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

Standard Pacific Corp. Reports 2011 First Quarter Results

IRVINE, CALIFORNIA, April 28, 2011.  Standard Pacific Corp. (NYSE:SPF) today announced operating results for its first quarter.

2011 First Quarter Highlights and Comparisons to the 2010 First Quarter
 
·  
Net loss of $14.8 million, or $0.04 per share, vs. net loss of $5.1 million, or $0.02 per share
 
·  
Revenues from home sales of $143.7 million, down 18% from $174.9 million
 
·  
439 new home deliveries, down 18% from 537 homes
 
·  
Average home price of $327,000 vs. $326,000
 
·  
Gross margin from home sales of 20.5% vs. 22.7%
 
·  
SG&A rate from home sales of 22.5% (22.1%* excluding restructuring charges) vs. 18.7%
 
·  
Net new orders down 14% to 652 homes
 
·  
Backlog value down 24% to $211.8 million from $278.3 million
 
o  
627 homes in backlog, down 24% from 821 homes
 
·  
Cash outflows from operating activities of $110.2 million vs. cash inflows of $33.6 million (2010 included $108 million tax refund)
 
o  
Cash outflows from operating activities before land purchases and land sales was $23.1 million* vs. cash inflows of $84.0 million*
 
·  
Homebuilding cash balance of $619.8 million vs. $591.7 million
 
·  
Adjusted net homebuilding debt to total adjusted capitalization ratio of 53.4%* vs. 55.1%*
 
o  
Total debt to book capitalization of 68.6% vs. 72.7%
 
Ken Campbell, the Company’s CEO commented, “Despite challenging housing market conditions, we continued to make progress with our strategy of opening new communities.  We opened 18 new communities during the quarter and expect to open another 22 communities by the middle of the year, representing a 20% increase in community count compared to last year and bringing our total community count to north of 155.”  Mr. Campbell added, “While home pricing has been under pressure over the last few quarters, our gross margin has remained above 20% for the sixth consecutive quarter.  In addition, we increased the dollar value of our backlog by 54% over the 2010 fourth quarter while holding the line on our margins in backlog.”

Mr. Campbell continued, “Consistent with our land strategy, we approved the purchase of 2,000 lots totaling $122 million and purchased 1,100 lots for $87 million during the quarter.  With $620 million of cash on hand and the additional liquidity provided by our new senior unsecured revolving credit facility, we believe we have ample liquidity to navigate through the market downturn.”

For the 2011 first quarter, the Company generated a net loss of $14.8 million, or $0.04 per diluted share, compared to net loss of $5.1 million, or $0.02 per diluted share, for the year earlier period.  The increase in the quarterly loss was driven primarily by an 18% decrease in home sale revenues from $174.9 million for the 2010 first quarter to $143.7 million for the 2011 first quarter and a 220 basis point decline in the Company’s gross margin to 20.5%.  The decrease in revenues was primarily the result of an 18% decline in new home deliveries to 439 homes.  The 2011 first quarter also included $0.6 million of restructuring charges related to employee
 
 
 
 
severance.  The Company’s consolidated average home price for the 2011 first quarter was $327,000, up slightly from $326,000 for the year earlier period largely due to a mix shift, which was partially offset by slightly lower pricing and fewer California deliveries.

Gross margin from home sales for the 2011 first quarter was 20.5% versus 22.7% for the year earlier period.  The 220 basis point decline in the 2011 first quarter gross margin from home sales was driven by lower margins in substantially all of the Company’s markets due to competitive pricing pressure, a mix shift to more deliveries from lower margin projects and, to a lesser extent, a reduction in the percentage of California deliveries as compared to the 2010 first quarter.  Excluding previously capitalized interest costs, gross margin from home sales for the 2011 first quarter was 28.1%* versus 29.2%* for the 2010 first quarter.

The Company’s 2011 first quarter SG&A expenses (including Corporate G&A) were $32.3 million compared to $32.8 million for the 2010 first quarter and included noncash stock-based compensation expenses of $1.9 million and $2.0 million, respectively.  The Company’s 2011 first quarter SG&A expenses included approximately $0.6 million in restructuring charges related to employee severance costs incurred in connection with further adjusting the Company’s workforce to align with lower sales volumes.  The Company’s 2011 first quarter SG&A rate from home sales was 22.5% versus 18.7% for the 2010 first quarter.  Excluding restructuring charges, the Company’s 2011 first quarter SG&A rate was 22.1%*.  The increase in the Company’s SG&A rate was primarily the result of an 18% decrease in revenues from home sales and higher sales and marketing costs associated with new community openings.

Net new orders (excluding joint ventures) for the 2011 first quarter decreased 14% from the 2010 first quarter to 652 homes on a 10% increase in the number of average active selling communities from 126 to 138.  The Company’s monthly sales absorption rate for the 2011 first quarter was 1.6 per community compared to 2.0 per community for the 2010 first quarter.  The Company’s cancellation rate for the 2011 first quarter was 14% versus 15% for the 2010 first quarter and 23% for the 2010 fourth quarter.  The total number of sales cancellations for the 2011 first quarter was 106, of which 59 cancellations related to homes in the Company’s 2011 first quarter beginning backlog and 47 related to orders generated during the quarter.

The dollar value of homes in backlog (excluding joint ventures) decreased 24% to $211.8 million, or 627 homes, compared to $278.3 million, or 821 homes, for the 2010 first quarter.  The decrease in backlog value was driven primarily by a 14% decrease in net new orders.

The Company used $110.2 million of cash flows from operating activities for the 2011 first quarter versus generating $33.6 million of cash flows from operating activities in the 2010 first quarter.  The decline in cash flows from operations as compared to the 2010 first quarter was driven primarily by a $31.7 million decrease in homebuilding revenues, a $36.3 million increase in land purchases and a $108 million decrease attributable to the federal tax refund that was received in the 2010 first quarter.  Cash outflows from operations for the three months ended March 31, 2011 and 2010 included $87.1 million and $50.8 million, respectively, of cash land purchases.  Excluding cash land purchases and land sales, cash outflows from operating activities for the 2011 first quarter were $23.1 million* versus cash inflows of $84.0 million* in the 2010 first quarter.

Earnings Conference Call

A conference call to discuss the Company’s 2011 first quarter results will be held at 12:00 p.m. Eastern time April 29, 2011.  The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://ir.standardpacifichomes.com.  The call will also be accessible via telephone by dialing (888) 801-6497 (domestic) or (913) 312-0652 (international); Passcode: 3913688. The audio transmission with the 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: 3913688.

 
2
 
About Standard Pacific

Standard Pacific, one of the nation’s largest homebuilders, has built more than 113,000 homes during its 45-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 opening of new communities; the dollar value and timing of anticipated land purchases; the availability of land opportunities 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, 2010 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” on page 9.

 
###

 
(Note: Tables Follow)


 
3
 

KEY STATISTICS AND FINANCIAL DATA1
 
     
As of or For the Three Months Ended
     
March 31,
  
March 31,
  
Percentage
  
December 31,
  
Percentage
     
2011
  
2010
  
or % Change
  
2010
  
or % Change
Operating Data
(Dollars in thousands, except average selling price)
                             
Deliveries
  
 439
    
 537
  
(18%)
    
 619
  
(29%)
Average selling price
$
 327,000
  
$
 326,000
  
0%
  
$
 340,000
  
(4%)
Home sale revenues
$
 143,699
  
$
 174,913
  
(18%)
  
$
 210,424
  
(32%)
Gross margin %
  
20.5%
    
22.7%
  
(2.2%)
    
22.1%
  
(1.6%)
Gross margin % from home sales (excluding impairments)*
  
20.5%
    
22.7%
  
(2.2%)
    
23.1%
  
(2.6%)
Gross margin % from home sales (excluding impairments and
                        
 
interest amortized to cost of home sales)*
  
28.1%
    
29.2%
  
(1.1%)
    
30.2%
  
(2.1%)
Asset impairments
$
 —
  
$
 —
  
—
  
$
 2,289
  
(100%)
Restructuring charges (excluding debt refinance)
$
 561
  
$
—
  
—
  
$
 —
  
—
SG&A expenses
$
 32,261
  
$
 32,752
  
(1%)
  
$
 38,038
  
(15%)
SG&A % from home sales
  
22.5%
    
18.7%
  
3.8%
    
18.1%
  
4.4%
SG&A % from home sales (excluding restructuring charges)*
  
22.1%
    
18.7%
  
3.4%
    
18.1%
  
4.0%
                             
Net new orders
  
 652
    
 759
  
(14%)
    
 428
  
52%
Average active selling communities
  
 138
    
 126
  
10%
    
 134
  
3%
Monthly sales absorption rate per community
  
 1.6
    
 2.0
  
(20%)
    
 1.1
  
45%
Cancellation rate
  
14%
    
15%
  
(1%)
    
23%
  
(9%)
Gross cancellations
  
 106
    
 133
  
(20%)
    
 130
  
(18%)
Cancellations from current quarter sales
  
 47
    
 73
  
(36%)
    
 59
  
(20%)
Backlog (homes)
  
 627
    
 821
  
(24%)
    
 414
  
51%
Backlog (dollar value)
$
 211,813
  
$
 278,269
  
(24%)
  
$
 137,423
  
54%
                             
Cash flows (uses) from operating activities
$
 (110,150)
  
$
 33,570
  
(428%)
  
$
 (52,463)
  
110%
Cash flows (uses) from investing activities
$
 (4,049)
  
$
 (1,008)
  
302%
  
$
 4,999
  
(181%)
Cash flows (uses) from financing activities
$
 (18,997)
  
$
 (41,863)
  
(55%)
  
$
 239,507
  
(108%)
Land purchases (incl. seller financing and excl. JV investments)
$
 87,110
  
$
 50,849
  
71%
  
$
 33,552
  
160%
Land sale proceeds
$
 —
  
$
 452
  
(100%)
  
$
 1,757
  
(100%)
Adjusted Homebuilding EBITDA*
$
 11,018
  
$
 21,879
  
(50%)
  
$
 28,892
  
(62%)
Adjusted Homebuilding EBITDA Margin %*
  
7.7%
    
12.5%
  
(4.8%)
    
13.6%
  
(5.9%)
Homebuilding interest incurred
$
 34,854
  
$
 26,230
  
33%
  
$
 28,328
  
23%
Homebuilding interest capitalized to inventories owned
$
 22,710
  
$
 13,599
  
67%
  
$
 19,425
  
17%
Homebuilding interest capitalized to investments in JVs
$
 1,629
  
$
 646
  
152%
  
$
 1,450
  
12%
Interest amortized to cost of sales (incl. cost of land sales)
$
 10,980
  
$
 11,796
  
(7%)
  
$
 14,898
  
(26%)

 
     
As of
     
March 31,
  
December 31,
  
Percentage
     
2011
  
2010
  
or % Change
Balance Sheet Data
(Dollars in thousands, except per share amounts)
                   
Homebuilding cash (including restricted cash)
$
 619,807
  
$
 748,754
  
(17%)
Inventories owned
$
 1,292,365
  
$
 1,181,697
  
9%
Lots owned and controlled
  
 25,505
    
 23,549
  
8%
Homes under construction
  
 801
    
 568
  
41%
Completed specs
  
 409
    
 512
  
(20%)
Deferred tax asset valuation allowance
$
 522,025
  
$
 516,366
  
1%
Homebuilding debt
$
 1,321,212
  
$
 1,320,254
  
0%
Joint venture recourse debt
$
 995
  
$
 3,865
  
(74%)
Stockholders' equity
$
 613,252
  
$
 621,862
  
(1%)
Stockholders' equity per share (including if-converted preferred stock)*
 $   1.80   $   1.83     (2%)
Total debt to book capitalization*
  
68.6%
    
68.5%
  
0.1%
Adjusted net homebuilding debt to total adjusted book capitalization*
    53.4%       47.9%     5.5%
 
1All statistical numbers exclude unconsolidated joint ventures unless noted otherwise.
*Please see “Reconciliation of Non-GAAP Financial Measures” beginning on page 9.

 
4
 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

         
Three Months Ended March 31,
         
2011
  
2010
         
(Dollars in thousands, except per share amounts)
         
(Unaudited)
Homebuilding:
          
 
Home sale revenues
$
 143,699
  
$
 174,913
 
Land sale revenues
  
 —
    
 456
   
Total revenues
  
 143,699
    
 175,369
 
Cost of home sales
  
 (114,312)
    
 (135,253)
 
Cost of land sales
  
—
    
 (253)
   
Total cost of sales
  
 (114,312)
    
 (135,506)
       
Gross margin
  
 29,387
    
 39,863
       
Gross margin %
  
20.5%
    
22.7%
 
Selling, general and administrative expenses
  
 (32,261)
    
 (32,752)
 
Loss from unconsolidated joint ventures
  
 (257)
    
 (434)
 
Interest expense
  
 (10,515)
    
 (11,985)
 
Other income (expense)
  
 292
    
 424
       
Homebuilding pretax loss
  
 (13,354)
    
 (4,884)
Financial Services:
          
 
Revenues
  
 1,060
    
 2,298
 
Expenses
  
 (2,418)
    
 (2,429)
 
Other income
  
 15
    
 33
       
Financial services pretax loss
  
 (1,343)
    
 (98)
Loss before income taxes
  
 (14,697)
    
 (4,982)
Provision for income taxes
  
 (100)
    
 (89)
Net loss
    
 (14,797)
    
 (5,071)
  Less: Net loss allocated to preferred shareholder
  
 6,415
    
 3,002
Net loss available to common stockholders
$
 (8,382)
  
$
 (2,069)
                   
Loss per common share:
          
 
Basic
    
$
 (0.04)
  
$
 (0.02)
 
Diluted
  
$
 (0.04)
  
$
 (0.02)
                   
Weighted average common shares outstanding:
          
 
Basic
      
193,158,727
    
101,836,408
 
Diluted
    
193,158,727
    
101,836,408
                   
Weighted average additional common shares outstanding
          
 
if preferred shares converted to common shares
  
147,812,786
    
147,812,786


 
5
 
CONDENSED CONSOLIDATED BALANCE SHEETS

           
March 31,
  
December 31,
           
2011
  
2010
           
(Dollars in thousands)
ASSETS
(Unaudited)
      
Homebuilding:
              
 
Cash and equivalents
 $
 587,394
  
 $
 720,516
 
Restricted cash
  
 32,413
    
 28,238
 
Trade and other receivables
 7,330
    
 6,167
 
Inventories:
              
   
Owned
      
 1,292,365
    
 1,181,697
   
Not owned
  
 20,013
    
 18,999
 
Investments in unconsolidated joint ventures
  
 77,091
    
 73,861
 
Deferred income taxes, net
  
 8,297
    
 9,269
 
Other assets
    
 40,035
    
 38,175
             
 2,064,938
    
 2,076,922
Financial Services:
          
 
Cash and equivalents
  
 10,781
    
 10,855
 
Restricted cash
  
 2,870
    
 2,870
 
Mortgage loans held for sale, net
  
 20,016
    
 30,279
 
Mortgage loans held for investment, net
  
 9,938
    
 9,904
 
Other assets
    
 1,524
    
 2,293
             
 45,129
    
 56,201
       
Total Assets
 $
 2,110,067
  
 $
 2,133,123
                     
LIABILITIES AND EQUITY
          
Homebuilding:
              
 
Accounts payable
 $
 15,785
  
 $
 16,716
 
Accrued liabilities
  
 138,342
    
 143,127
 
Secured project debt and other notes payable
  
 4,333
    
 4,738
 
Senior notes payable
  
 1,273,475
    
 1,272,977
 
Senior subordinated notes payable
  
 43,404
    
 42,539
             
 1,475,339
    
 1,480,097
Financial Services:
          
 
Accounts payable and other liabilities
  
 781
    
 820
 
Mortgage credit facilities
  
 20,695
    
 30,344
             
 21,476
    
 31,164
       
Total Liabilities
  
 1,496,815
    
 1,511,261
                     
Equity:
                
 
Stockholders' Equity:
          
   
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares
          
     
issued and outstanding at March 31, 2011 and December 31, 2010, respectively
  
 5
    
 5
   
Common stock, $0.01 par value; 600,000,000 shares authorized; 197,422,268
          
     
and 196,641,551 shares issued and outstanding at March 31, 2011
          
     
and December 31, 2010, respectively
  
 1,974
    
 1,966
   
Additional paid-in capital
  
 1,231,892
    
 1,227,292
   
Accumulated deficit
  
 (607,149)
    
 (592,352)
   
Accumulated other comprehensive loss, net of tax
  
 (13,470)
    
 (15,049)
     
Total Equity
  
 613,252
    
 621,862
       
Total Liabilities and Equity
 $
 2,110,067
  
 $
 2,133,123

INVENTORIES

   
March 31,
    
December 31,
   
2011
    
2010
   
(Dollars in thousands)
Inventories Owned:
  
(Unaudited)
      
     Land and land under development
   $ 876,853     $ 801,681
     Homes completed and under construction
     312,189       281,780
     Model homes
     103,323       98,236
        Total inventories owned
   $ 1,292,365     $ 1,181,697
               
Inventories Owned by Segment:
              
     California
   $ 798,447     $ 727,317
     Southwest
     239,025       222,791
     Southeast
     254,893       231,589
        Total inventories owned
   $ 1,292,365     $ 1,181,697
 
6
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         
Three Months Ended March 31,
         
2011
  
2010
         
(Dollars in thousands)
         
(Unaudited)
Cash Flows From Operating Activities:
          
 
Net income (loss)
$
 (14,797)
  
$
 (5,071)
 
Adjustments to reconcile net income (loss) to net cash
          
   
provided by (used in) operating activities:
          
     
Amortization of stock-based compensation
  
 1,922
    
 1,964
     
Other operating activities
  
 1,285
    
 1,079
     
Changes in cash and equivalents due to:
          
       
Trade and other receivables
  
 (1,163)
    
 (8,080)
       
Mortgage loans held for sale
  
 10,294
    
 8,544
       
Inventories - owned
  
 (105,146)
    
 (40,826)
       
Inventories - not owned
  
 (2,810)
    
 (11,062)
       
Other assets
  
 3,140
    
 108,412
       
Accounts payable and accrued liabilities
  
 (2,875)
    
 (21,390)
   
Net cash provided by (used in) operating activities
  
 (110,150)
    
 33,570
                   
Cash Flows From Investing Activities:
          
 
Investments in unconsolidated homebuilding joint ventures
  
 (3,369)
    
 (845)
 
Other investing activities
  
 (680)
    
 (163)
   
Net cash provided by (used in) investing activities
  
 (4,049)
    
 (1,008)
                   
Cash Flows From Financing Activities:
          
 
Change in restricted cash
  
 (4,175)
    
 942
 
Principal payments on secured project debt and other notes payable
  
 (405)
    
 (34,758)
 
Net proceeds from (payments on) mortgage credit facilities
  
 (9,649)
    
 (8,561)
 
Other financing activities
  
 (4,768)
    
 514
   
Net cash provided by (used in) financing activities
  
 (18,997)
    
 (41,863)
                   
Net increase (decrease) in cash and equivalents
  
 (133,196)
    
 (9,301)
Cash and equivalents at beginning of period
  
 731,371
    
 595,559
Cash and equivalents at end of period
$
 598,175
  
$
 586,258
                   
Cash and equivalents at end of period
$
 598,175
  
$
 586,258
Homebuilding restricted cash at end of period
  
 32,413
    
 14,128
Financial services restricted cash at end of period
  
 2,870
    
 3,195
Cash and equivalents and restricted cash at end of period
$
 633,458
  
$
 603,581

 
 




 
7
 
REGIONAL OPERATING DATA

       
Three Months Ended March 31,
       
2011
  
2010
       
Homes
  
Avg. Selling
Price
  
Homes
  
Avg. Selling
Price
New homes delivered:
                  
 
California
 170
  
$
 464,000
  
 218
  
 $
 454,000
 
Arizona
 35
    
 205,000
  
 47
    
 198,000
 
Texas
  
 76
    
 294,000
  
 90
    
 299,000
 
Colorado
 17
    
 311,000
  
 25
    
 298,000
 
Nevada
 5
    
 192,000
  
—
    
 —
 
Florida
 62
    
 203,000
  
 86
    
 188,000
 
Carolinas
 74
    
 222,000
  
 71
    
 227,000
     
Consolidated total
 439
    
 327,000
  
 537
    
 326,000
 
Unconsolidated joint ventures
 8
    
 391,000
  
 13
    
 492,000
 
Total (including joint ventures)
 447
  
 $
 328,000
  
 550
  
 $
 330,000
 
       
Three Months Ended March 31,
       
2011
  
2010
       
Homes
  
Avg. Selling
Communities
  
Homes
  
Avg. Selling
Communities
Net new orders:
              
 
California
 232
  
 45
  
 290
  
 44
 
Arizona
 46
  
 9
  
 60
  
 8
 
Texas
  
 120
  
 21
  
 106
  
 18
 
Colorado
 26
  
 5
  
 29
  
 6
 
Nevada
 1
  
 1
  
 3
  
 1
 
Florida
 115
  
 33
  
 141
  
 24
 
Carolinas
 112
  
 24
  
 130
  
 25
     
Consolidated total
 652
  
 138
  
 759
  
 126
 
Unconsolidated joint ventures
 8
  
 3
  
 15
  
 3
 
Total (including joint ventures)
 660
  
 141
  
 774
  
 129
 
       
At March 31,
       
2011
  
2010
Backlog ($ in thousands):
Homes
  
Value
  
Homes
  
Value
 
California
  
 181
  
$
 97,424
    
 319
  
$
 154,630
 
Arizona
  
 47
    
 10,331
    
 60
    
 12,518
 
Texas
    
 143
    
 43,335
    
 125
    
 37,415
 
Colorado
  
 39
    
 12,302
    
 58
    
 16,847
 
Nevada
  
 4
    
 859
    
 3
    
 591
 
Florida
  
 120
    
 24,632
    
 133
    
 25,709
 
Carolinas
  
 93
    
 22,930
    
 123
    
 30,559
     
Consolidated total
  
 627
    
 211,813
    
 821
    
 278,269
 
Unconsolidated joint ventures
  
 5
    
 2,361
    
 11
    
 5,072
 
Total (including joint ventures)
  
 632
  
$
 214,174
    
 832
  
$
 283,341
 
         
At March 31,
         
2011
  
2010
Lots owned and controlled:
        
 
California
  
 9,577
  
 8,174
 
Arizona
  
 1,926
  
 1,974
 
Texas
    
 3,478
  
 1,681
 
Colorado
  
 768
  
 271
 
Nevada
    
 1,143
  
 1,218
 
Florida
    
 5,916
  
 4,881
 
Carolinas
  
 2,697
  
 2,306
   
Total (including joint ventures)
  
 25,505
  
 20,505
               
 
Lots owned
  
 18,221
  
 16,220
 
Lots optioned or subject to contract
  
 5,844
  
 3,295
 
Joint venture lots
  
 1,440
  
 990
   
Total (including joint ventures)
  
 25,505
  
 20,505
               
Lots owned:
        
 
Raw lots
  
 4,933
  
 5,110
 
Lots under development
  
 4,439
  
 2,389
 
Finished lots
  
 7,169
  
 6,893
 
Under construction or completed homes
  
 1,680
  
 1,828
   
Total
  
 18,221
  
 16,220
 
8
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Each of the below measures are non-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 gross margin percentage from home sales 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
 
March 31,
2011
  
Gross
Margin %
  
March 31,
2010
  
Gross
Margin %
  
December 31,
2010
  
Gross
Margin %
 
(Dollars in thousands)
                             
Home sale revenues
$
 143,699
      
$
 174,913
      
$
 210,424
    
Less: Cost of home sales
  
 (114,312)
        
 (135,253)
        
 (163,606)
    
Gross margin from home sales
  
 29,387
  
20.5%
    
 39,660
  
22.7%
    
 46,818
  
22.2%
Add: Housing inventory impairment charges
  
 —
        
—
        
 1,818
    
Gross margin from home sales, excluding
                            
  impairment charges
  
 29,387
  
20.5%
    
 39,660
  
22.7%
    
 48,636
  
23.1%
Add: Capitalized interest included in cost
                            
   of home sales
  
 10,980
  
7.6%
    
 11,363
  
6.5%
    
 14,898
  
7.1%
Gross margin from home sales, excluding
                            
   impairment charges and interest amortized
                            
   to cost of home sales
$
 40,367
  
28.1%
  
$
 51,023
  
29.2%
  
$
 63,534
  
30.2%

The table set forth below reconciles the Company’s SG&A expenses to SG&A expenses excluding restructuring charges.  We believe this measure is useful to management and investors as it provides perspective on the underlying operating performance of the business excluding these charges.

 
Three Months Ended
 
March 31,
2011
  
March 31,
2010
  
December 31,
2010
 
(Dollars in thousands)
                 
                 
Selling, general and administrative expenses
$
 32,261
  
$
 32,752
  
$
 38,038
Less: Restructuring charges
  
 (561)
    
 —
    
 —
Selling, general and administrative expenses,  excluding  restructuring charges
$
 31,700
  
$
 32,752
  
$
 38,038
SG&A % from home sales, excluding restructuring charges
  
22.1%
    
18.7%
    
18.1%

The table set forth below reconciles the Company’s cash flows from operations to cash flows from operations excluding land purchases, proceeds from land sales, payments made to extinguish swap arrangements related to early extinguishment of debt and accelerated interest payments related to debt restructure.  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, land sales and debt restructuring activities.
 
 
Three Months Ended
 
March 31,
2011
  
March 31,
2010
  
December 31,
2010
 
(Dollars in thousands)
                 
                 
Cash flows from (used in) operations
$
 (110,150)
  
$
 33,570
  
$
 (52,463)
Add: Cash land purchases
  
 87,055
    
 50,849
    
 33,552
Less: Land sale proceeds
  
 —
    
 (452)
    
 (1,757)
Add: Swap unwind payments related to debt restructure
  
 —
    
 —
    
 24,545
Add: Accelerated interest payments related to debt restructure
  
 —
    
 —
    
 6,541
Cash flows from operations (excluding land purchases,
                
   land sales and debt restructuring payments) $  (23,095)   $  83,967   $  10,418



 
9
 

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 and deposit write-offs, (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 March 31,
     
March 31,
2011
  
March 31,
2010
  
December 31,
2010
  
2011
  
2010
     
(Dollars in thousands)
                                 
Net income (loss)
$
 (14,797)
  
$
 (5,071)
  
$
 (21,857)
  
$
 (21,450)
  
$
 30,615
 
Provision (benefit) for income taxes
  
 100
    
 89
    
 (1,190)
    
 (546)
    
 (96,474)
 
Homebuilding interest amortized to cost of sales and interest expense
  
 21,495
    
 23,781
    
 22,351
    
 98,453
    
 132,356
 
Homebuilding depreciation and amortization
  
 663
    
 551
    
 499
    
 2,180
    
 2,566
 
Amortization of stock-based compensation
  
 1,922
    
 1,964
    
 3,250
    
 11,806
    
 13,299
EBITDA
  
 9,383
    
 21,314
    
 3,053
    
 90,443
    
 82,362
Add:
                              
 
Cash distributions of income from unconsolidated joint ventures
  
 20
    
 —
    
 —
    
 20
    
 3,465
 
Impairment charges and deposit write-offs
  
 —
    
—
    
 1,918
    
 1,918
    
 32,135
 
(Gain) loss on early extinguishment of debt
  
 —
    
 —
    
 23,839
    
 30,028
    
 12,122
Less:
                              
 
Income (loss) from unconsolidated joint ventures
  
 (257)
    
 (434)
    
 25
    
 1,343
    
 (8,120)
 
Income (loss) from financial services subsidiary
  
 (1,358)
    
 (131)
    
 (107)
    
 351
    
 2,142
Adjusted Homebuilding EBITDA
$
 11,018
  
$
 21,879
  
$
 28,892
  
$
 120,715
  
$
 136,062
                                 
Homebuilding revenues
$
 143,699
  
$
 175,369
  
$
 212,424
  
$
 880,748
  
$
 1,132,231
                                 
Adjusted Homebuilding EBITDA Margin %
  
7.7%
    
12.5%
    
13.6%
    
13.7%
    
12.0%
 
The table set forth below reconciles net cash provided by (used in) operating activities, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:
 
     
Three Months Ended
  
LTM Ended March 31,
     
March 31,
2011
  
March 31,
2010
  
December 31,
2010
  
 
2011
  
 
2010
     
(Dollars in thousands)
                                 
Net cash provided by (used in) operating activities
$
 (110,150)
  
$
 33,570
  
$
 (52,463)
  
$
 (224,678)
  
$
 324,402
Add:
                              
 
Provision (benefit) for income taxes
  
 100
    
 89
    
 (1,190)
    
 (546)
    
 (96,474)
 
Homebuilding interest amortized to cost of sales and interest expense
 21,495
    
 23,781
    
 22,351
    
 98,453
    
 132,356
 
Excess tax benefits from share-based payment arrangements
  
 —
    
 27
    
 —
    
—
    
 324
Less:
                              
 
Income (loss) from financial services subsidiary
  
 (1,358)
    
 (131)
    
 (107)
    
 351
    
 2,142
 
Depreciation and amortization from financial services subsidiary
  
 343
    
 157
    
 344
    
 1,120
    
 660
 
(Gain) loss on disposal of property and equipment
  
 2
    
 (36)
    
 (2)
    
 1
    
 1,912
Net changes in operating assets and liabilities:
                            
   
Trade and other receivables
  
 1,163
    
 8,080
    
 (7,524)
    
 (13,458)
    
 (6,753)
   
Mortgage loans held for sale
  
 (10,294)
    
 (8,544)
    
 (6,319)
    
 (13,915)
    
 (17,463)
   
Inventories-owned
  
 105,146
    
 40,826
    
 28,286
    
 213,026
    
 (243,414)
   
Inventories-not owned
  
 2,810
    
 11,062
    
 3,791
    
 19,609
    
 13,189
   
Deferred income taxes, net of valuation allowance
  
 —
    
 —
    
—
    
 —
    
 96,562
   
Other assets
  
 (3,140)
    
 (108,412)
    
 (2,650)
    
 (6,224)
    
 (106,403)
   
Accounts payable
  
 931
    
 929
    
 16
    
 6,594
    
 11,690
   
Accrued liabilities
  
 1,944
    
 20,461
    
44,829
    
 43,326
    
 32,760
Adjusted Homebuilding EBITDA
$
 11,018
  
$
 21,879
  
$
 28,892
  
$
 120,715
  
$
 136,062
 
 


 
10
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Continued)

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.

     
March 31,
2011
  
December 31,
2010
  
March 31,
2010
     
(Dollars in thousands)
                     
Total consolidated debt
$
 1,341,907
  
$
 1,350,598
  
$
 1,156,700
Less:
                  
 
Financial services indebtedness
  
 (20,695)
    
 (30,344)
    
 (32,434)
 
Homebuilding cash
  
 (619,807)
    
 (748,754)
    
 (591,663)
Adjusted net homebuilding debt
  
 701,405
    
 571,500
    
 532,603
Stockholders' equity
  
 613,252
    
 621,862
    
 434,568
Total adjusted book capitalization
$
 1,314,657
  
$
 1,193,362
  
$
 967,171
                     
Total debt to book capitalization
  
68.6%
    
68.5%
    
72.7%
                     
Adjusted net homebuilding debt to total adjusted book capitalization ratio
  
53.4%
    
47.9%
    
55.1%

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, and excludes 3.9 million shares issued under a share lending agreement related to the Company’s 6% Convertible Senior Subordinated Notes.  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.
 
March 31,
  
December 31,
 
2011
  
2010
           
Actual common shares outstanding
  
 197,422,268
    
 196,641,551
Add: Conversion of preferred shares to common shares
  
 147,812,786
    
 147,812,786
Less: Common shares outstanding under share lending facility
  
 (3,919,904)
    
 (3,919,904)
Pro forma common shares outstanding
  
 341,315,150
    
 340,534,433
           
Stockholders' equity (actual amounts rounded to nearest thousand)
$
 613,252,000
  
$
 621,862,000
Divided by pro forma common shares outstanding
÷
 341,315,150
  
÷
 340,534,433
Pro forma stockholders' equity per common share
$
 1.80
  
$
 1.83

 
11