**ThisForm 10-Q consists of 15 sequentially numbered pages.**

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**FORM 10-Q**

** **

**SECURITIES AND EXCHANGE COMMISSION**

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**WASHINGTON,D.C. 20549**

** **

** **

** **

**QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

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** **

**Forthe quarterly period ended March 31, 2002**

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** **

**Commissionfile number 0-17189**

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** **

**CALIFORNIA COASTAL COMMUNITIES, INC.**

(Exact name ofregistrant as specified in its charter)

 

 

| **Delaware**                             |   | **02-0426634**      |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or organization.)          |   | Identification No.) |
|                                     |   |                |
| **6 Executive Circle, Suite 250**        |   |                |
| **Irvine, California**                   |   | **92614**           |
| (Address of principal executive offices) |   | (Zip Code)          |
|                                     |   |                |

Registrant’stelephone number, including area code:**(949)250-7700**

 

 

                Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15 (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 suchreports), and (2) has been subject to such filing requirements for the past 90days:

 

 

Yes   ý                        No     o

 

                Indicate by check mark whetherthe Registrant has filed all documents and reports required to be filed bySections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent tothe distribution of securities under a plan confirmed by a court.

 

 

Yes   ý                        No     o

 

 

Thenumber of shares of Common Stock outstanding at April 30, 2002 was 10,058,589.

 

 

 

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CALIFORNIA COASTAL COMMUNITIES,INC.

 

FORM 10-Q

 

FOR THE QUARTER ENDED MARCH 31,2002

 

                I N D E X                

 

 

 
| Part I -  | Financial Information: |                                                                                        |
|----------------|------------------------|---------------------------------------------------------------------------------------------|
|           |                   |                                                                                        |   |   |
|           | Item  1 -              | Consolidated  Financial Statements                                                          |   |
|           |                   |                                                                                        |   |   |
|           |                   |                                                                                        | Consolidated Balance Sheets  - December 31, 2001 and March 31, 2002 |   |
|           |                   |                                                                                        |   |   |
|           |                   |                                                                                        | Consolidated  Statements of Operations -Three  Months Ended March 31, 2001 and 2002 |   |
|           |                   |                                                                                        |   |   |
|           |                   |                                                                                        | Consolidated  Statements of Cash Flows -Three  Months Ended March 31, 2001 and 2002 |   |
|           |                   |                                                                                        |   |   |
|           |                   |                                                                                        | Notes to Consolidated  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                                 |   |
|           |                   |                                                                                        |   |   |
| Part II - | Other Information:     |                                                                                        |
|           |                   |                                                                                        |   |   |
|           | Item  1 -              | Legal  Proceedings                                                                          |   |
|           |                   |                                                                                        |   |   |
|           | Item 6 -               | Exhibits and  Reports on Form 8-K                                                           |   |
|           |                   |                                                                                        |   |   |
| SIGNATURE      |                   |                                                                                        |
|                |                        |                                                                                             |  |  |  |  |

 

 

2

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 CALIFORNIA COASTAL COMMUNITIES,INC.

 

CONSOLIDATED BALANCESHEETS

 

(in millions)

 

 

 

 
|                                             |   | **December 31,  2001** |            | **March 31, 2002** |   |
|--------------------------------------------------|--------|-----------------------------|-----------------|--------------------|--------|
|                                             |   |                        | **(Unaudited)** |               |
| ASSETS                                           |   |                        |            |               |   |
|                                             |   |                        |            |               |   |
| Cash and cash equivalents                        |   | $                           | 8.7             |               | $      | 5.8 |   |
| Short-term investments - available for sale      |   | 7.5                         |            | 3.9                |   |
| Restricted cash equivalents                      |   | 1.5                         |            | 1.5                |   |
| Real estate held for current development or sale |   | 14.0                        |            | 14.7               |   |
| Land held for future development                 |   | 147.3                       |            | 148.7              |   |
| Other assets                                     |   | 1.4                         |            | 4.2                |   |
|                                             |   |                        |            |               |   |
|                                             |   | $                           | 180.4           |               | $      | 178.8 |   |
|                                             |   |                        |            |               |   |
| LIABILITIES AND STOCKHOLDERS’  EQUITY       |   |                        |            |               |   |
|                                             |   |                        |            |               |   |
| Liabilities:                                     |   |                        |            |               |   |
| Accounts payable and accrued liabilities         |   | $                           | 3.1             |               | $      | 2.9 |   |
| Project debt                                     |   | 3.1                         |            | 3.2                |   |
| Other liabilities                                |   | 15.2                        |            | 13.1               |   |
|                                             |   |                        |            |               |   |
| Total liabilities                                |   | 21.4                        |            | 19.2               |   |
|                                             |   |                        |            |               |   |
| Commitments and contingencies                    |   |                        |            |               |   |
|                                             |   |                        |            |               |   |
| Stockholders’ equity:                       |   |                        |            |               |   |
| Common stock                                     |   | .5                          |            | .5                 |   |
| Capital in excess of par value                   |   | 139.8                       |            | 140.2              |   |
| Retained earnings                                |   | 18.8                        |            | 19.8               |   |
| Accumulated other comprehensive loss             |   | (.1                         | )               | (.9                | )      |
| Total stockholders’ equity                  |   | 159.0                       |            | 159.6              |   |
|                                             |   |                        |            |               |   |
|                                             |   | $                           | 180.4           |               | $      | 178.8 |   |

 

 

See the accompanying notes to consolidated financial statements.

 

 

3

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CALIFORNIA COASTALCOMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions,except per share amounts)

 

 
|                                                                      |   | **Three Months Ended** |   |
|---------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                      |   | **March 31,**          |   |
|                                                                      |   | **2001**               |   | **2002** |   |
|                                                                      |   |                   |   |   |   |
| Revenues                                                                  |   | $                      | 12.0   |   | $ | 2.9 |   |
|                                                                      |   |                   |   |   |   |
| Costs of sales                                                            |   | 10.0                   |   | 2.7 |   |
|                                                                      |   |                   |   |   |   |
| Gross operating margin                                                    |   | 2.0                    |   | .2 |   |
|                                                                      |   |                   |   |   |   |
| Selling, general and administrative expenses                              |   | .8                     |   | 1.0 |   |
| Interest expense                                                          |   | .1                     |   | .1 |   |
| Income from unconsolidated joint venture                                  |   | (.6                    | )      | (.6 | ) |
| Other income, net                                                         |   | (.2                    | )      | — |   |
|                                                                      |   |                   |   |   |   |
| Income (loss) before income taxes                                         |   | 1.9                    |   | (.3 | ) |
|                                                                      |   |                   |   |   |   |
| Provision (benefit) for income taxes                                      |   | .8                     |   | (1.3 | ) |
|                                                                      |   |                   |   |   |   |
| Net income                                                                |   | $                      | 1.1    |   | $ | 1.0 |   |
|                                                                      |   |                   |   |   |   |
| Other comprehensive loss:                                                 |   |                   |   |   |   |
|                                                                      |   |                   |   |   |   |
| Unrealized loss on short-term investments -  available for sale           |   | —                 |   | (.5 | ) |
| Less:   Reclassification adjustment for gains included in net income |   | —                 |   | (.3 | ) |
|                                                                      |   |                   |   |   |   |
|                                                                      |   | —                 |   | (.8 | ) |
|                                                                      |   |                   |   |   |   |
| Total comprehensive income                                                |   | $                      | 1.1    |   | $ | .2 |   |
|                                                                      |   |                   |   |   |   |
| Earnings per common share - basic                                         |   | $                      | .11    |   | $ | .10 |   |
|                                                                      |   |                   |   |   |   |
| Earnings per common share - diluted                                       |   | $                      | .11    |   | $ | .09 |   |

 

See the accompanying notes toconsolidated financial statements.

 

 

4

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CALIFORNIA COASTALCOMMUNITIES, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited)

 

(in millions)

 
|                                                                                                   |   | **Three Months Ended** |   |
|--------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                                   |   | **March 31,**          |   |
|                                                                                                   |   | **2001**               |   | **2002** |   |
|                                                                                                   |   |                   |   |   |   |
| Cash flows from operating activities:                                                                  |   |                   |   |   |   |
| Net income                                                                                             |   | $                      | 1.1    |   | $ | 1.0 |   |
| Adjustments to reconcile to cash provided by (used in)  operating activities:                          |   |                   |   |   |   |
| Non-cash interest expense                                                                              |   | .1                     |   | .1 |   |
| Deferred income taxes                                                                                  |   | .7                     |   | .3 |   |
| Gains on sales of short-term investments                                                               |   | —                 |   | (.3 | ) |
| Deferred compensation expense                                                                          |   | —                 |   | .1 |   |
| Gains on sales of real estate held for current  development or sale                                    |   | (2.0                   | )      | (.2 | ) |
| Proceeds from asset sales, net                                                                         |   | 11.9                   |   | 2.9 |   |
| Changes in assets and liabilities:                                                                     |   |                   |   |   |   |
| Investments in real estate held for current  development or sale                                       |   | (5.6                   | )      | (3.4 | ) |
| Investments in land held for future development                                                        |   | (1.1                   | )      | (1.4 | ) |
| Decrease in other assets                                                                               |   | .9                     |   | .3 |   |
| Decrease in accounts payable, accrued and other  liabilities, net                                      |   | (1.4                   | )      | (2.4 | ) |
|                                                                                                   |   |                   |   |   |   |
| Cash provided by (used in) operating activities                                                        |   | 4.6                    |   | (3.0 | ) |
|                                                                                                   |   |                   |   |   |   |
| Cash flows from financing activities:                                                                  |   |                   |   |   |   |
| Borrowings of project debt                                                                             |   | 5.0                    |   | .1 |   |
| Repayments of project debt                                                                             |   | (7.6                   | )      | — |   |
|                                                                                                   |   |                   |   |   |   |
| Cash provided by (used in) financing activities                                                        |   | (2.6                   | )      | .1 |   |
|                                                                                                   |   |                   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                   |   | 2.0                    |   | (2.9 | ) |
|                                                                                                   |   |                   |   |   |   |
| Cash and cash equivalents - beginning of period                                                        |   | 6.9                    |   | 8.7 |   |
|                                                                                                   |   |                   |   |   |   |
| Cash and cash equivalents - end of period                                                              |   | $                      | 8.9    |   | $ | 5.8 |   |
|                                                                                                   |   |                   |   |   |   |
| Supplemental disclosures of cash flow information:                                                     |   |                   |   |   |   |
| Cash paid during the period for  income taxes, net of refunds received                                 |   | $                      | .1     |   | $ | .1 |   |
|                                                                                                   |   |                   |   |   |   |
| Supplemental disclosures of  non-cash investing and financing activities:                              |   |                   |   |   |   |
| Unrealized loss on short-term  investments - available for sale   recorded as other comprehensive loss |   | —                 |   | (.5 | ) |
| Reclassification adjustment for  gains included in net income                                          |   | —                 |   | (.3 | ) |

 

 

 

See the accompanying notes to consolidated financial statements.

 

 

5

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CALIFORNIA COASTALCOMMUNITIES, INC.

 

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

(UNAUDITED)

 

**Note 1 - Basisof Presentation**

 

                The accompanying financialstatements have been prepared by California Coastal Communities, Inc. and itsconsolidated subsidiaries (the “Company”), without audit, pursuant to the rulesand regulations of the Securities and Exchange Commission. Certain informationand footnote disclosures normally included in financial statements prepared inaccordance with generally accepted accounting principles have been condensed oromitted pursuant to such rules and regulations. The Company believes that theseunaudited consolidated financial statements reflect all material adjustments(consisting only of normal recurring adjustments) and disclosures necessary forthe fair presentation of the results of operations and statements of financialposition when read in conjunction with the Financial Statements and Notesthereto included in the Company’s Annual Report on Form 10–K for the yearended December 31, 2001. The results for interim periods are not necessarilyindicative of the results to be expected for the full year. This reportcontains forward-looking statements. Readers are cautioned that any suchforward-looking statements are not guarantees of future performance and involverisks and uncertainties that actual events or results may differ materiallyfrom those described herein as a result of various factors, including withoutlimitation, the factors discussed generally in this report.

 

The Company completed its recapitalization (the “Recapitalization”) which became effective on September 2, 1997, pursuant to aprepackaged plan of reorganization which was confirmed by the U.S. BankruptcyCourt for the District of Delaware. The prepackaged plan was filed by theCompany, excluding all of its subsidiaries and affiliates, contemporaneouslywith a voluntary petition for relief under Chapter 11 of the bankruptcy code.On the effective date of the Recapitalization, the Company adopted theprovisions of Statement of Position No. 90-7, “Financial Reporting by Entities in Reorganization Under the BankruptcyCode” (“Fresh-Start Reporting”) as promulgated by the American Institute ofCertified Public Accountants. Accordingly, all assets and liabilities wererevalued to reflect their reorganization value, approximating their fair valueat the effective date of the Recapitalization. In addition, the accumulateddeficit of the Company was eliminated and its capital structure recast inconformity with the Recapitalization.

 

# **Note 2 —Significant Accounting Policies**

 

#### *Earnings Per Common Share*

 

                For the three monthsended March 31, 2001 and 2002, the weighted average common shares outstandingwere 10.1 million. Earnings per share, assuming dilution, is computed using theweighted average number of common shares outstanding and the dilutive effect ofpotential common shares outstanding.

 

### *New Accounting Pronouncements*

 

                In July 2001, theFinancial Accounting Standards Board (“FASB”) issued Statement of AccountingStandards (“SFAS”) No. 142, “Goodwill and other Intangible Assets”. Asrequired, the Company adopted the new standard effective January 2002. The newstandard did not have a significant impact on the Company’s financialstatements.

 

                In August 2001, the FASB issuedSFAS No. 143 “Accounting for Asset Retirement Obligations”, which addressesfinancial accounting and reporting for obligations associated with theretirement of tangible long-lived assets and the associated asset retirementcosts. SFAS No. 143 is required to be adopted for fiscal years beginning afterJune 15, 2002, with early adoption permitted. The Company adopted this newstandard effective January 2002, which did not have a significant impact on theCompany’s financial statements.

 

                Also in August2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposalof Long-Lived Assets”, which supersedes SFAS No. 121, “Accounting for theImpairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of”.This new statement also supersedes certain aspects of APB 30, “Reporting theResults of Operations—Reporting the Effects of Disposal of a Segment of aBusiness, and Extraordinary, Unusual and Infrequently Occurring Events andTransactions”, with regard to reporting the effects of a disposal of a segmentof a business and will require expected future operating losses fromdiscontinued operations to be reported in discontinued operations in the periodincurred (rather than as of the measurement date as presently required by APB30). In addition, more dispositions may qualify for discontinued operationstreatment. SFAS No. 144 retains the requirements of SFAS No. 121 whereby animpairment loss is 

 

 

 

 

6

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recognized if the carrying value of the asset is not recoverable fromits undiscounted cash flows or fair values are less than carrying values. Asrequired, the Company adopted this new standard in January 2002, which did nothave a significant impact on the Company’s financial statements.

 

*Impairment ofLong-Lived Assets*

 

                The Companyassesses the impairment of land held for future development and otherlong-lived assets in accordance with SFAS No. 144, which requires an impairedasset to be written down to fair value. Long-lived assets are reviewed forimpairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. As provided by SFAS No.144, impairment is evaluated by comparing an asset’s carrying value to theundiscounted estimated cash flows expected from the asset’s operations and eventualdisposition. If the sum of the undiscounted estimated future cash flows is lessthan the carrying value of the asset, an impairment loss is recognized based onthe fair value of the asset. If an impairment occurs, the fair value of anasset for purposes of SFAS No. 144 is deemed to be the amount a willingbuyer would pay a willing seller for such asset in a current transaction. OnSeptember 2, 1997, the Company completed its recapitalization pursuant to courtconfirmation of a Prepackaged Plan of Reorganization, and the Company appliedthe principles required by the American Institute of Certified PublicAccountant’s SOP 90-7, “Financial Reporting by Entities in Reorganization Underthe Bankruptcy Code” (“Fresh-Start Reporting”) and the carrying value of realestate properties was adjusted to fair value (see Note 1). Following theCalifornia Coastal Commission’s November 2000 suggested modifications to theBolsa Chica Local Coastal Program to limit development to only the upper benchof the Company’s 208-acre Bolsa Chica Mesa (see Note 4), the Company evaluatedthis asset’s carrying value. The Company updated its analysis as of December31, 2001. Since the undiscounted estimated future cash flows from the upperbench of the Bolsa Chica Mesa and the Company’s additional 242 acres at BolsaChica exceed its carrying value, there has been no impairment.

 

# **Note 3 —Restricted Cash Equivalents**

 

                Restrictedcash equivalents as of March 31, 2002 reflects a mortgage-backed securityrecorded at amortized cost, maturing in April 2002.  The security is provided as collateral for a letter of creditobtained by the Company to secure certain indemnity obligations under a taxsharing agreement with a former affiliate.

 

**Note 4 - LandHeld for Future Development**

 

                The Company owns approximately350acreslocated in Orange County, Californiaoverlooking the Pacific Ocean and the Bolsa Chica wetlands (which were sold by theCompany to the State of California in 1997), surrounded bytheCity of Huntington Beach andapproximately 35 miles south of downtown Los Angeles. The Company’s holdings include 208 acres on a mesa north of the Bolsa Chica wetlands (“BolsaChica Mesa”), approximately 100 acres on,or adjacent to, the Huntington Mesa and 42 acres of lowlands which wereacquired by the Company in September 1997.

 

                A Local CoastalProgram (“LCP”) for development of up to 2,500 homes on the Bolsa Chica Mesawas approved by the Orange County Board of Supervisors in December 1994 and bythe California Coastal Commission (the “Coastal Commission”) in January 1996.In October 1997, in response to a trial court decision in connection with alawsuit which challenged the 1996 approvals of the Coastal Commission (the “CoastalAct Lawsuit”), the Coastal Commissionapproved modifications to the LCP which eliminated the filling of Warner Pondand thereby reduced the maximum number of homes to be built from 2,500 to nomore than 1,235 homes on the Bolsa Chica Mesa. The Orange County Board ofSupervisors subsequently accepted the Coastal Commission’s suggestedmodifications.

 

                On November 16, 2000, inresponse to the April 1999 Court of Appeal’s decision in the Coastal ActLawsuit which prohibited relocation of a 14-acre grove of dying eucalyptustrees which serves as raptor habitat, the Coastal Commission held anotherpublic hearing on the LCP and decided to limit development to only the upperbench of the Bolsa Chica Mesa (the “Upper Mesa”). The Coastal Commission’slatest suggested modifications to the LCP would prohibit the Company and otherlandowners from development on the approximately 100-acre lower bench of theBolsa Chica Mesa (the “Lower Mesa”). On May 8, 2001, the County of Orangedeclined to consider the Coastal Commission’s November 2000 suggestedmodifications. In their response to the Coastal Commission, the County statedthat the Commission’s suggested modifications were infeasible and unacceptable.In particular, the County noted that the Commission’s suggested modificationswould remove 140 acres of viable residentially-zoned land from the County’splan.

 

 

 

 

 

 

7

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                In January 2001, the Companyfiled a complaint in Orange County Superior Court challenging the CoastalCommission’s November 2000 decision to substantially change the previouslyapproved LCP. On February 28, 2001, the Orange County Superior Court orderedthat the case be reassigned to San Diego Superior Court based on the request ofthe Coastal Commission.  The Company’scomplaint alleges that the Coastal Commission arbitrarily abandoned decades ofprior approvals that would have permitted development on the entire Bolsa ChicaMesa. The complaint also includes causes of action for violation of theCompany’s constitutional rights of equal protection and due process, and for apublic taking of its private property without compensation in contravention ofthe U.S. and California Constitutions.

 

                On August 31, 2001, the SanDiego Superior court ruled in the Company’s favor following a hearing on theCoastal Commission’s legal challenge to the Company’s complaint. The court’sruling allows the Company to continue its challenge to the Commission’sNovember 2000 decision as to how to protect certain raptor habitat on the BolsaChica Mesa, including the Commission’s recommendation that the Lower Mesa notbe developed. The court’s August 31, 2001 ruling initially upheld the CoastalCommission’s challenge to the portion of the complaint which includes causes ofaction for violation of the Company’s constitutional rights of equal protectionand due process, and for a public taking of its private property withoutcompensation in contravention of the U.S. and California Constitutions.However, after the Company amended its complaint, the San Diego Superior Courtruled in favor of the Company on January 30, 2002 and denied the CaliforniaCoastal Commission’s legal challenge against this portion of the Company’scomplaint. The Coastal Commission’s subsequent appeal of this ruling was deniedby the Court of Appeals on March 15, 2002. As a result, the case is currentlyexpected to be set for hearing on the merits sometime in the second half ofthis year; however, due to the uncertainty of the litigation process, theCompany cannot predict how long it will take to pursue its claims, or theprobability for success.

 

                While the Company vigorouslypursues its litigation to obtain entitlement for residential construction onthe Lower Mesa, it is also pursuing approval of permits for development of theUpper Mesa. On May 8, 2002, the County of Orange Planning Commission approvedthe Company's site plan for development of 379 single-family homes on the UpperMesa. The planned community on the Upper Mesa is currently expected to offer abroad mix of home choices, ranging in size from 1,560 square feet to 4,450square feet. This development plan will also require approval by the CoastalCommission. The Company currently expects to present this plan to the CoastalCommission later this year or early next year. The Company does not believethat the Coastal Commission process will permanently prevent it from developinga planned community at Bolsa Chica, however, there can be no assurance in thatregard, or as to when development could commence, or as to the number of acresor homes the Company would be permitted to develop, or that further litigationor administrative delay will not result.

 

                Uponcompletion of the Company’s recapitalization (the “Recapitalization”) as discussed in Note 1, the Company applied the principles required byFresh-Start Reporting and the carrying value of land held for development(Bolsa Chica) was adjusted to fair value as of September 2, 1997, afterconsideration of the October 1997 Coastal Commission action discussed above.The fair value was determined in 1997 using discounted estimated cash flowsexpected from the asset’s operations and eventual disposition. In addition,given the significance of the Bolsa Chica asset to the financial statements ofthe Company, the value of the Company’s stock immediately following the closingof the Recapitalization was used as an indicator of value of the subjectproperty. Following the November 2000 Coastal Commission action, an assessmentof impairment was conducted by the Company for the year ended December 31,2000. The Company updated its analysis as of December 31, 2001. In accordancewith the Company’s policy described in Note 2 — Impairment of Long-Lived Assetsand based upon the Company’s assessment of estimated undiscounted future cashflows, no provision for impairment has been considered necessary subsequent tothe Recapitalization.

 

                The estimation process involvedin the determination of value is inherently uncertain since it requiresestimates as to future events and market conditions. Such estimation processassumes the Company’s ability to complete development and dispose of its realestate properties in the ordinary course of business based on management’spresent plans and intentions. Economic, market, environmental and politicalconditions may affect management’s development and marketing plans. Inaddition, the implementation of such development and marketing plans could beaffected by the availability of future financing for development andconstruction activities. At such time as the Company’s homebuilding activitiesat Bolsa Chica commence, the Company would be required to account for suchproperty at the lower of cost or market, which may necessitate a write-down ofits carrying value. Accordingly, the ultimate values of the Company’s land heldfor future development are dependent upon future economic and marketconditions, the availability of financing, and the resolution of political,environmental and other related issues. The development of the Company’s BolsaChica Mesa project is dependent upon various governmental approvals, results oflitigation and economic factors. Accordingly, the amount ultimately realizedfrom such project may differ materially from current estimates and theproject’s carrying value.

 

 

 

 

 

 

 

 

8

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**Note 5 - Project Debt**

 

                In conjunction withthe July 20, 2001 acquisition of 83 single-family residential lots in NorthCorona, California, the Company’s homebuilding subsidiary, Hearthside Homes,Inc., entered into a construction loan agreement with a commercial bank tofinance the project. The $10.9 million loan facility is secured by a deed oftrust on the North Corona project and requires principal repayments upon thesale of homes. The loan bears an interest rate of prime plus three-fourthspercent (5.5% at March 31, 2002) and matures on July 19, 2002 unless extendedfor six months, at the Company’s option. As of March 31, 2002, approximately $3.2 million had been drawn underthis facility.

 

                The Company hasreceived loan approval from a commercial bank to finance the majority of theCompany’s April 23, 2002 acquisition of 36 lots near the city of Riverside andrelated home construction. The $7.8 million loan facility is expected to becompleted during the second quarter at comparable terms to the Company’s NorthCorona loan.

 

                Less than $.1 millionof construction period interest was capitalized to projects in the constructionstage for the three months ended March 31, 2001 and 2002.

 

**Note 6 — Income Taxes**

 

                Thefollowing is a summary of the tax provision (benefit):

 
|                                                                                |   | **Three Months Ended** |   |
|-------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                |   | **March 31,**          |   |
|                                                                                |   | **2001**               |   | **2002** |   |
| Current taxes                                                                       |   | $                      | .1     |   | $ | (.2 | )  |
| Deferred taxes                                                                      |   | —                 |   | (.2 | ) |
| Deferred taxes —  equivalent amount credited to capital in excess of par value |   | .7                     |   | — |   |
| Reduction in  contingent tax liabilities                                            |   | —                 |   | (.9 | ) |
| Provision  (benefit) for income taxes                                               |   | $                      | .8     |   | $ | (1.3 | ) |

 

                During the 2001 period, the taxprovision consists of federal and state taxes (primarily alternative minimumtaxes). A deferred income tax provision is reflected in the statement ofoperations, while an equivalent tax benefit from utilization ofpre-Reorganization net operating losses (“NOLs”), through a reduction in thevaluation allowance, is reflected by increasing the Company’s capital in excessof par value, pursuant to Fresh-Start Reporting. The income tax benefit in the2002 period reflects a $.9 million reduction in reserves for estimated stateincome taxes discussed below, reversal of $.2 million of alternative minimumtaxes payable due to a change in the federal income tax law enacted in thecurrent quarter and a $.2 million tax benefit from a reduction in the deferredtax asset valuation allowance on post-Reorganization state NOLs.

 

                The Internal Revenue Code (the“Code”) generally limits the availability of NOLs if an ownership change occurswithin any three-year period under Section 382. If the Company were toexperience an ownership change of more than 50%, the use of all remaining NOLswould generally be subject to an annual limitation equal to the value of theCompany’s equity before the ownership change, multiplied by the long-termtax-exempt rate. The federal NOLs available as of March 31, 2002 wereapproximately $185 million. The amount of NOLs which expire if not utilized is$10 million, $20 million and $155 million for 2005, 2006 and thereafter,respectively.

 

                In response to an unsolicitedwritten consent from a majority of its stockholders, the Company amended itscertificate of incorporation in October 1999 in order to preserve the abilityof the Company to utilize its tax loss carryforwards. Since the Company’s useof its NOLs would be severely restricted if it experiences an ownership changeof more than 50%, the Company’s majority stockholders requested that the Boardof Directors enact the amendments, which have been determined to be in the bestinterest of the Company and its stockholders. The amendments prohibit futurepurchases of the Company’s common stock by persons who would become new 5%holders, and also prohibit current holders of over 5% from increasing theirpositions, except in certain permissible circumstances which would notjeopardize the Company’s ability to use its NOLs. While these amendmentsreduced the Company’s risk of an ownership change occurring due to theacquisition of shares by 5% stockholders, the risk remains that an ownershipchange could result from the sale of shares by existing 5% stockholders.

 

                During April 2002, followingreduction of the cumulative ownership shift, as computed in accordance withSection 382, to below 20% due to the passage of time since certain stockholdertransactions, the Company’s Board of Directors authorized an investor topurchase over 5% of the Company’s common stock. On April 25, 2002, thisinvestor reported that it had become a 5% holder. The Company estimates thatafter giving effect to various transactions by stockholders who hold a 5% orgreater interest 

 

 

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in the Company,and the Company’s repurchase of an aggregate of approximately 1.4 millionshares in June 1999, it has experienced a three-year cumulative ownership shiftof approximately 22%. 

 

                In1995, the Internal Revenue Service (“IRS”) proposed material audit adjustmentswith respect to the tax returns of the Company and its consolidatedsubsidiaries, including formerly affiliated entities, for the years endedDecember 31, 1989, 1990 and 1991. The adjustments proposed by the IRS couldhave resulted in federal tax liability, before interest, of approximately $17million and disallowance of up to $132 million of NOL carryforwards. TheCompany disagreed with the positions taken by the IRS and filed protests withthe IRS to contest the proposed adjustments. In December 1998, the Companyexecuted a settlement agreement with the IRS with respect to the proposed adjustmentsdescribed above. As a result of this agreement, in February 1999 the Companypaid $759,000 (which included $280,000 of tax and $479,000 of interest throughJanuary 1999), net of the Company’s refund claim for 1992 NOL carrybacks ofapproximately $1.6 million, in full settlement of such claims. Under thissettlement agreement approximately $10 million of the Company’s NOLcarryforwards were disallowed. The Company utilized $8.1 million of NOLcarryback from 1992 to 1991 in connection with its refund claim. In June 2001,the Company received a refund of $28,000, including interest, indicatingacceptance by the IRS of the refund claim. Accordingly, pursuant to Fresh-StartReporting, the Company recorded utilization of approximately $1.6 million ofpre-Reorganization NOL, through a reduction in the valuation allowance,resulting in an equivalent amount credited to capital in excess of par value,during the second quarter of 2001.

 

                The Company has reviewed theextent of potential accompanying state tax liability adjustments and does notbelieve that any such adjustments would have a negative material impact on theCompany’s financial statements. Certain of the state jurisdictions in which theCompany filed amended returns for 1989, 1990 and 1991 have accepted suchreturns, thereby reducing the Company’s exposure to potential claims. Inconjunction with periodic reviews of the adequacy of reserves for estimatedstate income taxes, the Company reduced its reserves by approximately $3.2million and $2.3 million in the second and fourth quarters of 2001,respectively, and by approximately $.9 million during the first quarter of2002. The reduction in contingent liabilities is reflected as an income tax(benefit).

 

**Note 7 — Stock Plans**

 

                Inaccordance with Financial Accounting Standards Board Interpretation No. 44“Accounting for Certain Transactions Involving Stock Compensation,” the May2001 modification of stock options requires that they be accounted for asvariable awards, which measures compensation expense as the difference betweenthe option exercise price and the quoted market price of the Company shares.Accordingly, based upon the Company’s market price of $4.69 per share at March31, 2002 versus the option exercise price of $4.50 per share, during the currentquarter the Company has recorded compensation expense of approximately$143,000. Future increases in the fair value of the Company’s common stockwould result in additional compensation expense.

 

**Note 8 — Commitments andContingencies**

 

                The Company and its predecessorshave, through a variety of transactions effected since 1986, disposed ofseveral assets and businesses, many of which are unrelated to the Company’scurrent operations. By operation of law or contractual indemnity provisions,the Company has retained liabilities relating to certain of these assets andbusinesses. Many of such liabilities are supported by insurance or byindemnities from certain of the Company’s predecessors and currently orpreviously affiliated companies. The Company believes its balance sheetreflects adequate reserves for these matters.

 

                SeeNote 4 for a discussion of pending litigation relating to the CaliforniaCoastal Commission’s decision to prohibit development on the Lower Mesa ofBolsa Chica.

 

 

 

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ITEM 2 -                                                MANAGEMENT’SDISCUSSION AND ANALYSIS OF

                                                FINANCIALCONDITION AND RESULTS OF OPERATIONS

 

**General**

 

                TheCompany is a residential land development and homebuilding company withproperties located primarily in Southern California. The principal activitiesof the Company and its consolidated subsidiaries include: (i) obtainingzoning and other entitlements for land it owns and improving the land forresidential development; and (ii) single-family residential constructionin Southern California. Once the residential land owned by the Company isentitled, the Company may build homes, sell unimproved land to other developersor homebuilders, sell improved land to homebuilders, or participate in jointventures with other developers, investors or homebuilders to finance andconstruct infrastructure and homes. During 2002, the Company will focus itsimmediate efforts to (i) obtain approval from the County of Orange and theCalifornia Coastal Commission (“Coastal Commission”) for development permits tobuild 379 homes on the upper bench of the Bolsa Chica Mesa (“Upper Mesa”), asfurther described in Note 4 to the Company’s Financial Statements;(ii) vigorously pursue litigation (the “Coastal Commission Lawsuit”) challengingthe Coastal Commission’s November 2000 decision to prohibit development on thelower bench of the Bolsa Chica Mesa (“Lower Mesa”); and (iii) maintainprofitable homebuilding operations. However, the Company may also consider other strategic joint venture opportunities.There can be no assurance that the Company will accomplish, in whole or inpart, all or any of these strategic goals.

 

                During 2001 and the firstquarter of 2002, the Company generated gross operating margins and cash flowsfrom homebuilding activities on assets other than Bolsa Chica. Following theApril 23, 2002 acquisition of 36 lots in Riverside County, California, theCompany currently has on-going Southern California projects in Yucaipa, NorthCorona and near the city of Riverside. These homebuilding projects are expectedto generate significant cash flows and modest gross operating margins duringthe balance of 2002 and 2003. However, the Company’s inventory of entitled landavailable for homebuilding projects is still limited. The Company expects itsinventory may be fully developed by the second quarter of 2003, except forcompletion of the Riverside project. Given this limited inventory of buildablelots, the Company is striving to maintain profitable operating results for 2002and pursuing residential lot acquisition opportunities. Due to delays inapprovals for homebuilding at Bolsa Chica, continuation of homebuildingoperations beyond 2003 is dependent upon acquisition of suitable, entitledresidential lots within the Southern California area and Coastal Commissionapproval of the Company’s development plan for the Upper Bench of the BolsaChica Mesa.

 

                Bolsa Chica is the Company’sprincipal asset, representing 83% of total assets at March 31, 2002. It hasrequired and continues to require significant investments for entitlement andland development activities. Due to the November 2000 Coastal Commissiondecision to limit residential development to only the Upper Mesa, the Companyis faced with further delays in implementing its plans for residentialdevelopment on the Bolsa Chica Mesa. While the Company vigorously pursues itslitigation to obtain entitlement for residential construction on the LowerMesa, it is also pursuing approval of development permits for the Upper Mesa.On May 8, 2002, the County of Orange Planning Commission approved the Company'ssite plan for development of 379 single-family homes on the Upper Mesa. Thisdevelopment plan will also require approval by the Coastal Commission. TheCompany currently expects to present this plan to the Coastal Commission laterthis year or early next year. The Company does not believe that the CoastalCommission process will ultimately prevent it from developing a plannedcommunity at Bolsa Chica, however, there can be no assurance in that regard, oras to when development could commence, or as to the number of acres or homesthe Company will be permitted to develop, or that further litigation oradministrative delay will not result.

 

                Inaddition to the Upper Mesa land, the Company holds several other Bolsa Chicaparcels aggregating approximately 242 acres which may be developed asresidential lots or sold as park lands to various governmental agencies,subject to the outcome of litigation against the Coastal Commission and negotiations,if any, with potential purchasers of the various parcels. The Company believesthat those additional parcels represent substantial value to be realized uponresolution of litigation and/or through sales to third parties.

 

                The Bolsa Chica Land Trust andother environmental groups have periodically suggested that the Companyconsider selling the Bolsa Chica Mesa to a nonprofit corporation or the Stateof California. Historically, there has been no source of funding to financesuch a transaction. However, a citizens’ initiative has submitted voters’signatures to place a $3.4 billion bond measure on California’s November 2002ballot entitled the “Water Security, Clean Drinking Water, Coastal and BeachProtection Act of 2002”. If sufficient voter signatures are verified by countyand state officials to qualify this initiative for the November 2002 ballot,the bond initiative would include an unquantified line item for the State ofCalifornia to acquire all or a part of the Bolsa Chica Mesa. The Company is inthe process of evaluating the feasibility of this potential alternative. Therecan be no assurances that sufficient signatures will be verified to qualify thebond initiative for the November 2002 ballot; that if eligible, such a bondmeasure will be approved by the voters; that the Company will ever reach amutually acceptable agreement on the price and terms of a sale of the BolsaChica Mesa; or that a sale transaction will ever be completed.

 

 

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                Real estate held for currentdevelopment or sale and land held for future development (real estateproperties) are carried at fair value as of September 2, 1997, followingadoption of Fresh-Start Reporting as discussed in Notes 1 and 2 to theFinancial Statements, as adjusted by subsequent activity. The Company’s realestate properties are subject to a number of uncertainties which can affect thevalues of those assets. These uncertainties include litigation or appeals ofregulatory approvals (as discussed above) and availability of adequate capital,financing and cash flow. In addition, future values may be adversely affectedby increases in property taxes, increases in the costs of labor and materialsand other development risks, changes in general economic conditions, includinghigher mortgage interest rates, and other real estate risks such as the generaldemand for housing and the supply of competitive products. Real estateproperties do not constitute liquid assets and, at any given time, it may bedifficult to sell a particular property for an appropriate price.

 

                During the last six months of2001 it became apparent that both the national and California economies were ina recession, and economic data for the first four months of 2002 has notyielded convincing evidence of a recovery. Therefore, there can be no assuranceregarding the continued health of the southern California residential realestate market. In particular, (i) the slow-down in the national economy duringthe past year, (ii) the significant decreases in the value of national stockmarket indices and the resulting volatility of those markets; (iii) the eventsof September 11, 2001 and their effects on the economy; and (iv) potentialelectricity shortages and related price increases in California, collectivelyappear to be exerting recessionary pressures on the California economy and mayhave a negative impact on the southern California housing market.

 

                While low mortgage rates appearto have sustained housing demand to date, any future increase in mortgage rateswould most likely slow demand for new homes. The tight supply of new homes inCalifornia has also resulted in significant price increases over the last fiveyears. As a result, the affordability of new homes has been declining and couldfurther jeopardize future demand.

 

                All three of the Company’sactive homebuilding projects are located in the “Inland Empire” area ofsouthern California, which includes Riverside and San Bernardino counties. TheInland Empire has experienced significant population and job growth in the pastdecade. Continued growth is expected, partially due to the limited supply ofaffordably priced housing in coastal areas such as Orange County. The Companyis continuing to pursue lot acquisition opportunities throughout southernCalifornia.

 

                *ChapmanHeights.*  The Companyacquired 86 finished lots, which are part of a master-planned community knownas Chapman Heights, in the city of Yucaipa, California. The community surroundsan operating 18-hole public golf course and is planned for a total ofapproximately 2,100 homes, civic and commercial centers and two school sites.The Company opened for sales at the project in January of 2001, and hasreleased the first 66 homes for sale. As of May 13, 2002, closings on 42 homeswere completed and 18 additional homes were in escrow.

 

*                Providence Ranch. *In July 2001, the Company acquired 83 finished lots inthe master-planned community known as Providence Ranch in Riverside County,California near North Corona. The communities of Providence Ranch and theadjacent community of Corona Valley, are planned for a total of 2,600 homes,and are well-located to serve the employment centers of the greater Los Angelesarea, Orange County and the Ontario international airport. The Company commencedhome construction in October 2001, opened for sales in February 2002 and as ofMay 13, 2002, all 40 of the homes released for sale are in escrow. Deliveriesare expected to begin in June 2002.

 

                *VictoriaGrove.* On April 23, 2002, the Company acquired 36 finished lots froma residential builder in the master-planned community known as Victoria Grove,near the city of Riverside, in Riverside County. This well-establishedcommunity is planned for a total of 855 homes. In addition, the Company is in escrowto acquire 48 additional lots for a total project of 84 homes. The Companyexpects to begin home construction and open for sales by the end of the secondquarter of 2002.

 

**New Accounting Pronouncements**

 

                SeeItem 1, Notes to Consolidated Financial Statements

 

 

 

 

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**Liquidityand Capital Resources.**

 

                Theprincipal assets in the Company’s portfolio are residential land which must beheld over an extended period of time in order to be developed to a conditionthat, in management’s opinion, will ultimately maximize the return to theCompany. Consequently, the Company requires significant capital to finance itsreal estate development and homebuilding operations. Historically, sources ofcapital have included bank lines of credit, specific property financings, assetsales and available internal funds. The Company is utilizing project debt andinternally generated cash to fund construction on the North Corona project andthe recently acquired Riverside project, and is utilizing internally generatedcash to fund the Yucaipa and Bolsa Chica projects. The Company’s cash on handand cash equivalents as of March 31, 2002 were approximately $5.8 million, and$8.9 million on April 3, 2002 following the collection of proceeds from salesof short-term investments. The Company believes that its cash on hand and cashequivalents, future real estate sales proceeds, joint venture distributions,potential sales of short-term investments and funds available under its creditagreements for the North Corona and Riverside projects will be sufficient tomeet anticipated cash and capital requirements, primarily project developmentcosts for homebuilding projects and Bolsa Chica, and general and administrativeexpenses, for the next 12 months.

 

## ** Financial Condition**

 

*        March 31,2002 Compared with December 31, 2001*

 

                The$2.9 million decrease in cash and cash equivalents primarily reflects spendingon project development costs, partially offset by net proceeds from sales atthe Yucaipa project, and cash distributions received from the FairbanksHighlands joint venture, as well as other activity presented in the Statementsof Cash Flows.

 

                Restricted cashequivalents as of March 31, 2002 reflects a mortgage-backed security which isrestricted as collateral for a letter of credit obtained by the Company tosecure certain indemnity obligations under a tax sharing agreement with aformer affiliate.

 

                The$3.6 million decrease in short-term investments reflects the sale of a portionof such securities for $3.1 million and an adjustment for net realized andunrealized losses of $.5 million.

 

                The$.7 million increase in real estate held for current development or salereflects an aggregate of $3.4 million of infrastructure and home-building costsfor the Company’s Yucaipa and Providence Ranch projects. These investments werepartially offset by $2.7 million charged to cost of sales for deliveries of 12homes at the Yucaipa project during the quarter.

 

                The$1.4 million increase in land held for future development reflects investmentin the Bolsa Chica Mesa project during the first three months of the year.

 

                The$2.8 million increase in other assets primarily reflects a $3.1 millionreceivable for settlement of the sale of short-term investments on March 28,2002, which was collected on April 3, 2002. This increase was partially offset by distributions from unconsolidatedjoint ventures and the amortization of prepaid insurance.

 

                Accountspayable and accrued liabilities decreased by $.2 million, to a balance of $2.9million as of March 31, 2002, primarily reflecting reversal of alternativeminimum taxes payable due to a recent change in the federal income tax law.

 

                The$2.1 million decrease in other liabilities primarily reflects a tax benefit of$.9 million as a result of the reduction in reserves for estimated state incometaxes, in conjunction with the Company’s periodic review of the adequacy ofsuch reserves.  Such reserves were alsoreduced by a payment in January 2002 of approximately $.6 million to a statejurisdiction based upon settlement of an audit of a 1991 income tax return. Inaddition, net deferred taxes payable decreased by $.5 million due to areduction in the deferred tax asset valuation allowance on tax net operatinglosses (“NOLs”) as a result of the Company’s periodic review of the potentialutilization of NOLs.

 

The $.4 million increase in capital in excess of parvalue primarily reflects the reduction in the deferred tax asset valuationallowance on pre-Reorganization state NOLs.

 

 

 

 

 

 

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**Results of Operations**

 

                The nature of the Company’s business issuch that individual transactions often cause significant fluctuations inoperating results from year to year.

 

*         ThreeMonths Ended March 31, 2002 Compared with the Three Months Ended March 31, 2001*

 

                The Company reported revenues of$2.9 million and gross operating profit of $.2 million for the first quarter of2002, compared with $12.0 million in revenues and gross operating profit of$2.0 million for the first quarter of 2001. Revenues in the current periodreflect deliveries of 12 homes at the Company’s Yucaipa project. The comparableperiod of the prior year reflects deliveries of 20 homes, including nine homesat the Company’s Rancho San Pasqual project in Escondido, California, ninehomes at the Sandover project on the Bolsa Chica Mesa in Huntington Beach,California and the first two homes at the Yucaipa project. The currentquarter's gross margin of 7% reflects only sales at the Yucaipa project, ascompared with the prior period margin of 17% which primarily reflects sales atthe Escondido and Huntington Beach projects which were carried at relativelylower land bases.

 

                The $.2 million increase inselling, general and administrative expenses in the current period, compared tothe same period of 2001,  reflectscompensation expense related to variable accounting for stock options (see Note7 to the Company's Financial Statements).

 

                Income from unconsolidated jointventures in the three months ended March 31, 2002 is comparable to thatreflected in the first quarter of 2001. The current period amount reflects the Company’s share of profits fromdeliveries of four homes at Fairbanks Highlands, as compared with income fromdeliveries of seven homes in the comparable period of last year.

 

                The decrease in other income,net from $.2 million in the 2001 period to approximately zero in the threemonths ended March 31, 2002 primarily reflects increased period costs for landheld for future development, substantially offset by a gain on the sale ofshort-term investments in the current period.

 

                For the three months ended March31, 2001, pursuant to Fresh-Start reporting, a deferred income tax provision of$.7 million is reflected in the statement of operations, while the offsettingrealization of a tax benefit from utilization of pre-Reorganization NOLs,through a reduction in the valuation allowance, is reflected by increasing theCompany’s capital in excess of par value. The income tax benefit in the 2002period reflects a $.9 million reduction in reserves for estimated state incometaxes discussed above, reversal of $.2 million of alternative minimum taxespayable due to a change in the federal income tax law enacted in the current quarterand a $.2 million tax benefit from a reduction in the deferred tax assetvaluation allowance on post-Reorganization state NOLs.

 

 

 

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ITEM 3 -                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

 

                The Company is exposed to equityprice risk on its short-term investments in publicly traded equity securities.These investments, as of March 31, 2002, are comprised solely of common stockin Prudential Financial, Inc. Except for the Company’s recent sale of a portionof these securities, the Company has not attempted to reduce or eliminate itsexposure on these securities. As of March 31, 2002, the fair value of theCompany’s short-term investments - available for sale was $3.9 million.

 

**Safe Harbor StatementUnder the Private Securities Litigation Reform Act of 1995**

 

                Certain of theforegoing information contains forward-looking statements that relate to futureevents or the Company’s future financial performance.  These statements involve known and unknown risks, uncertaintiesand other factors which may cause the Company’s actual results, performance orachievements to be materially different from any future results, performancesor achievements expressed or implied by the forward-looking statements.  In some cases, you can identifyforward-looking statements by terminology such as “may”, “will”, “should”,“expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,“potential”, “continue”, or the negative of such terms or other comparable terminology.  These forward-looking statements include,but are not limited to, statements about the Company’s plans, objectives,goals, expectations and intentions, the number and types of homes and number ofacres of land that the Company may develop and sell, the timing and outcomes oflitigation, regulatory approval processes or administrative proceedings(including, but not limited to ongoing litigation and administrativeproceedings in the Coastal Commission Lawsuit related to the Company’sprincipal asset, the Bolsa Chica Mesa), the Company’s ability to continuerelationships with current or future partners, the Company’s ability to expendresources to comply with environmental regulations and local permittingrequirements, the effect of certain costs, contractual obligations and taxliabilities, both known and unknown, on the Company’s business, results ofoperations and financial condition, the condition and adequacy of the Company’sproperties, the Company’s ability to estimate cash flow projections due touncertainties in valuing real property, the Company’s ability to acquireresidential lots in order to continue home-building operations, the adequacy ofcapital, financing and cash flow required to continue the Company’s operationsand land development activities, the future condition of the real estate marketin Southern California, market risk exposure with respect to the Company’sshort-term equity investments, the Company’s ability to maintain profitableoperations, and other statements contained herein that are not historicalfacts.

 

PART II - OTHER INFORMATION

 

ITEM 1 -                Legal Proceedings

 

See “Item 1 - Business - Corporate IndemnificationMatters” and “Item 3 - Legal Proceedings” in the Company’s Annual Report on Form 10-K forthe year ended December 31, 2001.

 

 

ITEM 6 -                Exhibits and Reports on Form 8-K

 

                                                None.

 

.

SIGNATURE

 

 

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

 

 
|                    | CALIFORNIA COASTAL  COMMUNITIES, INC. |   |
|-------------------------|---------------------------------------|--------|
|                    |                                  |   |   |   |   |
| Date  May 15, 2002 | By                                    |   | */s/*  Sandra G. Sciutto |   |
|                    |                                  |   | SANDRA G. SCIUTTO |
|                    |                                  |   | Senior Vice President and |
|                    |                                  |   | Chief Financial Officer |
|                         |                                       |        |  |  |  |  |

 

 

 

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