EX-99.1 2 dex991.htm PRESS RELEASE DATED APRIL 28, 2005 Press Release dated April 28, 2005

Exhibit 99.1

 

LOGO  

NEWS RELEASE            

STANDARD PACIFIC CORP.            

 

15326 Alton Parkway, Irvine, California 92618-2338

Contact: Andrew H. Parnes, Executive Vice President-Finance & CFO
(949) 789-1616

 

FOR IMMEDIATE RELEASE ON THURSDAY, APRIL 28, 2005

 

STANDARD PACIFIC CORP. REPORTS RECORD FIRST QUARTER EARNINGS OF $2.36 PER SHARE, UP 95%, AND RAISES FULL YEAR GUIDANCE TO $11.20 PER SHARE

 

Financial and Operating Highlights – 2005 First Quarter vs. 2004 First Quarter

 

  •   Earnings per share up 95% to a record $2.36 vs. $1.21 last year

 

  •   Net income of $82.1 million, up 94%

 

  •   Homebuilding revenues up 56% to a record $836 million

 

  •   Record 2,407 new home deliveries, up 39% from last year

 

  •   Homebuilding gross margin up 330 basis points to 26.0%

 

  •   Record Adjusted Homebuilding EBITDA* of $146 million, an increase of 66% over 2004, and an EBITDA margin of 17.4%

 

  •   LTM return on average equity of 29.1%, up 520 basis points

 

  •   2,825 new home orders and record quarter-end backlog of 6,727 homes, up 23%, valued at $2.2 billion

 

  •   Over 80% of projected 2005 deliveries are either in backlog or closed in the first quarter

 

EPS Guidance for 2005 raised to $11.20, an increase of 23% year-over-year

 

IRVINE, CALIFORNIA, April 28, 2005

 

Standard Pacific Corp. (NYSE:SPF) today reported the Company’s 2005 first quarter operating results.

 

Stephen J. Scarborough, Chairman and Chief Executive Officer, stated, “We are pleased to start the new year on such a positive note reporting another record quarter of earnings, revenues, deliveries and backlog, setting the tone for what should be another record year. In fact, over 80% of our projected 2005 deliveries are either in backlog or were closed in the first quarter. The 56% increase in homebuilding revenues and 95% increase in earnings per share were driven, in large part, by solid growth in California and Florida, where we have substantial operations and excellent prospects for continued volume growth going forward.”

* For a definition of Adjusted Homebuilding EBITDA and a reconciliation of net income to Adjusted Homebuilding EBITDA and cash flows from operating activities to Adjusted Homebuilding EBITDA, please see the Selected Financial Data included herewith.

 

1

“Our record operating results were driven primarily by a 330 basis point improvement in our homebuilding gross margin to 26.0%, reflecting the quality of our locations and our pricing power in California, Florida and Arizona. Moreover, our strong homebuilding margin, combined with a 160 basis point decrease in our SG&A rate, generated a 280 basis point increase in our homebuilding pretax margin to 15.7%. And at quarter end, our LTM return on average equity stood at 29.1%, up 520 basis points year over year, reflecting the strength of our markets and an increased asset turnover rate.”

 

“These superior operating results continue our record of long-term growth which has been achieved while maintaining a strong balance sheet. At quarter end, our homebuilding leverage was at the low end of our target range, we had nearly $450 million of liquidity and our balance sheet was anchored by over $1.4 billion in stockholders’ equity. At the same time, we continue to maintain a 3-4 year supply of lots to fuel our growth initiatives, notwithstanding increasing constraints on the availability of buildable land in many of our significant markets.”

 

Mr. Scarborough continued, “We are raising our 2005 earnings guidance to $11.20 per share, up from our previous guidance of $10.50 per share, a 23% year-over-year increase, despite the impact of the unusually wet winter in Southern California and Arizona which resulted in the shift of approximately 250 deliveries into 2006. The higher earnings target for the year is primarily the result of an increase in our homebuilding gross margin percentage, reflecting the strength of our housing operations throughout California, Florida and Arizona, our three largest markets.”

 

“We are also providing initial earnings guidance for the second quarter of 2005 of $2.65 per share, up 54% year-over-year. We are targeting 2,650 deliveries, excluding 100 joint venture homes, and homebuilding revenues of $895 million in the quarter, up 32% and 16%, respectively.”

 

“For 2005 we are targeting 11,100 deliveries, excluding 250 homes in joint ventures, and homebuilding revenues of approximately $3.8 billion. To support our 25% increase in projected deliveries this year and position the Company for additional unit volume growth next year, we are planning to open between 130 and 140 new communities company-wide in 2005, up approximately 45% year-over-year. We expect that our new community openings will be concentrated more towards the middle and back half of the year. Consequently, our new home order comparisons will likely be flat for the first half of the year and accelerate significantly in the second half. Year-over-year order comparisons were much stronger in the first half of last year.”

 

“Going forward, the Company will be releasing its quarterly new home order numbers in conjunction with its quarterly earnings release. We believe that the order trends can be better analyzed when viewed with the quarterly operating results, quarter end backlog, and updated earnings and delivery guidance.”

 

Mr. Scarborough concluded, “While we are excited about our strong start to 2005 and our improved outlook for the balance of the year, we are even more excited about the Company’s long-term prospects. We have a solid foundation from which to grow in some of the country’s largest and most dynamic markets. In fact, with our strong land position in our existing markets alone, we have the capacity to grow our unit volume at a rate of 20% or more annually through 2007. We also see attractive opportunities for expansion into new markets, consistent with our strategy of continuing to diversify the Company geographically.”

 

2

Homebuilding Operations

 

Homebuilding pretax income for the 2005 first quarter increased 90% to $130.9 million from $69.1 million in the year earlier period. The increase in pretax income was driven by a 56% increase in homebuilding revenues, a 330 basis point improvement in the Company’s homebuilding gross margin percentage, and a 160 basis point decrease in our SG&A rate. These positive factors were partially offset by a $9.6 million decrease in joint venture income.

 

Homebuilding revenues for the 2005 first quarter increased 56% to $836.3 million from $535.3 million last year. The increase in revenues was attributable to a 43% increase in new home deliveries (exclusive of joint ventures) combined with a 9% increase in our consolidated average home price to $353,000.

 

During the 2005 first quarter, the Company delivered 691 new homes in California (exclusive of joint ventures), a 32% increase over the 2004 first quarter. Including joint ventures, California deliveries were up 20% to 736 homes. Deliveries were off 17% in Southern California to 340 new homes (including 10 joint venture deliveries) reflecting the slowdown in orders in the second half of 2004 in some of the Company’s Southern California markets. Deliveries were up 97% in Northern California to 396 new homes (including 35 joint venture deliveries), and were driven by strong order trends last year. In Florida, where housing market conditions remain strong, the Company delivered 818 new homes in the first quarter of 2005, representing a 108% year-over-year increase. The Company delivered 443 homes (including 1 joint venture delivery) during the 2005 first quarter in Arizona, an 8% decrease from the 2004 first quarter. The lower level of year-over-year deliveries was a result of delays experienced during the first quarter due to excessive rain combined with the timing of new community openings and sales activity last year. In the Carolinas, deliveries were up 115% to 168 new homes driven by order growth from new community openings. New home deliveries were up 40% in Texas and up 47% in Colorado, also driven by new community growth last year.

 

During the 2005 first quarter, the Company’s average home price was up 9% year-over-year to $353,000. The higher selling price was driven primarily by a 22% increase in the Company’s average price in California to $708,000 (exclusive of joint ventures). The higher price in California represents the impact of general price increases in many areas of the state combined with a change in the delivery mix during the 2005 first quarter. Our average price in Florida was $206,000, down 3% from the year ago period, and reflects the delivery of more affordable attached houses in South Florida combined with a proportionate increase in deliveries of our more affordable homes in Orlando. Our average price in Arizona was up 6% to $195,000 primarily reflecting general price increases in Phoenix and the addition of Tucson in the second half of last year where our average home price is over $250,000. Our average price was up 19% in the Carolinas and primarily reflects a change in delivery mix. Our average prices in Texas and Colorado were down 13% and up 7%, respectively, also reflecting changes in our product mix. For 2005, we expect that our average home price will decline approximately 9% to $340,000 as a result of a greater distribution of deliveries outside of California, particularly in Florida. We expect that our second quarter average home price will be $335,000 to $340,000.

 

The Company’s homebuilding gross margin percentage was up 330 basis points year-over-year to 26.0%. The increase in the year-over-year gross margin percentage was driven primarily by higher margins in Southern and Northern California and Florida. Our margins in Arizona were generally in line with the year earlier period and reflect healthy housing market conditions in the state. Margins in

 

3

the Carolinas, Texas, and Colorado were still below our company-wide average and generally reflected the impact of slower economic conditions in those regions. The higher overall gross margin percentage reflected our ability to raise home prices in many of our California markets during the past several quarters as a result of healthy housing demand combined with a constrained supply of buildable land, and improving margins in Florida due to healthy demand for new homes combined with volume and cost efficiencies. Our homebuilding gross margin percentage for the 2005 second quarter is expected to be similar to the 26.0% margin percentage generated in the first quarter while our margin for the full year is expected to be up approximately 125-150 basis points over the 24.4% homebuilding gross margin percentage generated in 2004.

 

Selling, general and administrative expenses (including corporate G&A) for the 2005 first quarter decreased 160 basis points to 11.0% of homebuilding revenues compared to 12.6% last year. The lower level of SG&A expenses as a percentage of homebuilding revenues was due primarily to the benefits of leveraging our overhead over a 56% higher revenue base. Our projected SG&A rate for the full year is expected to be approximately 11.0%.

 

Consistent with our expectations, income from unconsolidated joint ventures was down $9.6 million for the 2005 first quarter to $6.6 million. The lower level of venture profits was driven primarily by a 48% decrease in the number of joint venture deliveries to 46 homes versus 88 homes last year as well as by a decrease in joint venture income from land sales to other builders. For 2005, we expect to generate approximately $50 million in joint venture income from approximately 250 new home deliveries as well as profits from joint venture land sales to other builders.

 

New orders companywide for the first quarter of 2005 totaled 2,825 homes and were down slightly from the record level achieved a year ago, consistent with our expectations for the quarter. The order levels reflected generally healthy housing market conditions in the Company’s three largest markets: California, Florida, and Arizona, and flat to gradually improving housing market conditions in the Carolinas, Texas, and Colorado. Although new home orders were down year over year in Southern California, absorption rates in the first quarter improved nicely over the sales rates experienced in the second half of last year. The Company generated 1.6 sales per week per project in the first quarter of 2005 compared to 1.1 sales per week in the second half of 2004, reflecting an improved tone and the generally supply-constrained nature of the Southern California region. In Northern California, new home sales were down 26% on a 27% lower active community count. The Company continues to experience healthy demand for new homes in this region. New home orders were down 18% on an 18% increase in active selling communities in Florida. The lower sales rate per community in Florida during the quarter reflected a conscious decision by the Company to reduce the number of new homes for sale due to strong backlog levels. This adjustment in our rate of new home releases should better align sales with our production capabilities. The Company is generally experiencing healthy housing market conditions in all of its Florida markets. In Arizona, new home orders were up 20% on a 29% lower community count, resulting in a 68% increase on a same store basis. The total for the 2005 first quarter includes 36 orders from 3 communities from our new Tucson division, which we acquired in August 2004. Orders were up 64% in the Carolinas on a 73% higher community count, up 77% in Texas on a 25% higher community count, and up 16% in Colorado on a 9% higher community count. Conditions in these three markets are flat to gradually improving compared to the year earlier period. The Company’s cancellation rate for the 2005 first quarter was 16% compared to 15% for the year earlier period. The Company’s orders for the 2005 first quarter include 82 homes from 5 joint venture communities, compared to 53 homes from 4 joint venture communities last year.

 

4

The strong level of new home orders for the 2005 first quarter resulted in a record first quarter backlog of 6,727 presold homes (excluding 183 joint venture homes) valued at an estimated $2.2 billion (excluding $133 million of joint venture backlog), an increase of 14% from the March 31, 2004 backlog value.

 

The Company ended the quarter with 172 active selling communities, a 6% increase over the year earlier period. The Company is planning to open 100 to 110 new communities during the balance of the year and is targeting a year-end community count of approximately 190 to 200 active subdivisions, 10-15% higher than at the end of 2004. Since we expect that our new community openings will be concentrated more towards the middle and back half of the year, we anticipate that our new home order comparisons will likely be flat for the first half of the year and stronger in the second half.

 

Financial Services

 

In the 2005 first quarter, the Company generated a modest profit at the Company’s financial services subsidiary, which currently offers mortgage-banking services to our homebuyers in California, Arizona, Texas, and South Florida. The operating results continue to reflect tight, but improving, margins on loan sales and lower capture rates due to competitive pressures resulting from the significant reduction in mortgage refinance activity during the past year.

 

Financial services joint venture income, which is derived from mortgage banking joint ventures with third party financial institutions currently operating in conjunction with our homebuilding divisions in Colorado, the Carolinas, and Tampa and Southwestern Florida, was down $297,000 to $439,000. The lower level of income was primarily due to the Company’s decision in the first half of 2004 to transition its mortgage operations in Arizona and Texas from the joint venture structure to its wholly owned financial services subsidiary.

 

Earnings Conference Call

 

A conference call to discuss the Company’s 2005 first quarter earnings will be held at 11:00 am Eastern time tomorrow morning. The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://phx.corporate-ir.net/phoenix.zhtml?c=95153&p=irol-irhome. The call will also be accessible via telephone by dialing (800) 967-7134. The entire audio transmission with the synchronized slide presentation will also be available on our website for replay within 2 to 3 hours following the live broadcast. A replay of the conference call will also be available by dialing (888) 203-1112 (Passcode: 4656843).

 

Standard Pacific, one of the nation’s largest homebuilders, has built homes for more than 73,000 families during its 39-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in some of the strongest housing markets in the country with operations in major metropolitan areas in California, Texas, Arizona, Colorado, Florida and the Carolinas. The Company provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Family Lending Services, WRT Financial, Westfield Home Mortgage, Universal Land Title of South Florida and SPH Title. For

 

5

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: the percentage of 2005 projected deliveries in either backlog or closed in the first quarter; increasing constraints on the availability of buildable land; growth initiatives and the opportunity for expansion into new markets; the Company’s prospects for continued volume growth; expected year-over-year order comparisons; the Company’s intent to begin releasing quarterly orders with its quarterly earnings release; the Company’s long term prospects and its capacity to grow unit volume 20% or more annually through 2007; housing market conditions in the markets in which the Company operates; orders and backlog; the Company’s three to four year lot supply; expected new community openings and active subdivisions; the Company’s expected earnings, earnings per share, deliveries and revenues; the Company’s expected SG&A rate; expected average home prices; the expected homebuilding gross margin percentage for the Company and certain of its divisions; and expected joint venture income and deliveries. Forward-looking statements are based on 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 our 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; the demand for single-family homes; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of our 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 our mortgage banking operations, including hedging activities; future business decisions and our ability to successfully implement our operational, growth and other strategies; litigation and warranty claims; and other risks discussed in our filings with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2004. We assume no, and hereby disclaim any, obligation to update any of the foregoing or any other forward-looking statements. We nonetheless reserve 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.

 

(end of text, tables follow)

 

6

STANDARD PACIFIC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(Dollars in thousands, except per share amounts)

(Unaudited)

 

    

Three Months Ended

March 31,

  
     2005
     2004
  

Homebuilding:

                 

Revenues

    $ 836,346     $ 535,254  

Cost of sales

      (619,179 )     (413,823 )
    
 

Gross margin

      217,167       121,431  
    
 

Selling, general and administrative expenses

      (92,359 )     (67,707 )

Income from unconsolidated joint ventures

      6,627       16,249  

Interest expense

      (2,270 )     (1,565 )

Other income

      1,748       655  
    
 

Homebuilding pretax income

      130,913       69,063  
    
 

Financial Services:

                 

Revenues

      3,856       2,131  

Expenses

      (3,766 )     (2,564 )

Income from unconsolidated joint ventures

      439       736  

Other income

      106       47  
    
 

Financial services pretax income

      635       350  
    
 

Income before taxes

      131,548       69,413  

Provision for income taxes

      (49,433 )     (27,022 )
    
 

Net Income

    $ 82,115     $ 42,391  
    
 

Earnings Per Share:

                 

Basic

    $ 2.44     $ 1.25  

Diluted

    $ 2.36     $ 1.21  

Weighted Average Common Shares Outstanding:

                 

Basic

      33,701,735       33,940,048  

Diluted

      34,827,280       35,089,677  

Cash dividends per share

    $ 0.08     $ 0.08  

 

 

7

Selected Operating Data

 

     Three Months Ended
March 31,
     2005
    2004

New homes delivered:

              

Southern California

      330      342

Northern California

      361      182
    
  

Total California

      691      524
    
  

Florida

      818      393

Arizona

      442      482

Carolinas

      168      78

Texas

      136      97

Colorado

      106      72
    
  

Consolidated total

      2,361      1,646
    
  

Unconsolidated joint ventures:

              

Southern California

      10      69

Northern California

      35      19

Arizona

      1      —  
    
  

Total unconsolidated joint ventures

      46      88
    
  

Total (including joint ventures)

      2,407      1,734
    
  

Average selling prices of homes delivered:

              

California (excluding joint ventures)

    $ 708,000    $ 582,000

Florida

    $ 206,000    $ 213,000

Arizona (excluding joint venture)

    $ 195,000    $ 184,000

Carolinas

    $ 157,000    $ 132,000

Texas

    $ 227,000    $ 260,000

Colorado

    $ 301,000    $ 281,000

Consolidated (excluding joint ventures)

    $ 353,000    $ 324,000

Unconsolidated joint ventures

    $ 659,000    $ 606,000

Total (including joint ventures)

    $ 359,000    $ 338,000

Net new orders:

              

Southern California

      508      653

Northern California

      278      390
    
  

Total California

      786      1,043
    
  

Florida

      750      915

Arizona

      516      432

Carolinas

      259      158

Texas

      280      158

Colorado

      152      131
    
  

Consolidated total

      2,743      2,837
    
  

Unconsolidated joint ventures:

              

Southern California

      39      11

Northern California

      41      42

Arizona

      2      —  
    
  

Total unconsolidated joint ventures

      82      53
    
  

Total (including joint ventures)

      2,825      2,890
    
  

 

 

8

Selected Operating Data (continued)

 

     Three Months Ended March 31,
     2005
    2004

Average number of selling communities during the period:

              

Southern California

      25      24

Northern California

      16      23
    
  

Total California

      41      47
    
  

Florida

      53      45

Arizona

      14      21

Carolinas

      19      11

Texas

      25      20

Colorado

      12      11
    
  

Consolidated total

      164      155
    
  

Unconsolidated joint ventures:

              

Southern California

      1      1

Northern California

      3      3

Arizona

      1      —  
    
  

Total unconsolidated joint ventures

      5      4
    
  

Total (including joint ventures)

      169      159
    
  
     At March 31,
     2005
    2004

Backlog (in homes):

              

Southern California

      879      1,195

Northern California

      656      691
    
  

Total California

      1,535      1,886
    
  

Florida

      2,735      2,252

Arizona

      1,530      702

Carolinas

      256      145

Texas

      414      245

Colorado

      257      230
    
  

Consolidated total

      6,727      5,460
    
  

Unconsolidated joint ventures:

              

Southern California

      54      25

Northern California

      125      106

Arizona

      4      —  
    
  

Total unconsolidated joint ventures

      183      131
    
  

Total (including joint ventures)

      6,910      5,591
    
  

Backlog (estimated dollar value in thousands):

              

Consolidated total

    $ 2,232,250    $ 1,959,737

Unconsolidated joint ventures

      132,749      85,274
    
  

Total (including joint ventures)

    $ 2,364,999    $ 2,045,011
    
  

 

9

Selected Operating Data (continued)

 

     At March 31,
  
     2005
     2004
  

Building sites owned or controlled:

                 

Southern California

      13,618       12,149  

Northern California

      5,662       4,951  
    
 

Total California

      19,280       17,100  
    
 

Florida

      14,084       15,443  

Arizona

      10,477       6,746  

Carolinas

      4,075       3,786  

Texas

      3,111       2,882  

Colorado

      1,839       1,653  
    
 

Total (including joint ventures)

      52,866       47,610  
    
 

Total building sites owned

      26,910       23,659  

Total building sites optioned

      16,494       17,007  

Total joint venture lots

      9,462       6,944  
    
 

Total (including joint ventures)

      52,866       47,610  
    
 

Completed and unsold homes

      178       135  
    
 

Homes under construction

      5,895       4,689  
    
 
Selected Financial Data  
     Three Months Ended March 31,
  
     2005
     2004
  
     (Dollars in thousands)  

Net income

    $ 82,115     $ 42,391  

Net cash provided by (used in) operating activities

    $ (100,870 )   $ (164,077 )

Net cash provided by (used in) investing activities

    $ (92,931 )   $ (41,432 )

Net cash provided by (used in) financing activities

    $ 54,971     $ 272,368  

Adjusted Homebuilding EBITDA(1)

    $ 145,533     $ 87,925  

Homebuilding SG&A as a percentage of homebuilding revenues

      11.0 %     12.6 %

Homebuilding interest incurred

    $ 20,426     $ 21,435  

Homebuilding interest capitalized to inventories owned

    $ 18,156     $ 19,870  

Ratio of LTM Adjusted Homebuilding EBITDA to homebuilding interest incurred

      7.7 x     5.4 x
(1) Adjusted Homebuilding EBITDA means net income (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) material noncash impairment charges, if any, (e) homebuilding depreciation and amortization, (f) amortization of stock-based compensation, (g) income from unconsolidated joint ventures and (h) 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 investors as a measure of our ability to service debt and obtain financing. However, it should be noted that Adjusted Homebuilding EBITDA is not a U.S. generally accepted accounting principles (“GAAP”) financial measure. Due to the significance of the GAAP components excluded, Adjusted Homebuilding EBITDA 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.

 

10

The tables set forth below reconcile net cash used in operating activities and net income, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:

 

    

Three Months Ended

March 31,

  
     2005
     2004
  
     (Dollars in thousands)  

Net cash used in operating activities

    $ (100,870 )   $ (164,077 )

Add:

                 

Income taxes

      49,433       27,022  

Homebuilding interest expense

      2,270       1,565  

Expensing of previously capitalized interest included in cost of sales

      14,117       10,458  

Less:

                 

Income (loss) from financial services subsidiary

      90       (433 )

Depreciation and amortization from financial services subsidiary

      145       96  

Net changes in operating assets and liabilities:

                 

Trade and other receivables

      11,175       (35,200 )

Inventories-owned

      109,095       218,420  

Inventories-not owned

      18,162       6,384  

Deferred income taxes

      (3,464 )     (785 )

Other assets

      4,775       609  

Accounts payable

      (560 )     (1,077 )

Accrued liabilities

      41,635       20,741  

Liabilities from inventories not owned

      —         3,528  
    
 

Adjusted Homebuilding EBITDA

    $ 145,533     $ 87,925  
    
 

 

    

Three Months Ended

March 31,

  
     2005
    2004
  
     (Dollars in thousands)  

Net income

    $ 82,115    $ 42,391  

Add:

                

Cash distributions of income from unconsolidated joint ventures

      1,574      21,137  

Income taxes

      49,433      27,022  

Homebuilding interest expense

      2,270      1,565  

Expensing of previously capitalized interest included in cost of sales

      14,117      10,458  

Homebuilding depreciation and amortization

      1,023      1,044  

Amortization of stock-based compensation

      2,157      860  

Less:

                

Income from unconsolidated joint ventures

      7,066      16,985  

Income (loss) from financial services subsidiary

      90      (433 )
    
  

Adjusted Homebuilding EBITDA

    $ 145,533    $ 87,925  
    
  

 

Balance Sheet Data

(Dollars in thousands, except per share amounts)

 

     At March 31,
  
     2005
     2004
  

Stockholders’ equity per share

    $ 41.61     $ 31.68  

Ratio of total debt to total book capitalization (1)

      46.5 %     56.1 %

Ratio of adjusted net homebuilding debt to total book capitalization (2)

      44.4 %     50.3 %

Ratio of total debt to LTM adjusted homebuilding EBITDA (1)

      1.9 x     3.1 x

Ratio of adjusted net homebuilding debt to LTM adjusted homebuilding EBITDA (2)

      1.7 x     2.5 x

Homebuilding interest capitalized in inventories owned

    $ 62,659     $ 47,850  

Homebuilding interest capitalized as a percentage of inventories owned

      2.8 %     2.4 %
(1) Total debt at March 31, 2005 and 2004 includes $70.1 million and $38.3 million, respectively, of indebtedness of the Company’s financial services subsidiary and $28.1 million and $25.9 million, respectively, of indebtedness included in liabilities from inventories not owned.

 

(2) Net homebuilding debt reflects the offset of $3.4 million and $222.2 million in cash and equivalents at March 31, 2005 and 2004, respectively, against homebuilding debt of $1,124.5 million and $1,312.6 million, respectively. Adjusted net homebuilding debt at March 31, 2005 and 2004 is further adjusted to exclude $70.1 million and $38.3 million, respectively, of indebtedness of the Company’s financial services subsidiary and $28.1 million and $25.9 million, respectively, of indebtedness included in liabilities from inventories not owned. We believe that the adjusted net homebuilding debt to total book capitalization and adjusted net homebuilding debt to LTM adjusted homebuilding EBITDA ratios are useful to investors as a measure of our ability to obtain financing. These are non-GAAP ratios and other companies may calculate these ratios differently.

 

11

STANDARD PACIFIC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Dollars in thousands)

 

     March 31,
2005
   

December 31,

2004

     (Unaudited)     
ASSETS              

Homebuilding:

              

Cash and equivalents

    $ 8,367    $ 141,697

Trade and other receivables

      48,913      27,049

Inventories:

              

Owned

      2,263,490      2,111,868

Not owned

      309,273      268,028

Investments in and advances to unconsolidated joint ventures

      255,476      205,429

Deferred income taxes

      34,517      37,981

Goodwill

      88,607      84,544

Other assets

      41,300      35,162
    
  
       3,049,943      2,911,758
    
  

Financial Services:

              

Cash and equivalents

      3,607      9,107

Mortgage loans held for sale

      78,303      88,570

Other assets

      3,525      3,798
    
  
       85,435      101,475
    
  

Total Assets

    $ 3,135,378    $ 3,013,233
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY

Homebuilding:

              

Accounts payable

    $ 97,030    $ 96,470

Accrued liabilities

      238,700      286,125

Liabilities from inventories not owned

      33,644      32,390

Revolving credit facility

      77,200      —  

Trust deed and other notes payable

      24,188      26,340

Senior notes payable

      874,089      874,068

Senior subordinated notes payable

      149,049      149,026
    
  
       1,493,900      1,464,419
    
  

Financial Services:

              

Accounts payable and other liabilities

      1,376      2,127

Mortgage credit facilities

      70,121      81,892
    
  
       71,497      84,019
    
  

Total Liabilities

      1,565,397      1,548,438
    
  

Minority Interests

      164,819      142,800

Stockholders’ Equity:

              

Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued

      —        —  

Common stock, $0.01 par value; 100,000,000 shares authorized; 33,768,103 and 33,617,349 shares outstanding, respectively

      338      336

Additional paid-in capital

      422,675      418,927

Retained earnings

      982,149      902,732
    
  

Total Stockholders’ Equity

      1,405,162      1,321,995
    
  

Total Liabilities and Stockholders’ Equity

    $ 3,135,378    $ 3,013,233
    
  

 

12