Calton Inc. announces preliminary results for the fourth quarter and year.

MANALAPAN, N.J.--(BUSINESS WIRE)--Dec. 22, 1994--Calton Inc. (AMEX-CN) announced today certain preliminary results for the three and twelve month periods ended Nov. 30, 1994, including a record year end sales backlog level and further developments on the extension of its existing credit facility.

Douglas T. Noakes, president and chief executive officer, announced preliminary estimates of housing revenues for the three and twelve month periods ended Nov. 30, 1994 of $55.1 million (273 homes) and $165.5 million (899 homes), respectively, compared to $40.9 million (230 homes) and $157.3 million (860 homes) in the comparable periods in 1993. Management believes that the improvement in the fourth quarter and total year revenues reflects the progress made by the company in refilling its land pipeline and opening new communities for sales, as well as a recovery from the severe winter weather conditions in the Northeast which delayed land development, construction and deliveries in the first two quarters of fiscal 1994. The company opened twelve (12) new communities for sales during fiscal 1994 and plans to open four (4) additional communities within the next month in the Orlando, Fla. market.

Noakes also announced that the company achieved increases in the dollar value of new contracts recorded in 1994. During the three and twelve month periods ended Nov. 30, 1994, the company recorded net sales contracts of $46.4 million (240 homes) and $188.9 million (951 homes), representing increases in the dollar value of contracts of 3% and 15%, respectively, compared to the same periods in 1993. At Nov. 30, 1994, the backlog of homes under contract totalled 419 homes having an aggregate dollar value of $98.5 million, a record level at fiscal year end, reflecting increases in the number of homes in backlog and in backlog value of 14% and 31%, respectively, over the levels at Nov. 30, 1993. The average price per home in backlog at Nov. 30, 1994 increased 15% to approximately $235,000 compared to $205,000 at Nov. 30, 1993. Management attributes these favorable results, which have been achieved notwithstanding recent increases in interest rates during the second half of 1994, to an improved land pipeline, the opening of sixteen (16) new communities since May 31, 1993 and the company's strategic plan, including emphasis on marketing and building higher priced single family detached homes in its Northeast divisions.

The company continues to confront increased competition in a housing market that is showing further signs of slowing due, among other things, to sharp increases in mortgage rates compared to a year ago. In addition to pressures resulting from increased competition, the gross profit margins realized by the company have been and will continue to be unfavorably impacted by construction labor and material cost increases, interest rate increases and the start-up costs associated with opening a number of new communities for sales within a short time span. Gross profit margins have also been impacted by the fact that the company's land pipeline, which was severely depleted as it exited its restructuring in May 1993, has been refilled in a transitional market environment that reflected upward price pressures on land that could not be entirely passed along to buyers in a rising interest rate market.

In management's view, the company's share price remains depressed despite the company's recent progress due, among other things, to the impact of rising interest rates on building industry stock prices. The company plans to re-enter the capital market to complete its offering of units, consisting of senior notes and common stock, as soon as the conditions in the financial markets become more favorable. Costs of approximately $800,000 incurred by the company in connection with the proposed unit offering and the associated working capital facility will be charged against 1994 earnings.

Noakes also reported that the company has received a draft agreement from its current lenders extending the term of the existing facility from its current maturity date of June 1, 1995 to Nov. 30, 1996 on terms that the company generally deems to be favorable. The amended facility will permit borrowings of up to $68.5 million (of which $62.5 million is currently outstanding) and is anticipated to close before the end of January 1995. The proposed terms include a more favorable amortization schedule of $200,000 per month beginning June 1, 1996. The extension of the existing Credit Facility, which is subject to the final negotiation and execution of a formal amendment to the Credit Agreement and the satisfaction of certain closing conditions including appraisals, will provide a stabilized capital base for the company until such time as market conditions permit the company to re-enter the financial markets to obtain longer term capital. The company believes that funds generated by its operating activities, income tax payment reductions derived from NOL utilization and borrowing availability under the Credit Agreement, as extended, will provide sufficient capital to support the company's operations and near term plans through the term of the extended Credit Agreement.

Calton Inc.'s operations primarily consist of the design, construction and marketing of single family homes and townhomes through subsidiaries operating in central New Jersey, eastern Pennsylvania, central Florida, and the Chicago metropolitan area, where it has recorded its initial sales in its first two communities.

CONTACT: Calton Inc.,

Bradley A. Little, 908/780-1800