EX-99.1 2 ex991.htm PRESS RELEASE ANNOUNCING FINANCIAL RESULTS ex991.htm
Exhibit 99.1

News Release

STANDARD PACIFIC CORP. REPORTS 2009 FIRST QUARTER RESULTS

IRVINE, CALIFORNIA, May 7, 2009.  Standard Pacific Corp. (NYSE:SPF) today announced operating results for its first quarter ended March 31, 2009.  Homebuilding revenues from continuing operations for the 2009 first quarter were $209.5 million, down 40% from $348.2 million last year.  The Company generated a net loss of $49.5 million, or $0.21 per diluted share, versus a net loss of $216.9 million, or $3.00 per diluted share, for the year earlier period.  The 2009 first quarter results included asset impairment charges of $30.8 million, of which $28.7 million related to real estate inventories and $2.1 million related to lot option deposits.  Impairment related charges for the 2008 first quarter totaled $192.3 million.  The 2009 first quarter results also included $14.1 million in restructuring charges related to division consolidation and headcount reductions, and a $19.2 million charge related to the Company’s deferred tax asset valuation allowance.  Excluding asset impairment and restructuring charges, the Company’s 2009 first quarter loss was approximately $2.8 million*, or $0.01 per diluted share.*

During the quarter the Company generated $129.0 million of cash flows from operating activities, driven primarily from the receipt of a $114.5 million federal income tax refund and a $41.1 million decrease in inventories related to a reduction in the number of homes under construction and a decrease in land purchases.  These cash flows were partially offset by a $7.3 million payment to exit a joint venture, operating losses and other changes in working capital.  The Company ended the 2009 first quarter with $668.3 million of homebuilding cash (including restricted cash), a $41.9 million increase from December 2008.  The Company reduced its homebuilding debt during the quarter by $75.1 million primarily through the repayment of $35 million of its bank credit facilities and the purchase at a discount of $26.9 million of its senior notes.  On April 1, 2009, the Company repaid the remaining $124.6 million balance of its 5⅛% senior notes due 2009.

Ken Campbell, President and CEO stated, “While we continue to endure the effects of the same lousy housing market that all of the other homebuilders are trying to operate in, we made significant progress in reducing our cost structure to better align our business with the decline in demand for new homes.  The improvement in our overhead was achieved by reducing our headcount from nearly 1,300 employees at the end of December 2008 to less than 900 at the end of April 2009 – a 69% reduction from the peak in June 2006.  Since June 2006, we have reduced our operating division count from 24 to nine.”

Mr. Campbell continued, “Although we saw improvement in new home orders as compared to the anemic levels experienced during the 2008 fourth quarter, we remain intently focused on preserving cash by controlling our expenses, carefully managing new home starts and reducing speculative inventory levels.”



 
 
 
 
Homebuilding Operations

The Company generated a homebuilding pretax loss from continuing operations for the 2009 first quarter of $47.8 million compared to a pretax loss of $217.1 million in the year earlier period.  The Company’s homebuilding pretax loss from continuing operations for the 2009 first quarter included $30.8 million of asset impairment charges and $13.6 million in restructuring charges.  The decrease in pretax loss was primarily the result of a $161.5 million decrease in impairment charges, a $27.1 million decrease in the Company’s SG&A expenses (which included approximately $12.0 million in restructuring charges related to severance and division consolidations), a $23.7 million decrease in joint venture loss (to income of $3.1 million) and a $3.9 million increase in other income, which included a $5.3 million gain related to the early extinguishment of a portion of the Company’s 2010 and 2011 senior notes.  These changes were partially offset by a 40% decrease in homebuilding revenues to $209.5 million (due to a 34% decrease in new home deliveries and a 10% decline in our consolidated average home price) and the expensing of $11.0 million of non-capitalized interest expense during the 2009 first quarter.  

Gross Margin

Weak housing demand and declining home prices continued to pressure the Company’s gross margins.  For the 2009 first quarter, the Company’s homebuilding gross margin percentage from continuing operations (including land sales) was 3.9% compared to a negative 33.8% in the prior year period.  The 2009 first quarter gross margin included $28.7 million in inventory impairment charges related to 13 projects, of which $26.3 million related to current and future projects and $2.4 million related to land intended to be sold.  The impairments, which were included in cost of sales, related primarily to two projects in California totaling $19.6 million.  Excluding the housing inventory impairment charges from continuing operations, the Company’s 2009 first quarter gross margin from home sales would have been 17.4%* versus 15.1%* for the 2008 first quarter.  The 230 basis point increase in the year-over-year gross margin was driven largely by higher margins in California, the lower land basis in inventories due to impairments taken during 2008, and our efforts to reduce direct construction costs through rebidding of contracts and value engineering.  These factors were partially offset by lower home prices.  Until market conditions stabilize, the Company may continue to incur additional inventory impairment charges.

Restructuring and SG&A

The Company’s 2009 first quarter results included approximately $14.1 million in restructuring charges related to division consolidations and related headcount and facilities reductions, of which approximately $12.0 million was included in the Company’s selling, general and administrative (“SG&A”) expenses, $1.0 million in cost of sales, $0.6 million in other expense and $0.5 million in loss from discontinued operations.  The charges included approximately $10.3 million of severance costs and approximately $3.8 million related to lease terminations and fixed asset write-offs.  In connection with the restructuring, the Company reduced its total headcount by 30%, or 380 employees, from December 31, 2008 through the end of April 2009, and since December 31, 2007, the Company has reduced its workforce by over 50%, or nearly 1,000 employees.  From December 31, 2007 through the end of April 2009, the Company has also reduced its division count from 20 to nine, down from 24 at its peak.   

Excluding restructuring charges, the Company’s 2009 first quarter SG&A rate would have been 19.3%* versus 22.3%* for the 2008 first quarter.  The 300 basis point decrease in the Company’s year-over-year SG&A rate was primarily due to a decrease in personnel costs as a result of reductions in headcount, a reduction in advertising and marketing expenses, and a decrease in the level of incentive compensation expense.

2
Net New Orders

Net new orders (excluding joint ventures and discontinued operations) for the 2009 first quarter decreased 41% to 734 new homes.  The Company’s cancellation rate for the three months ended March 31, 2009 was 24%, down from 33% for the 2008 fourth quarter and flat when compared with the 2008 first quarter.  The Company’s sales absorption rate for the 2009 first quarter was 1.5 per month per community, down from the prior year first quarter of 2.0 per month per community, but up from the depressed sales pace of 1.0 per month per community for the 2008 fourth quarter.  The improvement in the Company’s sales absorption rate from the 2008 fourth quarter reflects seasonality, a decrease in the Company’s cancellation rate and the impact of historically low interest rates and increased affordability.  Notwithstanding the improvement during the quarter, sales absorption rates remain low relative to historical rates and reflect the challenging housing market.

Joint Venture Update

During the 2009 first quarter the Company exited its Chicago joint venture for a $7.3 million cash payment, resulting in the elimination of $19.8 million of joint venture recourse debt.  As of March 31, 2009, the Company’s unconsolidated joint ventures had $406.4 million in outstanding borrowings, $157.5 million of which were recourse to the Company.  In addition, as of such date, the Company had remaining land takedown obligations of approximately $21.2 million related to a single unconsolidated joint venture.

Income Taxes

The Company recorded a noncash valuation allowance of $19.2 million during the three months ended March 31, 2009 against its net deferred tax asset, resulting in a total cumulative allowance of $673.3 million at March 31, 2009.



 
*Please see “Reconciliation of Non-GAAP Financial Measures” on page 10.

 
3
 

 KEY STATISTICS AND FINANCIAL DATA**



     
Three Months Ended March 31,
     
2009
  
2008
  
% or Percentage
Change
     
(Dollars in thousands, except average selling price)
Operating Data:
              
Deliveries (1)
  
 687
    
 1,036
  
(34%)
Average selling price (1)
$
 300,000
  
$
 334,000
  
(10%)
Homebuilding revenues
$
 209,535
  
$
 348,243
  
(40%)
Gross margin %
  
3.9%
    
(33.8%)
  
37.7%
Gross margin % (excluding impairments)
  
17.4%
    
15.1%
  
2.3%
Impairments
$
 30,805
  
$
 192,345
  
(84%)
Restructuring charges
$
 14,119
  
$
 2,486
  
468%
SG&A %
  
25.0%
    
22.8%
  
2.2%
SG&A % (excluding restructuring charges)
  
19.3%
    
22.3%
  
(3.0%)
                   
Net new orders (1)
  
 734
    
 1,245
  
(41%)
Monthly sales absorption rate per community (1)
  
 1.5
    
 2.0
  
(25%)
Cancellation rate (1)
  
24%
    
24%
  
0%
Average active selling communities (1)
  
 158
    
 205
  
(23%)
Backlog (homes) (1)
  
 689
    
 1,488
  
(54%)
Backlog (dollar value) (1)
$
 212,208
  
$
 505,550
  
(58%)
                   
Cash flows from operating activities
$
 128,998
  
$
 228,882
  
(44%)
Cash flows (uses) from investing activities
$
 (1,500)
  
$
 8,608
  
(117%)
Cash uses from financing activities
$
 (204,723)
  
$
 (128,173)
  
60%
Land purchases, net
$
 680
  
$
 91,892
  
(99%)
Adjusted EBITDA (2)
$
 7,260
  
$
 (6,487)
  
(212%)
                   
                   
     
March 31,
2009
  
December 31,
2008
  
% or Percentage
Change
     
(Dollars in thousands, except per share amounts)
Balance Sheet Data:
              
Homebuilding cash (including restricted cash)
$
 668,300
  
$
 626,379
  
7%
Inventories owned
$
 1,195,483
  
$
 1,262,521
  
(5%)
Building sites owned or controlled
  
 22,775
    
 24,136
  
(6%)
Completed specs (excluding podium projects) (1)
  
 500
    
 589
  
(15%)
Completed specs - podium projects (1)
  
 104
    
 -
  
 -
Deferred tax asset valuation allowance
$
 673,274
  
$
 654,107
  
3%
Homebuilding debt
$
 1,411,290
  
$
 1,486,437
  
(5%)
Joint venture recourse debt
$
 157,492
  
$
 173,894
  
(9%)
Stockholders' equity
$
 361,028
  
$
 407,941
  
(11%)
Stockholders' equity per share (including as-converted preferred stock) (3)
$
 1.50
  
$
 1.70
  
(12%)
Total debt to book capitalization (4)
  
80.2%
    
79.2%
  
1.0%
Adjusted net homebuilding debt to book capitalization (5)
  
67.4%
    
68.0%
  
(0.6%)




 
**Please see “Notes to Key Statistics and Financial Data” beginning on page 11.

 
4
 

Earnings Conference Call

A conference call to discuss the Company’s 2009 first quarter will be held at 2:00 pm Eastern Time Friday, May 8, 2009.  The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://standardpacifichomes.com/ir.  The call will also be accessible via telephone by dialing (800) 753-9048 (domestic) or (913) 312-1453 (international); Passcode: 9809341.  The entire audio transmission with the synchronized slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 9809341.

About Standard Pacific

Standard Pacific, one of the nation’s largest homebuilders, has built homes for more than 105,000 families during its 43-year history.  The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers.  Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada.  The Company provides mortgage financing and title services to its homebuyers through Standard Pacific Mortgage and SPH Title.  For more information about the Company and its new home developments, please visit our website at: www.standardpacifichomes.com.

 This news release contains forward-looking statements.  These statements include but are not limited to statements regarding: the alignment of our cost structure with demand for new homes; trends in new home orders; our ability to preserve cash, control our expenses, manage new home starts and reduce speculative inventory levels;  the potential for further inventory impairment charges; and orders and backlog. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements.  Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company’s control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied.  Such factors include but are not limited to:  local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions of terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our credit agreements, public notes, and private term loans and our ability to comply with their covenants and repay such debt as it comes due; a negative change in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company’s business; governmental regulation, including the impact of "slow growth" or similar initiatives; new law restricting down payment assistance programs; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company’s mortgage banking operations, including hedging activities; future business decisions and the Company’s ability to successfully implement the Company’s operational and other strategies; litigation and warranty claims; and other risks discussed in the Company’s filings with the Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 and subsequent Quarterly Reports on Form 10-Q.  The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements.  The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release.  No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
 
Contact:
John Stephens, SVP & CFO (949) 789-1641, jstephens@stanpac.com or
Lloyd McKibbin, SVP & Treasurer (949) 789-1603, lmckibbin@stanpac.com.

###
(Note: Tables follow)

 
5
 

STANDARD PACIFIC CORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(2008 as Adjusted(1))


       
Three Months Ended March 31,
       
2009
  
2008
  
% Change
         
(Dollars in thousands, except per share amounts)
Homebuilding:
              
 
Home sale revenues
$
 206,233
  
$
 345,988
  
(40%)
 
Land sale revenues
  
 3,302
    
 2,255
  
46%
   
Total revenues
  
 209,535
    
 348,243
  
(40%)
 
Cost of home sales
  
 (196,702)
    
 (434,342)
  
(55%)
 
Cost of land sales
  
 (4,735)
    
 (31,495)
  
(85%)
   
Total cost of sales
  
 (201,437)
    
 (465,837)
  
(57%)
     
Gross margin
  
 8,098
 
  
 (117,594)
  
(107%)
     
Gross margin %
  
3.9%
    
(33.8%)
    
 
Selling, general and administrative expenses
  
 (52,379)
    
 (79,444)
  
(34%)
 
Income (loss) from unconsolidated joint ventures
  
 3,089
    
 (20,568)
  
(115%)
 
Interest expense
  
 (11,041)
    
 -
  
 -
 
Other income (expense)
  
 4,424
    
 555
  
697%
     
Homebuilding pretax loss
  
 (47,809)
    
 (217,051)
  
(78%)
Financial Services:
              
 
Revenues
  
 2,050
    
 6,241
  
(67%)
 
Expenses
  
 (2,995)
    
 (4,443)
  
(33%)
 
Income from unconsolidated joint ventures
  
 -
    
 203
  
(100%)
 
Other income
  
 41
    
 58
  
(29%)
     
Financial services pretax income (loss)
  
 (904)
    
 2,059
  
(144%)
Loss from continuing operations before income taxes
  
 (48,713)
    
 (214,992)
  
(77%)
Provision for income taxes
  
 (255)
    
 (684)
  
(63%)
Loss from continuing operations
  
 (48,968)
    
 (215,676)
  
(77%)
Loss from discontinued operations, net of income taxes
  
 (504)
    
 (1,191)
  
(58%)
Net loss
    
 (49,472)
    
 (216,867)
  
(77%)
  Less: Net loss allocated to preferred stockholders
  
 30,394
    
 -
  
 -
Net loss available to common stockholders
$
 (19,078)
  
$
 (216,867)
  
(91%)
                     
Basic loss per share:
              
 
Continuing operations
$
 (0.21)
  
$
 (2.98)
  
(93%)
 
Discontinued operations
  
 -
    
 (0.02)
  
(100%)
 
Basic loss per share
$
 (0.21)
  
$
 (3.00)
  
(93%)
                     
Diluted loss per share:
              
 
Continuing operations
$
 (0.21)
  
$
 (2.98)
  
(93%)
 
Discontinued operations
  
 -
    
 (0.02)
  
(100%)
 
Diluted loss per share
$
 (0.21)
  
$
 (3.00)
  
(93%)
                     
Weighted average common shares outstanding:
              
 
Basic
    
92,784,541
    
72,304,720
  
28%
 
Diluted
  
240,597,327
    
72,304,720
  
233%

                    
(1)  
Certain 2008 amounts have been retroactively adjusted to reflect the adoption of APB No. 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement).”
 
6
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(2008 as Adjusted(1))

           
March 31,
  
December 31,
           
2009
  
2008
ASSETS
(unaudited)
      
Homebuilding:
              
 
Cash and equivalents
 $
 543,260
  
 $
 622,157
 
Restricted cash
    
 125,040
    
 4,222
 
Trade and other receivables
  
 27,443
    
 21,008
 
Inventories:
              
   
Owned
      
 1,195,483
    
 1,262,521
   
Not owned
    
 35,208
    
 42,742
 
Investments in unconsolidated joint ventures
  
 49,621
    
 50,468
 
Deferred income taxes
  
 13,477
    
 14,122
 
Other assets
      
 24,325
    
 145,567
             
 2,013,857
    
 2,162,807
Financial Services:
            
 
Cash and equivalents
  
 5,353
    
3,681
   Restricted cash   3,795      4,295 
 
Mortgage loans held for sale
  
 49,135
    
 63,960
 
Mortgage loans held for investment
  
 10,749
    
 11,736
 
Other assets
      
 4,262
    
 4,792
             
 73,294
    
 88,464
Assets of discontinued operations
  
 383
    
 1,217
       
Total Assets
 $
 2,087,534
  
 $
 2,252,488
                     
LIABILITIES AND EQUITY
          
Homebuilding:
              
 
Accounts payable
  
 $
 32,610
  
 $
 40,225
 
Accrued liabilities
    
 205,749
    
 216,418
 
Liabilities from inventories not owned
  
 24,251
    
 24,929
 
Revolving credit facility
  
 27,870
    
 47,500
 
Secured project debt and other notes payable
  
 96,757
    
 111,214
 
Senior notes payable
  
 1,162,223
    
 1,204,501
 
Senior subordinated notes payable
  
 124,440
    
 123,222
             
 1,673,900
    
 1,768,009
Financial Services:
            
 
Accounts payable and other liabilities
  
 2,198
    
 3,657
 
Mortgage credit facilities
  
 46,940
    
 63,655
             
 49,138
    
 67,312
Liabilities of discontinued operations
  
 1,403
    
 1,331
       
Total Liabilities
  
 1,724,441
    
 1,836,652
                     
Equity:
                  
 
Stockholders' Equity:
          
   
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares
          
     
issued and outstanding at March 31, 2009 and December 31, 2008, respectively
  
 5
    
 5
   
Common stock, $0.01 par value; 600,000,000 shares authorized;100,851,622
          
     
and 100,624,350 shares issued and outstanding at March 31, 2009
          
     
and December 31,  2008, respectively
  
 1,008
    
 1,006
   
Additional paid-in capital
  
 998,018
    
 996,492
   
Accumulated deficit
  
 (616,314)
    
 (566,842)
   
Accumulated other comprehensive loss, net of tax
  
 (21,689)
    
 (22,720)
     
Total Stockholders' Equity
  
 361,028
    
 407,941
 
Noncontrolling Interests
  
 2,065
    
 7,895
   
Total Equity
    
 363,093
    
 415,836
       
Total Liabilities and Equity
 $
 2,087,534
  
 $
 2,252,488

                    
(1)  
Certain 2008 amounts have been retroactively adjusted to reflect the adoption of APB No. 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement).”
 
7
REGIONAL OPERATING DATA
       
Three Months Ended March 31,
       
2009
  
2008
  
% Change
New homes delivered:
              
 
California
  
 218
    
 304
  
(28%)
 
Arizona
  
 72
    
 155
  
(54%)
 
Texas (1)
  
 128
    
 179
  
(28%)
 
Colorado
  
 30
    
 46
  
(35%)
 
Nevada
  
 2
    
 21
  
(90%)
 
Florida
  
 160
    
 202
  
(21%)
 
Carolinas
  
 77
    
 129
  
(40%)
     
Consolidated total
  
 687
    
 1,036
  
(34%)
 
Unconsolidated joint ventures
  
 19
    
 99
  
(81%)
 
Discontinued operations
  
 3
    
 87
  
(97%)
 
Total (including joint ventures)
  
 709
    
 1,222
  
(42%)
                     
                     
Average selling prices of homes delivered:
              
 
California
$
 453,000
  
$
 533,000
  
(15%)
 
Arizona
  
 225,000
    
 246,000
  
(9%)
 
Texas (1)
  
 274,000
    
 267,000
  
3%
 
Colorado
  
 299,000
    
 334,000
  
(10%)
 
Nevada
  
 234,000
    
 305,000
  
(23%)
 
Florida
  
 192,000
    
 213,000
  
(10%)
 
Carolinas
  
 211,000
    
 258,000
  
(18%)
     
Consolidated (excluding joint ventures)
  
 300,000
    
 334,000
  
(10%)
 
Unconsolidated joint ventures
  
 538,000
    
 481,000
  
12%
 
Total continuing operations (including joint ventures)
$
 307,000
  
$
 347,000
  
(12%)
                     
 
Discontinued operations (including joint ventures)
$
 224,000
  
$
 164,000
  
37%

       
Three Months Ended March 31,
       
2009
  
2008
  
% Change
  
% Change
Same Store
Net new orders:
              
 
California
 263
  
 438
  
(40%)
  
(23%)
 
Arizona
 40
  
 143
  
(72%)
  
(54%)
 
Texas (1)
 108
  
 157
  
(31%)
  
3%
 
Colorado
 29
  
 67
  
(57%)
  
(44%)
 
Nevada
 -
  
 13
  
(100%)
  
(100%)
 
Florida
 179
  
 267
  
(33%)
  
(21%)
 
Carolinas
 115
  
 160
  
(28%)
  
(17%)
     
Consolidated total
 734
  
 1,245
  
(41%)
  
(24%)
 
Unconsolidated joint ventures
 50
  
 53
  
(6%)
  
51%
 
Discontinued operations
 2
  
 70
  
(97%)
  
 -
 
Total (including joint ventures)
 786
  
 1,368
  
(43%)
  
(22%)
                     
Average number of selling communities during the period:
          
 
California
 53
  
 68
  
(22%)
    
 
Arizona
 11
  
 18
  
(39%)
    
 
Texas (1)
 20
  
 30
  
(33%)
    
 
Colorado
 7
  
 9
  
(22%)
    
 
Nevada
 2
  
 4
  
(50%)
    
 
Florida
 39
  
 46
  
(15%)
    
 
Carolinas
 26
  
 30
  
(13%)
    
     
Consolidated total
 158
  
 205
  
(23%)
    
 
Unconsolidated joint ventures
 10
  
 16
  
(38%)
    
 
Discontinued operations
 -
  
 7
  
(100%)
    
 
Total (including joint ventures)
 168
  
 228
  
(26%)
    
__________________
(1)  
Texas excludes the San Antonio division, which is classified as a discontinued operation.
8

       
At March 31,
       
2009
  
2008
Backlog ($ in thousands):
Homes
  
Dollar Value
  
Homes
  
Dollar Value
 
California
  
 199
  
$
 89,954
    
 437
  
$
 211,576
 
Arizona
  
 44
    
 9,535
    
 182
    
 43,848
 
Texas (1)
  
 110
    
 33,468
    
 279
    
 86,484
 
Colorado
  
 77
    
 23,814
    
 144
    
 52,273
 
Nevada
  
 2
    
 458
    
 21
    
 5,805
 
Florida
  
 166
    
 33,930
    
 285
    
 69,738
 
Carolinas
  
 91
    
 21,049
    
 140
    
 35,826
     
Consolidated total
  
 689
    
 212,208
    
 1,488
    
 505,550
 
Unconsolidated joint ventures
  
 57
    
 33,744
    
 77
    
 62,711
 
Discontinued operations
  
 -
    
 -
    
 27
    
 5,631
 
Total (including joint ventures)
  
 746
  
$
 245,952
    
 1,592
  
$
 573,892

 __________________
(1)  
Texas excludes the San Antonio division, which is classified as a discontinued operation.



       
At March 31,
       
2009
  
2008
  
% Change
Building sites owned or controlled:
          
 
Building sites owned
 18,265
  
 21,491
  
(15%)
 
Building sites optioned or subject to contract
 2,281
  
 4,621
  
(51%)
 
Joint venture lots
 2,227
  
 5,654
  
(61%)
   
Total continuing operations (including joint ventures)
 22,773
  
 31,766
  
(28%)
   
Discontinued operations
 2
  
 836
  
(100%)
     
Total
 22,775
  
 32,602
  
(30%)
                 
Total homes under construction (including specs):
          
 
Consolidated (excluding podium projects)
 865
  
 1,984
  
(56%)
 
Podium projects
 134
  
 134
  
0%
   
Total consolidated
 999
  
 2,118
  
(53%)
                 
Spec homes under construction:
          
 
Consolidated (excluding podium projects)
 494
  
 835
  
(41%)
 
Podium projects
 134
  
 134
  
0%
   
Total consolidated
 628
  
 969
  
(35%)
                 
Completed and unsold homes:
          
 
Consolidated (excluding podium projects)
 500
  
 535
  
(7%)
 
Podium projects
 104
  
 2
  
5,100%
   
Total consolidated
 604
  
 537
  
12%



 
9
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The tables set forth below reconcile the Company's earnings (loss) for the three months ended March 31, 2009 and 2008 to earnings (loss) excluding the after-tax impairment, restructuring and deferred tax asset valuation charges:

 
Three Months Ended March 31,
 
2009
  
2008
 
(Dollars in thousands, except per share amounts)
           
Net income (loss)
$
 (49,472)
  
$
 (216,867)
Add: Impairment charges, net of income taxes
  
 18,883
    
 117,908
Add: Restructuring charges, net of income taxes
  
 8,655
    
 1,524
Add: Deferred tax asset charge
  
 19,167
    
 83,746
Net income (loss), as adjusted
$
 (2,767)
  
$
 (13,689)
           
Diluted loss per share
$
 (0.01)
  
$
 (0.19)
Diluted shares outstanding
  
 240,597,327
    
 72,304,720
 
The table set forth below reconciles the Company's homebuilding gross margin percentage and gross margin percentage from home sales for the three months ended March 31, 2009 and 2008, excluding housing inventory impairment charges:


 
Three Months Ended March 31,
 
2009
  
Gross
Margin %
  
2008
  
Gross
Margin %
   
(Dollars in thousands)
                   
Homebuilding gross margin
$
 8,098
  
3.9%
  
$
 (117,594)
  
(33.8%)
Less: Land sale revenues
  
 (3,302)
        
 (2,255)
    
Add: Cost of land sales
  
 4,735
        
 31,495
    
Gross margin from home sales
  
 9,531
  
4.6%
    
 (88,354)
  
(25.5%)
Add: Housing inventory impairment charges
  
 26,332
        
 140,659
    
Gross margin from home sales, as adjusted
$
 35,863
  
17.4%
  
$
 52,305
  
15.1%


The table set forth below reconciles the Company’s SG&A rate for the three months ended March 31, 2009 and 2008 to the SG&A rate excluding restructuring charges:


 
Three Months Ended March 31,
 
2009
  
SG&A%
    
2008
  
SG&A%
 
(Dollars in thousands)
                   
Selling, general and administrative expenses
$
 52,379
  
25.0%
  
$
 79,444
  
22.8%
Less: Restructuring charges
  
 (12,001)
  
(5.7%)
    
 (1,870)
  
(0.5%)
Selling, general and administrative expenses,
   excluding restructuring charges
$
 40,378
  
19.3%
  
$
 77,574
  
22.3%


__________________                                                                                                                                                     
We believe that the measures described above, which exclude the effect of impairment, tax valuation and restructuring charges, are useful to investors as they provide investors with a perspective on the underlying operating performance of the business by isolating the impact of charges related to inventory impairments, land deposit and capitalized preacquisition cost writeoffs for abandoned projects, the tax valuation allowance and restructuring charges.  However, it should be noted that such measures are not GAAP financial measures.  Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
10
NOTES TO KEY STATISTICS AND FINANCIAL DATA
(1)  
Excludes unconsolidated joint ventures and discontinued operations.
(2)  
Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges, (e) homebuilding depreciation and amortization, (f) amortization of stock-based compensation, (g) income (loss) from unconsolidated joint ventures and (h) income (loss) from financial services subsidiary.  Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently.  We believe Adjusted Homebuilding EBITDA information is useful to investors as one measure of the Company’s ability to service debt and obtain financing.  However, it should be noted that Adjusted Homebuilding EBITDA is not a U.S. generally accepted accounting principles (“GAAP”) financial measure.  Due to the significance of the GAAP components excluded, Adjusted Homebuilding EBITDA should not be considered in isolation or as an alternative to net income, cash flow from operations or any other operating or liquidity performance measure prescribed by GAAP.

For the three and twelve months ended March 31, 2009 and 2008, EBITDA and adjusted homebuilding EBITDA from continuing and discontinued operations was calculated as follows:

       
Three Months Ended March 31,
    
LTM Ended March 31,
  
     
2009
  
 
2008
  
2009
  
2008
  
       
(Dollars in thousands)
  
                             
Net income (loss)
$
 (49,472)
  
$
 (216,867)
  
$
 (1,066,220)
  
$
 (943,456)
  
 
Provision (benefit) for income taxes
  
 -
    
 -
    
 (6,795)
    
 (164,135)
  
 
Homebuilding interest amortized to cost of sales and interest expense
   25,718      13,359     
 110,705 
    
 123,234 
  
 
Homebuilding depreciation and amortization
  
 824
    
 1,651
    
 5,024
    
 7,515
  
 
Amortization of stock-based compensation
  
 1,529
    
 4,156
    
 8,483
    
 21,302
  
EBITDA
  
 (21,401)
    
 (197,701)
    
 (948,803)
    
 (955,540)
  
Add:
                          
 
Cash distributions of income from unconsolidated joint ventures
  
 -
    
 357
    
 1,618
    
 10,235
  
 
Impairment charges
  
 30,805
    
 172,290
    
 862,780
    
 967,570
  
Less:
                          
 
Income (loss) from unconsolidated joint ventures
  
 3,089
    
 (20,365)
    
 (127,421)
    
 (180,041)
  
 
Income (loss) from financial services subsidiary
  
 (945)
    
 1,798
    
 (2,815)
    
 1,268
  
Adjusted Homebuilding EBITDA
$
 7,260
  
$
 (6,487)
  
$
 45,831
  
$
 201,038
  
 
The table set forth below reconciles net cash provided by (used in) operating activities, from continuing and discontinued operations, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:
 
     
Three Months Ended March 31,
  
LTM Ended March 31,
  
     
2009
  
2008
  
2009
  
2008
  
     
(Dollars in thousands)
  
Net cash provided by (used in) operating activities
$
 128,998
  
$
 228,882
   $
 163,267
  
$
 727,834
  
Add:
                          
 
Provision (benefit) for income taxes
  
 -
    
 -
    
 (6,795)
    
 (164,135)
  
 
Deferred tax valuation allowance
  
 (19,167)
    
 (83,746)
    
 (409,048)
    
 (264,226)
  
  Homebuilding interest amortized to cost of sales and interest expense  
 25,718
    
 13,359
    
   110,705
    
 123,234 
  
 
Excess tax benefits from share-based payment arrangements
  
 -
    
 -
    
 -
    
 985
  
 
Gain (loss) on early extinguishment of debt
  
 5,333
    
 1,125
    
 (3,811)
    
 3,890
  
Less:
                          
 
Income (loss) from financial services subsidiary
  
 (945)
    
 1,798
    
 (2,815)
    
 1,268
  
 
Depreciation and amortization from financial services subsidiary
  
 175
    
 207
    
 751
    
 768
  
 
Loss on disposal of property and equipment
  
 663
    
 -
    
 3,455
    
 1,439
  
Net changes in operating assets and liabilities:
                        
   
Trade and other receivables
  
 6,393
    
 3,577
    
 (3,592)
    
 (10,593)
  
   
Mortgage loans held for sale
  
 (15,799)
    
 (99,783)
    
 (7,396)
    
 (85,565)
  
   
Inventories-owned
  
 (41,822)
    
 36,058
    
 (112,447)
    
 (321,862)
  
   
Inventories-not owned
  
 678
    
 (55)
    
 (316)
    
 (10,816)
  
   
Deferred income taxes
  
 19,167
    
 60,849
    
 302,072
    
 172,000
  
   
Other assets
  
 (120,274)
    
 (219,991)
    
 (47,012)
    
 13,256
  
   
Accounts payable
  
 7,793
    
 28,057
    
 37,685
    
 12,614
  
   
Accrued liabilities
  
 10,135
    
 27,186
    
 23,910
    
 7,897
  
Adjusted Homebuilding EBITDA
$
 7,260
  
$
 (6,487)
  
$
 45,831
  
$
 201,038
  
 
11
 

(3)  
The pro forma common shares outstanding include the as-converted Series B Preferred Stock.  In addition, this calculation excludes 7.8 million shares issued under a share lending agreement related to the Company’s 6% Convertible Senior Subordinated Notes issued on September 28, 2007.  The Company believes that the pro forma stockholders’ equity per common share information is useful to investors as a measure to determine the book value per common share after giving effect of the issuance of Preferred Shares assuming full conversion to common stock and excluding shares outstanding under the share lending agreement.  This is a non-GAAP financial measure and due to the significance of items adjusted and excluded from this calculation, such measure should not be considered in isolation or as an alternative to operating performance measures.  The following table reconciles actual common shares outstanding to pro forma common shares outstanding and calculates pro forma stockholders’ equity per share:


 
March 31,
2009
  
December 31,
2008
Actual common shares outstanding
  
 100,851,622
    
 100,624,350
Add: Conversion of Preferred shares to common shares
  
 147,812,786
    
 147,812,786
Less: Common shares outstanding under share lending facility
  
 (7,839,809)
    
 (7,839,809)
Pro forma common shares outstanding
  
 240,824,599
    
 240,597,327
           
Stockholders' equity (actual amounts rounded to nearest thousand)
$
 361,028,000
  
$
 407,941,000
Divided by pro forma common shares outstanding
÷
 240,824,599
  
÷
 240,597,327
Pro forma stockholders' equity per common share
$
 1.50
  
$
 1.70


(4)  
Total debt at March 31, 2009 and December 31, 2008 includes $46.9 million and $63.7 million, respectively, of indebtedness of the Company’s financial services subsidiary.
(5)  
Adjusted net homebuilding debt excludes indebtedness included in liabilities from inventories not owned and indebtedness of the Company’s financial services subsidiary and additionally reflects the offset of cash and equivalents in excess of $5 million.  We believe that the adjusted net homebuilding debt to total book capitalization and adjusted net homebuilding debt to LTM adjusted homebuilding EBITDA ratios are useful to investors as a measure of the Company’s ability to obtain financing.  These are non-GAAP ratios and other companies may calculate these ratios differently.  For purposes of the ratio of adjusted net homebuilding debt to total book capitalization, total book capitalization is adjusted net homebuilding debt plus stockholders’ equity. Adjusted net homebuilding debt is calculated as follows:

     
 March 31,
  
December 31,
     
2009
  
2008
       
(Dollars in thousands)
               
Total consolidated debt
$
 1,458,230
  
$
 1,550,092
Less:
            
 
Financial services indebtedness
  
 (46,940)
    
 (63,655)
 
Homebuilding cash in excess of $5 million
  
 (663,300)
    
 (621,386)
Adjusted net homebuilding debt
$
 747,990
  
$
 865,051

 
 
 
12