-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QNqfbqMmXEbBpWgJpjIzwP6TYba3/ZQsIUJ4rEIzmYPObOiGUJw8/tnYHUBxE7DU nnJC2+kb8yVLpQB4EMGfaQ== 0001017062-00-001216.txt : 20000516 0001017062-00-001216.hdr.sgml : 20000516 ACCESSION NUMBER: 0001017062-00-001216 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD PACIFIC CORP /DE/ CENTRAL INDEX KEY: 0000878560 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 330475989 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10959 FILM NUMBER: 633795 BUSINESS ADDRESS: STREET 1: 1565 W MACARTHUR BLVD CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146684300 MAIL ADDRESS: STREET 1: 1565 W MACARTHUR BLVD CITY: COSTA MESA STATE: CA ZIP: 92626 10-Q 1 STANDARD PACIFIC CORP. - PERIOD ENDED 03/31/2000 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to ------------- ------------ Commission file number 1-10959 STANDARD PACIFIC CORP. (Exact name of registrant as specified in its charter) Delaware 33-0475989 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 15326 Alton Parkway, Irvine, CA 92618-2338 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (949) 789-1600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]. APPLICABLE ONLY TO CORPORATE ISSUERS Registrant's shares of common stock outstanding at May 1, 2000: 28,738,380 STANDARD PACIFIC CORP. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 The consolidated financial statements included herein have been prepared by Standard Pacific Corp. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information normally included in the financial statements prepared in accordance with generally accepted accounting principles has been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. -1- STANDARD PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended March 31, ---------------------------- 2000 1999 ----------- ------------ Homebuilding: Revenues $ 232,120 $ 214,480 Cost of sales 190,206 174,641 ----------- ------------ Gross margin 41,914 39,839 ----------- ------------ Selling, general and administrative expenses 18,450 20,224 Income from unconsolidated joint ventures 907 4,618 Interest expense 429 291 Amortization of excess of cost over net assets acquired 495 495 Other income 34 24 ----------- ------------ Homebuilding pretax income 23,481 23,471 ----------- ------------ Financial Services: Revenues 430 590 Income from unconsolidated joint venture 148 198 Other income 49 - Expenses 817 680 ----------- ------------ Financial services pretax income (loss) (190) 108 ----------- ------------ Income from continuing operations before income taxes 23,291 23,579 Provision for income taxes (9,396) (9,708) ----------- ------------ Income from continuing operations 13,895 13,871 Income (loss) from discontinued operation, net of income taxes of $54 in 1999 - (77) ----------- ------------ Net Income $ 13,895 $ 13,794 =========== ============ Basic Net Income Per Share: Income per share from continuing operations $ 0.48 $ 0.47 Income (loss) per share from discontinued operation - (0.00) ----------- ------------ Net Income Per Share $ 0.48 $ 0.47 =========== ============ Weighted average common shares outstanding 29,052,400 29,636,636 =========== ============ Diluted Net Income Per Share: Income per share from continuing operations $ 0.48 $ 0.46 Income (loss) per share from discontinued operation - (0.00) ----------- ------------ Net Income Per Share $ 0.48 $ 0.46 =========== ============ Weighted average common and diluted shares outstanding 29,168,978 29,885,871 =========== ============
The accompanying notes are an integral part of these consolidated statements. -2- STANDARD PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) (Unaudited)
March 31, December 31, 2000 1999 ---------- ------------ ASSETS Homebuilding: Cash and equivalents $ 3,143 $ 2,865 Other notes and accounts receivable, net 21,070 10,489 Mortgage notes receivable and accrued interest 4,380 4,530 Inventories 733,993 699,489 Investments in and advances to unconsolidated joint ventures 59,875 49,116 Property and equipment, net 2,726 2,656 Deferred income taxes 13,462 12,738 Other assets 12,304 13,350 Excess of cost over net assets acquired, net 14,820 15,315 -------- -------- 865,773 810,548 -------- -------- Financial Services: Cash and equivalents 144 313 Mortgage loans held for sale 14,633 17,554 Other assets 1,430 1,553 -------- -------- 16,207 19,420 -------- -------- Total Assets $881,980 $829,968 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Homebuilding: Accounts payable $ 45,715 $ 42,344 Accrued liabilities 71,655 69,437 Revolving credit facility 64,000 23,000 Trust deed notes payable 3,499 3,531 Senior notes payable 298,874 298,847 -------- -------- 483,743 437,159 -------- -------- Financial Services: Accounts payable and accrued liabilities 448 620 Mortgage warehouse line of credit 9,171 10,304 -------- -------- 9,619 10,924 -------- -------- Stockholders' Equity: Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued - - Common stock, $.01 par value; 100,000,000 shares authorized; 28,738,380 and 29,208,680 shares outstanding, respectively 287 292 Paid-in capital 273,880 278,701 Retained earnings 114,451 102,892 -------- -------- Total stockholders' equity 388,618 381,885 -------- -------- Total Liabilities and Stockholders' Equity $881,980 $829,968 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. -3- STANDARD PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ Cash Flows From Operating Activities: Net income $ 13,895 $ 13,794 Adjustments to reconcile net income to net cash provided by (used in) operating activities of continuing operations: Discontinued operation - 77 Income from unconsolidated joint ventures (907) (4,618) Depreciation and amortization 323 300 Amortization of excess of cost over net assets acquired 495 495 Changes in cash and equivalents due to: Receivables and accrued interest (7,510) 24,774 Inventories (34,477) (37,705) Deferred income taxes (724) 1,212 Other assets 1,169 1,713 Accounts payable 3,371 5,679 Accrued liabilities 2,055 (5,367) ------------ ------------ Net cash provided by (used in) operating activities of continuing operations (22,310) 354 ------------ ------------ Cash Flows From Investing Activities: Net additions to property and equipment (393) (307) Investments in and advances to unconsolidated joint ventures (23,145) (8,016) Distributions and repayments from unconsolidated joint ventures 13,293 17,132 ------------ ------------ Net cash provided by (used in) investing activities (10,245) 8,809 ------------ ------------ Cash Flows From Financing Activities: Net proceeds from (payments on) revolving credit facility 41,000 27,300 Net proceeds from (payments on) mortgage warehouse line of credit (1,133) (9,499) Principal payments on senior notes and trust deed notes payable (32) (36,002) Dividends paid (2,336) (1,481) Repurchase of common shares (4,872) - Proceeds from the exercise of stock options 37 41 ------------ ------------ Net cash provided by (used in) financing activities 32,664 (19,641) ------------ ------------ Net change in cash from discontinued operation - 5,626 ------------ ------------ Net increase (decrease) in cash and equivalents 109 (4,852) Cash and equivalents at beginning of period 3,178 53,194 ------------ ------------ Cash and equivalents at end of period $ 3,287 $ 48,342 ============ ============ Summary of Cash Balances: Continuing operations $ 3,287 $ 4,586 Discontinued operation - 43,756 ------------ ------------ $ 3,287 $ 48,342 ============ ============ Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest - continuing operations $ 5,540 $ 8,543 Income taxes 4,300 9,500
The accompanying notes are an integral part of these consolidated statements. -4- STANDARD PACIFIC CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 1. Basis of Presentation --------------------- In the opinion of management, the financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2000 and December 31, 1999, and the results of operations and cash flows for the periods presented. Unless the context otherwise requires, the terms "we", "us" and "our" refer to Standard Pacific Corp. and its subsidiaries. 2. Capitalization of Interest -------------------------- The following is a summary of interest capitalized and expensed related to inventories for the three-month periods ended March 31, 2000 and 1999.
Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ (Dollars in thousands) Total interest incurred during the period $ 8,027 $ 8,729 Less: Interest capitalized as a cost of real estate under development 7,598 8,438 ------------ ------------ Interest expensed $ 429 $ 291 ============ ============ Interest previously capitalized as a cost of real estate under development, included in cost of sales $ 5,002 $ 5,385 ============ ============ Capitalized interest in ending inventories $ 23,982 $ 18,208 ============ ============
3. Statement of Cash Flows ----------------------- Cash flows from the discontinued operation have been presented as a separate line item in the accompanying consolidated statements of cash flows. The net change in cash for the discontinued operation presented in the statements of cash flows for the three-month period ended March 31, 1999 reflects the net change in the cash balance of our savings and loan subsidiary, which was sold in May 1999. 4. Recent Accounting Pronouncement ------------------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133). Under the provisions of FAS 133, we will be required to recognize all derivatives as either assets or liabilities in the consolidated balance sheets and measure these instruments at fair value. We are required to adopt FAS 133 effective January 1, 2001. We have not yet quantified the impact of adopting FAS 133. -5- 5. Reclassifications ----------------- Certain reclassifications have been made to the 1999 consolidated financial statements to conform with current period presentation. 6. Net Income Per Share -------------------- We compute net income per share in accordance with Statement of Financial Accounting Standards No. 128 "Earnings per Share" (FAS 128). This statement requires the presentation of both basic and diluted net income per share for financial statement purposes. Basic net income per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per share includes the effect of the potential shares outstanding, including dilutive stock options using the treasury stock method. The table set forth below reconciles the components of the basic net income per share calculation to diluted net income per share.
For the Three Months Ended March 31, ----------------------------------------------------------------- 2000 1999 ------------------------------- ------------------------------- Income Shares EPS Income Shares EPS -------- ---------- ------- -------- ---------- ------- (Dollars in thousands, except per share amounts) Basic Net Income Per Share: Income available to common stockholders from continuing operations $13,895 29,052,400 $0.48 $13,871 29,636,636 $0.47 Effect of dilutive stock options - 116,578 - 249,235 ------- ---------- ------- ---------- Diluted income per share from continuing operations $13,895 29,168,978 $0.48 $13,871 29,885,871 $0.46 ======= ========== ===== ======= ========== =====
7. Discontinued Operations ----------------------- In May 1997, the Board of Directors adopted a plan of disposition (the "Plan") for our savings and loan subsidiary ("Savings"). Pursuant to the Plan, we sold substantially all of Savings' mortgage loan portfolio in June 1997. The proceeds from the sale of the mortgages were used to pay off substantially all of the outstanding balances of Federal Home Loan Bank advances with the remaining amount temporarily invested until the savings deposits were sold along with Savings' remaining assets. The gain generated from the sale of this mortgage loan portfolio, net of related expenses, was not material. In August 1998, we entered into a definitive agreement to sell the remainder of Savings' business, including Savings' charter, which closed on May 31, 1999. An after tax net gain of $618,000, or $.02 per diluted share, was recorded in the 1999 second quarter as a result of this sale. Proceeds from the sale of Savings were approximately $8.8 million before transaction and other related costs. Savings has been accounted for as a discontinued operation and the results of its operations have been segregated in the accompanying 1999 consolidated income statements. Interest income from the discontinued operation totaled approximately $782,000 for the three month period ended March 31, 1999. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context otherwise requires, the terms "we," "us" and "our" refer to Standard Pacific Corp. and its subsidiaries. Results of Operations Selected Financial Information
Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ (Dollars in thousands) Homebuilding: Revenues $232,120 $214,480 Cost of sales 190,206 174,641 -------- -------- Gross margin 41,914 39,839 -------- -------- Gross margin percentage 18.1% 18.6% -------- -------- Selling, general and administrative expenses 18,450 20,224 Income from unconsolidated joint ventures 907 4,618 Interest expense 429 291 Amortization of excess of cost over net assets acquired 495 495 Other income 34 24 -------- -------- Homebuilding pretax income 23,481 23,471 -------- -------- Financial Services: Revenues 430 590 Income from unconsolidated joint venture 148 198 Other income 49 - Expenses 817 680 -------- -------- Financial services pretax income (loss) (190) 108 -------- -------- Income from continuing operations before income taxes $ 23,291 $ 23,579 ======== ========
Operating Data
Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ New Homes Delivered: Southern California 235 194 Northern California 174 168 -------- -------- Total California 409 362 -------- -------- Dallas 58 39 Austin 37 28 Houston 9 36 -------- -------- Total Texas 104 103 -------- -------- Arizona 183 188 -------- -------- Consolidated total 696 653 Unconsolidated joint ventures (Southern California) 17 - -------- -------- Total 713 653 ======== ======== Average Selling Price: California deliveries (excluding joint ventures) $428,966 $442,132 Texas deliveries $254,686 $224,488 Arizona deliveries $163,470 $160,864 Combined (excluding joint ventures) $333,117 $326,825 Combined (including joint ventures) $337,126 $326,825
-7- Operating Data - (continued)
Three Months Ended March 31, ---------------------------- 2000 1999 ------------ ------------ Net New Orders: Southern California 341 318 Northern California 328 276 -------- -------- Total California 669 594 -------- -------- Dallas 75 63 Austin 68 39 Houston 14 35 -------- -------- Total Texas 157 137 -------- -------- Arizona 243 204 -------- -------- Consolidated total 1,069 935 Unconsolidated joint ventures (Southern California) 44 - -------- -------- Total 1,113 935 ======== ======== Average Selling Communities during the quarter: Southern California 20 19 Northern California 14 14 Texas 22 17 Arizona 13 10 Unconsolidated joint ventures (Southern California) 3 - -------- -------- Total 72 60 ======== ======== At March 31, ---------------------------- 2000 1999 ------------ ------------ Backlog (in units): Southern California 448 501 Northern California 327 355 -------- -------- Total California 775 856 -------- -------- Dallas 100 75 Austin 70 48 Houston 9 30 -------- -------- Total Texas 179 153 -------- -------- Arizona 387 384 -------- -------- Consolidated total 1,341 1,393 Unconsolidated joint ventures (Southern California) 73 - -------- -------- Total backlog 1,414 1,393 ======== ======== Backlog at quarter end (estimated dollar value in thousands) $477,393 $461,789 ======== ======== Building Sites Owned or Controlled: California 8,223 9,614 Texas 2,318 2,538 Arizona 3,978 3,671 -------- -------- Total 14,519 15,823 ======== ========
-8- Income from continuing operations for the 2000 first quarter increased to $13,895,000, or $0.48 per diluted share, compared to $13,871,000, or $0.46 per diluted share, for the year earlier period. Net income for the 2000 first quarter including the discontinued operation increased to $13,895,000, or $0.48 per diluted share, compared to $13,794,000, or $0.46 per diluted share, for the 1999 first quarter. The discontinued operation in 1999 reflects our former savings and loan subsidiary, which was sold during the 1999 second quarter for an after tax gain of $618,000, or $0.02 per diluted share. First quarter 2000 earnings before interest, taxes, depreciation and amortization ("EBITDA") was $29.8 million compared to $31.5 million for the same period in 1999. Homebuilding Homebuilding revenues in the 2000 first quarter increased 8 percent to $232.1 million from $214.5 million in the year earlier period. The higher revenue total was due to a 7 percent increase in new home deliveries (exclusive of joint ventures) coupled with a 2 percent increase in the average home selling price to $333,000. During the quarter ended March 31, 2000, we delivered 426 new homes in California, an 18 percent increase over the prior year period. Deliveries were up 30 percent in Southern California and up 4 percent in Northern California. Our Arizona operation delivered 183 new homes in the 2000 first quarter which was in line with the strong level of deliveries generated in the year earlier period. Deliveries in our Dallas and Austin divisions improved significantly from the previous year period as reflected by their 49 percent and 32 percent gains, respectively, while deliveries in Houston declined by 27 homes. During the 2000 first quarter the average home price in California declined 3 percent from the year earlier period to $429,000, reflecting a shift in product mix. The average home price in Texas was up 13 percent to $255,000 reflecting a greater proportion of deliveries from our Dallas and Austin operations where prices are generally higher than in Houston. The average home price in Arizona was up slightly to $163,000. The homebuilding gross margin percentage for the 2000 first quarter was 18.1 percent, down 50 basis points from the prior year first quarter, but up 60 basis points over the 1999 fourth quarter gross margin percentage. First quarter deliveries were impacted by rising labor and material costs experienced in 1999 which are beginning to moderate. Selling, general and administrative expenses as a percentage of revenues for the 2000 first quarter were 7.9 percent compared to 9.4 percent for the same period last year. The fluctuation in SG&A expenses as a percentage of revenues is primarily due to the timing of certain sales and marketing costs incurred in connection with the opening of new communities. In addition, many general and administrative expenses are typically fixed in nature and decline as a percentage of revenues in a growing revenue environment. Income from unconsolidated joint ventures for the 2000 first quarter was generated from the delivery of 17 homes in the initial phase of our 390 home three-project joint venture in Fullerton, California in Orange County. The joint venture income in the prior year first quarter was generated from land sales from our Talega land development joint venture in South Orange County. We are expecting to recognize additional joint venture income from land sales in each of these ventures during the year. -9- Net new home orders for the 2000 first quarter were up 19 percent over the year earlier period to a first quarter record of 1,113 new homes on a 20 percent increase in average community count. Orders were up 21 percent in Southern California on a 21 percent increase in average community count, up 19 percent in Northern California on a flat community count, up 15 percent in Texas on a 29 percent increase in active selling communities and up 19 percent in Arizona on a 30 percent increase in active selling communities. Our backlog of presold homes at March 31, 2000 stood at 1,414 homes, with an estimated sales value of approximately $477.4 million, up 3 percent from the 1999 first quarter backlog value. We are planning to open approximately 55 to 60 new communities in 2000 compared to 43 in 1999, of which approximately 30 to 35 will be located in California, 10 in Texas and 15 in Arizona. Assuming there are no significant changes in the economy, consumer confidence or interest rates, we expect to be in a position to increase unit deliveries in 2000. Financial Services Revenues from our financial services subsidiary for the 2000 first quarter were down 27 percent from the year earlier period despite a modest increase in the number and dollar value of loans sold during the quarter. The reduction in revenues from the year earlier period reflects lower margins realized on sales of mortgage loans due to increased competitive pressures, as well as a one-time gain recognized in the 1999 first quarter from the pay-off of a commercial loan. The rise in operating expenses reflects the increase in overhead from expanding our mortgage banking operations in California. The financial services joint venture income reflects the operating results of our mortgage banking venture with Wells Fargo Bank in Arizona and Texas. Other financial services income represents earnings from our new title insurance operation in Texas, which began serving as a title insurance agent and offering title examination services in September 1999. Recent Development On April 14, 2000, we entered into a definitive agreement to acquire The Writer Corporation, a publicly-traded Denver-based homebuilder ("Writer"), for a purchase price of $3.35 per share of Writer common stock, or a total of approximately $26.7 million, plus the assumption of approximately $27.7 million of indebtedness. The acquisition consideration will be payable in a combination of cash and Standard Pacific common stock, with Writer's public shareholders being entitled to elect to receive up to the entire purchase price in cash, subject to certain limitations. Writer is a longtime homebuilder in the Denver metropolitan area, and more recently has expanded its operations into the emerging Fort Collins/Northern Colorado market. For the year ended December 31, 1999, Writer had revenues of $82 million and delivered 383 new homes. Under the terms of the proposed acquisition, Writer's stockholders will receive, at their election, a combination of cash and/or Standard Pacific common stock valued at $3.35 per share of Writer common stock. Not more than 60 percent and not less than 50 percent of the aggregate consideration will be paid in shares of Standard Pacific common stock. Standard Pacific's shares will be valued based on their average trading price for a 20 day period prior to consummation of the merger, provided that in no event will the shares be valued at less than $11.00 per share or more than $13.50 per share. In the event the -10- option to elect cash is oversubscribed, Writer's directors, officers and 15 percent shareholders have agreed to accept shares of Standard Pacific common stock. Consummation of the transaction is subject to customary conditions, including registration with the Securities and Exchange Commission and approval of Writer's stockholders. No assurances can be given that the transaction will be consummated. Liquidity and Capital Resources Our homebuilding operations' principal uses of cash have been for operating expenses, land acquisitions, construction expenditures, market expansion (including through acquisitions), principal and interest payments on debt, share repurchases and dividends to our shareholders. Cash requirements have been provided from internally generated funds and outside borrowings, including a bank revolving credit facility and public note offerings. Our mortgage banking subsidiary uses cash from internal funds and a mortgage warehouse credit facility to fund its mortgage lending operations. Based on our current business plan and our desire to carefully manage our leverage, we believe that these sources of cash are sufficient to finance our current working capital requirements and other needs. In August 1999, we amended our unsecured revolving credit facility with our bank group to, among other things, increase the commitment to $450 million, extend the maturity date one year to July 31, 2003 and revise certain financial and other covenants. This agreement contains a borrowing base provision and financial covenants which may limit the amount we may borrow under the revolving credit facility. At March 31, 2000, we had borrowings of $64 million outstanding under this facility. To fund mortgage loans through our financial services subsidiary, we have a $40 million revolving mortgage warehouse credit facility with a bank. Mortgage loans are generally held for a short period of time and are typically sold to investors within 15 days following funding. Borrowings, which are LIBOR based, are secured by the related mortgage loans held for sale. The facility, which has a current maturity date of May 31, 2000, also contains certain financial covenants. We are in discussions with the bank regarding extending the maturity date of this facility, which we anticipate being completed before May 31, 2000. In October 1998, the Securities and Exchange Commission declared effective our $300 million universal shelf registration statement on Form S-3. The universal shelf registration statement permits the issuance of common stock, preferred stock, debt securities and warrants. We currently have $200 million available under the universal shelf. From time to time, purchase money mortgage financing is used to finance land acquisitions. At March 31, 2000 and December 31, 1999, we had approximately $3.5 million outstanding in trust deed notes payable. Additionally, as a form of off balance sheet financing and for other strategic purposes, joint venture structures are used on selected projects. This type of structure, in which the joint venture typically obtains secured construction and development financing, minimizes the use of funds from our revolving credit facility and other corporate financing sources. We plan to continue using these types of arrangements to finance the development of properties as opportunities arise. -11- We paid an $.08 per share common dividend, or an aggregate dividend of $2.3 million, during the quarter ended March 31, 2000, which represents a 60 percent increase from our 1999 fourth quarter cash dividend of $.05 per share. Common stock dividends are paid at the discretion of our Board of Directors and are dependent upon various factors, including earnings, cash flows, capital requirements and operating and financial conditions, including our overall level of leverage. Additionally, our revolving credit facility and public notes impose restrictions on the amount of dividends we may be able to pay. On April 25, 2000, our Board of Directors declared a quarterly cash dividend of $.08 per share of common stock. This dividend is to be paid on May 26, 2000 to shareholders of record on May 12, 2000. In April 2000, our Board of Directors increased the aggregate stock repurchase limit of our previously announced stock buyback plan from $25 million to $35 million. During the quarter ended March 31, 2000, we repurchased 476,300 shares of common stock for approximately $4.9 million pursuant to this plan. From the inception of the plan through March 31, 2000, we have repurchased an aggregate of approximately 2.4 million shares of common stock for approximately $19.7 million, leaving a balance of approximately $15.3 million available for future share repurchases. We have no other material commitments or off balance sheet financing arrangements that under current market conditions are expected to materially affect our future liquidity. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks related to fluctuations in interest rates on our mortgage loans receivable and bank debt. Both our mortgage banking subsidiary, Family Lending, and our mortgage banking joint venture, SPH Mortgage, seek to manage interest rate risk with respect to loan commitments and loans held for sale by preselling loans on a best efforts basis. To enhance potential returns on the sale of mortgage loans, Family Lending has begun selling a portion of its mortgage loans on a non-presold mandatory delivery basis during the quarter ended March 31, 2000. To hedge its interest rate risk associated with extending interest rate commitments to customers prior to selling closed loans to investors, Family Lending has entered into forward sale commitments of mortgage-backed securities during the first quarter ended March 31, 2000. While our hedging strategy of buying and selling mortgage-backed securities should assist us in mitigating risk associated with selling loans on a mandatory delivery basis, these instruments involve elements of market risk which could result in losses on loans sold in this manner if not hedged properly. In January 2000, Family Lending retained a third party advisory firm to assist with selling loans on a mandatory delivery basis and entering into forward sale commitments of mortgage-backed securities. Other than entering into forward sale commitments of mortgage-backed securities described above, there have been no other material changes in our market risk exposure since December 31, 1999. Please see our Annual Report on Form 10-K for the year ended December 31, 1999 for further discussion related to our market risk exposure. -12- FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which represent our expectations or beliefs concerning future events, including, but not limited to, statements regarding: . rising labor and material costs in 1999 which we believe are beginning to moderate; . expected additional joint venture income from land sales during 2000; . our backlog of homes and their estimated sales value; . planned new home community openings; . our prospects for continued growth in unit volume in 2000; . the anticipated extension of our financial services subsidiary's mortgage warehouse credit facility; . the sufficiency of our cash provided by internally generated funds and outside borrowings; . our planned continued use of joint ventures as a financing structure; . the likely effect on our future liquidity of our existing material commitments and off balance sheet financing arrangements; and . our exposure to market risks, including fluctuations in interest rates. We caution that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward- looking statements, including, without limitation, the following: . changes in local and general economic and market conditions, including consumer confidence; . changes in interest rates and the availability of construction and mortgage financing; . changes in costs and availability of material, supplies and labor; . the cyclical and competitive nature of homebuilding; . the availability of debt and equity capital; . changes in the availability of suitable undeveloped land at reasonable prices; . governmental regulation; and . adverse weather conditions and natural disasters. Results actually achieved thus may differ materially from expected results included in these and any other forward-looking statements contained herein. Please see our Annual Report on Form 10-K for the year ended December 31, 1999 for a further discussion of these and other risks and uncertainties applicable to our business. -13- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. STANDARD PACIFIC CORP. (Registrant) Dated: May 12, 2000 By: /s/ Stephen J. Scarborough ----------------------------- Stephen J. Scarborough Chief Executive Officer and President Dated: May 12, 2000 By: /s/ Andrew H. Parnes ----------------------------- Andrew H. Parnes Vice President - Finance, Treasurer and Chief Financial Officer -14- PART II OTHER INFORMATION Item 1. Legal proceedings None Item 2. Change in Securities None Item 3. Default upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2.1 Agreement and Plan of Merger dated as of April 14, 2000 among Standard Pacific Corp., The Writer Corporation, and TWC Acquisition Corp. incorporated by reference to Exhibit 2.1 of the Registrant's Registration Statement on Form S-4 (file no. 333-37014). 3.1 Bylaws of Registrant incorporated by reference to Exhibit 3.5 of the Registrant's Registration Statement on Form S-4 (file no. 333-37014). 10.1 Standard Pacific Corp. 2000 Stock Incentive Plan incorporated by reference to Exhibit 10.8 of the Registrant's Registration Statement on Form S-4 (file no. 333-37014). 27. Financial Data Schedule. (b) Current Reports on Form 8-K None -15- EX-27 2 FINANCIAL DATA SCHEDULE - ARTICLE 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 2000 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 3-MOS DEC-31-2000 DEC-31-1999 JAN-01-2000 JAN-01-1999 MAR-31-2000 MAR-31-1999 3,287 0 0 0 40,083 0 0 0 733,993 0 0 0 6,103 0 3,377 0 881,980 0 0 0 298,874 0 0 0 0 0 287 0 388,331 0 881,980 0 232,120 214,480 232,747 215,268 190,206 174,641 18,855 16,781 (34) (24) 0 0 429 291 23,291 23,579 9,396 9,708 13,895 13,871 0 (77) 0 0 0 0 13,895 13,794 $0.48 $0.47 $0.48 $0.46 AMOUNTS FOR CURRENT ASSETS AND CURRENT LIABILITIES ARE NOT PRESENTED HERE AS THE BALANCE SHEET PRESENTED IS UNCLASSIFIED.
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