EX-99.1 2 a13-5119_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS

RELEASE

 

FOR IMMEDIATE RELEASE

CONTACT: Anna E. Torma

(512) 433-5312

 

FORESTAR GROUP INC. REPORTS FULL YEAR

AND FOURTH QUARTER 2012 RESULTS

 

Delivering the Greatest Value From Every Acre, Accelerating Value Realization and Growing Through Strategic Investments

 

AUSTIN, TEXAS, February 13, 2013—Forestar Group Inc. (NYSE: FOR) today reported full year 2012 net income of approximately $12.9 million, or $0.36 per diluted share, compared with full year 2011 net income of approximately $7.2 million, or $0.20 per diluted share outstanding.

 

($ in millions, except per share)

 

Full Year 2012

 

Full Year 2011

 

 

 

 

 

 

 

Net income

 

$

12.9

 

$

7.2

 

 

 

 

 

 

 

Net income per share

 

$

0.36

 

$

0.20

 

 

Full year 2012 results include after-tax expenses of approximately ($4.1) million, or ($0.12) per share, associated with acquisition of CREDO Petroleum Corporation, and an after-tax loss of ($2.9) million, or ($0.08) per share, associated with loss on extinguishment of debt related to amendment and extension of our term loan.  Full year 2011 results include an after-tax gain of $40.2 million, or $1.12 per share, related to sale of about 57,000 acres of timberland, an after-tax loss of ($29.4) million or ($0.82) per share principally related to non-cash asset impairments associated with entering into agreements to acquire certain assets from the CL Realty and TEMCO ventures and an after-tax loss of ($2.1) million, or ($0.06) per share, associated with proposed private debt offerings.  Full year 2012 net income excluding special items was $19.9 million, or $0.56 per share, compared with a net loss before special items of ($1.5) million or ($0.04) per share in 2011.

 

($ in millions, except per share)

 

Full Year 2012

 

Full Year 2011

 

Net income per share

 

$

0.36

 

$

0.20

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

CREDO Petroleum acquisition expenses

 

$

0.12

 

$

—

 

Loss on extinguishment of debt

 

0.08

 

—

 

Debt offering expenses

 

—

 

0.06

 

Non-cash asset impairments

 

—

 

0.82

 

Gain on sale of timberland

 

—

 

(1.12

)

Total special items

 

$

0.20

 

$

(0.24

)

 

 

 

 

 

 

Net income (loss) per share before special items*

 

$

0.56

 

$

(0.04

)

 

*These are Non-GAAP financial measures.  The reconciliation between GAAP and Non-GAAP measures is provided in the tables following this press release, and on the investor relations section of the company’s website.

 


 

“Our 2012 results are beginning to reflect the benefit of our Triple in FOR strategic initiatives focused on accelerating value realization, optimizing transparency and disclosure, and growing our net asset value through strategic and disciplined investments,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

 

Full Year 2012 Significant Highlights (includes ventures)

 

Mineral Resources — Oil & Gas

 

·             Oil production increased over 144% compared with 2011

 

·             29 additional oil and gas wells completed; 936 total producing wells at year-end

 

·             8,910 net mineral acres leased to exploration and production companies

 

Real Estate

 

·             Sold 1,365 developed residential lots, a 22% increase compared with 2011 — almost 1,340 lots under option contracts at year-end

 

·             Generated $18.4 million in gross profit from residential lot sales, including our share of venture activity, up 60% compared with 2011

 

·             Acquired entire interest in 17 residential and mixed-use real estate projects from the CL Realty and TEMCO ventures for a net investment of approximately $23.5 million

 

·             Sold approximately 9,330 acres of undeveloped land for about $19 million through our retail sales program

 

·             Sold two stabilized multifamily communities, Broadstone Memorial and Las Brisas, generating approximately $40 million in cash flow

 

·             Completed construction of Promesa, a 289-unit multifamily community in Austin, Texas

 

·             Initiated development of two multifamily venture properties, with locations in Austin and Denver

 

Strategic Initiatives

 

·             Completed the acquisition of CREDO Petroleum in an all cash transaction for $14.50 per share, representing an equity purchase price of $146 million

 

Fourth Quarter 2012 Significant Highlights

 

The company reported fourth quarter 2012 net income of approximately $10.0 million, or $0.28 per diluted share, compared with a fourth quarter 2011 net loss of approximately ($22.9) million, or ($0.65) per share outstanding.

 

($ in millions, except per share)

 

4th Qtr 2012

 

4th Qtr 2011

 

 

 

 

 

 

 

Net income (loss)

 

$

10.0

 

$

(22.9

)

 

 

 

 

 

 

Net income (loss) per share

 

$

0.28

 

$

(0.65

)

 

2


 

Fourth quarter 2012 results include after-tax expenses of approximately ($0.4) million, or ($0.01) per share, associated with acquisition of CREDO Petroleum.  Fourth quarter 2011 results include an after-tax loss of ($28.9) million, or ($0.82) per share principally related to non-cash asset impairments associated with entering into agreements to acquire the entire interest in 17 projects from the CL Realty and TEMCO ventures.  Fourth quarter 2012 net income excluding special items was $10.4 million, or $0.29 per share, compared with net income excluding special items of $6.0 million, or $0.17 per share in 2011.

 

($ in millions, except per share)

 

4th Qtr 2012

 

4th Qtr 2011

 

 

 

 

 

 

 

Net income (loss) per share

 

$

0.28

 

$

(0.65

)

 

 

 

 

 

 

Special items:

 

 

 

 

 

CREDO Petroleum acquisition expenses

 

0.01

 

—

 

Non-cash asset impairments

 

—

 

0.82

 

Total special items

 

0.01

 

$

0.82

 

 

 

 

 

 

 

Net income per share before special items*

 

$

0.29

 

$

0.17

 

 

*These are Non-GAAP financial measures.  The reconciliation between GAAP and Non-GAAP measures is provided in the tables following this press release, and on the investor relations section of the company’s website.

 

MINERAL RESOURCES

 

Fourth Quarter 2012 Significant Highlights

 

·                  Oil production up almost 122,000 barrels or 245% compared with fourth quarter 2011, including over 116,500 barrels of production from acquisition of CREDO Petroleum

 

·                  Leased almost 5,000 net mineral acres to exploration and production companies for almost $300 per acre

 

·                  16 wells drilled; 936 gross producing wells, up 406 compared with fourth quarter 2011 principally due to acquisition of Credo Petroleum during third quarter 2012

 

Mineral Resources Segment Financial Results:

 

($ in millions)

 

4Q 2012

 

4Q 2011

 

FY 2012

 

FY 2011

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues

 

$

17.2

 

$

6.8

 

$

44.2

 

$

24.6

 

 

 

 

 

 

 

 

 

 

 

Segment Earnings

 

$

5.7

 

$

3.7

 

$

21.6

(1)

$

16.0

(1)

 

(1)Full year 2012 and 2011 mineral resources segment results include $5.0 million and $3.8 million, respectively, in costs principally associated with development of our water resource initiatives.

 

Mineral resources segment earnings increased in fourth quarter and full year 2012 compared with fourth quarter and full year 2011 principally due to higher oil production primarily due to the acquisition of CREDO Petroleum and higher lease bonus revenues, which more than offset lower oil and gas pricing and increased costs.

 

3


 

REAL ESTATE

 

Fourth Quarter 2012 Significant Highlights

 

·             Sold 384 fully developed residential lots, up 24% from fourth quarter 2011, with average lot prices up 34% compared with fourth quarter 2011

 

·             Sold 40 commercial acres for approximately $208,300 per acre

 

·             Sold almost 7,400 acres of undeveloped land for $1,900 per acre

 

·             Venture completed sale of Las Brisas multifamily community near Austin, TX, generating almost $10 million in cash proceeds to Forestar

 

·             Purchased multifamily site in Charlotte, NC for approximately $5.6 million

 

Real Estate Segment Financial Results:

 

($ in millions)

 

4Q 2012

 

4Q 2011

 

FY 2012

 

FY 2011

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues

 

$

48.4

 

$

46.4

 

$

120.1

 

$

106.2

 

 

 

 

 

 

 

 

 

 

 

Segment Earnings (Loss)

 

$

21.6

 

$

(25.0

)

$

53.6

 

$

(25.7

)

 

Fourth quarter 2012 real estate segment earnings were higher compared with fourth quarter 2011 principally due to higher residential lot sales, $8.2 million in earnings associated with venture’s gain on sale of Las Brisas multifamily community, and increased commercial tract sales.  In addition, fourth quarter and full year 2011 real estate segment results were negatively impacted by ($44.5) million and ($45.2) million in non-cash asset impairment charges, principally related to the acquisition of certain assets from CL Realty and TEMCO ventures.

 

FIBER RESOURCES

 

Fourth Quarter 2012 Significant Highlights

 

·                  Sold over 162,000 tons of fiber - recreational leasing remains strong

 

Fiber Resources Segment Financial Results:

 

($ in millions)

 

4Q 2012

 

4Q 2011

 

FY 2012

 

FY 2011

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues

 

$

3.0

 

$

0.9

 

$

8.3

 

$

4.8

 

 

 

 

 

 

 

 

 

 

 

Segment Earnings

 

$

2.3

 

$

0.1

 

$

5.0

 

$

1.9

 

 

Fourth quarter and full year 2012 fiber resources segment earnings increased compared with fourth quarter and full year 2011 principally due to increased fiber sales activity and higher pricing. Recreational leasing activity remained strong during fourth quarter, with almost 99% of available land leased for recreation.

 

4


 

OUTLOOK

 

“We continue to build momentum through execution of our Triple in FOR strategic initiatives, focused on accelerating value realization, increasing transparency and disclosure and growing through strategic and disciplined investments.  We have made great progress, but I believe Forestar is just beginning to realize its full potential,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

 

“Our preliminary year-end 2012 total proven reserves are approximately 5.6 million BOE (barrels of oil equivalent), up over 87% compared with year-end 2011, driven by the acquisition of CREDO Petroleum. Our oil and gas strategic initiatives are focused on increasing exploration, production and reserves, a key driver of future earnings and cash flow.  In addition, we are committed to delivering the growth and returns associated with acquisition of CREDO Petroleum.  We anticipate participating in over 50 non-operating working interest oil wells in the Bakken and Three Forks formations in 2013, and we are planning to drill or participate in over 80 additional oil wells in the Lansing-Kansas City formation in Kansas and Nebraska.  These three formations offer lower-risk, repeatable drilling opportunities that we expect to significantly exceed our target returns. As a result, we expect 2013 capital expenditures for drilling and participation in working interests to exceed $70 million and anticipate our share of total production in 2013 to exceed one million barrels of oil equivalent, an over 50% increase compared with 2012.

 

“Housing markets are experiencing solid signs of a long-term sustainable recovery, with growing demand for residential lots and increased interest in residential and commercial tracts.  Our backlog remains strong, and we are well positioned to increase sales, with a solid portfolio of over 50 active residential and mixed-use communities in the major markets of Texas.

 

“We continue to build a solid pipeline of multifamily development properties, including the acquisition of a well-located multifamily development site in Charlotte, North Carolina for approximately $5.6 million during fourth quarter.  We substantially completed construction of our Promesa multifamily community in 2012 and expect the project to reach stabilization and be positioned for sale during first half of 2013.  In addition, we initiated construction of two multifamily projects: Eleven, in Austin and 360°, in Denver, both of which are held in ventures and remain on target for unit deliveries to begin in late 2013.

 

“We are well positioned to recognize and responsibly deliver the greatest value from every acre and grow our business through strategic and disciplined investments.  Our portfolio is comprised of the strongest assets since we became a public company at year-end 2007, and I believe has the potential to generate significant earnings and cash flow as we accelerate value realization,” concluded Mr. DeCosmo.

 

The Company will host a conference call on February 14, 2013 at 10:00 am ET to discuss results of fourth quarter and full year 2012. The meeting may be accessed through webcast or conference call. The webcast may be accessed through Forestar’s Internet site at www.forestargroup.com.  To access the conference call, listeners from North America should dial 1-800-510-9836 at least 15 minutes prior to the start of the call. Those wishing to access the call from outside North America should dial 1-617-614-3670. The password is Forestar. Replays of the call will be available for two weeks following the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 31120450.

 

5


 

About Forestar Group

 

Forestar Group Inc. operates in three business segments: real estate, mineral resources and fiber resources. At the end of fourth quarter 2012, the real estate segment owns directly or through ventures almost 136,000 acres of real estate located in ten states and fourteen markets in the U.S.  The real estate segment has 15 real estate projects representing approximately 26,070 acres currently in the entitlement process, and 74 entitled, developed and under development projects in seven states and eleven markets encompassing almost 14,400 acres, comprised of 23,800 planned residential lots and almost 2,400 commercial acres. The mineral resources segment includes approximately 752,000 net acres of oil and gas mineral interests, with approximately 590,000 acres of fee ownership located principally in Texas, Louisiana, Alabama, and Georgia and about 162,000 net acres of leasehold and overriding royalty interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas.  These leasehold interests include almost 6,000 net mineral acres in the core of the prolific Bakken and Three Forks formations.  In addition, the mineral resources segment owns a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and Alabama and about 20,000 acres of groundwater leases in central Texas. The fiber resources segment includes the sale of wood fiber and management of our recreational leases.  Forestar’s address on the World Wide Web is www.forestargroup.com.

 

Forward Looking Statements

 

This release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” and other words and terms of similar meaning.  These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements, including our ability to achieve synergies and value creation contemplated by the merger with Credo, and our ability to promptly and effectively integrate Credo’s businesses.  Other factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; changes in commodity prices; opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including development costs; demand for new housing, including impacts from mortgage credit availability; lengthy and uncertain entitlement processes; cyclicality of our businesses; accuracy of accounting assumptions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond our control.  Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this news release to reflect the occurrence of events after the date of this news release.

 

6


 

FORESTAR GROUP INC.

(UNAUDITED)

 

Business Segments

 

 

 

Fourth Quarter

 

Full Year

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(In thousands,
except per share)

 

(In thousands,
except per share)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

$

48,431

 

$

46,354

 

$

120,115

 

$

106,168

 

Mineral resources

 

17,167

 

6,800

 

44,220

 

24,584

 

Fiber resources

 

2,979

 

853

 

8,256

 

4,821

 

Total revenues

 

$

68,577

 

$

54,007

 

$

172,591

 

$

135,573

 

 

 

 

 

 

 

 

 

 

 

Segment earnings (loss)

 

 

 

 

 

 

 

 

 

Real estate (a)

 

$

21,651

 

$

(25,020

)

$

53,582

 

$

(25,704

)

Mineral resources

 

5,662

 

3,731

 

21,581

 

16,023

 

Fiber resources

 

2,274

 

103

 

5,056

 

1,893

 

Total segment earnings (loss)

 

29,587

 

(21,186

)

80,219

 

(7,788

)

Items not allocated to segments:

 

 

 

 

 

 

 

 

 

General and administrative expense (b)

 

(5,694

)

(4,286

)

(25,176

)

(20,110

)

Share-based compensation income (expense)

 

(3,438

)

(6,668

)

(14,929

)

(7,067

)

Gain on sale of assets

 

—

 

—

 

16

 

61,784

 

Interest expense

 

(3,714

)

(4,079

)

(19,363

)

(17,012

)

Other corporate non-operating income

 

33

 

291

 

191

 

368

 

Income (loss) before taxes

 

16,774

 

(35,928

)

20,958

 

10,175

 

Income tax (expense) benefit

 

(6,742

)

13,048

 

(8,016

)

(3,021

)

Net income (loss) attributable to Forestar Group Inc.

 

$

10,032

 

$

(22,880

)

$

12,942

 

$

7,154

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

(0.65

)

$

0.37

 

$

0.20

 

Diluted

 

$

0.28

 

$

(0.65

)

$

0.36

 

$

0.20

 

Weighted average common shares outstanding (in millions):

 

 

 

 

 

 

 

 

 

Basic

 

35.2

 

35.2

 

35.2

 

35.4

 

Diluted

 

35.6

 

35.2

 

35.5

 

35.8

 

 

 

 

At Year-End

 

Supplemental Financial Information:

 

2012

 

2011

 

 

 

(In thousands)

 

 

 

 

 

 

 

Borrowings under senior credit facility

 

$

244,000

 

$

130,000

 

Other debt (c)

 

50,063

 

91,587

 

Total debt

 

$

294,063

 

$

221,587

 

 

(a)         Real estate segment results include non-cash impairment charges of $44.5 million in fourth quarter 2011 and $45.2 million during full year 2011, principally related to entering into agreements to acquire 17 projects from CL Realty and TEMCO ventures.

(b)         Full year 2012 general and administrative expenses include approximately $6.3 million in costs associated with the acquisition of CREDO Petroleum Corporation. Full year 2011 general and administrative expenses include $3.2 million paid to outside advisors related to private debt offerings which were withdrawn due to the deterioration in terms available to us in the capital markets.

(c)          Consists principally of consolidated venture non-recourse debt.

 

7


 

FORESTAR GROUP INC.

MINERAL RESOURCES SEGMENT

PERFORMANCE METRICS

 

 

 

Fourth Quarter

 

Full Year

 

 

 

2012

 

2011

 

2012

 

2011

 

Leasing Activity from Owned Mineral Interests

 

 

 

 

 

 

 

 

 

Acres Leased

 

5,000

 

320

 

8,900

 

8,100

 

Average Bonus / Acre

 

$

300

 

$

60

 

$

600

 

$

280

 

Delay Rentals Received

 

$

64,000

 

$

512,900

 

$

2,218,600

 

$

992,200

 

Oil & Gas Production

 

 

 

 

 

 

 

 

 

Royalty Interests(1)

 

 

 

 

 

 

 

 

 

Gross Wells

 

542

 

530

 

542

 

530

 

Oil Production (Barrels)

 

52,700

 

44,400

 

230,100

 

142,100

 

Average Oil Price ($ / Barrel)

 

$

80.98

 

$

101.53

 

$

86.66

 

$

96.24

 

Natural Gas Production (MMcf)

 

468.4

 

357.6

 

1,703.9

 

1,594.6

 

Average Natural Gas Price ($ / Mcf)

 

$

2.56

 

$

3.91

 

$

2.57

 

$

3.94

 

BOE Production(2)

 

130,800

 

104,000

 

514,100

 

407,900

 

Average Price ($ / BOE)

 

$

41.81

 

$

56.78

 

$

47.32

 

$

48.94

 

Working Interests

 

 

 

 

 

 

 

 

 

Gross Wells

 

403

 

8

 

403

 

8

 

Oil Production (Barrels)

 

118,800

 

5,300

 

141,200

 

9,800

 

Average Oil Price ($ / Barrel)

 

$

80.08

 

$

107.72

 

$

82.54

 

$

105.48

 

Natural Gas Production (MMcf)

 

221.5

 

15.9

 

285.1

 

27.3

 

Average Natural Gas Price ($ / Mcf)

 

$

3.59

 

$

4.53

 

$

3.49

 

$

4.65

 

BOE Production(2)

 

155,700

 

8,000

 

188,700

 

14,300

 

Average Price ($ / BOE)

 

$

66.20

 

$

80.92

 

$

67.03

 

$

80.89

 

Total Oil & Gas Interests

 

 

 

 

 

 

 

 

 

Gross Wells(3)

 

936

 

530

 

936

 

530

 

Oil Production (Barrels)

 

171,500

 

49,700

 

371,300

 

151,900

 

Average Oil Price ($ / Barrel)

 

$

80.36

 

$

102.19

 

$

85.09

 

$

96.84

 

Natural Gas Production (MMcf)

 

689.9

 

373.6

 

1,989.0

 

1,622.0

 

Average Natural Gas Price ($ / Mcf)

 

$

2.89

 

$

3.93

 

$

2.71

 

$

3.95

 

BOE Production(2)

 

286,500

 

112,000

 

702,800

 

422,200

 

Average Price ($ / BOE)

 

$

55.07

 

$

58.50

 

$

52.61

 

$

50.02

 

Well Activity

 

 

 

 

 

 

 

 

 

Mineral Interests Owned (4)

 

 

 

 

 

 

 

 

 

Net Acres Held By Production

 

39,000

 

32,000

 

39,000

 

32,000

 

Gross Wells Drilled

 

—

 

20

 

13

 

36

 

Productive Gross Wells

 

542

 

530

 

542

 

530

 

Mineral Interests Leased

 

 

 

 

 

 

 

 

 

Net Acres Held By Production

 

37,000

 

—

 

37,000

 

—

 

Gross Wells Drilled

 

16

 

—

 

16

 

—

 

Productive Gross Wells(5)

 

394

 

—

 

394

 

—

 

Total Well Activity

 

 

 

 

 

 

 

 

 

Net Acres Held By Production

 

76,000

 

32,000

 

76,000

 

32,000

 

Gross Wells Drilled

 

16

 

20

 

29

 

36

 

Productive Gross Wells

 

936

 

530

 

936

 

530

 

 

(1)

Includes our share of venture activity in which we own a 50% interest. Our share of natural gas production is 74 MMcf and 321 MMcf in fourth quarter and full year 2012 and 95 MMcf and 493 MMcf in fourth quarter and full year 2011

(2)

BOE — Barrels of oil equivalent (converting natural gas to oil at 6 Mcfe / Bbl)

(3)

Excludes 9 working interest wells for Q4 and FY 2012 and 8 working interest wells for Q4 and FY 2011 as we also own a royalty interest in these wells

(4)

Wells operated by third-party lessees/operators. Represent wells in which we own a royalty or working interest in a producing well

(5)

Excludes 1,181 wells in which Credo Petroleum has an overriding royalty interest

 

8


 

FOURTH QUARTER 2012

MINERAL RESOURCES PIPELINE

 

MINERAL INTERESTS OWNED (1)

 

Forestar’s mineral resources segment includes approximately 590,000 owned net mineral acres principally located in Texas, Louisiana, Georgia and Alabama.

 

State

 

Available
for Lease

 

Leased

 

Held by
Production

 

Total (2)

 

Texas

 

213,000

 

12,000

 

27,000

 

252,000

 

Louisiana

 

115,000

 

17,000

 

12,000

 

144,000

 

Georgia

 

152,000

 

—

 

—

 

152,000

 

Alabama

 

40,000

 

—

 

—

 

40,000

 

California

 

1,000

 

—

 

—

 

1,000

 

Indiana

 

1,000

 

—

 

—

 

1,000

 

Total

 

522,000

 

29,000

 

39,000

 

590,000

 

 

(1) Represents net acres and includes ventures

(2) Excludes 477 net mineral acres located in Colorado, which includes 379 leased acres and 29 acres held by production

 

MINERAL INTERESTS LEASED (1)

 

Forestar’s mineral resources segment includes approximately 162,000 net mineral acres of leasehold and overriding royalty interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas predominantly as result of our September 28, 2012 acquisition of CREDO Petroleum.

 

State

 

Undeveloped

 

Held by
Production

 

Total (2)

 

Nebraska

 

77,000

 

2,000

 

79,000

 

Kansas

 

40,000

 

3,000

 

43,000

 

Oklahoma

 

—

 

17,000

 

17,000

 

North Dakota

 

4,000

 

2,000

 

6,000

 

Texas

 

1,000

 

2,000

 

3,000

 

Other(2)

 

3,000

 

11,000

 

14,000

 

Total

 

125,000

 

37,000

 

162,000

 

 

(1) Represents net acres

(2) Includes approximately 8,400 net acres of overriding royalty interests

 

9


 

FORESTAR GROUP INC.

REAL ESTATE SEGMENT

PERFORMANCE METRICS

 

 

 

Fourth Quarter

 

Full Year

 

REAL ESTATE

 

2012

 

2011

 

2012

 

2011

 

Owned, Consolidated & Equity Method Ventures:

 

 

 

 

 

 

 

 

 

Residential Lots Sold

 

384

 

309

 

1,365

 

1,117

 

Revenue per Lot Sold

 

$

58,100

 

$

43,300

 

$

52,000

 

$

47,400

 

Commercial Acres Sold

 

40

 

2

 

95

 

26

 

Revenue per Commercial Acre Sold

 

$

208,300

 

$

547,200

 

$

130,800

 

$

193,700

 

Undeveloped Acres Sold

 

7,370

 

13,200

 

9,330

 

17,150

 

Revenue per Acre Sold

 

$

1,900

 

$

2,300

 

$

2,100

 

$

2,400

 

Owned & Consolidated Ventures:

 

 

 

 

 

 

 

 

 

Residential Lots Sold

 

251

 

109

 

926

 

567

 

Revenue per Lot Sold

 

$

57,600

 

$

62,700

 

$

52,000

 

$

56,700

 

Commercial Acres Sold

 

28

 

—

 

83

 

4

 

Revenue per Commercial Acre Sold

 

$

194,500

 

—

 

$

114,800

 

$

185,300

 

Undeveloped Acres Sold

 

7,250

 

13,200

 

9,195

 

17,130

 

Revenue per Acre Sold

 

$

1,900

 

$

2,300

 

$

2,000

 

$

2,400

 

Ventures Accounted For Using the Equity Method:

 

 

 

 

 

 

 

 

 

Residential Lots Sold

 

133

 

200

 

439

 

550

 

Revenue per Lot Sold

 

$

58,900

 

$

32,700

 

$

52,100

 

$

37,700

 

Commercial Acres Sold

 

12

 

2

 

12

 

22

 

Revenue per Commercial Acre Sold

 

$

239,800

 

$

547,200

 

$

239,800

 

$

195,200

 

Undeveloped Acres Sold

 

120

 

—

 

135

 

20

 

Revenue per Acre Sold

 

$

2,900

 

—

 

$

2,600

 

$

3,000

 

 

YEAR-END 2012

REAL ESTATE PIPELINE

 

Real Estate

 

Undeveloped

 

In
Entitlement
Process

 

Entitled

 

Developed &
Under
Development

 

Total
Acres*

 

 

 

 

 

 

 

 

 

 

 

 

 

Undeveloped Land

 

 

 

 

 

 

 

 

 

 

 

Owned

 

88,364

 

 

 

 

 

 

 

 

 

Ventures

 

6,901

 

 

 

 

 

 

 

95,265

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

 

 

 

 

 

 

 

 

 

Owned

 

 

 

23,362

 

8,979

 

805

 

 

 

Ventures

 

 

 

 

 

2,038

 

203

 

35,387

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Owned

 

 

 

2,708

 

1,203

 

592

 

 

 

Ventures

 

 

 

 

 

387

 

190

 

5,080

 

Total Acres

 

95,265

 

26,070

 

12,607

 

1,790

 

135,732

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Residential Lots

 

 

 

 

 

21,052

 

2,748

 

23,800

 

 

* In addition, Forestar owns a 58% interest in a venture which controls approximately 16,000 acres of undeveloped land in Georgia with minimal investment. Excludes acres associated with fully developed commercial and income producing properties.

 

10

 


 

FORESTAR GROUP INC.

FIBER RESOURCES SEGMENT

PERFORMANCE METRICS

 

 

 

Fourth Quarter

 

Full Year

 

FIBER RESOURCES

 

2012

 

2011

 

2012

 

2011

 

Fiber Sales *

 

 

 

 

 

 

 

 

 

Pulpwood Tons Sold

 

105,000

 

44,100

 

370,200

 

266,200

 

Average Pulpwood Price / Ton

 

$

10.65

 

$

9.31

 

$

9.83

 

$

8.69

 

Sawtimber Tons Sold

 

57,000

 

5,600

 

123,700

 

56,800

 

Average Sawtimber Price / Ton

 

$

23.98

 

$

22.17

 

$

21.77

 

$

16.13

 

 

 

 

 

 

 

 

 

 

 

Total Tons Sold

 

162,000

 

49,700

 

493,900

 

323,000

 

Average Price / Ton

 

$

15.34

 

$

10.76

 

$

12.82

 

$

10.00

 

 

 

 

 

 

 

 

 

 

 

Recreational Activity

 

 

 

 

 

 

 

 

 

Average Acres Leased

 

128,200

 

139,300

 

129,800

 

174,500

 

Average Lease Rate / Acre

 

$

8.36

 

$

8.83

 

$

8.73

 

$

8.80

 

 

11


 

FORESTAR GROUP INC.

PROJECTS IN ENTITLEMENT

 

A summary of projects in the entitlement process (a) at year-end 2012 follows:

 

 

 

 

 

Project

 

Project

 

County

 

Acres (b)

 

 

 

 

 

 

 

California

 

 

 

 

 

Hidden Creek Estates

 

Los Angeles

 

700

 

Terrace at Hidden Hills

 

Los Angeles

 

30

 

 

 

 

 

 

 

Georgia

 

 

 

 

 

Ball Ground

 

Cherokee

 

500

 

Crossing

 

Coweta

 

230

 

Fincher Road

 

Cherokee

 

3,890

 

Fox Hall

 

Coweta

 

960

 

Garland Mountain

 

Cherokee/Bartow

 

350

 

Martin’s Bridge

 

Banks

 

970

 

Mill Creek

 

Coweta

 

770

 

Serenity

 

Carroll

 

440

 

Waleska

 

Cherokee

 

90

 

Wolf Creek

 

Carroll/Douglas

 

12,230

 

Yellow Creek

 

Cherokee

 

1,060

 

 

 

 

 

 

 

Texas

 

 

 

 

 

Lake Houston

 

Harris/Liberty

 

3,700

 

San Jacinto

 

Montgomery

 

150

 

 

 

 

 

 

 

Total

 

 

 

26,070

 

 

(a)         A project is deemed to be in the entitlement process when customary steps necessary for the preparation of an application for governmental land-use approvals, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed.  Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received.

 

(b)         Project acres, which are the total for the project regardless of our ownership interest, are approximate.  The actual number of acres entitled may vary.

 

12


 

FORESTAR GROUP INC.

REAL ESTATE PROJECTS

 

A summary of our entitled,(a) developed & under development projects at year-end 2012 follows:

 

 

 

 

 

 

 

Residential Lots (c)

 

Commercial Acres (d)

 

Project

 

County

 

Interest
Owned(b)

 

Lots Sold Since
 Inception

 

Lots
Remaining

 

Acres Sold Since
 Inception

 

Acres
Remaining (f)

 

Projects we own

 

 

 

 

 

 

 

 

 

 

 

 

 

California

 

 

 

 

 

 

 

 

 

 

 

 

 

San Joaquin River

 

Contra Costa/ Sacramento

 

100%

 

—

 

—

 

—

 

288

 

Colorado

 

 

 

 

 

 

 

 

 

 

 

 

 

Buffalo Highlands

 

Weld

 

100%

 

—

 

164

 

—

 

—

 

Johnstown Farms

 

Weld

 

100%

 

170

 

443

 

2

 

7

 

Pinery West

 

Douglas

 

100%

 

—

 

—

 

—

 

111

 

Stonebraker

 

Weld

 

100%

 

—

 

603

 

—

 

—

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

Arrowhead Ranch

 

Hays

 

100%

 

—

 

259

 

—

 

6

 

Bar C Ranch

 

Tarrant

 

100%

 

292

 

907

 

—

 

—

 

Barrington Kingwood

 

Harris

 

100%

 

48

 

132

 

—

 

—

 

Cibolo Canyons

 

Bexar

 

100%

 

732

 

743

 

96

 

54

 

Harbor Lakes

 

Hood

 

100%

 

203

 

246

 

2

 

19

 

Hunter’s Crossing

 

Bastrop

 

100%

 

397

 

93

 

38

 

71

 

Lakes of Prosper

 

Collin

 

100%

 

—

 

285

 

—

 

—

 

La Conterra

 

Williamson

 

100%

 

120

 

380

 

—

 

58

 

Maxwell Creek

 

Collin

 

100%

 

808

 

191

 

10

 

—

 

Oak Creek Estates

 

Comal

 

100%

 

131

 

516

 

13

 

—

 

Stoney Creek

 

Dallas

 

  90%

 

144

 

610

 

—

 

—

 

Summer Creek Ranch

 

Tarrant

 

100%

 

820

 

454

 

35

 

44

 

Summer Lakes

 

Fort Bend

 

100%

 

473

 

657

 

56

 

—

 

Summer Park (g)

 

Fort Bend

 

100%

 

—

 

210

 

27

 

63

 

The Colony

 

Bastrop

 

100%

 

438

 

711

 

22

 

31

 

The Preserve at Pecan Creek

 

Denton

 

100%

 

370

 

424

 

—

 

7

 

Village Park

 

Collin

 

100%

 

504

 

256

 

3

 

2

 

Westside at Buttercup Creek

 

Williamson

 

100%

 

1,413

 

83

 

66

 

—

 

Other projects (11)

 

Various

 

100%

 

2,493

 

171

 

227

 

38

 

Georgia

 

 

 

 

 

 

 

 

 

 

 

 

 

Seven Hills

 

Paulding

 

100%

 

653

 

434

 

26

 

113

 

Villages of Burt Creek

 

Dawson

 

100%

 

—

 

1,715

 

—

 

57

 

Towne West

 

Bartow

 

100%

 

—

 

2,674

 

—

 

121

 

Other projects (18)

 

Various

 

100%

 

1,729

 

3,040

 

3

 

705

 

Florida

 

 

 

 

 

 

 

 

 

 

 

 

 

Other projects (3)

 

Various

 

100%

 

708

 

137

 

—

 

—

 

Missouri and Utah

 

 

 

 

 

 

 

 

 

 

 

 

 

Other projects (2)

 

Various

 

100%

 

499

 

55

 

—

 

—

 

 

 

 

 

 

 

13,145

 

16,593

 

626

 

1,795

 

Projects in entities we consolidate

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

City Park

 

Harris

 

75%

 

1,210

 

101

 

50

 

115

 

Lantana

 

Denton

 

55%(e)

 

957

 

1,291

 

—

 

12

 

Timber Creek

 

Collin

 

88%

 

—

 

614

 

—

 

—

 

Willow Creek

 

Walter/Fort Bend

 

90%

 

—

 

231

 

—

 

—

 

Other projects (2)

 

Various

 

Various

 

7

 

202

 

—

 

129

 

Georgia

 

 

 

 

 

 

 

 

 

 

 

 

 

The Georgian

 

Paulding

 

75%

 

289

 

1,052

 

—

 

—

 

 

 

 

 

 

 

2,463

 

3,491

 

50

 

256

 

Total owned and consolidated

 

 

 

 

 

15,608

 

20,084

 

676

 

2,051

 

Projects in ventures that we account for using the equity method

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas

 

 

 

 

 

 

 

 

 

 

 

 

 

Entrada

 

Travis

 

50%

 

—

 

821

 

—

 

—

 

Fannin Farms West

 

Tarrant

 

50%

 

324

 

24

 

—

 

12

 

Harper’s Preserve

 

Montgomery

 

50%

 

202

 

1,523

 

—

 

72

 

Lantana

 

Denton

 

Various(e)

 

1,470

 

62

 

16

 

42

 

Long Meadow Farms

 

Fort Bend

 

37%

 

1,003

 

796

 

119

 

180

 

Southern Trails

 

Brazoria

 

80%

 

576

 

407

 

—

 

—

 

Stonewall Estates

 

Bexar

 

50%

 

305

 

83

 

—

 

—

 

Other projects (1)

 

Nueces

 

50%

 

—

 

—

 

—

 

15

 

Total in ventures

 

 

 

 

 

3,880

 

3,716

 

135

 

321

 

Combined Total

 

 

 

 

 

19,488

 

23,800

 

811

 

2,372

 

 

(a)

A project is deemed entitled when all major discretionary governmental land-use approvals have been received. Some projects may require additional permits and/or non-governmental authorizations for development.

 

13


 

(b)

Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them.  Accordingly, portions of these projects may appear as owned, consolidated and/or accounted for using the equity method.

(c)

Lots are for the total project, regardless of our ownership interest. Lots remaining represent vacant developed lots, lots under development and future planned lots and are subject to change based on business plan revisions.

(d)

Commercial acres are for the total project, regardless of our ownership interest and are net developable acres, which may be fewer than the gross acres available in the project.

(e)

The Lantana project consists of a series of 26 partnerships in which our voting interests range from 25% to 55%.  We account for three of these partnerships using the equity method and we consolidate the remaining partnerships.

(f)

Excludes acres associated with commercial and income producing properties.

(g)

Formerly Waterford Park

 

A summary of our significant commercial and income producing properties at year-end 2012 follows:

 

Project

 

County

 

Market

 

Interest
Owned (a)

 

Type

 

Acres

 

Description

Radisson Hotel

 

Travis

 

Austin

 

100

%

Hotel

 

2

 

413 guest rooms and suites

Promesa

 

Travis

 

Austin

 

100

%

Multifamily

 

16

 

289 unit luxury apartment

Eleven

 

Travis

 

Austin

 

25

%

Multifamily

 

3

 

257 unit luxury apartment (b)

360O

 

Arapahoe

 

Denver

 

20

%

Multifamily

 

4

 

304 unit luxury apartment (b)

 

(a)

Interest owned reflects our total equity interest in the project, whether owned directly or indirectly.

(b)

Construction in progress

 

14


 

FORESTAR GROUP INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

Forestar’s Net Income and Earnings Per Share (EPS) excluding special items for the fourth quarters and years ended December 31, 2012 and 2011 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company believes presenting non-GAAP Net Income and EPS is helpful to analyze financial performance without the impact of items that may obscure trends in the company’s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-GAAP measures and the directly related GAAP measures.

 

 

 

Fourth Quarter

 

Full Year

 

($ in millions, except per share amounts)

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), after-tax, in accordance with GAAP

 

$

10.0

 

$

(22.9

)

$

12.9

 

$

7.2

 

 

 

 

 

 

 

 

 

 

 

Special items, after-tax

 

 

 

 

 

 

 

 

 

Credo Petroleum acquisition expenses

 

0.4

 

—

 

4.1

 

—

 

Loss on extinguishment of debt

 

—

 

—

 

2.9

 

—

 

Debt offering expenses

 

—

 

—

 

—

 

2.1

 

Non-cash asset impairments

 

—

 

28.9

 

—

 

29.4

 

Gain on sale of timberland

 

—

 

—

 

—

 

(40.2

)

Total special items, after-tax

 

0.4

 

28.9

 

$

7.0

 

(8.7

)

 

 

 

 

 

 

 

 

 

 

Net income, after-tax, excluding special items

 

$

10.4

 

$

6.0

 

$

19.9

 

$

(1.5

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, in accordance with GAAP

 

$

0.28

 

$

(0.65

)

$

0.36

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

Special items, after-tax, per diluted share

 

 

 

 

 

 

 

 

 

Credo acquisition expenses

 

0.01

 

—

 

0.12

 

—

 

Loss on extinguishment of debt

 

—

 

—

 

0.08

 

—

 

Debt offering expenses

 

—

 

—

 

—

 

0.06

 

Non-cash asset impairments

 

—

 

0.82

 

 

 

0.82

 

Gain on sale of timberland

 

—

 

—

 

—

 

(1.12

)

Total special items, after-tax

 

0.01

 

$

0.82

 

$

0.20

 

$

(0.24

)

 

 

 

 

 

 

 

 

 

 

Net income per share, excluding special items

 

$

0.29

 

$

0.17

 

$

0.56

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

Average basic shares outstanding

 

35.2

 

35.2

 

35.2

 

35.4

 

Average diluted shares outstanding

 

35.6

 

35.2

 

35.5

 

35.8

 

 

15