1095996--3/14/2007--WILLIAM_LYON

related topics

{debt, indebtedness, cash}

{condition, economic, financial}

{cost, contract, operation}

{gas, price, oil}

{personnel, key, retain}

{product, liability, claim}

{investment, property, distribution}

{tax, income, asset}

{competitive, industry, competition}

{loss, insurance, financial}

{cost, regulation, environmental}

Revenues may decrease and results of operations may be adversely affected as a result of declines in demand for housing and other changes in economic and business conditions. Interest rates and the unavailability of mortgage financing can adversely affect demand for housing. Financial condition and results of operations may be adversely affected by any decrease in the value of land inventory, as well as by the associated carrying costs. Adverse weather and geological conditions may increase costs, cause project delays and reduce consumer demand for housing, all of which would adversely affect the Company s results of operations and prospects. The Company s business is geographically concentrated, and sales, results of operations, financial condition and business would be negatively impacted by a decline in regional economies. The Company may not be able to compete effectively against competitors in the homebuilding industry. The Company s operating results are variable. Difficulty in obtaining sufficient capital could result in increased costs and delays in completion of projects. The Company s success depends on key executive officers and personnel. Construction defect, soil subsidence and other building-related claims may be asserted against the Company, and the Company may be subject to liability for such claims. Governmental laws and regulations may increase the Company s expenses, limit the number of homes that the Company can build or delay completion of projects. The Company is subject to environmental laws and regulations, which may increase costs, limit the areas in which the Company can build homes and delay completion of projects. The Company s results of operations and prospects may be adversely affected if it is not able to acquire desirable lots for residential buildout. Utility shortages or price increases could have an adverse impact on operations. The Company s business and results of operations are dependent on the availability and skill of subcontractors. An ownership change may have occurred with the result that the Company s ability to use tax net operating loss carryforwards may have been severely limited and thus the Company may have liability for additional taxes. Increased insurance costs and reduced insurance coverages may affect the Company s results of operations and increase the potential exposure to liability. The Company s level of indebtedness could adversely affect its financial condition and prevent it from fulfilling its obligations. The Company is the general partner in partnership joint ventures and may be liable for joint venture obligations. The Company s senior notes are unsecured, and effectively subordinated to other secured indebtedness The guarantees of the Company s senior notes by the Company s subsidiaries may be avoidable as fraudulent transfers and any new guarantees may be avoidable as preferences. The indentures for the senior notes impose significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities and taking some corporate actions. The Company may not be able to satisfy its obligations upon a change of control.

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1095996--3/14/2007--WILLIAM_LYON_HOMES