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Standard Pacific Corp. Reports 2010 Third Quarter Results

IRVINE, Calif., Oct. 26, 2010 /PRNewswire via COMTEX/ --

Standard Pacific Corp. (NYSE: SPF) today announced operating results for its third quarter ended September 30, 2010.

2010 Third Quarter Highlights and Comparisons to the 2009 Third Quarter

  • Net income of $4.5 million vs. a net loss of $23.8 million
    • 2010 net income of $5.5 million*, excluding $1.0 million charge related to debt repurchase
  • Earnings per share of $0.02 vs. a loss per share of $0.10
  • Homebuilding revenues of $207.5 million, down 37% from $327.4 million
  • 599 new home deliveries (excluding joint ventures), down 33% from 893 homes
  • Average home price of $345,000, up 14% from $302,000
  • Gross margin from home sales of 23.6% vs. 18.6%
  • Homebuilding SG&A rate from home sales of 17.6% vs. 15.6%* (2009 third quarter excludes $1.5 million of restructuring charges)
    • SG&A expenses down $7.4 million from 2009 third quarter
  • Net new orders (excluding joint ventures) down 38% to 555 homes on a 2% decline in average community count (down 23% from 719 homes in the 2010 second quarter)
  • Backlog value (excluding joint ventures) down 35% to $214.2 million vs. $329.7 million
    • 605 homes in backlog, down 39% from 995 homes
  • Cash outflows from operating activities of $67 million vs. cash inflows of $113 million
    • $91.3 million of cash land purchases in 2010 vs. $21.6 million in 2009
  • Homebuilding cash balance of $546 million vs. $807 million

Ken Campbell, the Company's President and CEO commented, "I am pleased to announce our second consecutive quarter of profitability in an extremely challenging housing market.Our ability to generate a profit at a delivery rate of 1.5 homes per community per month bodes well for us when the housing market returns to any level of normalcy.Consistent with our strategy, our gross margins have also held steady and our average sales price is up meaningfully over the prior year period."Mr. Campbell continued, "Unfortunately it appears that the nation's economic recovery may take longer than many anticipated.We will continue to manage through this downturn with a focus on rebuilding our land portfolio, while keeping an eye on maintaining the proper balance between new investment and liquidity."

The Company generated net income of $4.5 million, or $0.02 per diluted share, for the 2010 third quarter compared to a net loss of $23.8 million, or $0.10 per diluted share, for the year earlier period. The primary drivers of the improved operating performance for the 2010 third quarter were higher gross margins, higher average sales prices, lower asset impairments and lower overhead costs. The 2009 third quarter results included $7.7 million of inventory impairment charges related to land sales, an $8.8 million charge related to the early extinguishment of debt and $1.3 million of restructuring charges. The 2010 third quarter included a $1.0 million charge related to the early extinguishment of debt and did not include any inventory impairments. Excluding the loss on the early extinguishment of debt, the Company generated net income of $5.5 million*, or $0.02* per diluted share, for the 2010 third quarter.

Homebuilding revenues for the 2010 third quarter were $207.5 million, down 37% from $327.4 million for the 2009 third quarter. The decrease in homebuilding revenues was driven primarily by a 33% decline in new home deliveries, offset in part by a 14% increase in consolidated average home price to $345,000 as compared to the 2009 third quarter. The increase in average home price was largely due to the delivery of more higher priced homes in Southern California and a reduction in deliveries in Florida as compared to the 2009 third quarter.

Gross margin from home sales for the 2010 third quarter was 23.6% versus 18.6% for the year earlier period. The 500 basis point improvement in the 2010 third quarter gross margin from home sales was driven primarily by lower direct construction costs and higher margins in substantially all of our markets, and price increases in Southern California. Excluding previously capitalized interest costs, gross margin from home sales for the 2010 third quarter was 29.7%* versus 24.3%* for the 2009 third quarter.

The Company's 2010 third quarter SG&A expenses (including Corporate G&A) were $36.3 million compared to $43.7 million for the 2009 third quarter, which included noncash stock-based compensation charges of $3.1 million and $1.7 million, respectively. The Company's 2010 third quarter SG&A rate from home sales was 17.6% versus an adjusted rate of 15.6%* for the 2009 third quarter (2009 third quarter excludes $1.5 million in restructuring charges). The increase in the Company's SG&A rate was primarily the result of a 23% decrease in revenues from home sales.

The Company's 2010 third quarter income tax provision was $2.1 million, which was fully offset by a noncash reversal of its deferred tax asset valuation allowance for the same amount. In addition, during the three and nine months ended September 30, 2010, the Company recorded a noncash reduction of its deferred tax asset of $4.8 million and $14.1 million, respectively, and a corresponding noncash reduction of its deferred tax asset valuation allowance related to built-in losses realized during these periods that were in excess of the Section 382 annual limitation. As of September 30, 2010, the Company had a $516.1 million deferred tax asset valuation allowance.

The Company used $67.4 million of cash flows from operating activities for the 2010 third quarter versus generating $112.6 million of cash flows from operating activities in the year earlier period. The decline in cash flows from operations as compared to the 2009 third quarter was driven primarily by a $69.7 million increase in cash land purchases in the 2010 third quarter and a $119.9 million decrease in homebuilding revenues (including a $56.6 million decrease in land sale revenues). Cash flow from operations for the three months ended September 30, 2010 and 2009 included $91.3 million and $21.6 million, respectively, of cash land purchases. Excluding cash land purchases and land sales, cash flow from operating activities for the 2010 third quarter was $22.9 million* versus $77.9 million* in the year earlier period.

Net new orders (excluding joint ventures) for the 2010 third quarter decreased 38% from the 2009 third quarter to 555 homes on a 2% decline in the number of average active selling communities from 134 to 131. The Company's monthly sales absorption rate for the 2010 third quarter was 1.4 per community compared to 2.2 per community for the 2009 third quarter. The Company's cancellation rate for the 2010 third quarter was 19% versus 15% for both the 2009 third quarter and the 2010 second quarter. The total number of sales cancellations for the 2010 third quarter was 132, of which 82 cancellations related to homes in the Company's 2010 third quarter beginning backlog and 50 related to orders generated during the quarter.

The dollar value of the Company's backlog (excluding joint ventures) decreased 35% to $214.2 million, or 605 homes, compared to $329.7 million, or 995 homes, for the 2009 third quarter. The decrease in backlog value was driven primarily by a 38% decrease in net new orders, which was offset in part by a 7% increase in average home price in backlog from $331,000 to $354,000.

During the 2010 third quarter, the Company approved (but has not yet consummated) the purchase of $93 million of land, comprised of approximately 2,000 lots, 32% of which are finished, 43% partially developed and 25% raw. During the same period, the Company purchased approximately 1,800 lots valued at $127 million ($91 million of which were cash purchases and $32 million were acquired through an investment in a joint venture). Approximately 73% of the $127 million in land purchases related to land located in California, with the balance spread throughout the Company's other operations. For the nine months ended September 30, 2010, the Company purchased approximately 4,600 lots valued at $281 million.

Earnings Conference Call

A conference call to discuss the Company's 2010 third quarter will be held at 12:00 p.m. Eastern time October 27, 2010. 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) 747-4660 (domestic) or (913) 312-1500 (international); Passcode: 3684458 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:3684458.

About Standard Pacific

Standard Pacific, one of the nation's largest homebuilders, has built more than 110,000 homes during its 44-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. 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 new home orders, deliveries, backlog, average home price, revenue, strategy, profitability, cash flow, liquidity, gross margins, overhead expenses and other costs; the dollar value and timing of anticipated land purchases; the availability of land opportunities that meet our return threshold, and our ability to consummate these opportunities; 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 debt agreements; our ability to repay our debt as it comes due; changes 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, 2009 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

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

(Note: Tables Follow)













KEY STATISTICS AND FINANCIAL DATA(1)








As of or For the Three Months Ended




September 30,
2010


September 30,
2009


Percentage
or % Change


June 30,
2010


Percentage
or % Change








Operating Data

(Dollars in thousands, except average selling price)
















Deliveries


599



893


(33%)



891


(33%)

Average selling price

$

345,000


$

302,000


14%


$

355,000


(3%)

Homebuilding revenues

$

207,466


$

327,411


(37%)


$

317,159


(35%)

Gross margin %


23.5%



13.0%


10.5%



20.9%


2.6%

Gross margin % from home sales (excluding impairments)*


23.6%



18.6%


5.0%



20.9%


2.7%

Gross margin % from home sales (excluding impairments













and interest amortized to cost of home sales)*


29.7%



24.3%


5.4%



27.5%


2.2%

Impairments and write-offs

$

-


$

7,814


(100%)


$

-


-

Restructuring charges (excluding debt refinance)

$

-


$

1,315


(100%)


$

-


-

SG&A %


17.5%



13.3%


4.2%



13.7%


3.8%

SG&A % (excluding restructuring charges and land sales)*


17.6%



15.6%


2.0%



13.7%


3.9%
















Net new orders


555



893


(38%)



719


(23%)

Average active selling communities


131



134


(2%)



127


3%

Monthly sales absorption rate per community


1.4



2.2


(36%)



1.9


(26%)

Cancellation rate


19%



15%


4%



15%


4%

Cancellations from beginning backlog


82



92


(11%)



76


8%

Cancellations from current quarter sales


50



71


(30%)



54


(7%)

Backlog (homes)


605



995


(39%)



649


(7%)

Backlog (dollar value)

$

214,237


$

329,661


(35%)


$

237,708


(10%)
















Cash flows (uses) from operating activities

$

(67,414)


$

112,572


(160%)


$

5,349


(1360%)

Cash flows (uses) from investing activities

$

(35,995)


$

(9,241)


290%


$

(1,451)


2381%

Cash flows (uses) from financing activities

$

(61,447)


$

(147,732)


(58%)


$

114,028


(154%)

Land purchases (incl. seller financing and excl. JV investments)

$

94,672


$

21,595


338%


$

103,278


(8%)

Land sale proceeds

$

940


$

56,273


(98%)


$

447


110%

Adjusted Homebuilding EBITDA*

$

29,701


$

31,749


(6%)


$

51,104


(42%)

Adjusted Homebuilding EBITDA Margin %*


14.3%



9.7%


4.6%



16.1%


(1.8%)

Homebuilding interest incurred

$

28,070


$

26,218


7%


$

27,730


1%

Homebuilding interest capitalized to inventories owned

$

17,126


$

12,836


33%


$

16,515


4%

Homebuilding interest capitalized to investments in JVs

$

687


$

749


(8%)


$

736


(7%)

Interest amortized to cost of sales (incl. cost of land sales)

$

12,546


$

23,048


(46%)


$

21,325


(41%)






As of




September 30,
2010


June 30,
2010



Percentage
or % Change


December 31,
2009


Percentage
or % Change









Balance Sheet Data

(Dollars in thousands, except per share amounts)

















Homebuilding cash (including restricted cash)

$

546,096


$

710,385



(23%)


$

602,222


(9%)

Inventories owned

$

1,151,599


$

1,057,238



9%


$

986,322


17%

Building sites owned or controlled


23,250



21,853



6%



19,191


21%

Homes under construction


886



1,003



(12%)



934


(5%)

Completed specs


391



293



33%



282


39%

Deferred tax asset valuation allowance

$

516,133


$

523,041



(1%)


$

534,596


(3%)

Homebuilding debt

$

1,216,786


$

1,239,623



(2%)


$

1,156,726


5%

Joint venture recourse debt

$

7,819


$

34,636



(77%)


$

38,835


(80%)

Stockholders' equity

$

453,475


$

447,710



1%


$

435,798


4%

Stockholders' equity per share (including if-converted














preferred stock)*

$

1.81


$

1.78



2%


$

1.75


3%

Total debt to book capitalization*


73.4%



74.5%



(1.1%)



73.4%


0.0%

Adjusted net homebuilding debt to total adjusted














book capitalization*


59.7%



54.2%



5.5%



56.0%


3.7%

















(1) All statistical numbers exclude unconsolidated joint ventures and discontinued operations unless noted otherwise.

*Please see "Reconciliation of Non-GAAP Financial Measures" at the end of this release.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS












Three Months Ended

September 30,


Nine Months Ended

September 30,





2010


2009



2010


2009





(Dollars in thousands, except per share amounts)





(Unaudited)

Homebuilding:














Home sale revenues

$

206,516


$

269,873



$

698,138


$

760,312


Land sale revenues


950



57,538




1,856



66,306



Total revenues


207,466



327,411




699,994



826,618


Cost of home sales


(157,677)



(219,641)




(543,400)



(661,211)


Cost of land sales


(954)



(65,147)




(1,628)



(75,578)



Total cost of sales


(158,631)



(284,788)




(545,028)



(736,789)




Gross margin


48,835



42,623




154,966



89,829




Gross margin %


23.5%



13.0%




22.1%



10.9%


Selling, general and administrative expenses


(36,339)



(43,695)




(112,504)



(142,100)


Income (loss) from unconsolidated joint ventures


1,801



(1,960)




1,141



(4,449)


Interest expense


(10,257)



(12,633)




(32,721)



(35,409)


Loss on early extinguishment of debt


(999)



(8,824)




(6,189)



(3,457)


Other income (expense)


1,035



(305)




4,277



(1,309)




Homebuilding pretax income (loss)


4,076



(24,794)




8,970



(96,895)

Financial Services:














Revenues


3,430



3,762




9,711



10,095


Expenses


(2,721)



(2,753)




(8,026)



(9,009)


Income from unconsolidated joint ventures


-



-




-



119


Other income


30



19




111



108




Financial services pretax income


739



1,028




1,796



1,313

Income (loss) from continuing operations before income taxes


4,815



(23,766)




10,766



(95,582)

Provision for income taxes


(272)



(33)




(633)



(298)

Income (loss) from continuing operations


4,543



(23,799)




10,133



(95,880)

Loss from discontinued operations, net of income taxes


-



(45)




-



(569)

Net income (loss)


4,543



(23,844)




10,133



(96,449)

Less: Net (income) loss allocated to preferred stockholder


(2,676)



14,500




(5,982)



59,022

Net income (loss) available to common stockholders

$

1,867


$

(9,344)



$

4,151


$

(37,427)

















Basic income (loss) per common share:














Continuing operations

$

0.02


$

(0.10)



$

0.04


$

(0.40)


Discontinued operations


-



-




-



-


Basic income (loss) per common share

$

0.02


$

(0.10)



$

0.04


$

(0.40)

















Diluted income (loss) per common share:














Continuing operations

$

0.02


$

(0.10)



$

0.04


$

(0.40)


Discontinued operations


-



-




-



-


Diluted income (loss) per common share

$

0.02


$

(0.10)



$

0.04


$

(0.40)

















Weighted average common shares outstanding:














Basic


103,100,974



95,250,351




102,582,491



93,731,253


Diluted


106,137,371



95,250,351




111,005,597



93,731,253

































Weighted average additional common shares outstanding if preferred shares converted to common shares


147,812,786



147,812,786




147,812,786



147,812,786






























REGIONAL OPERATING DATA












Three Months Ended September 30,


Nine Months Ended September 30,





2010


2009


2010


2009





Homes


Avg. Selling Price


Homes


Avg. Selling Price


Homes



Avg. Selling Price


Homes


Avg. Selling Price

New homes delivered:





















California

234


$

508,000


347


$

442,000


826


$

502,000


948


$

429,000


Arizona

45



214,000


75



202,000


154



204,000


209



210,000


Texas

95



291,000


82



269,000


286



294,000


328



279,000


Colorado

28



302,000


37



312,000


93



296,000


113



305,000


Nevada

6



208,000


5



226,000


15



201,000


13



226,000


Florida

103



196,000


235



181,000


347



192,000


603



189,000


Carolinas

88



230,000


112



216,000


306



231,000


308



218,000




Consolidated total

599



345,000


893



302,000


2,027



344,000


2,522



301,000


Unconsolidated joint ventures

12



456,000


15



548,000


40



467,000


92



524,000


Discontinued operations

-



-


1



130,000


-



-


4



201,000


Total (including joint ventures)

611


$

347,000


909


$

306,000


2,067


$

347,000


2,618


$

309,000




























Three Months Ended September 30,


Nine Months Ended September 30,





2010


2009


2010


2009





Homes


Avg. Selling Communities


Homes


Avg. Selling Communities


Homes


Avg. Selling Communities


Homes


Avg. Selling Communities

Net new orders:

















California

223


46


377


49


824


45


1,139


52


Arizona

39


10


79


7


145


9


235


9


Texas

76


16


96


19


277


17


335


19


Colorado

26


4


34


6


77


5


95


6


Nevada

11


1


2


2


26


1


10


2


Florida

98


28


189


28


356


26


617


33


Carolinas

82


26


116


23


328


25


365


24




Consolidated total

555


131


893


134


2,033


128


2,796


145


Unconsolidated joint ventures

10


3


28


5


38


3


167


8


Discontinued operations

-


-


1


-


-


-


3


-


Total (including joint ventures)

565


134


922


139


2,071


131


2,966


153
























At September 30,





2010


2009

Backlog ($ in thousands):

Homes


Value


Homes


Value


California


245


$

123,083



424


$

190,185


Arizona


38



8,184



102



21,815


Texas


100



30,907



137



42,849


Colorado


38



11,412



60



18,022


Nevada


11



2,220



1



213


Florida


87



18,291



161



31,457


Carolinas


86



20,140



110



25,120




Consolidated total


605



214,237



995



329,661


Unconsolidated joint ventures


7



3,148



22



10,722


Total (including joint ventures)


612


$

217,385



1,017


$

340,383
















At September 30,






2010


2009

Building sites owned or controlled:






California


9,646


7,740


Arizona


1,982


1,925


Texas


2,448


1,676


Colorado


392


261


Nevada


1,203


1,906


Florida


5,001


4,856


Carolinas


2,578


1,656



Total (including joint ventures)


23,250


20,020










Building sites owned


17,468


15,516


Building sites optioned or subject to contract


4,320


2,543


Joint venture lots


1,462


1,961



Total (including joint ventures)


23,250


20,020









Building sites owned:






Raw lots


5,080


3,792


Lots under development


3,469


2,537


Finished lots


7,189


7,142


Under construction or completed homes


1,730


2,045



Total


17,468


15,516









CONDENSED CONSOLIDATED BALANCE SHEETS















September
30,
2010

December
31,
2009







(Dollars in thousands)

ASSETS

(Unaudited)




Homebuilding:









Cash and equivalents

$

529,113


$

587,152


Restricted cash



16,983



15,070


Trade and other receivables


13,673



12,676


Inventories:










Owned




1,151,599



986,322



Not owned



17,278



11,770


Investments in unconsolidated joint ventures


79,481



40,415


Deferred income taxes, net


10,791



9,431


Other assets




29,537



131,086








1,848,455



1,793,922

Financial Services:








Cash and equivalents


10,215



8,407


Restricted cash



2,870



3,195


Mortgage loans held for sale, net


36,134



41,048


Mortgage loans held for investment, net


10,378



10,818


Other assets




3,528



3,621








63,125



67,089




Total Assets

$

1,911,580


$

1,861,011












LIABILITIES AND EQUITY






Homebuilding:









Accounts payable and accrued liabilities

$

204,375


$

222,550


Secured project debt and other notes payable


4,857



59,531


Senior notes payable


1,109,848



993,018


Senior subordinated notes payable


102,081



104,177








1,421,161



1,379,276

Financial Services:








Accounts payable and other liabilities


1,342



1,436


Mortgage credit facilities


35,602



40,995








36,944



42,431




Total Liabilities


1,458,105



1,421,707












Equity:











Stockholders' Equity:








Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares









issued and outstanding at September 30, 2010 and December 31, 2009, respectively

5



5



Common stock, $0.01 par value; 600,000,000 shares authorized; 107,147,906









and 105,293,180 shares issued and outstanding at September 30, 2010 and









December 31, 2009, respectively


1,071



1,053



Additional paid-in capital


1,040,270



1,030,664



Accumulated deficit


(570,495)



(580,628)



Accumulated other comprehensive loss, net of tax


(17,376)



(15,296)



Total Stockholders' Equity


453,475



435,798


Noncontrolling Interests


-



3,506



Total Equity



453,475



439,304




Total Liabilities and Equity

$

1,911,580


$

1,861,011



















September 30,
2010


December 31,
2009



(Dollars in thousands)

Inventories Owned:


(Unaudited)








Land and land under development


$ 741,607


$ 564,516

Homes completed and under construction


312,971


316,323

Model homes


97,021


105,483

Total inventories owned


$ 1,151,599


$ 986,322






Inventories Owned by Segment:










California


$ 720,696


$ 618,336

Southwest


209,576


196,279

Southeast


221,327


171,707

Total inventories owned


$ 1,151,599


$ 986,322






RECONCILIATION OF NON-GAAP FINANCIAL MEASURES


Each of the below measures are not GAAP financial measures and other companies may calculate such non-GAAP measures differently. 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.


The table set forth below reconciles the Company's net income to net income excluding the loss on early extinguishment of debt. We believe this measure is useful to management and investors as it provides perspective on the underlying operating performance of the business excluding this charge and provides comparability with the Company's peer group. Net income excluding the loss on early extinguishment of debt for the three months ended September 30, 2010 is calculated as follows (dollars in thousands):

Net income

$

4,543

Add: Loss on early extinguishment of debt


999

Net income, as adjusted


5,542

Less: Adjusted net income allocated to preferred stockholder


(3,265)

Adjusted net income available to common stockholders

$

2,277




Diluted earnings per common share

$

0.02

Weighted average diluted common shares outstanding


106,137,371




The table set forth below reconciles the Company's homebuilding gross margin percentage to the gross margin percentage from home sales, excluding housing inventory impairment charges and interest amortized to cost of home sales. We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges and provide comparability with the Company's peer group.


Three Months Ended


September 30,
2010


Gross
Margin
%


September 30
2009


Gross
Margin
%


June 30,
2010


Gross
Margin
%


(Dollars in thousands)
















Homebuilding gross margin

$

48,835


23.5%


$

42,623


13.0%


$

66,268


20.9%

Less: Land sale revenues


(950)





(57,538)





(450)



Add: Cost of land sales


954





65,147





421



Gross margin from home sales


48,839


23.6%



50,232


18.6%



66,239


20.9%

Add: Housing inventory impairment charges


-





-





-



Gross margin from home sales, excluding















impairment charges


48,839


23.6%



50,232


18.6%



66,239


20.9%

Add: Capitalized interest included in cost















of home sales


12,546


6.1%



15,383


5.7%



20,943


6.6%

Gross margin from home sales, excluding















impairment charges and interest amortized















to cost of home sales

$

61,385


29.7%


$

65,615


24.3%


$

87,182


27.5%
















The table set forth below reconciles the Company's SG&A expenses to SG&A expenses excluding restructuring charges. We believe these measures are useful to management and investors as they provide perspective on the underlying operating performance of the business excluding these charges.


Three Months Ended


September 30,
2010


September 30,
2009


June 30,
2010


(Dollars in thousands)



















Selling, general and administrative expenses

$

36,339


$

43,695


$

43,413

Less: Restructuring charges


-



(1,495)



-

Selling, general and administrative expenses, excluding restructuring charges

$

36,339


$

42,200


$

43,413

SG&A % from home sales, excluding restructuring charges


17.6%



15.6%



13.7%




















RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)


The table set forth below reconciles the Company's cash flows from operations to cash flows from operations excluding land purchases and proceeds from land sales. We believe this measure is useful to management and investors to provide perspective on underlying cash flow generation excluding swings related to the timing of land purchases and land sales.


Three Months Ended



September 30,
2010


September 30,
2009


June 30,
2010



(Dollars in thousands)






















Cash flows from (used in) operations

$

(67,414)


$

112,572


$

5,349


Add: Cash land purchases


91,272



21,595



79,364


Less: Land sale proceeds


(940)



(56,273)



(447)


Cash flows from operations (excluding land purchases and land sales)

$

22,918


$

77,894


$

84,266












The table set forth below reconciles the Company's total consolidated debt to adjusted net homebuilding debt and provides the Company's total debt to book capitalization and adjusted net homebuilding debt to total adjusted book capitalization ratios. We believe that the adjusted net homebuilding debt to total adjusted book capitalization ratio is useful to management and investors as a measure of the Company's ability to obtain financing. For purposes of the ratio of adjusted net homebuilding debt to total adjusted book capitalization, total adjusted book capitalization is adjusted net homebuilding debt plus stockholders' equity. Adjusted net homebuilding debt excludes indebtedness included in liabilities from inventories not owned, indebtedness of the Company's financial services subsidiary and additionally reflects the offset of cash and equivalents.






September 30,
2010


June 30,
2010


December 31,
2009


September 30,
2009










(Dollars in thousands)















Total consolidated debt

$

1,252,388


$

1,304,749


$

1,199,621


$

1,490,134

Less:














Indebtedness included in liabilities from inventories not owned


-



-



(1,900)



-


Financial services indebtedness


(35,602)



(65,126)



(40,995)



(38,798)


Homebuilding cash


(546,096)



(710,385)



(602,222)



(806,766)

Adjusted net homebuilding debt


670,690



529,238



554,504



644,570

Stockholders' equity


453,475



447,710



435,798



349,591

Total adjusted book capitalization

$

1,124,165


$

976,948


$

990,302


$

994,161















Total debt to book capitalization


73.4%



74.5%



73.4%



81.0%















Adjusted net homebuilding debt to total adjusted book capitalization ratio


59.7%



54.2%



56.0%



64.8%
















The table set forth below calculates pro forma stockholders' equity per common share. The pro forma common shares outstanding include the if-converted Series B Preferred Stock. In addition, this calculation excludes 3.9 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 management and 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. 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,

2010


June 30,

2010


March 31,

2010


December 31,

2009













Actual common shares outstanding


107,147,906



106,957,421



106,165,483



105,293,180

Add: Conversion of preferred shares to common shares


147,812,786



147,812,786



147,812,786



147,812,786

Less: Common shares outstanding under share lending facility


(3,919,904)



(3,919,904)



(3,919,904)



(3,919,904)













Pro forma common shares outstanding


251,040,788



250,850,303



250,058,365



249,186,062













Stockholders' equity (actual amounts rounded to nearest thousand)

$

453,475,000


$

447,710,000


$

434,568,000


$

435,798,000

Divided by pro forma common shares outstanding

÷

251,040,788


÷

250,850,303


÷

250,058,365


÷

249,186,062

Pro forma stockholders' equity per common share

$

1.81


$

1.78


$

1.74


$

1.75














RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)


The table set forth below calculates EBITDA and Adjusted Homebuilding EBITDA. 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 management and investors as one measure of the Company's ability to service debt and obtain financing. Adjusted Homebuilding EBITDA is a non-GAAP financial measure and due to the significance of the GAAP components excluded, 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.





Three Months Ended


LTM Ended September 30,




September
30,

2010


September
30,

2009


June
30,

2010


2010


2009




(Dollars in thousands)


















Net income (loss)

$

4,543


$

(23,844)


$

10,661


$

92,796


$

(494,292)


Provision (benefit) for income taxes


272



-



272



(95,930)



(47,678)


Homebuilding interest amortized to cost of sales and interest expense


22,803



35,681



31,804



117,692



129,526


Homebuilding depreciation and amortization


479



672



539



2,201



3,356


Amortization of stock-based compensation


3,115



1,651



3,519



14,203



8,037

EBITDA


31,212



14,160



46,795



130,962



(401,051)

Add:

















Cash distributions of income from unconsolidated joint ventures


-



-



-



3,139



1,530


Impairment charges


-



7,814



-



11,192



472,734


(Gain) loss on early extinguishment of debt


999



8,824



5,190



9,663



7,813

Less:

















Income (loss) from unconsolidated joint ventures


1,801



(1,960)



(226)



874



(25,542)


Income (loss) from financial services subsidiary


709



1,009



1,107



1,927



1,180

Adjusted Homebuilding EBITDA

$

29,701


$

31,749


$

51,104


$

152,155


$

105,388


















Homebuilding revenues

$

207,466


$

327,411


$

317,159


$

1,039,773


$

1,203,017


















Adjusted Homebuilding EBITDA Margin %


14.3%



9.7%



16.1%



14.6%



8.8%


















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,

2010


September
30,

2009


June
30,

2010


2010


2009





(Dollars in thousands)



















Net cash provided by (used in) operating activities


$

(67,414)


$

112,572


$

5,349


$

81,170


$

375,353

Add:

















Provision (benefit) for income taxes


272



-



272



(95,930)



(47,678)


Deferred tax valuation allowance



6,908



(9,278)



13,603



107,250



(162,280)


Homebuilding interest amortized to cost of sales and interest expense



22,803



35,681



31,804



117,692



129,526


Excess tax benefits from share-based payment arrangements



-



-



-



324



-

Less:
















Income (loss) from financial services subsidiary


709



1,009



1,107



1,927



1,180


Depreciation and amortization from financial services subsidiary



280



169



153



753



700


(Gain) loss on disposal of property and equipment


1



1



-



1,237



3,230

Net changes in operating assets and liabilities:

















Trade and other receivables


(579)



(2,191)



(6,518)



(3,993)



(15,287)



Mortgage loans held for sale



(31,621)



(16,071)



34,319



(7,548)



(20,039)



Inventories-owned


83,309



(103,969)



(3,715)



35,883



(303,581)



Inventories-not owned



6,520



324



6,488



25,413



(5,715)



Deferred income taxes


(7,180)



9,277



(13,875)



(11,320)



169,218



Other assets


596



1,997



(1,030)



(110,433)



(91,100)



Accounts payable and accrued liabilities



17,077



4,586



(14,333)



17,564



82,081

Adjusted Homebuilding EBITDA


$

29,701


$

31,749


$

51,104


$

152,155


$

105,388



















SOURCE Standard Pacific Corp.