be accessed live over the phone by dialing (877)�407-0784, or for international callers, (201)�689-8560. A telephonic replay will be available approximately three hours after the call and can be accessed by dialing (877)�870-5176, or for international callers, (858)�384-5517. The passcode for both the live call and the replay is 13592913. The replay will be available until 11:59 p.m. (ET) on November�18, 2014.

Investors and other interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Investors section of the Company�s website at investors.WCICommunities.com. The on-line replay will be available for a limited time beginning approximately two hours following the call.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (�GAAP�), this press release contains the non-GAAP financial measures of EBITDA, Adjusted EBITDA and Adjusted gross margin from homes delivered. The reasons for the use of these measures, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included below following the unaudited consolidated financial statements.

About WCI Communities, Inc.

WCI Communities is a lifestyle community developer and luxury homebuilder of single- and multi-family homes in most of coastal Florida�s highest growth and largest markets. With a legacy that spans more than 60 years, WCI Communities has an established expertise in developing amenity-rich, lifestyle-oriented master-planned communities, catering to move-up, active adult and second-home buyers. Headquartered in Bonita Springs, Florida, WCI Communities is a fully integrated homebuilder and developer with complementary real estate brokerage and title services businesses.

To learn more about WCI Communities, please visit the Company�s website at www.WCICommunities.com.

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Forward-Looking Statements

Any statements made in this press release that are not statements of historical fact, including statements about the Company�s beliefs and expectations, are forward-looking statements within the meaning of the federal securities laws, and should be evaluated as such. These forward-looking statements include, but are not limited to, statements we make regarding our ability to leverage overhead costs and increase profitability, our expectations with respect to future growth, and market conditions. The Company bases these forward-looking statements or projections on its current expectations, plans and assumptions that it has made in light of its experience in the industry, as well as its perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances and at such time. Actual results could differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: a slowing or reversal of the recovery of the housing market, either on a national level or in Florida; changing local and economic conditions and the cyclical nature of the housing business; rising levels of unemployment; substantial increases in mortgage interest rates, the unavailability of mortgage financing or changes in tax laws which make home ownership more expensive or less attractive; and poor weather conditions or natural disasters. For more information concerning these and other important factors that could cause actual results to differ materially from those contained in the forward-looking statements, please refer to the Company�s �Risk Factors� in Item�1A of Part I of our Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on February�27, 2014 and subsequent filings by the Company. As you read and consider this press release, you should understand that the forward-looking statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties and assumptions and you should not place undue reliance on these forward-looking statements or projections. Although the Company believes that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect the Company�s actual financial results or results of operations and could cause actual results to differ materially from those expressed or implied in the forward-looking statements and projections. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. If the Company does update one or more forward-looking statements, there should be no inference that it will make additional updates with respect to those or other forward-looking statements.

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WCI Communities, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

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�	��	September�30,�2014		�	�	December�31,�2013		�
�	��	(unaudited)		�	�	�		�
Assets	��				�
Cash and cash equivalents	��	$	169,541	��	�	$	213,352	��
Restricted cash	��	�	12,772	��	�	�	8,911	��
Notes and accounts receivable	��	�	4,747	��	�	�	7,107	��
Real estate inventories	��	�	420,045	��	�	�	280,293	��
Property and equipment, net	��	�	25,226	��	�	�	24,479	��
Other assets	��	�	19,533	��	�	�	18,101	��
Income taxes receivable	��	�	465	��	�	�	77	��
Deferred tax assets, net of valuation allowances	��	�	119,141	��	�	�	125,646	��
Goodwill	��	�	7,520	��	�	�	7,520	��
	��	�	�	�	�	�	�	�
Total assets	��	$	778,990	��	�	$	685,486	��
	��	�	�	�	�	�	�	�
Liabilities and Equity	��				�
Accounts payable and other liabilities	��	$	69,555	��	�	$	54,920	��
Customer deposits	��	�	37,198	��	�	�	20,702	��
Senior notes, including unamortized premium of $1,215 at September�30, 2014	��	�	251,215	��	�	�	200,000	��
	��	�	�	�	�	�	�	�
Total liabilities	��	�	357,968	��	�	�	275,622	��
	��	�	�	�	�	�	�	�
WCI Communities, Inc. shareholders� equity:	��				�
Preferred stock, $0.01 par value; 15,000,000 shares authorized, none issued	��	�	���	��	�	�	���	��
Common stock, $0.01 par value; 150,000,000 shares authorized, 25,824,734 shares issued and 25,787,999 shares outstanding at September�30, 2014; 25,795,072 shares issued and 25,768,035 shares outstanding at December�31, 2013	��	�	258	��	�	�	258	��
Additional paid-in capital	��	�	301,109	��	�	�	298,530	��
Retained earnings	��	�	117,942	��	�	�	108,984	��
Treasury stock, at cost, 36,735 shares at September�30, 2014 and 27,037 shares at December�31, 2013	��	�	(374	)�	�	�	(196	)�
	��	�	�	�	�	�	�	�
Total WCI Communities, Inc. shareholders� equity	��	�	418,935	��	�	�	407,576	��
Noncontrolling interests in consolidated joint ventures	��	�	2,087	��	�	�	2,288	��
	��	�	�	�	�	�	�	�
Total equity	��	�	421,022	��	�	�	409,864	��
	��	�	�	�	�	�	�	�
Total liabilities and equity	��	$	778,990	��	�	$	685,486	��
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WCI Communities, Inc.

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

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Three�Months�Ended�September�30,

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Nine�Months�Ended�September�30,

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�

��

2014

�

�

2013

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�

2014

�

�

2013

�

Revenues

��

�

�

�

Homebuilding

��

$

62,381

��

�

$

60,802

��

�

$

171,294

��

�

$

145,054

��

Real estate services

��

�

22,886

��

�

�

20,524

��

�

�

67,848

��

�

�

60,915

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Amenities

��

�

4,393

��

�

�

4,192

��

�

�

17,257

��

�

�

16,620

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��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Total revenues

��

�

89,660

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�

�

85,518

��

�

�

256,399

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�

�

222,589

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�

�

�

�

�

�

�

�

�

�

�

�

�

�

Cost of Sales

��

�

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Homebuilding

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45,937

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�

42,992

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�

124,354

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100,621

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Real estate services

��

�

22,455

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19,656

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�

66,041

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�

57,762

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Amenities

��

�

5,570

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�

�

5,713

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�

18,465

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18,343

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�

�

�

�

�

�

�

�

�

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Total cost of sales

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73,962

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68,361

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208,860

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176,726

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�

�

�

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�

�

�

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Gross margin

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15,698

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17,157

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�

47,539

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�

45,863

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�

�

�

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�

�

�

�

�

�

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�

Selling, general and administrative expenses

��

�

11,034

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10,279

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�

�

32,026

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�

�

29,007

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Interest expense

��

�

191

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�

�

184

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�

�

876

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�

�

1,798

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Other income, net

��

�

(107

)�

�

�

(29

)�

�

�

(535

)�

�

�

(1,249

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Expenses related to early repayment of debt

��

�

���

��

�

�

5,105

��

�

�

���

��

�

�

5,105

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

11,118

��

�

�

15,539

��

�

�

32,367

��

�

�

34,661

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��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Income from operations before income taxes

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�

4,580

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�

�

1,618

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�

�

15,172

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�

�

11,202

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Income tax (expense) benefit

��

�

(1,703

)�

�

�

���

��

�

�

(6,337

)�

�

�

85

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net income

��

�

2,877

��

�

�

1,618

��

�

�

8,835

��

�

�

11,287

��

Net loss attributable to noncontrolling interests

��

�

263

��

�

�

340

��

�

�

123

��

�

�

163

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net income attributable to WCI Communities, Inc.

��

�

3,140

��

�

�

1,958

��

�

�

8,958

��

�

�

11,450

��

Preferred stock dividends

��

�

���

��

�

�

(18,980

)�

�

�

���

��

�

�

(19,680

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net income (loss) attributable to common shareholders of WCI Communities, Inc.

��

$

3,140

��

�

$

(17,022

)�

�

$

8,958

��

�

$

(8,230

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Earnings (loss) per share attributable to common shareholders of WCI Communities, Inc.:

��

�

�

�

Basic

��

$

0.12

��

�

$

(0.71

)�

�

$

0.34

��

�

$

(0.41

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Diluted

��

$

0.12

��

�

$

(0.71

)�

�

$

0.34

��

�

$

(0.41

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Weighted average number of shares of common stock outstanding:

��

�

�

�

Basic

��

�

26,020

��

�

�

24,138

��

�

�

26,018

��

�

�

20,099

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Diluted

��

�

26,307

��

�

�

24,138

��

�

�

26,272

��

�

�

20,099

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

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WCI Communities, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

�

�	��	Nine�Months�Ended�September�30,						�
�	��	2014		�	�	2013		�
Operating activities	��				�
Net income	��	$	8,835	��	�	$	11,287	��
Adjustments to reconcile net income to net cash used in operating activities:	��				�
Amortization of debt issuance costs	��	�	619	��	�	�	462	��
Amortization of debt (premium) discount	��	�	(35	)�	�	�	243	��
Expenses related to early repayment of debt	��	�	���	��	�	�	5,105	��
Depreciation	��	�	1,910	��	�	�	1,513	��
Provision for (recovery of) bad debts	��	�	(2	)�	�	�	270	��
Loss on sale of property and equipment	��	�	���	��	�	�	69	��
Deferred income tax expense	��	�	6,720	��	�	�	���	��
Stock-based and other non-cash long-term incentive compensation expense	��	�	2,541	��	�	�	4,312	��
Changes in assets and liabilities:	��				�
Restricted cash	��	�	(3,861	)�	�	�	2,883	��
Notes and accounts receivable	��	�	2,362	��	�	�	3,021	��
Real estate inventories	��	�	(141,285	)�	�	�	(94,772	)�
Other assets	��	�	(899	)�	�	�	4,496	��
Income taxes receivable	��	�	(388	)�	�	�	16,750	��
Accounts payable and other liabilities	��	�	(4,974	)�	�	�	1,362	��
Customer deposits	��	�	16,496	��	�	�	7,316	��
	��	�	�	�	�	�	�	�
Net cash used in operating activities	��	�	(111,961	)�	�	�	(35,683	)�
	��	�	�	�	�	�	�	�
Investing activities	��				�
Distributions of capital from an unconsolidated joint venture	��	�	���	��	�	�	577	��
Additions to property and equipment	��	�	(2,465	)�	�	�	(1,525	)�
	��	�	�	�	�	�	�	�
Net cash used in investing activities	��	�	(2,465	)�	�	�	(948	)�
	��	�	�	�	�	�	�	�
Financing activities	��				�
Proceeds from the issuance of common stock, net	��	�	���	��	�	�	90,257	��
Proceeds from the issuance of senior notes	��	�	51,250	��	�	�	200,000	��
Repayment of senior secured term notes	��	�	���	��	�	�	(126,250	)�
Payments of debt issuance costs	��	�	(1,116	)�	�	�	(5,597	)�
Proceeds from the sale of community development district bonds	��	�	21,673	��	�	�	���	��
Payments of community development district obligations	��	�	(936	)�	�	�	(338	)�
Payment of preferred stock dividend	��	�	���	��	�	�	(700	)�
Purchases of treasury stock	��	�	(178	)�	�	�	���	��
Distribution to noncontrolling interests	��	�	(78	)�	�	�	���	��
	��	�	�	�	�	�	�	�
Net cash provided by financing activities	��	�	70,615	��	�	�	157,372	��
	��	�	�	�	�	�	�	�
Net increase (decrease) in cash and cash equivalents	��	�	(43,811	)�	�	�	120,741	��
Cash and cash equivalents at the beginning of the period	��	�	213,352	��	�	�	81,094	��
	��	�	�	�	�	�	�	�
Cash and cash equivalents at the end of the period	��	$	169,541	��	�	$	201,835	��
	��	�	�	�	�	�	�	�

---

Reconciliation of Non-GAAP Financial Measures

In addition to the results reported in accordance with U.S. generally accepted accounting principles (�GAAP�), we have provided information in this press release relating to adjusted gross margin from homes delivered, EBITDA and Adjusted EBITDA (as defined below).

Adjusted Gross Margin from Homes Delivered

We calculate adjusted gross margin from homes delivered by subtracting the gross margin from land and home sites, if any, from Homebuilding gross margin to arrive at gross margin from homes delivered. Adjusted gross margin from homes delivered is calculated by adding asset impairments, if any, and capitalized interest in cost of sales to gross margin from homes delivered. Management uses adjusted gross margin from homes delivered to evaluate operating performance in our Homebuilding segment and make strategic decisions regarding sales price, construction and development pace, product mix and other operating decisions. We believe that adjusted gross margin from homes delivered is relevant and useful to investors and other interested parties for evaluating our comparative operating performance from period to period and among companies within the homebuilding industry as it is reflective of overall profitability during any given reporting period. This measure is considered a non-GAAP financial measure and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures when evaluating our operating performance. Although other companies in the homebuilding industry report similar information, the methods used by such companies may differ from our methodology and, therefore, may not be comparable. We urge investors and other interested parties to understand the methods used by other companies in the homebuilding industry to calculate gross margins and any adjustments to such amounts before comparing our measures to those of such other companies.

The table below reconciles adjusted gross margin from homes delivered to the most directly comparable GAAP financial measure, Homebuilding gross margin, for the periods presented herein.

�

�

��

Three Months Ended

�

�

Nine Months Ended

�

�

��

September�30,

�

�

September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

($ in thousands)

�

Homebuilding gross margin

��

$

16,444

��

�

$

17,810

��

�

$

46,940

��

�

$

44,433

��

Less: gross margin from land and home sites

��

�

���

��

�

�

166

��

�

�

���

��

�

�

201

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Gross margin from homes delivered

��

�

16,444

��

�

�

17,644

��

�

�

46,940

��

�

�

44,232

��

Add: capitalized interest in cost of sales

��

�

1,386

��

�

�

1,317

��

�

�

3,653

��

�

�

2,880

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Adjusted gross margin from homes delivered

��

$

17,830

��

�

$

18,961

��

�

$

50,593

��

�

$

47,112

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Gross margin from homes delivered as a percentage of revenues from homes delivered

��

�

26.4

%�

�

�

29.2

%�

�

�

27.4

%�

�

�

30.6

%�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Adjusted gross margin from homes delivered as a percentage of revenues from homes delivered

��

�

28.6

%�

�

�

31.3

%�

�

�

29.5

%�

�

�

32.6

%�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

EBITDA and Adjusted EBITDA

Adjusted EBITDA measures performance by adjusting net income (loss) attributable to common shareholders of WCI Communities, Inc. to exclude, if any, interest expense, capitalized interest in cost of sales, income taxes, depreciation (��EBITDA��), preferred stock dividends, income (loss) from discontinued operations, other income, stock-based and other non-cash long-term incentive compensation expense, asset impairments and expenses related to early repayment of debt. We believe that the presentation of Adjusted EBITDA provides useful information to investors and other interested parties regarding our results of operations because it assists those parties and us when analyzing and benchmarking the performance and value of our business. We also believe that Adjusted EBITDA is useful as a measure of comparative

---

operating performance from period to period and among companies in the homebuilding industry as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effects of our capital structure (such as preferred stock dividends and interest expense), asset base (primarily depreciation), items outside of our control (primarily income taxes) and the volatility related to the timing and extent of non-operating activities (such as discontinued operations and asset impairments). Accordingly, we believe that this measure is useful for comparing general operating performance from period to period. Other companies may define Adjusted EBITDA differently and, as a result, our measure of Adjusted EBITDA may not be directly comparable to Adjusted EBITDA of other companies. Although we use Adjusted EBITDA as a financial measure to assess the performance of our business, the use of Adjusted EBITDA is limited because it does not include certain material costs, such as interest and income taxes, necessary to operate our business. Adjusted EBITDA and EBITDA should be considered in addition to, and not as substitutes for, net income (loss) in accordance with GAAP as a measure of performance. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Our EBITDA-based measures have limitations as analytical tools and, therefore, investors and other interested parties should not consider them in isolation or as substitutes for analyses of our results as reported under GAAP. Some such limitations are:

�

�

�

�

they do not reflect the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations;

�

�

�

�

they are not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows;

�

�

�

�

they do not reflect the interest expense necessary to service our debt; and

�

�

�

�

other companies in our industry may calculate these measures differently than we do, thereby limiting their usefulness as comparative measures.

Because of these limitations, our EBITDA-based measures are not intended to be alternatives to net income (loss), indicators of our operating performance, alternatives to any other measure of performance in conformity with GAAP or alternatives to cash flow provided by (used in) operating activities as measures of liquidity. Investors and other interested parties should therefore not place undue reliance on our EBITDA-based measures or ratios calculated using those measures. Our GAAP-based measures can be found in our unaudited consolidated financial statements in Item�1 of the Quarterly Report on Form 10-Q that we plan to file with the Securities and Exchange Commission on or before November�7, 2014.

---

The table below reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss) attributable to common shareholders of WCI Communities, Inc., for the periods presented herein.

�

�

��

Three Months Ended

�

�

Nine Months Ended

�

�

��

September�30,

�

�

September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

($ in thousands)

�

Net income (loss) attributable to common shareholders of WCI Communities, Inc.

��

$

3,140

��

�

$

(17,022

)�

�

$

8,958

��

�

$

(8,230

)�

Interest expense

��

�

191

��

�

�

184

��

�

�

876

��

�

�

1,798

��

Capitalized interest in cost of sales (1)

��

�

1,386

��

�

�

1,317

��

�

�

3,653

��

�

�

2,880

��

Income taxes (2)

��

�

1,703

��

�

�

���

��

�

�

6,337

��

�

�

(85

)�

Depreciation

��

�

678

��

�

�

505

��

�

�

1,910

��

�

�

1,513

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

EBITDA

��

�

7,098

��

�

�

(15,016

)�

�

�

21,734

��

�

�

(2,124

)�

Preferred stock dividends (3)

��

�

���

��

�

�

18,980

��

�

�

���

��

�

�

19,680

��

Other income, net (4)

��

�

(107

)�

�

�

(29

)�

�

�

(535

)�

�

�

(1,249

)�

Stock-based and other non-cash long-term incentive compensation expense (5)

��

�

856

��

�

�

2,280

��

�

�

2,541

��

�

�

4,312

��

Expenses related to early repayment of debt (6)

��

�

���

��

�

�

5,105

��

�

�

���

��

�

�

5,105

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Adjusted EBITDA

��

$

7,847

��

�

$

11,320

��

�

$

23,740

��

�

$

25,724

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Adjusted EBITDA margin

��

�

8.8

%�

�

�

13.2

%�

�

�

9.3

%�

�

�

11.6

%�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

(1)	Represents capitalized interest expensed in cost of sales on home deliveries and land and home site sales.

(2)	Represents the Company�s income taxes as reported in its unaudited consolidated statements of operations.

(3)

Represents a reduction in net income attributable to WCI Communities, Inc. pertaining to its preferred stock wherein we (i)�exchanged 903,825 shares of our common stock (valued at $19.0 million) for 10,000 outstanding shares of our Series A preferred stock during July 2013 and (ii)�paid $0.7 million in cash to purchase the one outstanding share of our Series B preferred stock during April 2013. All such shares of preferred stock, which were carried at a nominal value on our consolidated balance sheets, have been cancelled and retired. In accordance with Accounting Standards Codification 260, Earnings Per Share, paragraph 10-S99-2, any difference between the consideration transferred to our preferred stock shareholders and the corresponding book value has been (i)�characterized as a preferred stock dividend in the Company�s unaudited consolidated statements of operations during the period that the related transaction was completed and (ii)�deducted from net income attributable to WCI Communities, Inc. to arrive at net income (loss) attributable to common shareholders of WCI Communities, Inc.

(4)	Represents the Company�s other income, net as reported in its unaudited consolidated statements of operations.

(5)	Represents expenses recorded in the Company�s unaudited consolidated statements of operations related to its stock-based and other non-cash long-term incentive compensation plans.

(6)

Represents expenses related to early repayment of debt as reported in the Company�s unaudited consolidated statements of operations during the three and nine months ended September�30, 2013, including write-offs of unamortized debt discount and debt issuance costs and a prepayment premium related to our voluntary prepayment during August 2013 of the entire outstanding principal amount of the Company�s Senior Secured Term Notes due 2017.

Investor Relations Contact:

Scott Bowles � [email protected] � (239)�498-8481

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