Capital Pacific Holdings, Inc. Reports Results for Fiscal 2002

Press Release: Capital Pacific Holdings, Inc.
June 3, 2002
NEWPORT BEACH, CA -- Capital Pacific Holdings, Inc. (Amex: CPH) May 29 reported net income of $6.3 million, or 43 cents per share for the fiscal year ended February 28, 2002, as compared to net recurring income of $10.7 million, or 77 cents per share, for fiscal year 2001, ended February 28, 2001. The results for fiscal 2001 exclude an extraordinary gain of $1.5 million, or 11 cents per share, resulting from the retirement of debt at less than face value.

Revenues for fiscal 2002 totaled $299 million, as compared to the $364 million recorded during fiscal 2001. Including unconsolidated joint ventures and including certain homebuilding projects in which the Company formerly had an equity interest and manages on a fee basis, revenues totaled $359 million in fiscal 2002, as compared with $426 million in fiscal 2001.

For the fourth quarter of fiscal 2002, the Company posted net income of $2.8 million, or 19 cents per share on revenues of $80 million, as compared to the $5.5 million, or 40 cents per share, posted during fiscal 2001 on revenues of $118 million.

"While the revenue and income results for fiscal 2002 were somewhat lower than fiscal 2001, at the same time we have substantially enhanced the underlying strength of our Company," said Steve Spelman, Chief Financial Officer of the Company.

"Over the past year, the Company has:

1. increased stockholders' equity by $10 million;

2. completed the Exchange Transaction which will have the effect of
increasing stockholders' equity by an additional $8.3 million in future
periods, including $5.6 million in the first quarter of Fiscal 2003;

3. reduced its debt to capital ratio from 67% to 56%;

4. lowered its average borrowing costs from 8.4% to 5.5%; and

5. reduced interest incurred by $10.9 million or 42%," added Mr. Spelman. As a result of the restructuring, the Company now owns 100% of Capital Pacific Holdings, LLC, its primary homebuilding entity, which has $212 million in assets and equity of $110 million at February 28, 2002.

Including unconsolidated joint ventures, the Company closed 839 homes in fiscal 2002, as compared to 1,209 homes closed in fiscal 2001. For the fourth quarter of fiscal 2002, the Company closed 210 homes, as compared to the 304 home closings recorded for the fourth quarter of fiscal 2001. Average home sale prices increased from $315,000 in fiscal 2001 to $346,000 in fiscal 2002.

Companywide backlog totaled 194 units as of the end of fiscal 2002, representing $74 million in potential revenues. At the end of fiscal 2001, backlog stood at 512 units, representing $174 million in potential revenues. The decrease in backlog is primarily due to a decrease in actively selling projects from 26 at February 28, 2001 to 22 projects at February 28, 2002, including the Company's exit from the Las Vegas market. The Company anticipates opening between 11 and 18 net new communities during fiscal 2003. Net new orders increased from 188 in the fourth quarter of fiscal 2001, to 273 in the fourth quarter of fiscal 2002. In the first quarter of fiscal 2003, ending May 31, 2002, backlog is expected to increase by nearly 40% to approximately 270 units, representing approximately $100 million in potential revenues.

"We have increased stockholders' equity by 48% in the past five years and our reduced leverage and borrowing costs and the continuing effects of our recent restructuring will enhance the growth of this key measure," said Hadi Makarechian, Chairman and Chief Executive Officer of the Company.

Capital Pacific Holdings, Inc. is a Newport Beach-based homebuilding and real estate development Company with operations in Arizona, California, Colorado and Texas. The Company's website can be accessed at www.cph-inc.com . For more information, please contact Steve Spelman, Chief Financial Officer, at (949) 622-8400.

This press release includes "forward-looking" information (as defined by the Private Securities Litigation Reform Act of 1995) that involves risk and uncertainty, including projections and assumptions regarding the business environment in which the Company operates. Actual future results and trends may differ materially depending on a variety of factors, including the Company's successful execution of internal performance strategies; changes in general national and regional economic conditions, such as levels of employment, consumer confidence and income, uncertainty arising from acts of terrorism and similar factors, availability to homebuilders of financing for acquisitions, development and construction, availability to homebuyers of permanent mortgages, interest rate levels and the demand for housing; supply levels of land, labor and materials; difficulties in obtaining permits or approvals from governmental authorities; difficulties in marketing homes; regulatory changes and weather and other environmental uncertainties; competitive influences; and the outcome of pending and future legal claims and proceedings; and other influences.

SOURCE: Capital Pacific Holdings, Inc.