<PAGE>

           This Form 10-Q consists of 15 sequentially numbered pages.

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                    ----------------------------------------

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

                         Commission file number 0-17189

                      CALIFORNIA COASTAL COMMUNITIES, INC.
                      ------------------------------------
             (Exact name of registrant 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's telephone number, including area code: (949) 250-7700

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(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 such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                               Yes X   No
                                  ---     ---

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

                               Yes X   No
                                  ---     ---


The number of shares of Common Stock outstanding at June 30, 2000 was
10,058,589.

<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2000

                                    I N D E X

<TABLE>
<CAPTION>
                                                                                           Page No.
                                                                                           --------
<S>                                                                                        <C>
PART I - Financial Information:

         Item 1 -   Financial Statements

                    Balance Sheets -
                    December 31, 1999 and June 30, 2000........................................ 3

                    Statements of Operations -
                    Three Months and Six Months Ended June 30, 1999 and 2000................... 4

                    Statements of Cash Flows -
                    Six Months Ended June 30, 1999 and 2000.................................... 5

                    Notes to Financial Statements.............................................. 6

         Item 2 -   Management's Discussion and Analysis of Financial
                    Condition and Results of Operations........................................10

         Item 3 -   Quantitative and Qualitative Disclosures About
                    Market Risk................................................................13

PART II - Other Information:

         Item 1 - Legal Proceedings............................................................14

         Item 4 - Submission of Matters to a Vote of Security Holders..........................14

         Item 5 - Other Information............................................................14

         Item 6 - Exhibits and Reports on Form 8-K.............................................15

SIGNATURE......................................................................................15
</TABLE>


                                       2
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                                 BALANCE SHEETS

                                  (in millions)

<TABLE>
<CAPTION>
                                                                   December 31,                June 30,
                                                                      1999                       2000
                                                                   -----------               -----------
     ASSETS                                                                                  (Unaudited)
<S>                                                                <C>                       <C>
Cash and cash equivalents ....................................       $   5.8                   $   7.0
Short-term investments........................................           3.0                       --
Restricted cash...............................................           3.4                       3.3
Real estate held for development or sale......................          15.1                      21.6
Land held for development.....................................         136.5                     138.8
Other assets..................................................           6.1                       3.8
                                                                     -------                   -------

                                                                     $ 169.9                   $ 174.5
                                                                     =======                   =======

      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
     Accounts payable and accrued liabilities.................       $   2.0                   $   2.5
     Project debt.............................................           7.4                      10.5
     Other liabilities........................................          27.7                      26.2
                                                                     -------                   -------

     Total liabilities........................................          37.1                      39.2
                                                                     -------                   -------


Stockholders' equity:
     Common stock ............................................            .5                        .5
     Capital in excess of par value...........................         130.2                     131.2
     Retained earnings........................................           2.1                       3.6
                                                                     -------                   -------

     Total stockholders' equity...............................         132.8                     135.3
                                                                     -------                   -------

                                                                     $ 169.9                   $ 174.5
                                                                     =======                   =======
</TABLE>


               See the accompanying notes to financial statements.

                                       3
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                            STATEMENTS OF OPERATIONS
                     (in millions, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           Three Months Ended          Six Months Ended
                                                                 June 30,                  June 30,
                                                            1999         2000           1999         2000
                                                            ----         ----           ----         ----
<S>                                                        <C>         <C>            <C>           <C>
Revenues................................................   $ --        $ 7.5          $  --         $ 7.5

Costs of sales..........................................     --          5.9             --           5.9
                                                           -----       ------         ------        ------

   Gross operating profit...............................     --          1.6             --           1.6

Selling, general and administrative expenses............     .8           .9            1.6           1.8
Interest expense........................................     .1          --              .5            .1
Income from unconsolidated joint venture................     --          (.8)            --          (1.3)
Other income, net.......................................    (.5)         (.4)           (.8)         (1.6)
                                                           -----       ------         ------        ------

Income (loss) before income taxes.......................    (.4)         1.9           (1.3)          2.6

Provision for income taxes..............................     .1           .8             .1           1.1
                                                           -----       ------         ------        ------

Net income (loss).......................................   $(.5)       $ 1.1          $(1.4)        $ 1.5
                                                           =====       ======         ======        ======


Earnings (loss) per common share - basic and diluted:...   $(.05)      $  .11         $ (.12)       $  .15
                                                           =====       ======         ======        ======
</TABLE>

               See the accompanying notes to financial statements.

                                       4
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                            STATEMENTS OF CASH FLOWS

                                  (in millions)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         Six Months Ended
                                                                                              June 30,
                                                                                      1999               2000
                                                                                    --------            ------
<S>                                                                                 <C>                 <C>
Cash flows from operating activities:
      Net income (loss)................................................             $   (1.4)           $  1.5
      Adjustments to reconcile to cash used
       by operating activities:
         Non-cash interest expense.....................................                   .4                .1
         Interest income on restricted cash............................                  (.1)              (.1)
         Deferred income taxes.........................................                   --               1.0
         Gains on asset sales..........................................                   --              (1.7)
         Proceeds from asset sales, net................................                   --               7.4
         Investments in real estate held for development or sale.......                 (3.5)            (12.2)
         Investments in land held for development......................                 (1.2)             (2.3)
         Decrease in other assets......................................                   .9               2.3
         Decrease in accounts payable, accrued
           and other liabilities.......................................                 (1.4)             (1.1)
                                                                                    --------            ------

              Cash used by operating activities........................                 (6.3)             (5.1)
                                                                                    --------            ------

Cash flows from investing activities:
      Maturity of short-term investments...............................                   --               3.0
                                                                                    --------            ------
              Cash provided by investing activities....................                   --               3.0
                                                                                    --------            ------

Cash flows from financing activities:
      Borrowings of project debt.......................................                  3.7               8.6
      Repayments of project debt.......................................                   --              (5.5)
      Repurchases of common stock......................................                 (8.3)              --
      Deposit of restricted cash.......................................                 (3.2)              --
      Return of interest income from restricted cash...................                   --                .2
                                                                                    --------            ------

              Cash (used) provided by financing activities.............                 (7.8)              3.3
                                                                                    --------            ------

Net increase (decrease) in cash and cash equivalents...................                (14.1)              1.2

Cash and cash equivalents - beginning of period........................                 26.6               5.8
                                                                                    --------            ------

Cash and cash equivalents - end of period..............................             $   12.5            $  7.0
                                                                                    ========            ======
</TABLE>

               See the accompanying notes to financial statements.

                                       5
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

         The accompanying financial statements have been prepared by
California Coastal Communities, Inc. and its consolidated subsidiaries (the
"Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading
when read in conjunction with the Financial Statements and Notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and the current year's previously issued Quarterly Report
on Form 10-Q. The results for interim periods are not necessarily indicative
of the results to be expected for the full year. This report contains forward
looking statements. Readers are cautioned that any such forward looking
statements are not guarantees of future performance and involve risks and
uncertainties that actual events or results may differ materially from those
described herein as a result of various factors, including without
limitation, the factors discussed generally in this report.

         The Company completed its recapitalization (the "Recapitalization")
which became effective on September 2, 1997, pursuant to a prepackaged plan
of reorganization which was confirmed by the U.S. Bankruptcy Court for the
District of Delaware. The prepackaged plan was filed by the Company,
excluding all of its subsidiaries and affiliates, contemporaneously with a
voluntary petition for relief under Chapter 11 of the bankruptcy code. On the
effective date of the Recapitalization, the Company adopted the provisions of
Statement of Position No. 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("Fresh-Start Reporting") as
promulgated by the American Institute of Certified Public Accountants.
Accordingly, all assets and liabilities were revalued to reflect their
reorganization value, approximating their fair value at the effective date of
the Recapitalization. In addition, the accumulated deficit of the Company was
eliminated and its capital structure recast in conformity with the
Recapitalization.

NOTE 2 - EARNINGS (LOSS) PER COMMON SHARE

         The Company computes earnings per share in accordance with Statement
of Financial Accounting Standards No. 128, "Earnings per Share". For the six
months ended June 30, 1999 and 2000, the weighted average common shares
outstanding were 11.3 million and 10.1 million, respectively. For the three
months ended June 30, 1999 and 2000, the weighted average common shares
outstanding were 11.1 million and 10.1 million, respectively. The weighted
average common shares outstanding reflect the repurchase of approximately 1.4
million shares by the Company in June 1999. Earnings per share, assuming
dilution, is computed using the weighted average number of common shares
outstanding and the dilutive effect of potential common shares outstanding.

NOTE 3 - RESTRICTED CASH

         Restricted cash as of June 30, 2000 reflects a mortgage-backed
security recorded at amortized cost, maturing in July 2000. The security is
held as collateral for a letter of credit obtained by the Company to secure
certain indemnity obligations under a tax sharing agreement with a former
affiliate.

NOTE 4 - LAND HELD FOR DEVELOPMENT

         The Company owns approximately 350 acres located in Orange County,
California adjacent to the Pacific Ocean and the Bolsa Chica wetlands (which
were sold by the Company to the State of California as described below),
surrounded by the City of Huntington Beach and approximately 35 miles south
of downtown Los Angeles. The Company's holdings include 208 acres on a mesa
north of the Bolsa Chica wetlands ("Warner Mesa"), approximately 100 acres
on, or adjacent to, the Huntington Mesa and 42 acres of lowlands which were
acquired by the Company in September 1997.

                                       6
<PAGE>


         The planned community at Warner Mesa is expected to offer a mix of
home choices, primarily single-family detached homes. A Local Coastal Program
("LCP") for development of up to 3,300 homes (up to 2,500 on Warner Mesa and
up to 900 on the Bolsa Chica lowlands, which were subsequently sold as
discussed below) was approved by the Orange County Board of Supervisors in
December 1994 and by the California Coastal Commission (the "Coastal
Commission") in January 1996.

         In February 1997, the Company completed the sale of its
approximately 880-acre Bolsa Chica lowlands, which had previously been
planned for the development of up to 900 homes and wetlands restoration, to
the California State Lands Commission for $25 million. Under an interagency
agreement among various state and federal agencies, these agencies have
agreed to restore the Bolsa Chica wetlands habitat utilizing escrowed funds
from the Ports of Los Angeles and Long Beach.

         In March 1996, a lawsuit (the "Coastal Act Lawsuit") was filed
challenging the approvals of the Coastal Commission. The judgment in the
Coastal Act Lawsuit was entered by the trial court in August 1997, and
required the Coastal Commission to reconsider the filling of a 1.7 acre pond
on Warner Mesa ("Warner Pond") and development of any homes in the Bolsa
Chica wetlands. The August 1997 judgment was appealed by both the project
opponents and the Company as discussed below. In October 1997, in response to
the trial court's decisions, the Coastal Commission approved modifications to
the LCP which eliminated the filling of Warner Pond and thereby reduced the
maximum number of homes to be built from 2,500 to no more than 1,235 homes on
Warner Mesa. The Orange County Board of Supervisors subsequently accepted the
Coastal Commission's suggested modifications. However, in March 1998, the
trial court ruled that the Coastal Commission should not have narrowed the
scope of public comments during the Coastal Commission's October 1997
hearing, and ordered the Coastal Commission to hold a third hearing on the
LCP.

         In October 1997, opponents of the Warner Mesa project appealed the
trial court's August 1997 decision on the basis that the trial court should
have reversed the Coastal Commission's January 1996 approval allowing
relocation of certain raptor habitat. In April 1999, the California Court of
Appeal overturned the August 1997 judgment of the trial court with respect to
the raptor habitat. The appellate court ruled that, under the Coastal Act,
the Coastal Commission should not have allowed the removal and relocation of
this raptor habitat. The court order instructing the Coastal Commission on
how to proceed in response to this decision was issued in June 1999.

         The Company was recently informed that the Coastal Commission
postponed its public hearing on the LCP from August to October 2000, in order
to give the Commission staff additional time to evaluate the LCP and finalize
its report, which had been scheduled for release at the end of July. The
Commission staff's report is expected to be released in late September 2000.
In January 2000, the Coastal Commission staff reported to the local press
that they intend to recommend limiting development to approximately 65 acres
out of the approximately 1,600 acres in the LCP area. Alternatively, the
County is seeking Coastal Commission approval of modifications to the LCP
which protect the environment in accordance with the courts' decisions, and
allow the Company to responsibly develop 183 acres of Warner Mesa, including
approximately 22 acres owned by other landowners. Upon approval by the
Coastal Commission, such modifications would require approval by the Orange
County Board of Supervisors, followed by certification of the LCP by the
Coastal Commission. The Coastal Commission is currently scheduled to hold its
public hearing on the LCP during the week of October 9, 2000. If the County's
proposed modifications to the LCP are approved at that time, the Company
could then process secondary permits and commence infrastructure construction
on Warner Mesa during the third quarter of 2001. The Company does not believe
that the Coastal Commission process will ultimately prevent it from
developing a planned community at Warner Mesa; however, there can be no
assurance in that regard, or as to the number of acres the Company would be
permitted to develop, or that further litigation or administrative delay will
not result.

         Upon completion of the Company's Recapitalization as discussed in
Note 1, the Company applied the principles required by Fresh-Start Reporting
and the carrying value of land held for development (Warner Mesa) was
adjusted to fair value of approximately $130 million as of September 2, 1997,
after consideration of the October 1997 Coastal Commission action discussed
above. No provision for impairment has been considered necessary subsequent
to the Recapitalization. The estimation process involved in the determination
of fair value is inherently uncertain since it requires estimates as to
future events and market conditions. Such estimation process assumes the
Company's ability to complete development and dispose of its real estate
properties in the ordinary course of business based on management's present
plans and intentions. Economic, market, environmental and political
conditions may affect management's development and marketing plans. In
addition, the implementation of such development and marketing plans could be
affected by the availability of future financing for development and
construction activities. Accordingly, the ultimate

                                       7
<PAGE>

fair values of the Company's real estate properties are dependent upon future
economic and market conditions, the availability of financing, and the
resolution of political, environmental and other related issues.

NOTE 5 - PROJECT DEBT

         In January 1999, Signal Landmark, a subsidiary of the Company,
entered into a construction loan agreement with a commercial bank to finance
construction of infrastructure and the first 45 homes at phase II of the
Company's 112-home Rancho San Pasqual project in Escondido, California.
Effective in July 2000, the loan was amended to finance an additional 29
homes, increasing the original $14.3 million facility to $18.8 million. The
loan is secured by a deed of trust on the Rancho San Pasqual project and
requires principle repayments upon the sale of homes. The loan bears an
interest rate of prime plus three-fourths percent, and matures on January 18,
2001. As of June 30, 2000, approximately $11.6 million was drawn on this
facility and an aggregate of $5.5 million was repaid upon home closings. For
the six months ended June 30, 1999 and 2000, approximately $.1 million and
$.4 million, respectively, of construction period interest was capitalized to
the project.

         In March 2000, Signal Landmark entered into an additional
construction loan agreement with a commercial bank to finance the
construction of infrastructure and 16 homes at the Company's Sandover project
on Warner Mesa, overlooking the Bolsa Chica wetlands in Huntington Beach,
California. The $9 million loan facility is secured by a deed of trust on the
Sandover project and requires principle repayments upon the sale of homes.
The loan bears an interest rate of prime plus three-fourths percent and has a
maturity date of March 21, 2001. As of June 30, 2000, approximately $4.4
million was drawn on this facility, and construction period interest
capitalized to the project was approximately $.1 million for the six months
ended June 30, 2000.

NOTE 6 - INCOME TAXES

         The Internal Revenue Code (the "Code") generally limits the
availability of net operating losses ("NOLs") if an ownership change occurs
within any three-year period under Section 382. If the Company were to
experience an ownership change, the Company's annual use of its NOLs would
generally be limited to the value of the Company's equity immediately before
the ownership change multiplied by the long-term tax-exempt rate. The first
date upon which the Company experienced an ownership shift subsequent to the
Recapitalization (a Section 382(l)(5) protected ownership change), was June
16, 1998. The Company estimates that after giving effect to various
transactions by stockholders who hold a 5% or greater interest in the
Company, and the Company's repurchase of an aggregate of approximately 1.9
million shares in December 1998 and June 1999, it has experienced a
cumulative ownership shift as computed in accordance with Section 382 of
approximately 40%. The federal NOLs available as of June 30, 2000 are
approximately $196 million, which expire beginning in 2005.

         In response to an unsolicited written consent from a majority of its
stockholders, the Company amended its certificate of incorporation on October
14, 1999 in order to preserve the ability of the Company to utilize its $197
million of tax loss carryforwards. Since the Company's use of its NOLs would
be severely restricted if it experiences an ownership change of 50% or more,
the Company's majority stockholders requested that the Board of Directors
enact the amendments, which have been determined to be in the best interest
of the Company and its stockholders. The amendments prohibit future purchases
of the Company's common stock by persons who would become new 5% holders, and
also prohibit current holders of over 5% from increasing their positions,
except in certain permissible circumstances which would not jeopardize the
Company's ability to use its NOLs. While these amendments reduced the
Company's risk of an ownership change occurring due to the acquisition of
shares by 5% stockholders, the risk remains that an ownership change could
result from the sale of shares by existing 5% stockholders.

         In 1995, the Internal Revenue Service ("IRS") proposed material
audit adjustments with respect to the tax returns of the Company and its
consolidated subsidiaries, including formerly affiliated entities, for the
years ended December 31, 1989, 1990 and 1991. The adjustments proposed by the
IRS, if upheld, could have resulted in Federal tax liability, before
interest, of approximately $17 million and disallowance of up to $132 million
of NOL carryforwards. The Company disagreed with the positions taken by the
IRS and filed protests with the IRS to contest the proposed adjustments. In
December 1998, the Company executed a settlement agreement with the IRS with
respect to the proposed adjustments described above. As a result of this
agreement, in February 1999 the Company paid $759,000 (which includes
$280,000 of tax and $479,000 of interest through January 1999), net of the
Company's refund claim for 1992 NOL carrybacks of approximately $1.6 million,
in full settlement of such claims. Under this settlement agreement

                                       8
<PAGE>

approximately $10 million of the Company's NOL carryforwards was disallowed.
The Company utilized $8.1 million of NOL carryback from 1992 to 1991 in
connection with its refund claim. However, there can be no assurance that the
refund will be upheld. The Company has reviewed the extent of potential
accompanying state tax liability adjustments and does not believe that any
such adjustments would have a material impact on the Company's financial
statements.

         Cash payments for federal, state and local income taxes were
approximately $.9 million and approximately $.1 million during the six months
ended June 30, 1999 and 2000, respectively.


                                       9
<PAGE>

ITEM 2 -    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

         The Company is a residential land development and homebuilding
company with properties located primarily in Southern California. The
principal activities of the Company and its consolidated subsidiaries include:
(i) obtaining zoning and other entitlements for land it owns and improving the
land for residential development; and (ii) single-family residential
construction in Southern California. Once the residential land owned by the
Company is entitled, the Company may sell unimproved land to other developers
or homebuilders; sell improved land to homebuilders; or participate in joint
ventures with other developers, investors or homebuilders to finance and
construct infrastructure and homes. During 2000, the Company will continue to
focus its immediate efforts to (i) obtain approval from the California Coastal
Commission ("Coastal Commission") for modifications to the Local Coastal
Program ("LCP") for the Warner Mesa project in accordance with the court's
decisions as further described in Note 4 to the Company's Financial
Statements; (ii) complete the secondary permitting for development of Warner
Mesa; and (iii) commence infrastructure construction on Warner Mesa during the
third quarter of 2001; however, the Company may also consider other strategic
and joint venture opportunities. There can be no assurance that the Company
will accomplish, in whole or in part, all or any of these strategic goals.

         The Company's real estate properties are subject to a number of
uncertainties which can affect the fair values of those assets. These
uncertainties include litigation or appeals of regulatory approvals and
availability of adequate capital, financing and cash flow. The Coastal
Commission is currently scheduled to hold its public hearing on the LCP during
the week of October 9, 2000. If the County's proposed modifications to the LCP
are approved at that time, the Company could then process secondary permits
and commence infrastructure construction on Warner Mesa during the third
quarter of 2001; however, there can be no assurance in that regard. In
addition, future values may be adversely affected by increases in property
taxes, increases in the costs of labor and materials and other development
risks, changes in general economic conditions, including higher mortgage
interest rates, and other real estate risks such as the demand for housing
generally and the supply of competitive products. Real estate properties do
not constitute liquid assets and, at any given time, it may be difficult to
sell a particular property for an appropriate price. During the last three
years, the strengthened economy of California has resulted in improvement in
the real estate market, and the number of potential purchasers interested in
Southern California residential properties appears to have increased,
resulting in improved prices. However, there can be no assurance regarding the
continued health of the California economy and the strength and longevity of
current conditions affecting the residential real estate market.

         The Company's internal home-building operations focus primarily on
the entry-level and move-up single-family detached market. The Fairbanks
Highlands joint venture home-building activities reflect a large, luxury
single-family product under construction by the Company's partner. Major
projects are described as follows:

    RANCHO SAN PASQUAL. In the City of Escondido in San Diego County,
approximately 30 miles north of downtown San Diego, the Company is developing
an 850-acre, gated community consisting of 580 residential lots surrounding an
18-hole golf course. From 1996 through April 1998, the Company sold 468 Phase
I residential lots at Rancho San Pasqual to four homebuilders. In 1999, the
Company's subsidiary began constructing infrastructure and homes on the
112-home Phase II of the project, and opened for sales in October 1999. As of
August 7, 2000, 26 homes had been delivered and an additional 34 homes were in
escrow.

    SANDOVER. The Company's subsidiary is currently building 16 homes on
approximately five acres of Warner Mesa, which is in the City of Huntington
Beach (whereas the rest of the Company's Warner Mesa property is in an
unincorporated area within the County of Orange). The Company opened for sales
at the project, known as "Sandover", in June 2000. As of August 7, 2000, five
homes were in escrow.

    FAIRBANKS HIGHLANDS. The Fairbanks Highlands property consists of
approximately 380 acres near the communities of Fairbanks Ranch and Rancho
Santa Fe in the northern part of the city of San Diego. The project includes
93 luxury homes, averaging approximately 4,800 square feet, on single-family
residential lots averaging 1.34 acres each and approximately 215 acres of open
space. In December 1996, the Company formed a joint venture with a major
homebuilder to develop this property, retaining a continuing 35% partnership
interest in the venture. The Company's partner is managing the day-to-day
operations of the venture, providing all construction financing and building
all of the homes at the site. Closings on 19 homes were completed and 46 homes
were in escrow as of August 7, 2000.

                                       10
<PAGE>

    CHAPMAN HEIGHTS. The Company recently acquired 29 finished lots which are
part of a master-planned community known as Chapman Heights, in the city of
Yucaipa, California, and obtained an option to purchase an additional 57
finished lots. The community surrounds an operating 18-hole public golf course
and is planned for a total of approximately 2,100 homes, civic and commercial
centers and two school sites. The Company will begin construction of model
homes during the third quarter of 2000.


LIQUIDITY AND CAPITAL RESOURCES.

         The principal asset in the Company's portfolio is residential land
which must be held over an extended period of time in order to be developed to
a condition that, in management's opinion, will ultimately maximize the return
to the Company. Consequently, the Company requires significant capital to
finance its real estate development operations. Historically, sources of
capital have included bank lines of credit, specific property financings,
asset sales and available internal funds. The Company believes that its cash
on hand, which was approximately $7 million at June 30, 2000, in addition to
funds available under its credit agreements and expected cash flows from
home-building projects, will be sufficient to meet anticipated cash and
capital requirements, including primarily project development costs for Warner
Mesa, Sandover and Rancho San Pasqual and general and administrative expenses
for the next 12 months. The Company is utilizing project debt as necessary, to
fund the Rancho San Pasqual and Sandover construction. The Company's Fairbanks
Highlands joint venture began generating cash distributions in March 2000, and
the Company's Rancho San Pasqual project began generating cash flow during the
second quarter. In addition, the Company expects that its Sandover project
will begin contributing to income and generating positive cash flow in the
fourth quarter of 2000. These three homebuilding projects are expected to
generate in excess of $20 million in cash flow over the next 18 months, based
on present economic conditions and market assumptions.


FINANCIAL CONDITION

    JUNE 30, 2000 COMPARED WITH DECEMBER 31, 1999

         The $1.2 million increase in cash and cash equivalents primarily
reflects the maturity of short-term investments and the initial funding of a
construction loan on the Sandover project, partially offset by spending on
project development costs for Warner Mesa, as well as other activity presented
in the Statements of Cash Flows.

         Restricted cash as of June 30, 2000 reflects collateral for a letter
of credit obtained by the Company to secure certain indemnity obligations
under a tax sharing agreement with a former affiliate.

         The $6.5 million increase in real estate held for development or sale
represents infrastructure and home-building costs for the Company's 112-home
Rancho San Pasqual project in Escondido, California, the 16-home Sandover
project in Huntington Beach, California, and the purchase of the first 29 lots
in the Company's recently acquired project in Yucaipa, California, partially
offset by deliveries of 21 homes at the Rancho San Pasqual project during the
second quarter.

         The $2.3 million increase in land held for development reflects
investment in the Warner Mesa project during the first six months of the year.

         Other assets decreased by $2.3 million, primarily reflecting the
reduced investment in the Fairbanks Highlands joint venture due to cash
distributions received for preferred return to the Company. In addition, the
decrease reflects the release of collateral held under an insurance indemnity
agreement and the collection of income tax refunds receivable.

         Accounts payable and accrued liabilities increased by $.5 million, to
a balance of $2.5 million as of June 30, 2000, primarily reflecting increased
construction activity at the Rancho San Pasqual and Sandover projects.

         The $3.1 million increase in project debt reflects $8.6 million
borrowed under bank loans for infrastructure and home construction costs at
the Rancho San Pasqual and Sandover projects, offset by repayments of $5.5
million made in conjunction with home deliveries at the Rancho San Pasqual
project.


                                       11
<PAGE>

         The $1.5 million decrease in other liabilities primarily reflects a
January 2000 transaction completed with the Charter Township of Calumet,
Michigan (the "Township"), whereby the Company donated approximately 160
acres of its land in Michigan, and certain other assets, to the Township. The
donation was made in exchange for the Township's agreement to make a borrow
source available to the U.S. Environmental Protection Agency ("EPA") for soil
cover to be used in EPA's implementation of remedial actions on that portion
of the conveyed property which is a portion of a superfund site. The Township
also assumed certain other liabilities and provided the Company with certain
indemnities in connection with the transaction. The Company believes its
liabilities, if any, with respect to this superfund site have been discharged
as a result of this transaction. Accordingly, the Company recognized other
income of $1.1 million, which represents elimination of a reserve for an
indemnity obligation, net of unamortized discount, during the first quarter
of 2000.

RESULTS OF OPERATIONS

         The nature of the Company's business is such that individual
transactions often cause significant fluctuations in operating results from
year to year.

    THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH THE THREE MONTHS ENDED JUNE
    30, 1999

         The Company reported revenues of $7.5 million and gross profit of
$1.6 million for the second quarter of 2000, compared with no revenues for the
second quarter of 1999. Revenues in the current period reflect deliveries of
21 homes at the Company's 112-home Rancho San Pasqual project in Escondido,
California.

         The increase in selling, general and administrative expenses from $.8
million in the 1999 period to $.9 million in the 2000 period primarily
reflects an increase in selling costs charged to the period for the Rancho San
Pasqual and Sandover projects.

         The $.8 million of income from unconsolidated joint venture in the
three months ended June 30, 2000 reflects profits from the Company's interest
in the Fairbanks Highlands joint venture. The venture delivered 11 homes
during the period.

         The decrease in other income, net from $.5 million in the 1999 period
to $.4 million in the three months ended June 30, 2000 primarily reflects an
absence in 2000 of non-recurring income from recovery of legal expenses
related to settled construction defects litigation. The decrease was
substantially offset by recognition in the 2000 period of $.4 million of
non-recurring deferred income on the 1996 land sale to the Fairbanks Highlands
joint venture.

         The benefit for deferred income taxes for the three months ended June
30, 1999 was offset by a corresponding valuation allowance. For the three
months ended June 30, 2000, pursuant to Fresh-Start reporting, a deferred
income tax provision is reflected in the statement of operations, while the
offsetting realization of a tax benefit from utilization of pre-Reorganization
NOL is reflected by increasing the Company's capital in excess of par value.

    SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH THE SIX MONTHS ENDED JUNE 30,
    1999

         The Company reported revenues of $7.5 million, resulting in gross
profit of $1.6 million for the first six months of 2000 compared with no
revenues in the 1999 period. Revenues in the 2000 period reflect the delivery
of homes at the Rancho San Pasqual project in Escondido, California, which
commenced in April 2000.

         The increase in selling, general and administrative expenses from
$1.6 million in the 1999 period to $1.8 million in the 2000 period primarily
reflects an increase in selling costs charged to the period for the Rancho San
Pasqual and Sandover projects.

         The decrease in interest expense from $.5 million in 1999 to $.1
million in the 2000 period primarily reflects the April 1999 cessation of
interest accruals on capital contribution notes due to a partnership. Interest
expense in the current period reflects amortization of discount on liabilities
which was recorded under Fresh-Start Reporting in connection with the
Company's 1997 Recapitalization.

                                       12
<PAGE>

         The $1.3 million of income from unconsolidated joint venture in the
2000 period reflects profits from the Company's interest in the 93-home
Fairbanks Highlands joint venture. The venture delivered 18 homes during the
six months ended June 30, 2000.

         The increase in other income, net from $.8 million in the 1999
period to $1.6 million in the six months ended June 30, 2000 primarily
reflects the January 2000 transaction with the Township described above and
recognition of $.4 million of non-recurring deferred income on the 1996 land
sale to the Fairbanks Highlands joint venture. These increases were partially
offset by an absence in 2000 of non-recurring income from recovery of legal
expenses related to settled construction defects litigation and a reduction
in interest income due to lower cash balances.

         The benefit for deferred income taxes for the six months ended June
30, 1999 was offset by a corresponding valuation allowance. For the six months
ended June 30, 2000, pursuant to Fresh-Start reporting, a deferred income tax
provision is reflected in the statement of operations, while the offsetting
realization of a tax benefit from utilization of pre-Reorganization NOL is
reflected by increasing the Company's capital in excess of par value.


ITEM 3 -    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         None.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

         Certain of the foregoing information as well as certain information
set forth in Part II of this report under the heading "Legal Proceedings" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is forward looking in nature and involves risks and uncertainties
that could significantly impact the ability of the Company to achieve its
currently anticipated goals and objectives. These risks and uncertainties
include, but are not limited to litigation or appeals of regulatory approvals
(including ongoing litigation and administrative proceedings in the Coastal
Act Lawsuit related to the Company's principal asset, Warner Mesa),
injunctions prohibiting implementation of approved development plans pending
the outcome of litigation, and availability of adequate capital, financing and
cash flow. In addition, future values may be adversely affected by increases
in property taxes, increases in the costs of labor and materials and other
development risks, changes in general economic conditions, including higher
mortgage interest rates, and other real estate risks such as the demand for
housing generally and the supply of competitive products. Real estate
properties do not constitute liquid assets and, at any given time, it may be
difficult to sell a particular property for an appropriate price. Other
significant risks and uncertainties are discussed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.


                                       13
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

         See "Item 1 - Business - Corporate Indemnification Matters" and "Item 3
         - Legal Proceedings" in the Company's Annual Report on Form 10-K for
         the year ended December 31, 1999.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Annual Meeting of the Company's stockholders was held on May 10,
         2000. A quorum of common stock was present in person or by proxy. The
         following proposals were approved by the requisite vote of the
         Company's stockholders entitled to vote, as follows:

         Proposal No. 1: THE DIRECTOR PROPOSAL. The Company's director proposal
         recommended election of five directors to a one-year term. Set forth
         below is a table of how the votes were cast for each nominee, which
         constituted the affirmative votes for all nominees, by the holders of
         approximately 99.0% of the outstanding Common Stock represented in
         person or by proxy at the Annual Meeting.

<TABLE>
<CAPTION>

                        NAME             VOTES CAST "FOR NOMINEE"     VOTES "WITHHELD"
                        ----             ------------------------     ----------------
               <S>                       <C>                          <C>
               Phillip R. Burnaman II            8,929,695                 81,960
               David J. Matlin                   8,929,695                 81,960
               Raymond J. Pacini                 8,929,877                 81,778
               Thomas W. Sabin, Jr.              8,929,785                 81,780
               J. Thomas Talbot                  8,929,979                 81,676
</TABLE>

         Proposal No. 2: THE REDUCTION OF AUTHORIZED SHARES PROPOSAL. The
         holders of Common Stock cast 6,489,299 votes for and 83,931 votes
         against the Company's proposal to approve an amendment to the Company's
         Amended and Restated Certificate of Incorporation to reduce the number
         of shares of Common Stock from 18,000,000 to 11,000,000 and to reduce
         the number of shares of Excess Stock from 18,000,000 to 11,000,000.
         Such votes constituted the affirmative vote for the Reduction of
         Authorized Shares Proposal by the holders of approximately 64.5% of the
         Company's outstanding Common Stock. Such votes constituted the
         affirmative vote for the Reduction of Authorized Shares Proposal by the
         holders of approximately 64.5% of the Company's outstanding Common
         Stock. There were 5,574 abstentions and 2,432,851 broker non-votes.

         Proposal No. 3: THE AUDITOR PROPOSAL. The holders of Common Stock cast
         9,003,911 votes for and 2,406 votes against the Company's proposal to
         ratify the appointment of Deloitte & Touche, LLP as the Company's
         independent auditors for the fiscal year ending December 31, 2000. Such
         votes constituted the affirmative vote for the Auditor Proposal by the
         holders of approximately 99.9% of the outstanding Common Stock
         represented in person or by proxy at the Annual Meeting. There were
         5,338 abstentions and no broker non-votes by the holders of shares of
         Common Stock with respect to the Auditor Proposal.

ITEM 5 - OTHER INFORMATION

         Stockholders wishing to bring a proposal before the Registrant's 2001
         Annual Meeting of Stockholders (but not wishing to include such
         proposal in the Registrant's Proxy Statement) must cause written notice
         of such proposal to be received by the Secretary of the Registrant at
         its principal executive offices no later than December 21, 2000.


                                       14
<PAGE>


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)    Exhibits:

         27.1     Financial Data Schedule.

         (b)      Reports on Form 8-K:

                  No reports on Form 8-K were filed during the three months
                  ended June 30, 2000.

                                    SIGNATURE

         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 thereunto duly authorized.

                                            CALIFORNIA COASTAL COMMUNITIES, INC.

Date  August 9, 2000                  By      /s/  Sandra G. Sciutto
      --------------                        ------------------------
                                            SANDRA G. SCIUTTO
                                            Senior Vice President and
                                            Chief Financial Officer


                                       15