PICO Holdings

Press Release

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PICO Holdings, Inc. Announces Results for the First Quarter of 2008

(LA JOLLA, CALIFORNIA)-May 9, 2008-PICO Holdings, Inc. (NASDAQ: PICO) reported shareholders' equity of $525.1 million ($27.88 per share) at March 31, 2008, compared to shareholders' equity of $525.9 million ($27.92 per share) at December 31, 2007, and $513.9 million ($27.48 per share) at March 31, 2007.  During the first quarter of 2008, shareholders' equity declined by $737,000, and book value per share decreased by 0.1%.  

Commenting on the quarter, PICO's President and Chief Executive Officer, John Hart, said:

"During the first quarter, winter weather delayed the construction of a surge tank, which was the final phase of the Fish Springs Ranch pipeline project to deliver 8,000 acre-feet of water annually to the northern valleys of Reno, Nevada.  With the spring thaw under way, we expect that the surge tank will be completed, and the entire infrastructure tested, later in June.  All 28.6 miles of the main transmission pipeline have passed pressure tests.  The remaining testing includes the surge tank, terminal tank, and the computerized supervisory control and data acquisition system.  

"In western Nevada, we continue to build our holdings in the Carson City/Lyon County area.  As of March 31, 2008, we have acquired or have the option to acquire approximately 4,366 acre-feet of water rights in this location, consisting of Carson River agriculture-designated water rights, and some water rights designated for municipal and industrial use.  We anticipate that up to approximately 3,200 acre-feet of these water rights will be available for municipal use to help satisfy projected demand for 20,000 acre-feet of new water supply over the next 20 years in the fast-growing Dayton corridor.

"Vidler has submitted additional hydro-geological studies to support applications for new water rights in the Tule Desert Groundwater Basin, which were jointly filed by Vidler and the Lincoln County Water District.  We expect a decision on the award of further water rights later in 2008.

"In the Real Estate Operations segment, we activated a new business, Union Community Partners, LLC, during the first quarter.  UCP aims to acquire attractive, well-located finished lots, partially-developed lots, and un-entitled land in select California markets, where the long-term prognosis for new housing demand is healthy, but where medium-sized developers and homebuilders have immediate financial challenges.  During the first quarter, UCP acquired 40 finished lots, 73 partially entitled lots, and un-entitled land which could yield 960 lots in the future, all in and around Fresno, California.  UCP is evaluating further acquisitions that meet our threshold rate of return.

"In April, we sold our 22.5% interest in Jungfraubahn Holding AG for net proceeds of 75.5 million Swiss Francs, or approximately US$75.3 million.  To eliminate currency exposure on the sales proceeds, we converted 67.5 million Swiss Francs into U.S. dollars, and placed the US$66.8 million in a short term deposit with a leading global investment bank in Europe.

"As a result of purchasing our holding in Jungfraubahn at an attractive valuation, and Jungfraubahn's improved operating and financial performance, assisted in part by our participation on the Board, we estimate that we realized a total annual compound rate of return of approximately 20%, in U.S. dollar terms including dividends received, over the 12 year period since we first started to acquire our interest.

"Our decision to redeploy our capital was based in part on the opportunities that we continue to see in our core water and land businesses.

"The sale of Jungfraubahn will be recorded in the second quarter of our 2008 financial year, ending June 30, 2008.  We estimate that the sale will result in a gain of approximately $46.1 million before taxes in the second quarter, and the 2008 financial year.  However, the sale is expected to have only a minimal effect on shareholders' equity and book value per share, as most of the gain and related tax effects had already been recorded in previous accounting periods as a net unrealized gain, in the Other Comprehensive Income component of Shareholders' Equity."

PICO is a diversified holding company.  PICO seeks to acquire, build, and operate businesses where significant value can be created from the development of unique assets, and to acquire businesses which we identify as undervalued and where our management participation in operations can aid in the recognition of the business's fair value, as well as create additional value.   

Our objective is to maximize long-term shareholder value.  We manage our operations to achieve a superior return on net assets over the long term, as opposed to short-term earnings.  Currently our two major businesses are Vidler Water Company, a water resource development business, and Nevada Land & Resource Company, one of the largest private landowners in the state of Nevada.  Vidler is a significant private sector owner of water resources and water storage operations in Nevada, Arizona, Idaho, California, and Colorado.  Nevada Land owns approximately 456,000 acres of former railroad land in northern Nevada, and certain water and mineral rights related to the property.

At March 31, 2008, PICO Holdings, Inc. had a market capitalization of $569.3 million, and 18,833,737 shares issued and outstanding (net of treasury stock).

Given the size and diversity of our asset base, this release only summarizes the most significant elements in our first quarter 2008 results.  For fuller information on our principal activities and assets, recent developments, and the current outlook, we encourage all investors to read our Form 10-Q report for the first quarter of 2008, which has already been filed with the SEC.  The report can be accessed on-line via our web-site (www.picoholdings.com), or you can call Carlene Wilbur (614-475-3178 ext. 255) to request a paper copy.

This press release contains "forward-looking statements", that is statements related to future, not past, events.  In this context, forward-looking statements often address our current expected future business and financial performance, and often contain words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", or "will".  By their nature, forward-looking statements address matters that are, to different degrees, uncertain.  These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.  We do not undertake to update our forward-looking statements, and undue reliance should not be placed on forward-looking statements, which speak only as of the day they are made.  Such statements include, but are not limited to, statements regarding the completion of the Fish Springs pipeline project on budget and on schedule; the timeline for delivery of water through the Fish Springs pipeline; the trend for increasing water demands in the northern valleys of Reno; long term projections for population growth in the West and the availability of developable land; the anticipated closing of the land sales in escrow at Nevada Land; the future demand for lands owned by PICO; and the growth plans of PICO.  Such forward-looking statements are subject to a number of risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Potential risks and uncertainties include, but are not limited to, (a) uncertainties regarding the construction of the Fish Springs pipeline; (b) the risk that demand for strategic water assets will not increase or continue; © Vidler's ability to identify properties which are best suited for development; (d) governmental approval processes and PICO's ability to work with governmental agencies; and (e) PICO's ability to identify promising businesses in which the Company can create value.  Other risks and uncertainties are detailed from time to time in PICO's filings with the U.S. Securities and Exchange Commission, including those described under the heading "Risk Factors" in our 2007 annual report on Form 10-K.

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Max Webb
Chief Financial Officer
(858) 456-6022 ext. 216