Note 5 - Investments in Unconsolidated Land Development and Homebuilding Joint Ventures

12 Months Ended

Dec. 31, 2012

Equity Method Investments and Joint Ventures Disclosure [Text Block]

5. Investments in Unconsolidated Land Development and Homebuilding Joint Ventures

The table set forth below summarizes the combined statements of operations for our unconsolidated land development and homebuilding joint ventures that we accounted for under the equity method:

	Year December 31,
	2012			2011			2010
	(Dollars in thousands)
Revenues	$	21,178		$	69,941		$	66,667
Cost of sales and expenses		(18,788	)		(55,447	)		(56,125	)
Income of unconsolidated joint ventures	$	2,390		$	14,494		$	10,542
Income (loss) from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations	$	(2,090	)	$	207		$	1,166

Income (loss) from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income (loss) of our unconsolidated land development and homebuilding joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements plus any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  In addition, we defer recognition of our share of income that relates to lots purchased by us from land development joint ventures until we ultimately sell the homes to be constructed to third parties, at which time we account for these earnings as a reduction of the cost basis of the lots purchased from these joint ventures.  For the years ended December 31, 2012, 2011 and 2010, income (loss) from unconsolidated joint ventures was primarily attributable to our share of income (loss) related to one Southern California land development joint venture and one Northern California homebuilding joint venture, which were allocated based on the provisions of the underlying joint venture operating agreements.

During the years ended December 31, 2012, 2011 and 2010, all of our unconsolidated joint ventures were reviewed for impairment.  Based on the impairment review, we recorded impairment charges of $0.5 million in 2010.  No impairments were recorded for joint venture projects for the years ended December 31, 2012 and 2011.

The table set forth below summarizes the combined balance sheets for our unconsolidated land development and homebuilding joint ventures that we accounted for under the equity method:

	December 31,
	2012		2011
	(Dollars in thousands)
Assets:
Cash	$	15,627	$	24,155
Inventories		129,477		230,571
Other assets		10,783		11,190
Total assets	$	155,887	$	265,916
Liabilities and Equity:
Accounts payable and accrued liabilities	$	5,796	$	21,190
Standard Pacific equity		51,173		77,259
Other Members' equity		98,918		167,467
Total liabilities and equity	$	155,887	$	265,916
Investments in unconsolidated joint ventures reflected in the accompanying consolidated balance sheets	$	52,443	$	81,807

In some cases our net investment in these unconsolidated joint ventures is not equal to our proportionate share of equity reflected in the table above primarily because of differences between asset impairments that we recorded against our joint venture investments and the impairments recorded by the applicable joint venture.  Our investments in unconsolidated joint ventures also included approximately $6.9 million and $9.1 million of homebuilding interest capitalized to investments in unconsolidated joint ventures as of December 31, 2012 and 2011, respectively, which capitalized interest is not included in the combined balance sheets above.

Our investments in these unconsolidated joint ventures may represent a variable interest in a VIE depending on, among other things, the economic interests of the members of the entity and the contractual terms of the arrangement.  We analyze all of our unconsolidated joint ventures under the provisions of ASC 810 to determine whether these entities are deemed to be VIEs, and if so, whether we are the primary beneficiary.  As of December 31, 2012, all of our homebuilding and land development joint ventures with unrelated parties were determined under the provisions of ASC 810 to be unconsolidated joint ventures either because they were not deemed to be VIEs, or, if they were a VIE, we were not deemed to be the primary beneficiary.

During the 2012 third quarter, we acquired control of the remaining assets of one of our Southern California land development joint ventures.  The assets include approximately 1,700 residential lots, commercial and retail sites and a school site.  A portion of this transaction was accounted for as a business combination in accordance with ASC 805.  As a result of this transaction, our homebuilding assets increased by approximately $121 million, representing $5 million of homebuilding cash and $116 million of inventories owned.  In addition, we assumed approximately $4 million of accounts payable and accrued liabilities, and recorded $12 million of contingent consideration, which is included in accrued liabilities and represents a future payment to one of the joint venture partners related to the future sale of a retail site that we acquired as part of the transaction.