<PAGE>

           This Form 10-Q consists of 13 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 MARCH 31, 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

      Former name, address and fiscal year, if changed since last report.

         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 April 30, 2000 was
10,058,589.

<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2000

                                    I N D E X
                                -----------------
<TABLE>
<CAPTION>
                                                                                                   Page No.
                                                                                                   -------
PART I - Financial Information:
<S>                                                                                                <C>
           Item 1 -    Financial Statements

                       Balance Sheets -
                       December 31, 1999 and March 31, 2000..............................................3

                       Statements of Operations -
                       Three Months Ended March 31, 1999 and 2000........................................4

                       Statements of Cash Flows -
                       Three Months Ended March 31, 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.......................12


PART II - Other Information:

           Item 1 - Legal Proceedings...................................................................13

           Item 6 - Exhibits and Reports on Form 8-K....................................................13

SIGNATURE...............................................................................................13
</TABLE>


                                       2
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                                 BALANCE SHEETS
                                 --------------
                                  (in millions)
<TABLE>
<CAPTION>
                                                                  DECEMBER 31, 1999                  MARCH 31, 2000
                                                                  -----------------                  --------------
<S>                                                               <C>                                <C>
     ASSETS                                                                                            (unaudited)

Cash and cash equivalents.....................................          $   5.8                        $   9.3
Short-term investments........................................              3.0                            --
Restricted cash...............................................              3.4                            3.2
Real estate held for development or sale......................             15.1                           19.8
Land held for development.....................................            136.5                          137.7
Other assets..................................................              6.1                            5.7
                                                                         ------                           ----

                                                                        $ 169.9                        $ 175.7
                                                                        =======                        =======

     LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

     Accounts payable and accrued liabilities.................          $   2.0                        $   2.9
     Project debt.............................................              7.4                           12.8
     Other liabilities........................................             27.7                           26.5
                                                                          -----                           ----

        Total liabilities.....................................             37.1                           42.2
                                                                          -----                           ----

Stockholders' equity:

     Common stock .............................................              .5                             .5
     Capital in excess of par value...........................            130.2                          130.5
     Retained earnings........................................              2.1                            2.5
                                                                        -------                         ------

        Total stockholders' equity............................            132.8                          133.5
                                                                          -----                          -----

                                                                        $ 169.9                        $ 175.7
                                                                        =======                        =======
</TABLE>




              See the accompanying notes to financial statements.


                                       3
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

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

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                            MARCH 31,

                                                                                   1999                 2000
                                                                                   ----                 ----
<S>                                                                             <C>                  <C>
Revenues ..............................................................         $   --               $   --

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

      Gross operating margin...........................................             --                   --

Selling, general and administrative expenses...........................              .8                   .9
Interest expense.......................................................              .4                   .1
Income from unconsolidated joint venture...............................             --                   (.5)
Other income, net......................................................             (.3)                (1.2)
                                                                                --------             --------

Income (loss) before income taxes......................................             (.9)                  .7

Provision for income taxes.............................................             --                    .3
                                                                                --------             --------

Net income (loss)......................................................         $   (.9)               $  .4
                                                                                ========             --------

Earnings (loss) per common share - basic and diluted...................         $   (.08)              $  .04
                                                                                ========             ========
</TABLE>



              See the accompanying notes to financial statements.


                                       4
<PAGE>

                      CALIFORNIA COASTAL COMMUNITIES, INC.

                            STATEMENTS OF CASH FLOWS
                            --------------------------
                                  (in millions)
<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED
                                                                                              MARCH 31,
                                                                                      1999             2000
                                                                                      ----             ----
<S>                                                                                <C>               <C>
Cash flows from operating activities:

      Net income (loss).........................................................    $  (.9)          $    .4
      Adjustments to reconcile to cash used
         by operating activities:

         Non-cash interest expense..............................................        .3                .1
         Deferred income taxes..................................................       --                 .3
         Investments in real estate held for development or sale................      (1.1)             (4.7)
         Investments in land held for development...............................       (.6)             (1.2)
         Decrease in other assets...............................................        .6                .4
         Decrease in accounts payable, accrued and other liabilities, net.......      (1.3)              (.4)
                                                                                      -----             ----

              Cash used by operating activities.................................      (3.0)             (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................................................       1.4               5.4
      Deposit of restricted cash................................................      (3.2)              --
      Return of interest income from restricted cash............................       --                 .2
                                                                                      ----              ----

              Cash provided (used) by financing activities......................      (1.8)              5.6
                                                                                      -----             ----

Net increase (decrease) in cash and cash equivalents............................      (4.8)              3.5

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

Cash and cash equivalents - end of period.......................................    $ 21.8             $ 9.3
                                                                                    ======             =====
</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. 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 three
months ended March 31, 1999 and 2000, the weighted average common shares
outstanding were 11.5 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 March 31, 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. On April 16, 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.

         On April 11, 2000, the Coastal Commission postponed its public
hearing on the LCP from June to August 2000, in order to give the Commission
staff additional time to finalize its report and, at the request of local
activists, to hold the hearing in Huntington Beach, California. 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. The Commission staff's report is
expected to be released in July 2000. 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 approximately 180 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 August 7, 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 second 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 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.

                                       7
<PAGE>

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. 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 original maturity date of
January 18, 2000 was extended at Signal Landmark's option for a six-month period
to July 18, 2000. The loan may be extended for an additional six-month period at
Signal Landmark's option. The loan provides a facility of $14.3 million at an
interest rate of prime plus three-fourths percent. As of March 31, 2000,
approximately $9.9 million was drawn on this facility. For the three months
ended March 31, 1999 and 2000, approximately $.1 million and $.2 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 March 31, 2000, approximately $2.9 million was drawn on this
facility, and construction period interest capitalized to the project was less
than $.1 million for the three months ended March 31, 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 39%. The federal NOLs available as of March 31, 2000 are
approximately $197 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

                                       8
<PAGE>

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 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 less than $.1 million during the three months
ended March 31, 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 second 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 August 7, 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 second 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 May 1,
2000, eight homes have been delivered and an additional 31 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 expects to open
for sales at the project, known as "Sandover", in the second quarter of 2000.

    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 eight homes were completed and 45 homes were in escrow as
of May 1, 2000.


                                       10
<PAGE>

 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 in excess of $9 million at March 31, 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 to
fund the Rancho San Pasqual and Sandover construction. The Company's
Fairbanks Highlands joint venture began generating cash distributions in
March 2000. In addition, the Company expects that its Rancho San Pasqual and
Sandover projects will begin contributing to income and generating positive
cash flow in the second and fourth quarters of 2000, respectively. These
three homebuilding projects are expected to generate in excess of $20 million
in cash flow over the next two years, based on present economic conditions
and market assumptions.

FINANCIAL CONDITION

    MARCH 31, 2000 COMPARED WITH DECEMBER 31, 1999

         The $3.5 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 March 31, 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 $4.7 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 and the 16-home Sandover
project in Huntington Beach, California.

         The $1.2 million increase in land held for development reflects
investment in the Warner Mesa project during the first quarter.

          Other assets decreased by $.4 million as a result of collection of
receivables and amortization of prepaid costs.

         Accounts payable and accrued liabilities increased by $.9 million, to a
balance of $2.9 million as of March 31, 2000, reflecting increased construction
activity at the Rancho San Pasqual and Sandover projects.

         The $5.4 million increase in project debt reflects borrowings for
infrastructure and home construction costs at the Rancho San Pasqual and
Sandover projects.

         The $1.2 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.

 RESULTS OF OPERATIONS


                                       11
<PAGE>

         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 MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH
31, 1999

         The Company reported no revenues for the first quarters of 2000 and
1999. The Company will resume reporting revenues in the second quarter of 2000,
reflecting the delivery of homes at its 112-home Rancho San Pasqual project in
Escondido, California, which commenced in April 2000.

         The increase in 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 decrease in interest expense from $.4 million in 1999 to $.1
million in the 2000 period reflects the April 1999 cessation of interest
accruals on capital contribution notes due to a partnership.

         The $.5 million of income from unconsolidated joint venture in the
2000 period reflects profits from the Company's interest in the Fairbanks
Highlands joint venture. The venture delivered seven homes during the three
months ended March 31, 2000.

         The increase in other income, net from $.3 million in the 1999 period
to $1.2 million in the three months ended March 31, 2000 primarily reflects the
January 2000 transaction with the Township, described above, partially offset by
a reduction in interest income due to lower cash balances.

         The benefit for deferred income taxes for the three months ended
March 31, 1999 was offset by a corresponding valuation allowance. For the
three months ended March 31, 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.


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<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 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 March 31, 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 MAY 12,  2000               By      /s/  Sandra G. Sciutto
     --------------                    ------------------------
                                       SANDRA G. SCIUTTO
                                       Senior Vice President and
                                       Chief Financial Officer


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