EX-99.1 2 ex991.htm PRESS RELEASE ex991.htm
 
Exhibit 99.1
 

 
News Release

Standard Pacific Corp. Reports 2009 Third Quarter Results

IRVINE, CALIFORNIA, October 29, 2009.  Standard Pacific Corp. (NYSE:SPF) today announced operating results for its third quarter ended September 30, 2009.  Homebuilding revenues for the 2009 third quarter were $327.4 million (including $57.5 million in land sale revenues), down 18% from $400.3 million last year.  The Company generated a net loss of $23.8 million, or $0.10 per diluted share, versus a net loss of $369.9 million, or $2.54 per diluted share, for the year earlier period.  The 2009 third quarter results included asset impairment charges of $7.8 million, which related primarily to the sale of a podium building and land, versus $368.4 million in impairments in the prior year period.  The 2009 third quarter results also included $10.1 million in debt and other restructuring charges and a $9.3 million charge related to the deferred tax asset generated during the quarter.  Excluding asset impairment and restructuring charges, the Company generated a 2009 third quarter net loss of approximately $3.6 million*, or $0.01 per diluted share.*

During the quarter, the Company generated $112.6 million of cash flows from operations, driven primarily from a $104.0 million decrease in inventories (including $56.2 million related to the sale of a podium building and land).  The Company ended the quarter with $806.8 million of homebuilding cash (including $283.3 million of restricted cash, $257.6 million of which was held in escrow related to the issuance of $280 million of 10¾% senior notes due 2016).  On October 9, 2009, the Company completed a refinancing transaction pursuant to which it utilized the $257.6 million of net proceeds from the issuance of the 10¾% senior notes due 2016 and cash on hand to repurchase approximately $133.4 million, $122.0 million and $3.4 million of senior notes due 2010, 2011 and 2013, respectively.  The Company also exchanged $32.8 million of its 2012 senior subordinated convertible notes during the quarter for approximately 7.6 million shares of common stock at an effective price of $4.30 per share.  Finally, the Company repaid the remaining $37.1 million balance on its Term Loan A credit facility, the $22.9 million balance on its revolving credit facility, $51.3 million of other indebtedness and assumed $52.1 million of joint venture recourse debt during the quarter.  In connection with these financing transactions, the Company recorded an $8.8 million non-cash loss on the early extinguishment of debt.

As a result of these transactions, the Company reduced the amount of senior notes, revolving credit facility and Term Loan A indebtedness that was scheduled to mature before 2013 from $528 million to $180 million ($15 million in 2010, $49 million in 2011 and $116 million in 2012).  Since just prior to the closing of the MatlinPatterson transaction in June 2008, the Company has reduced the principal amount of its total homebuilding and joint venture recourse debt by over $725 million from $2.0 billion to $1.27 billion and has reduced the amount of homebuilding and joint venture recourse debt maturing prior to 2013 from $1.33 billion to $322 million (including $180 million of senior notes, $97 million of project specific debt and $45 million of joint venture recourse debt related to three joint ventures).

Ken Campbell, the Company’s President and CEO stated, “With over $500 million of cash in the bank, anticipated near-term positive cash flows from operations and the significant reduction in the amount of our debt that is scheduled to mature in the next three years, we believe we have ample liquidity to acquire land assets to support our growth when the upturn in the housing market occurs.”

Mr. Campbell continued, “Holding our gross margins at 18% and our SG&A rate at 15% during the quarter is not great performance, but gives a good indication of the margins built into our inventory and positions us reasonably well for significant improvements in profitability with only small improvements in the housing market.”


Homebuilding Operations

The Company generated a homebuilding pretax loss for the 2009 third quarter of $24.8 million compared to a pretax loss of $389.4 million in the year earlier period.  The Company’s homebuilding pretax loss for the 2009 third quarter included $7.8 million of asset impairment charges, $8.8 million of loss on early extinguishment of debt and $1.6 million in restructuring charges.  The decrease in pretax loss was primarily the result of a $360.5 million decrease in impairment charges and a $33.2 million decrease in the Company’s SG&A expenses.  These changes were partially offset by a $9.3 million reduction in gross margin (excluding impairments), an $8.7 million increase in non-capitalized interest expense and a $7.0 million increase in loss on early extinguishment of debt.

Homebuilding revenues decreased 18% to $327.4 million during the 2009 third quarter primarily due to a 25% decrease in new home deliveries to 893 homes and a 9% decline in consolidated average home price to $302,000.  These decreases were offset in part by a $52.1 million increase in land sale revenues in the 2009 third quarter.  The Company’s average home price was flat with the 2009 second quarter at $302,000 and was slightly positive on a same community basis.

The Company’s homebuilding gross margin (including land sales) for the 2009 third quarter was 13.0% compared to a negative 51.9% in the prior year period.  The 2009 third quarter gross margin included $7.7 million in inventory impairment charges, which were included in cost of land sales and related to the sale of a podium building in Southern California and a land sale in Florida.  Excluding land sales and the related inventory impairment charges, the Company’s 2009 third quarter gross margin from home sales would have been 18.6%* versus 14.1%* for the 2008 third quarter.  The 450 basis point increase in the year-over-year adjusted gross margin was driven primarily by higher margins in California and lower direct construction costs as a result of value engineering and the rebidding of contracts.

The Company’s 2009 third quarter selling, general and administrative (“SG&A”) expenses (including Corporate G&A) decreased $33.2 million, or 43%, from the year earlier period resulting in an SG&A rate of 13.3% versus 19.2% in the prior year period.  The Company’s 2009 third quarter results included approximately $1.5 million in homebuilding restructuring charges related to severance and lease terminations, all of which was included in the Company’s SG&A expenses.  Excluding land sale revenues and restructuring charges, the Company’s 2009 third quarter SG&A rate was 15.6%* versus 18.7%* for the 2008 third quarter despite a 32% decrease in home sale revenues.

Net new orders (excluding joint ventures and discontinued operations) for the 2009 third quarter decreased 3% from the 2008 third quarter to 893 new homes on a 28% decrease in the number of average active selling communities from the prior year period from 186 to 134.  The Company’s cancellation rate for the three months ended September 30, 2009 was 15%, down from 16% for the 2009 second quarter and 26% for the 2008 third quarter.  The Company’s monthly sales absorption rate for the 2009 third quarter was 2.2 per community, up from the prior year third quarter rate of 1.7 per community, but down from 2.7 per community for the 2009 second quarter.  The improvement in the Company’s sales absorption rate during the quarter as compared to the 2008 third quarter was due to increases in most of its markets on a per community basis with absorption rates relatively better in California, Arizona and Florida.

The dollar value of the Company’s backlog (excluding joint ventures) decreased 17% to $329.7 million, or 995 homes, as compared to the 2008 third quarter value, but was up 7% from the 2009 second quarter backlog value.

2
Earnings Conference Call

A conference call to discuss the Company’s 2009 third quarter will be held at 1:00 p.m. Eastern Time Friday, October 30, 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 (888) 213-3752 (domestic) or (913) 981-5510 (international); Passcode: 5369884.  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: 5369884.

About Standard Pacific

Standard Pacific, one of the nation’s largest homebuilders, has built more than 108,000 homes 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: trends in new home orders, deliveries, average home price and backlog; anticipated cash flows and future profitability; the sufficiency of our liquidity to support growth; and the future condition of the housing market.  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; 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; 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.

 
*Please see “Reconciliation of Non-GAAP Financial Measures” on page 8.

###
(Note: Tables follow)

 
3
 

 KEY STATISTICS AND FINANCIAL DATA**


     
As of or For the Three Months Ended
                 
% or
        
% or
     
September 30,
  
September 30,
  
Percentage
  
June 30,
  
Percentage
     
2009
  
2008
  
Change
  
2009
  
Change
     
(Dollars in thousands, except average selling price)
Operating Data:
                        
Deliveries (1)
  
 893
    
 1,188
  
(25%)
    
 942
  
(5%)
Average selling price (1)
$
 302,000
  
$
 332,000
  
(9%)
  
$
 302,000
  
0%
Homebuilding revenues
$
 327,411
  
$
 400,340
  
(18%)
  
$
 289,672
  
13%
Gross margin %
  
13.0%
    
(51.9%)
  
64.9%
    
13.5%
  
(0.5%)
Gross margin % from home sales (excluding impairments)*
  
18.6%
    
14.1%
  
4.5%
    
18.5%
  
0.1%
Impairments and write-offs
$
 7,814
  
$
 368,354
  
(98%)
  
$
 21,270
  
(63%)
Restructuring charges
$
 1,315
  
$
 4,181
  
(69%)
  
$
 5,504
  
(76%)
SG&A %
  
13.3%
    
19.2%
  
(5.9%)
    
15.9%
  
(2.6%)
SG&A % (excluding restructuring charges and land sales)*
  
15.6%
    
18.7%
  
(3.1%)
    
14.6%
  
1.0%
                             
Net new orders (1)
  
 893
    
 921
  
(3%)
    
 1,169
  
(24%)
Monthly sales absorption rate per community (1)
  
 2.2
    
 1.7
  
29%
    
 2.7
  
(19%)
Cancellation rate (1)
  
15%
    
26%
  
(11%)
    
16%
  
(1%)
Average active selling communities (1)
  
 134
    
 186
  
(28%)
    
 144
  
(7%)
Backlog (homes) (1)
  
 995
    
 1,248
  
(20%)
    
 982
  
1%
Backlog (dollar value) (1)
$
 329,661
  
$
 395,657
  
(17%)
  
$
 308,540
  
7%
                             
Cash flows (uses) from operating activities
$
 112,572
  
$
 31,933
  
253%
  
$
 68,595
  
64%
Cash flows (uses) from investing activities
$
 (9,241)
  
$
 (11,111)
  
(17%)
  
$
 (10,128)
  
(9%)
Cash flows (uses) from financing activities
$
 (147,732)
  
$
 116,719
  
(227%)
  
$
 (32,681)
  
352%
Land purchases
$
 21,595
  
$
 9,267
  
133%
  
$
 7,857
  
175%
Adjusted Homebuilding EBITDA (2)
$
 31,749
  
$
 13,126
  
142%
  
$
 32,963
  
(4%)
Homebuilding interest incurred
$
 26,218
  
$
 34,428
  
(24%)
  
$
 26,797
  
(2%)
Homebuilding interest capitalized to inventories owned
$
 12,836
  
$
 28,890
  
(56%)
  
$
 14,106
  
(9%)
Homebuilding interest capitalized to investments
                       
   in unconsolidated joint ventures
$
 749
  
$
 1,600
  
(53%)
  
$
 956
  
(22%)
                             
     
As of
     
September 30,
2009
  
June 30,
2009
  
% or Percentage Change
  
December 31,
2008
  
% or Percentage Change
     
(Dollars in thousands, except per share amounts)
Balance Sheet Data:
                        
Homebuilding cash (including restricted cash)
$
 806,766
  
$
 573,038
  
41%
  
$
 626,379
  
29%
Inventories owned
$
 1,074,153
  
$
 1,115,556
  
(4%)
  
$
 1,262,521
  
(15%)
Building sites owned or controlled
  
 20,020
    
 22,012
  
(9%)
    
 24,136
  
(17%)
Homes under construction (1)
  
 1,106
    
 1,041
  
6%
    
 1,326
  
(17%)
Completed specs (excluding podium projects) (1)
  
 163
    
 258
  
(37%)
    
 589
  
(72%)
Completed specs - podium projects (1)
  
 193
    
 193
  
0%
    
 -
  
 -
Deferred tax asset valuation allowance
$
 691,464
  
$
 682,186
  
1%
  
$
 654,107
  
6%
Homebuilding debt
$
 1,451,336
  
$
 1,275,300
  
14%
  
$
 1,486,437
  
(2%)
Joint venture recourse debt
$
 45,189
  
$
 112,141
  
(60%)
  
$
 173,894
  
(74%)
Stockholders' equity
$
 349,591
  
$
 346,512
  
1%
  
$
 407,941
  
(14%)
Stockholders' equity per share (including as-converted
                        
   preferred stock) (3)
$
 1.40
  
$
 1.44
  
(3%)
  
$
 1.70
  
(18%)
Total debt to book capitalization (4)
  
81.0%
    
79.3%
  
1.7%
    
79.2%
  
1.8%
Adjusted net homebuilding debt to book capitalization (5)
  
65.0%
    
67.1%
  
(2.1%)
    
68.0%
  
(3.0%)


  *Please see “Reconciliation of Non-GAAP Financial Measures” on page 8.
**Please see “Notes to Key Statistics and Financial Data” beginning on page 9.

 
4
 

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


       
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
       
2009
  
2008
  
2009
  
2008
       
(Dollars in thousands, except per share amounts)
Homebuilding:
                      
 
Home sale revenues
$
 269,873
  
$
 394,942
  
$
 760,312
  
$
 1,145,608
 
Land sale revenues
  
 57,538
    
 5,398
    
 66,306
    
 13,609
   
Total revenues
  
 327,411
    
 400,340
    
 826,618
    
 1,159,217
 
Cost of home sales
  
 (219,641)
    
 (548,622)
    
 (661,211)
    
 (1,462,654)
 
Cost of land sales
  
 (65,147)
    
 (59,375)
    
 (75,578)
    
 (97,704)
   
Total cost of sales
  
 (284,788)
    
 (607,997)
    
 (736,789)
    
 (1,560,358)
     
Gross margin
  
 42,623
 
  
 (207,657)
    
 89,829
 
  
 (401,141)
     
Gross margin %
  
13.0%
    
(51.9%)
    
10.9%
    
(34.6%)
 
Selling, general and administrative expenses
  
 (43,695)
    
 (76,894)
    
 (142,100)
    
 (235,473)
 
Loss from unconsolidated joint ventures
  
 (1,960)
    
 (91,937)
    
 (4,449)
    
 (130,322)
 
Interest expense
  
 (12,633)
    
 (3,938)
    
 (35,409)
    
 (3,938)
 
Loss on early extinguishment of debt
  
 (8,824)
    
 (1,841)
    
 (3,457)
    
 (11,339)
 
Other income (expense)
  
 (305)
    
 (7,100)
    
 (1,309)
    
 (10,145)
     
Homebuilding pretax loss
  
 (24,794)
    
 (389,367)
    
 (96,895)
    
 (792,358)
Financial Services:
                      
 
Revenues
  
 3,762
    
 2,492
    
 10,095
    
 10,897
 
Expenses
  
 (2,753)
    
 (3,106)
    
 (9,009)
    
 (11,063)
 
Income from unconsolidated joint ventures
  
 -
    
 284
    
 119
    
 659
 
Other income
  
 19
    
 17
    
 108
    
 128
     
Financial services pretax income (loss)
  
 1,028
    
 (313)
    
 1,313
    
 621
Loss from continuing operations before income taxes
  
 (23,766)
    
 (389,680)
    
 (95,582)
    
 (791,737)
(Provision) benefit for income taxes
  
 (33)
    
 19,840
    
 (298)
    
 (42,030)
Loss from continuing operations
  
 (23,799)
    
 (369,840)
    
 (95,880)
    
 (833,767)
Loss from discontinued operations, net of income taxes
  
 (45)
    
 (69)
    
 (569)
    
 (2,005)
Net loss
    
 (23,844)
    
 (369,909)
    
 (96,449)
    
 (835,772)
  Less: Net loss allocated to preferred stockholders
  
 14,500
    
 165,213
    
 59,022
    
 188,354
Net loss available to common stockholders
$
 (9,344)
  
$
 (204,696)
  
$
 (37,427)
  
$
 (647,418)
                             
Basic loss per share:
                      
 
Continuing operations
$
 (0.10)
  
$
 (2.54)
  
$
 (0.40)
  
$
 (8.59)
 
Discontinued operations
  
 -
    
 -
    
 -
    
 (0.02)
 
Basic loss per share
$
 (0.10)
  
$
 (2.54)
  
$
 (0.40)
  
$
 (8.61)
                             
Diluted loss per share:
                      
 
Continuing operations
$
 (0.10)
  
$
 (2.54)
  
$
 (0.40)
  
$
 (8.59)
 
Discontinued operations
  
 -
    
 -
    
 -
    
 (0.02)
 
Diluted loss per share
$
 (0.10)
  
$
 (2.54)
  
$
 (0.40)
  
$
 (8.61)
                             
Weighted average common shares outstanding:
                      
 
Basic
    
95,250,351
    
80,681,394
    
93,731,253
    
75,155,044
 
Diluted
  
243,063,137
    
145,800,364
    
241,544,039
    
97,019,962



 



        __________________
(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).”

 
5
 
 
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(2008 as Adjusted(1))

 
           
September 30,
    
December 31,
           
2009
    
2008
ASSETS
(unaudited)
      
Homebuilding:
              
 
Cash and equivalents
 $
 523,474
  
 $
 622,157
 
Restricted cash
    
 283,292
    
 4,222
 
Trade and other receivables
  
 17,677
    
 21,008
 
Inventories:
              
   
Owned
      
 1,074,153
    
 1,262,521
   
Not owned
    
 33,389
    
 42,742
 
Investments in unconsolidated joint ventures
  
 38,548
    
 50,468
 
Deferred income taxes
  
 10,383
    
 14,122
 
Other assets
      
 21,263
    
 145,567
             
 2,002,179
    
 2,162,807
Financial Services:
            
 
Cash and equivalents
  
 6,524
    
 3,681
 
Restricted cash
    
 2,295
    
 4,295
 
Mortgage loans held for sale
  
 42,625
    
 63,960
 
Mortgage loans held for investment
  
 10,734
    
 11,736
 
Other assets
      
 4,373
    
 4,792
             
 66,551
    
 88,464
Assets of discontinued operations
  
 159
    
 1,217
       
Total Assets
 $
 2,068,889
  
 $
 2,252,488
                     
LIABILITIES AND EQUITY
          
Homebuilding:
              
 
Accounts payable
  
 $
 22,928
  
 $
 40,225
 
Accrued liabilities
    
 179,473
    
 216,418
 
Liabilities from inventories not owned
  
 22,440
    
 24,929
 
Revolving credit facility
  
 -
    
 47,500
 
Secured project debt and other notes payable
  
 96,816
    
 111,214
 
Senior notes payable
  
 1,251,193
    
 1,204,501
 
Senior subordinated notes payable
  
 103,327
    
 123,222
             
 1,676,177
    
 1,768,009
Financial Services:
            
 
Accounts payable and other liabilities
  
 1,731
    
 3,657
 
Mortgage credit facilities
  
 38,798
    
 63,655
             
 40,529
    
 67,312
Liabilities of discontinued operations
  
 854
    
 1,331
       
Total Liabilities
  
 1,717,560
    
 1,836,652
                     
Equity:
                  
 
Stockholders' Equity:
          
   
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares issued and outstanding
          
     
at September 30, 2009 and December 31, 2008, respectively
  
 5
    
 5
   
Common stock, $0.01 par value; 600,000,000 shares authorized; 105,119,880 and 100,624,350 shares
          
     
issued and outstanding at September 30, 2009 and December 31,  2008, respectively
  
 1,051
    
 1,006
   
Additional paid-in capital
  
 1,028,624
    
 996,492
   
Accumulated deficit
  
 (663,291)
    
 (566,842)
   
Accumulated other comprehensive loss, net of tax
  
 (16,798)
    
 (22,720)
     
Total Stockholders' Equity
  
 349,591
    
 407,941
 
Noncontrolling Interests
  
 1,738
    
 7,895
   
Total Equity
    
 351,329
    
 415,836
       
Total Liabilities and Equity
 $
 2,068,889
  
 $
 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).”

 
6
 

REGIONAL OPERATING DATA


       
Three Months Ended September 30,
       
2009
  
2008
       
Homes
  
Avg. Selling
Price
  
Homes
  
Avg. Selling
Price
New homes delivered:
                      
 
California
  
 347
  
$
 442,000
    
 435
  
$
 482,000
 
Arizona
  
 75
    
 202,000
    
 132
    
 215,000
 
Texas (1)
  
 82
    
 269,000
    
 165
    
 291,000
 
Colorado
  
 37
    
 312,000
    
 62
    
 358,000
 
Nevada
  
 5
    
 226,000
    
 22
    
 278,000
 
Florida
  
 235
    
 181,000
    
 220
    
 206,000
 
Carolinas
  
 112
    
 216,000
    
 152
    
 233,000
     
Consolidated total
  
 893
    
 302,000
    
 1,188
    
 332,000
 
Unconsolidated joint ventures
  
 15
    
 548,000
    
 66
    
 578,000
 
Discontinued operations
  
 1
    
 130,000
    
 14
    
 176,000
 
Total (including joint ventures)
  
 909
  
$
 306,000
    
 1,268
  
$
 343,000




       
Three Months Ended September 30,
    
       
2009
  
2008
    
       
Homes
  
Avg. Selling
Communities
  
Homes
  
Avg. Selling
Communities
  
% Change Same Store
Net new orders:
                  
 
California
 377
  
 49
  
 340
  
 60
  
36%
 
Arizona
 79
  
 7
  
 100
  
 13
  
47%
 
Texas (1)
 96
  
 19
  
 117
  
 29
  
25%
 
Colorado
 34
  
 6
  
 54
  
 8
  
(16%)
 
Nevada
 2
  
 2
  
 15
  
 2
  
(87%)
 
Florida
 189
  
 28
  
 168
  
 45
  
81%
 
Carolinas
 116
  
 23
  
 127
  
 29
  
15%
     
Consolidated total
 893
  
 134
  
 921
  
 186
  
35%
 
Unconsolidated joint ventures
 28
  
 5
  
 49
  
 11
  
26%
 
Discontinued operations
 1
  
 -
  
 8
  
 -
  
 -
 
Total (including joint ventures)
 922
  
 139
  
 978
  
 197
  
34%


 

       
At September 30,
       
2009
  
2008
 
Homes
  
Value
  
Homes
  
Value
Backlog ($ in thousands):                      
 
California
  
 424
  
$
 190,185
    
 384
  
$
 177,890
 
Arizona
  
 102
    
 21,815
    
 140
    
 30,413
 
Texas
    
 137
    
 42,849
    
 219
    
 64,950
 
Colorado
  
 60
    
 18,022
    
 103
    
 31,609
 
Nevada
  
 1
    
 213
    
 14
    
 3,408
 
Florida
  
 161
    
 31,457
    
 261
    
 57,880
 
Carolinas
  
 110
    
 25,120
    
 127
    
 29,507
     
Consolidated total
  
 995
    
 329,661
    
 1,248
    
 395,657
 
Unconsolidated joint ventures
  
 22
    
 10,722
    
 49
    
 35,443
 
Total (including joint ventures)
  
 1,017
  
$
 340,383
    
 1,297
  
$
 431,100

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





 
7
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The table set forth below reconciles the Company's earnings (loss) for the three months ended September 30, 2009 and 2008 to earnings (loss) excluding the after-tax impairment, restructuring, loss on early extinguishment of debt and deferred tax asset valuation charges:

 
Three Months Ended September 30,
 
2009
  
2008
 
(Dollars in thousands, except per share amounts)
           
Net income (loss)
$
 (23,844)
  
$
 (369,909)
Add: Impairment charges, net of income taxes
  
 4,774
    
 225,064
Add: Restructuring charges, net of income taxes
  
 804
    
 2,555
Add: Loss on early extinguishment of debt, net of income taxes
  
 5,391
    
 1,125
Add: Deferred tax asset charge
  
 9,278
    
 134,088
Net income (loss), as adjusted
$
 (3,597)
  
$
 (7,077)
           
Diluted earnings (loss) per share
$
 (0.01)
  
$
 (0.05)
Diluted shares outstanding
  
 243,063,137
    
 145,800,364

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 September 30, 2009 and 2008, and June 30, 2009, excluding housing inventory impairment charges:

 
Three Months Ended
 
September 30,
2009
  
Gross
Margin %
  
September 30,
2008
  
Gross
Margin %
  
June 30,
2009
  
Gross
Margin %
 
(Dollars in thousands)
                             
Homebuilding gross margin
$
 42,623
  
13.0%
  
$
 (207,657)
  
(51.9%)
  
$
 39,108
  
13.5%
Less: Land sale revenues
  
 (57,538)
        
 (5,398)
        
 (5,466)
    
Add: Cost of land sales
  
 65,147
        
 59,375
        
 5,696
    
Gross margin from home sales
  
 50,232
  
18.6%
    
 (153,680)
  
(38.9%)
    
 39,338
  
13.8%
Add: Housing inventory impairment charges
  
 -
        
 209,228
        
 13,129
    
Gross margin from home sales, as adjusted
$
 50,232
  
18.6%
  
$
 55,548
  
14.1%
  
$
 52,467
  
18.5%


The table set forth below reconciles the Company’s SG&A rate for the three months ended September 30, 2009 and 2008, and June 30, 2009 to the SG&A rate excluding restructuring charges and the SG&A rate excluding land sale revenues and restructuring charges:
 
 
Three Months Ended
 
September 30,
2009
  
SG&A%
(excl. land sales)
  
September 30,
2008
  
SG&A%
(excl. land sales)
  
June 30,
2009
  
SG&A%
(excl. land sales)
 
(Dollars in thousands)
                             
Selling, general and administrative expenses
$
 43,695
  
16.2%
  
$
 76,894
  
19.5%
  
$
 46,026
  
16.2%
Less: Restructuring charges
  
 (1,495)
  
(0.6%)
    
 (2,977)
  
(0.8%)
    
 (4,650)
  
(1.6%)
Selling, general and administrative expenses,
                          
   excluding restructuring charges
$
 42,200
  
15.6%
  
$
 73,917
  
18.7%
  
$
 41,376
  
14.6%
 
__________________
We believe that the measures described above, which exclude the effect of impairment, tax valuation and restructuring charges, and loss on early extinguishment of debt, 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 impairments, tax valuation and restructuring charges, and loss on early extinguishment of debt.  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.

 
8
 

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) (gain) loss on early extinguishment of debt (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) 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 September 30, 2009 and 2008, and three months ended June 30, 2009, EBITDA and Adjusted Homebuilding EBITDA from continuing and discontinued operations was calculated as follows:

     
Three Months Ended
  
LTM Ended September 30,
     
September 30,
2009
  
September 30,
2008
  
June 30,
2009
  
2009
  
2008
     
(Dollars in thousands)
                                 
Net income (loss)
$
 (23,844)
  
$
 (369,909)
  
$
 (23,133)
  
$
 (494,292)
  
$
 (1,276,776)
 
Provision (benefit) for income taxes
  
 -
    
 (19,886)
    
 -
    
 (47,678)
    
 55,883
 
Homebuilding interest amortized to cost of sales and interest expense
  
 35,681
    
 25,867
    
 33,590
    
 129,526
    
 115,359
 
Homebuilding depreciation and amortization
  
 672
    
 1,438
    
 711
    
 3,356
    
 6,931
 
Amortization of stock-based compensation
  
 1,651
    
 5,174
    
 4,079
    
 8,037
    
 20,671
EBITDA
  
 14,160
    
 (357,316)
    
 15,247
    
 (401,051)
    
 (1,077,932)
Add:
                              
 
Cash distributions of income from unconsolidated joint ventures
  
 -
    
 229
    
 326
    
 1,530
    
 1,402
 
Impairment charges
  
 7,814
    
 276,105
    
 13,129
    
 472,734
    
 938,986
 
(Gain) loss on early extinguishment of debt
  
 8,824
    
 1,841
    
 (176)
    
 7,812
    
 9,380
Less:
                              
 
Income (loss) from unconsolidated joint ventures
  
 (1,960)
    
 (91,653)
    
 (5,459)
    
 (25,542)
    
 (209,703)
 
Income (loss) from financial services subsidiary
  
 1,009
    
 (614)
    
 1,022
    
 1,180
    
 374
Adjusted Homebuilding EBITDA
$
 31,749
  
$
 13,126
  
$
 32,963
  
$
 105,387
  
$
 81,165

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
  
LTM Ended September 30,
     
September 30,
2009
  
September 30,
2008
  
June 30,
2009
  
2009
  
2008
     
(Dollars in thousands)
                             
Net cash provided by (used in) operating activities
$
 112,572
  
$
 31,933
  
$
 68,595
  
$
 375,353
  
$
 545,946
Add:
                              
 
Provision (benefit) for income taxes
  
 -
    
 (19,886)
    
 -
    
 (47,678)
    
 55,883
 
Deferred tax valuation allowance
  
 (9,278)
    
 (134,088)
    
 (8,913)
    
 (162,280)
    
 (529,185)
 
Homebuilding interest amortized to cost of sales and interest expense
  
 35,681
    
 25,867
    
 33,590
    
 133,420
    
 115,359
Less:
                              
 
Income (loss) from financial services subsidiary
  
 1,009
    
 (614)
    
 1,022
    
 1,180
    
 374
 
Depreciation and amortization from financial services subsidiary
  
 169
    
 188
    
 171
    
 700
    
 837
 
Loss on disposal of property and equipment
  
 1
    
 901
    
 675
    
 3,230
    
 2,340
Net changes in operating assets and liabilities:
                            
   
Trade and other receivables
  
 (2,191)
    
 1,442
    
 (7,666)
    
 (15,287)
    
 (40,315)
   
Mortgage loans held for sale
  
 (16,071)
    
 14,446
    
 8,854
    
 (20,039)
    
 (22,969)
   
Inventories-owned
  
 (103,969)
    
 (58,537)
    
 (95,734)
    
 (303,581)
    
 (330,984)
   
Inventories-not owned
  
 324
    
 6,154
    
 460
    
 (5,715)
    
 5,344
   
Deferred income taxes
  
 9,277
    
 124,936
    
 8,913
    
 169,218
    
 206,136
   
Other assets
  
 1,997
    
 18,669
    
 1,599
    
 (94,995)
    
 (4,624)
   
Accounts payable
  
 (540)
    
 1,264
    
 10,336
    
 42,877
    
 50,535
   
Accrued liabilities
  
 5,126
    
 1,401
    
 14,797
    
 39,204
    
 33,590
Adjusted Homebuilding EBITDA
$
 31,749
  
$
 13,126
  
$
 32,963
  
$
 105,387
  
$
 81,165



 
9
 

NOTES TO KEY STATISTICS AND FINANCIAL DATA (Continued)


(3)  
The pro forma common shares outstanding include the as-converted Series B Preferred Stock.  In addition, this calculation excludes 3.9 million shares as of September 30, 2009, and 7.8 million shares as of June 30, 2009 and December 31, 2008, issued under a share lending agreement related to the Company’s 6% Convertible Senior Subordinated Notes issued on September 28, 2007.  During the 2009 third quarter, 3.9 million of the shares issued under the share lending agreement were returned to the Company.  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 used to calculate pro forma stockholders’ equity per share:

 
September 30,
2009
  
June 30,
2009
  
December 31,
2008
                 
Actual common shares outstanding
  
 105,119,880
    
 101,110,072
    
 100,624,350
Add: Conversion of Preferred shares to common shares
  
 147,812,786
    
 147,812,786
    
 147,812,786
Less: Common shares outstanding under share lending facility
  
 (3,919,904)
    
 (7,839,809)
    
 (7,839,809)
Pro forma common shares outstanding
  
 249,012,762
    
 241,083,049
    
 240,597,327
                 
Stockholders' equity (actual amounts rounded to nearest thousand)
$
 349,591,000
  
$
 346,512,000
  
$
 407,941,000
Divided by pro forma common shares outstanding
÷
 249,012,762
  
÷
 241,083,049
  
÷
 240,597,327
Pro forma stockholders' equity per common share
$
 1.40
  
$
 1.44
  
$
 1.70

(4)  
Total debt at September 30, 2009, June 30, 2009 and December 31, 2008 includes $38.8 million, $55.6 million and $63.7 million, respectively, of indebtedness of the Company’s financial services subsidiary.
(5)  
Adjusted net homebuilding debt excludes 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 ratio is useful to investors as a measure of the Company’s ability to obtain financing.  This is a non-GAAP ratio and other companies may calculate this ratio 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:
 
     
 September 30,
  
 June 30,
  
December 31,
     
2009
  
2009
  
2008
       
(Dollars in thousands)
                     
Total consolidated debt
$
 1,490,134
  
$
 1,330,940
  
$
 1,550,092
Less:
                  
 
Financial services indebtedness
  
 (38,798)
    
 (55,640)
    
 (63,655)
 
Homebuilding cash in excess of $5 million
  
 (801,766)
    
 (568,038)
    
 (621,386)
Adjusted net homebuilding debt
$
 649,570
  
$
 707,262
  
$
 865,051

 
 

10