EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

News Release

 

STANDARD PACIFIC CORP. REPORTS 39% INCREASE IN FISCAL 2005 EPS TO $6.30 ON REVENUES OF $4.0 BILLION

 

Financial and Operating Highlights – 2005 Fiscal Year vs. 2004 Fiscal Year

 

  •   Earnings per share up 39% to a record $6.30 vs $4.54 last year

 

  •   Record net income of $441 million, up 40% year over year

 

  •   Record homebuilding revenues of $4.0 billion, up 19% over 2004

 

  •   Record 11,411* new home deliveries, up 29% from last year

 

  •   Homebuilding gross margin up 280 bps to 27.2%

 

  •   Record Adjusted Homebuilding EBITDA** of $791 million, up 31%, and an EBITDA margin of 19.8%

 

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

 

  •   Earnings per share up 10% to a record $2.22 vs. $2.01 last year

 

  •   Record net income of $154.9 million, up 12%

 

  •   Homebuilding revenues up 8% to a record $1.27 billion

 

  •   Record 3,558* new home deliveries, up 24% from last year

 

  •   Homebuilding gross margin up 80 basis points to 27.7%

 

  •   Record Adjusted Homebuilding EBITDA** of $274 million, an increase of 10% over 2004, and an EBITDA margin of 21.6%

 

  •   LTM return on average equity of 29.0%, up 140 basis points

 

  •   2,154* new home orders and quarter-end backlog of 6,276* homes, valued at a record $2.3 billion, up 9%

 

EPS Guidance for 2006 maintained at $6.90, an increase of 10% year-over-year.

 

IRVINE, CALIFORNIA, February 2, 2006, Standard Pacific Corp. (NYSE:SPF) today reported the Company’s 2005 fourth quarter and fiscal year operating results.

 

Stephen J. Scarborough, Chairman and Chief Executive Officer, stated, “2005 marks the tenth consecutive year of revenue and earnings growth for the Company and the most successful year in the Company’s 39-

* Excludes the Company’s unconsolidated joint ventures.

 

** 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.

 

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year history. Over this ten-year period our revenues and earnings per share increased at compound annual rates of 28% and 53%, respectively.”

 

“We had an extremely strong fourth quarter with earnings up 10% to $2.22 per share. This is on top of a 72% increase in earnings per share in last year’s fourth quarter. And our earnings for the full year increased 39% to $6.30 per share following a 49% increase the previous year. The fourth quarter and full year earnings were driven by solid gains in delivery unit volume and healthy increases in our homebuilding gross margin percentage. And consistent with our commitment to maximize long-term shareholder value, we continued to generate outstanding financial returns. Our strong operating performance, combined with a disciplined focus on efficient asset utilization, resulted in a 29.0% LTM return on average stockholders’ equity, up 140 basis points from 2004.”

 

“Notwithstanding the demands on capital associated with our growth, we have continued to maintain a strong balance sheet. We ended the year with over $1.7 billion in shareholders’ equity and modest homebuilding leverage. At the same time, we increased our lot position 45% year over year and have been able to maintain a 3 to 4 year supply of land in our increasingly constrained markets. Our strong balance sheet and land position provide a solid platform to fuel our internal growth going forward.”

 

Mr. Scarborough continued, “Looking forward to 2006, we are targeting 13,000 deliveries, excluding 475 joint venture homes, and revenues approaching $5.0 billion, up 14% and 24%, respectively. Our expectations for the year are bolstered by our backlog of nearly 6,300 homes, valued at $2.3 billion, representing nearly 50% of our 2006 full year delivery projection, including at least 65% of our projected 2006 Arizona and Florida deliveries.”

 

“Our business plan for 2006 reflects our current view that many of our housing markets are moderating from the unsustainable pace of the past few years and that demand for new homes will adjust to more normalized and sustainable levels resulting in generally lower absorption rates on a project-by-project basis. At the same time, we plan to open approximately 150 new projects during the year, up 63% over 2005, which should help drive a 32% year-over-year increase in our community count by the end of the second quarter to 220 projects and support our projected increase in deliveries for 2006. These new communities represent a well-balanced mix of product and price points with the openings evenly split between the first half and the second half of the year.”

 

“For 2006, we are maintaining our earnings guidance at $6.90 per share, a 10% year-over-year increase. We are also providing initial earnings’ guidance for the first quarter of 2006 of $1.25 per share, up 6% from last year’s first quarter earnings. During the quarter, we are targeting 2,475 deliveries, excluding 35 joint venture homes, and homebuilding revenues of $885 million.”

 

Mr. Scarborough added, “Our strong operating performance and growth continue to validate the fundamental soundness of our multi-faceted business model which emphasizes a commitment to our existing markets while opportunistically entering new markets that provide us with substantial long-term growth potential. We have entered six new states and 19 new markets over the last seven years, significantly altering the geographic composition of the Company and providing a more diversified base of operations. During the year, we entered San Antonio, where we expect to be a top-5 builder in only our first full year of operations, and Las Vegas, where our new start up operation gained an important foothold as a partner in a consortium that will develop a 12,000 home master-planned community in North Las Vegas.”

 

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“We remain confident in our long-term prospects for growth. This confidence is no more evident than by our recent stock buyback activity. During the fourth quarter we repurchased over 1.2 million shares, extending our buyback string to 10 consecutive years. And to provide for additional buyback capacity, our Board approved a new $100 million repurchase plan this week.”

 

Mr. Scarborough concluded, “As we complete another record breaking year and begin what is expected to be another solid year, I want to offer my heartfelt appreciation to all of the loyal employees and business associates of Standard Pacific whose tremendous efforts have been vital to our success and growth over the years. It is this talented team of homebuilding professionals, combined with our Company’s rich and enduring culture, that has played a big part in the successful growth of the Company. During the year, the Company received a number of prestigious accolades in recognition of our growth and financial performance. We are proud to have been named for the sixth consecutive year to the Forbes Platinum 400 list of America’s Best Big Companies and to Fortune’s list of the 100 Fastest Growing Companies. In addition, we are on the threshold of becoming a Fortune 500 company based on our 2005 results.”

 

Homebuilding Operations

 

Homebuilding pretax income for the 2005 fourth quarter increased 11% to $247.9 million from $223.8 million in the year earlier period. The increase in pretax income was driven by an 8% increase in homebuilding revenues, an 80 basis point improvement in the Company’s homebuilding gross margin percentage, and a $15.1 million increase in homebuilding joint venture income. These positive factors were partially offset by a 150 basis point increase in our SG&A rate.

 

Homebuilding revenues for the 2005 fourth quarter increased 8% to $1.27 billion from $1.17 billion last year. The increase in revenues was attributable to a 24% increase in new home deliveries (exclusive of joint ventures), partially offset by a 12% decrease in our consolidated average home price to $351,000.

 

The 24% increase in new home deliveries companywide was influenced by the following regional trends: During the 2005 fourth quarter, the Company delivered 989 new homes in California (exclusive of joint ventures), a 12% decrease from the 2004 fourth quarter. Deliveries were up 7% in Southern California to 769 new homes (excluding 22 joint venture deliveries) reflecting the pickup in orders in the first half of 2005 in the Company’s Southern California markets. Deliveries were down 47% in Northern California to 220 new homes (excluding 44 joint venture deliveries), and primarily reflects the decrease in new home orders in the first half of 2005 due to the reduction in new homes available for sale, particularly in the San Francisco Bay area, resulting from a decrease in the number of active selling communities. The decrease in active selling communities was principally due to the rapid sell out of projects during late 2004 and the first half of 2005. In Florida, where the Company had been steadily increasing the number of active selling communities, the Company delivered 1,038 new homes in the fourth quarter of 2005, representing a 17% year-over-year increase. The Company delivered 553 homes (excluding 4 joint venture deliveries) during the 2005 fourth quarter in Arizona, a 27% increase from the 2004 fourth quarter. The increase in new home deliveries in the state was due to higher new home order levels in Phoenix during the fourth quarter of 2004 and the first quarter of 2005 reflecting strong demand for new housing. In the Carolinas, deliveries were up 104% to 351 new homes driven primarily by order growth from new community openings and improving market conditions. New home deliveries were up 346% in Texas to 504 new homes, driven by new community growth and improving market conditions in Dallas and Austin, combined with the delivery of 250 new homes from our newly acquired San Antonio division. Deliveries were off 8% in Colorado year-over-year as a result of a decrease in new orders in the second quarter of 2005.

 

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During the 2005 fourth quarter, the Company’s average home price declined 12% year-over-year to $351,000. The lower average selling price was attributable to the shifting geographic mix of our new home deliveries whereby 72% of this year’s consolidated fourth quarter deliveries were from outside of California compared to 61% last year (exclusive of joint venture homes). The average home prices in our non-California divisions are substantially lower than those in California. Our average home price in California was $687,000 for the fourth quarter of 2005, a 1% increase from the year earlier period. The relatively flat average home price reflects the impact of delivering a greater percentage of our homes in California from the more affordable Inland Empire, Ventura, and Bakersfield divisions. The impact on our California average home price from the geographic mix shift was more than offset by the general level of price increases experienced in the state. Our average price in Florida was up 8% from the year ago period to $240,000, and primarily reflects the impact of general price increases throughout the state. Our average price in Arizona was up 32% to $237,000, primarily reflecting the strong level of price increases experienced in Phoenix over the past several quarters. Our average price was up 4% in the Carolinas and primarily reflected a change in delivery mix. Our average prices in Texas and Colorado were down 26% and 5%, respectively, reflecting shifts in our product mix to more affordable homes, and the addition of San Antonio during the year. The average home price in our new San Antonio division was $140,000. For 2006, we expect that our average home price will increase approximately $33,000, or 10%, to $380,000. We are projecting a 2006 first quarter average home price of $356,000, up slightly over the 2005 first quarter average. The increase in the first quarter and full year average home price primarily reflects the significant increase in new home prices experienced in the Phoenix market in 2005 and the moderate level of price increases experienced in the California and Florida markets over the same time period.

 

The Company’s fourth quarter homebuilding gross margin percentage was up 80 basis points year-over-year to 27.7%. The increase in the year-over-year gross margin percentage was driven primarily by a slightly higher margin in California and meaningfully higher margins in Florida and Arizona. Margins in the Carolinas, Texas, and Colorado, while generally improving, were still below our company-wide average and generally reflected the impact of softer housing market conditions in those regions and the less supply-constrained nature of those markets. The higher overall gross margin percentage reflected our ability to raise home prices in most of our California markets during 2005 as a result of healthy housing demand combined with a constrained supply of buildable land. The higher year-over-year margins in Florida and Arizona reflected strong demand for new homes during 2004 and 2005 combined with increasing volume and cost efficiencies. Our homebuilding gross margin percentage for the 2006 first quarter is expected to be in the 27.0% to 28.0% range, while our margin for the full year is expected to be approximately 25.0%. Our 2006 full year gross margin guidance reflects a stable new home price environment, consistent with past practices, and budgets in some markets for sales incentives.

 

Selling, general and administrative expenses (including corporate G&A) for the 2005 fourth quarter increased 150 basis points to 10.5% of homebuilding revenues compared to 9.0% last year. The higher level of SG&A expenses as a percentage of homebuilding revenues was due to (1) the shifting geographic mix of our deliveries, where our non-California operations generally incur higher levels of SG&A expenses as a percentage of revenues, (2) an increase in equity-based compensation, including the cost of expensing stock options, and (3) overhead incurred in connection with our start-up operations in San Antonio, Bakersfield, the Central Valley of California and Las Vegas. Our projected SG&A rate for 2006 is expected to be approximately 11.0%, while the 2006 first quarter rate is expected to be approximately 13.0%.

 

Income from unconsolidated joint ventures was up $15.1 million for the 2005 fourth quarter to $27.8 million. The higher level of venture profits was driven by a $15.8 million increase in income from joint venture land sales to other builders, partially offset by a $700,000 decrease in joint venture homebuilding income. Deliveries from the Company’s unconsolidated homebuilding joint ventures totaled 70 new homes in the 2005 fourth quarter versus 82 last year. For 2006, we expect to generate approximately $75-$80 million in total joint venture income from approximately 475 new home deliveries and $35 million in

 

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profits from joint venture land sales to other builders. For the 2006 first quarter, we are projecting to generate $13 million in total venture income from the delivery of approximately 35 joint venture homes and $8 million in venture land sale income.

 

New orders companywide for the fourth quarter of 2005 totaled 2,154 homes (excluding 64 from unconsolidated joint ventures), an 11% decrease from the 2004 fourth quarter. The overall decline in orders resulted from the delay in a number of new community openings during the quarter as well as a slowing of demand in some of the Company’s markets from the unsustainable pace of the past several quarters. Even with this moderation in demand, the Company believes that current conditions are generally healthy in its three largest markets: California, Florida, and Arizona, while conditions are generally improving in the Carolinas, Texas and Colorado.

 

Excluding joint ventures, new home orders were up 11% year over year in Southern California on a 12% higher average community count, reflecting healthy demand for new homes and the generally supply-constrained nature of the Southern California region. In Northern California, new home orders were down 74% on a 29% lower average community count. The decrease in new home orders reflects a slowdown in order activity from the robust pace in 2004, an increased level of cancellations and a significant reduction in new communities from the 2004 level due to rapid sellouts in many San Francisco Bay Area projects earlier in 2005. New home orders were down 38% in Florida on a 6% decrease in active selling communities. A number of factors contributed to the decrease in Florida order activity: (1) continued intentional slowing of orders to better align production and sales, (2) limiting the number of investor sales, (3) a long and severe hurricane season, (4) decreased traffic, and (5) a modest increase in the cancellation rate. The Company still believes that, overall, demand for housing in Florida remains healthy. In Arizona, new home orders were down 19% on a 44% higher average community count. While the Phoenix market has experienced an adjustment in its market tone from the unsustainable pace of the last several quarters, the Company saw its order comparisons improve in December with the opening of several new communities during the quarter. The Company is still intentionally limiting the weekly number of homes available for sale at some of its Phoenix projects to address long construction cycle times. Cycle times have increased in Phoenix as a result of the tightening supply of construction labor and materials brought on by the record level of demand for new homes in this market. Orders were up 15% in the Carolinas on a flat community count, and up 176% in Texas on a 65% higher average community count. The Texas total for the 2005 fourth quarter includes 211 new home orders from 16 communities generated from the Company’s new San Antonio division. In Colorado, orders were up 10% on a flat community count. Economic conditions in the Company’s Carolina, Texas and Colorado markets continue to improve and are expected to contribute to improved housing market conditions going forward. In addition, we generated 32 orders during the fourth quarter from our new homebuilding joint venture in Chicago.

 

The Company’s cancellation rate for the 2005 fourth quarter was 25%, up from the year earlier rate of 17%. The Company’s cancellation rate was noticeably higher in Northern California, up modestly in Florida while generally in line with the year earlier rates in Arizona and Southern California.

 

The level of new home orders for the 2005 fourth quarter resulted in a strong fourth quarter backlog of 6,276 presold homes (excluding 203 joint venture homes) valued at a record $2.3 billion (excluding $118 million of joint venture backlog), an increase of 9% from the December 31, 2004 backlog value.

 

The Company ended the year with 181 active selling communities (excluding 5 joint venture communities), an 8% increase over the year earlier period. The Company is projecting to open approximately 150 new communities during 2006 with the openings evenly split between the first half and the second half of the year. As a result, the Company is targeting 220 active communities by mid year and 240 to 250 by the end of 2006.

 

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Financial Services

 

In the 2005 fourth quarter, the Company generated pretax income of $1.2 million from the Company’s financial services subsidiary, which currently offers mortgage-banking services to our homebuyers in California, Arizona, Texas, and South Florida, up 10% from the year earlier period. The increase in income was primarily driven by a higher volume of loan sales, partially offset by a lower margin on loans sold.

 

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, Orlando and Southwestern Florida, was up 11% to $635,000. The higher level of income was primarily due to an increase in the number of new home deliveries in these markets.

 

Proposed Acquisition

 

The Company and The Beechwood Organization, a New York-based homebuilder, have jointly elected to discontinue the previously announced discussions regarding the Company’s potential acquisition of Beechwood’s homebuilding operations.

 

Earnings Conference Call

 

A conference call to discuss the Company’s 2005 fourth quarter earnings will be held at 11:00 am Eastern time tomorrow, Friday, February 3, 2006. 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: 6437094).

 

Standard Pacific, one of the nation’s largest homebuilders, has built homes for more than 82,000 families during its 40-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, Florida, Arizona, the Carolinas, Texas, Colorado, and Nevada. 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, Home First Funding, Universal Land Title of South Florida and SPH Title. 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: the soundness of the Company’s business model; the expected market rank of the Company’s San Antonio operations for 2006; moderation of the Company’s housing markets and that housing demand will adjust to more normalized and sustainable levels resulting in lower absorption rates; the Company’s solid platform for internal growth and its long term prospects for growth; the strength of the Company’s balance sheet; 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; expected homebuilding gross margins; expected joint venture income and deliveries; and the Company becoming a Fortune 500 company. 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

 

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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 and affordability of 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.

 

Contact:

 

Andrew H. Parnes, Executive Vice President-Finance & CFO (949) 789-1616, aparnes@stanpac.com or Lloyd H. McKibbin, Vice President & Treasurer (949) 789-1603, lmckibbin@stanpac.com.

 

(end of text, tables follow)

 

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STANDARD PACIFIC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
December 31,
    

Year Ended

December 31,

  
     2005
     2004
     2005
     2004
  

Homebuilding:

                                 

Revenues

    $ 1,267,716     $ 1,171,275     $ 3,993,082     $ 3,341,600  

Cost of sales

      (916,073 )     (856,488 )     (2,908,422 )     (2,525,797 )
    
 
 
 

Gross margin

      351,643       314,787       1,084,660       815,803  
    
 
 
 

Selling, general and administrative expenses

      (133,239 )     (104,879 )     (439,850 )     (343,869 )

Income from unconsolidated joint ventures

      27,774       12,706       58,944       43,415  

Other income (expense)

      1,692       1,223       746       (6,203 )
    
 
 
 

Homebuilding pretax income

      247,870       223,837       704,500       509,146  
    
 
 
 

Financial Services:

                                 

Revenues

      4,935       4,969       18,279       12,854  

Expenses

      (3,716 )     (3,863 )     (14,821 )     (12,323 )

Income from unconsolidated joint ventures

      635       571       2,252       2,491  

Other income

      138       139       604       448  
    
 
 
 

Financial services pretax income

      1,992       1,816       6,314       3,470  
    
 
 
 

Income before taxes

      249,862       225,653       710,814       512,616  

Provision for income taxes

      (94,970 )     (86,817 )     (269,830 )     (196,799 )
    
 
 
 

Net Income

    $ 154,892     $ 138,836     $ 440,984     $ 315,817  
    
 
 
 

Earnings Per Share:

                                 

Basic

    $ 2.29     $ 2.07     $ 6.52     $ 4.69  

Diluted

    $ 2.22     $ 2.01     $ 6.30     $ 4.54  

Weighted Average Common Shares Outstanding:

                                 

Basic

      67,631,302       67,021,708       67,621,717       67,374,432  

Diluted

      69,775,652       69,164,716       69,969,466       69,572,206  

Cash dividends per share

    $ 0.04     $ 0.04     $ 0.16     $ 0.16  

 

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Selected Operating Data

 

     Three Months Ended
December 31,
   

Year Ended

December 31,

     2005
    2004
    2005
    2004

New homes delivered:

                            

Southern California

      769      717      1,993      2,141

Northern California

      220      413      1,173      1,166
    
  
  
  

Total California

      989      1,130      3,166      3,307
    
  
  
  

Florida

      1,038      884      3,576      2,345

Arizona

      553      435      2,014      1,676

Carolinas

      351      172      1,032      507

Texas

      504      113      1,162      561

Colorado

      123      134      461      421
    
  
  
  

Consolidated total

      3,558      2,868      11,411      8,817
    
  
  
  

Unconsolidated joint ventures:

                            

Southern California

      22      —        66      78

Northern California

      44      81      203      194

Arizona

      4      1      14      2
    
  
  
  

Total unconsolidated joint ventures

      70      82      283      274
    
  
  
  

Total (including joint ventures)

      3,628      2,950      11,694      9,091
    
  
  
  

Average selling prices of homes delivered:

                            

California (excluding joint ventures)

    $ 687,000    $ 679,000    $ 680,000    $ 646,000

Florida

    $ 240,000    $ 222,000    $ 231,000    $ 222,000

Arizona (excluding joint venture)

    $ 237,000    $ 179,000    $ 216,000    $ 183,000

Carolinas

    $ 165,000    $ 158,000    $ 160,000    $ 152,000

Texas

    $ 185,000    $ 250,000    $ 204,000    $ 242,000

Colorado

    $ 308,000    $ 324,000    $ 320,000    $ 306,000

Consolidated (excluding joint ventures)

    $ 351,000    $ 398,000    $ 347,000    $ 375,000

Unconsolidated joint ventures

    $ 798,000    $ 693,000    $ 732,000    $ 658,000

Total (including joint ventures)

    $ 360,000    $ 406,000    $ 357,000    $ 383,000

Net new orders:

                            

Southern California

      404      363      2,330      1,958

Northern California

      78      295      732      1,422
    
  
  
  

Total California

      482      658      3,062      3,380
    
  
  
  

Florida

      458      738      3,049      3,418

Arizona

      497      612      1,976      2,298

Carolinas

      191      166      1,074      607

Texas

      434      157      1,378      647

Colorado

      92      84      460      461
    
  
  
  

Consolidated total

      2,154      2,415      10,999      10,811
    
  
  
  

Unconsolidated joint ventures:

                            

Southern California

      18      1      138      20

Northern California

      14      69      127      230

Arizona

      —        1      42      4

Illinois

      32      —        32      —  
    
  
  
  

Total unconsolidated joint ventures

      64      71      339      254
    
  
  
  

Total (including joint ventures)

      2,218      2,486      11,338      11,065
    
  
  
  

 

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Selected Operating Data (continued)

 

     Three Months Ended
December 31,
   

Year Ended

December 31,

     2005
    2004
    2005
    2004

Average number of selling communities during the period:

                    

Southern California

    29    26    27    24

Northern California

    12    17    13    20
    
  
  
  

Total California

    41    43    40    44
    
  
  
  

Florida

    50    53    52    49

Arizona

    23    16    16    16

Carolinas

    17    17    19    13

Texas

    38    23    29    21

Colorado

    13    13    12    13
    
  
  
  

Consolidated total

    182    165    168    156
    
  
  
  

Unconsolidated joint ventures:

                    

Southern California

    1    1    2    1

Northern California

    2    4    3    4

Arizona

    —      1    1    1

Illinois

    —      —      —      —  
    
  
  
  

Total unconsolidated joint ventures

    3    6    6    6
    
  
  
  

Total (including joint ventures)

    185    171    174    162
    
  
  
  

 

     At December 31,
     2005
    2004

Backlog (in homes):

          

Southern California

    1,038    701

Northern California

    298    739
    
  

Total California

    1,336    1,440
    
  

Florida

    2,276    2,803

Arizona

    1,418    1,456

Carolinas

    207    165

Texas

    829    270

Colorado

    210    211
    
  

Consolidated total

    6,276    6,345
    
  

Unconsolidated joint ventures:

          

Southern California

    97    25

Northern California

    43    119

Arizona

    31    3

Illinois

    32    —  
    
  

Total unconsolidated joint ventures

    203    147
    
  

Total (including joint ventures)

    6,479    6,492
    
  

 

10

Selected Operating Data (continued)

 

     At December 31,
     2005
    2004

Backlog (estimated dollar value in thousands):

              

Southern California

    $ 738,135    $ 484,328

Northern California

      220,436      494,203
    
  

Total California

      958,571      978,531
    
  

Florida

      612,362      640,922

Arizona

      433,491      294,648

Carolinas

      34,961      26,099

Texas

      156,602      61,174

Colorado

      68,882      75,351
    
  

Consolidated total

      2,264,869      2,076,725
    
  

Unconsolidated joint ventures:

              

Southern California

      64,628      21,250

Northern California

      31,073      76,899

Arizona

      8,841      848

Illinois

      13,920      —  
    
  

Total unconsolidated joint ventures

      118,462      98,997
    
  

Total (including joint ventures)

    $ 2,383,331    $ 2,175,722
    
  

Building sites owned or controlled:

              

Southern California

      15,795      11,704

Northern California

      7,891      5,047
    
  

Total California

      23,686      16,751
    
  

Florida

      15,814      15,474

Arizona

      12,371      9,858

Carolinas

      5,335      3,773

Texas

      13,251      3,157

Colorado

      1,611      2,489

Nevada

      2,255      —  

Illinois

      220      —  
    
  

Total (including joint ventures)

      74,543      51,502
    
  

Total building sites owned

      54,374      25,832

Total building sites optioned

      8,785      17,355

Total joint venture lots

      11,384      8,315
    
  

Total (including joint ventures)

      74,543      51,502
    
  

Completed and unsold homes:

              

Consolidated

      318      202

Joint Ventures

      3      6
    
  

Total (including joint ventures)

      321      208
    
  

Homes under construction:

              

Consolidated

      6,080      5,787

Joint Ventures

      534      157
    
  

Total (including joint ventures)

      6,614      5,944
    
  

 

11

Selected Financial Data

 

     Three Months Ended
December 31,
  
     2005
     2004
  
     (Dollars in thousands)  

Net income

    $ 154,892     $ 138,836  

Net cash provided by (used in) operating activities

    $ 134,479     $ 356,438  

Net cash provided by (used in) investing activities

    $ (69,842 )   $ (39,826 )

Net cash provided by (used in) financing activities

    $ (51,296 )   $ (183,277 )

Adjusted Homebuilding EBITDA(1)

    $ 274,176     $ 250,325  

Homebuilding SG&A as a percentage of homebuilding revenues

      10.5 %     9.0 %

Homebuilding interest incurred and capitalized to inventories owned

    $ 27,146     $ 20,952  

Ratio of LTM Adjusted Homebuilding EBITDA to homebuilding interest incurred

      8.3 x     6.9 x
(1) Adjusted Homebuilding EBITDA means net income (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) expensing of previously capitalized interest included in cost of sales, (c) material noncash impairment charges, if any, (d) homebuilding depreciation and amortization, (e) amortization of stock-based compensation, (f) income from unconsolidated joint ventures and (g) income 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.

 

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

 

     Three Months Ended
December 31,
     Year Ended
December 31,
  
     2005
     2004
     2005
     2004
  
     (Dollars in thousands)  

Net cash provided by (used in) operating activities

    $ 134,479     $ 356,438     $ (205,244 )   $ 99,667  

Add:

                                 

Income taxes

      94,970       86,817       269,830       196,799  

Expensing of previously capitalized interest included in cost of sales

      21,170       20,850       64,580       59,382  

Less:

                                 

Income from financial services subsidiary

      1,219       1,106       3,458       531  

Depreciation and amortization from financial services subsidiary

      147       136       580       472  

Loss on early extinguishment of debt

      —         —         5,938       10,154  

Net changes in operating assets and liabilities:

                                 

Trade and other receivables

      60,767       5,576       89,134       6,507  

Inventories-owned

      (18,437 )     (145,767 )     559,766       281,171  

Inventories-not owned

      54,786       (18,235 )     69,407       50,611  

Deferred income taxes

      16,570       11,599       20,700       11,620  

Other assets

      (6,140 )     (8,360 )     14,114       5,594  

Accounts payable

      (7,913 )     (7,340 )     (16,267 )     (16,326 )

Accrued liabilities

      (74,710 )     (50,011 )     (64,968 )     (84,738 )

Liabilities from inventories not owned

      —         —         —         3,958  
    
 
 
 

Adjusted Homebuilding EBITDA

    $ 274,176     $ 250,325     $ 791,076     $ 603,088  
    
 
 
 
     Three Months Ended
December 31,
     Year Ended
December 31,
  
     2005
     2004
     2005
     2004
  
     (Dollars in thousands)  

Net income

    $ 154,892     $ 138,836     $ 440,984     $ 315,817  

Add:

                                 

Cash distributions of income from unconsolidated joint ventures

      26,551       15,031       61,725       67,457  

Income taxes

      94,970       86,817       269,830       196,799  

Expensing of previously capitalized interest included in cost of sales

      21,170       20,850       64,580       59,382  

Homebuilding depreciation and amortization

      1,536       986       5,361       3,572  

Amortization of stock-based compensation

      4,685       2,188       13,250       6,498  

Less:

                                 

Income from unconsolidated joint ventures

      28,409       13,277       61,196       45,906  

Income from financial services subsidiary

      1,219       1,106       3,458       531  
    
 
 
 

Adjusted Homebuilding EBITDA

    $ 274,176     $ 250,325     $ 791,076     $ 603,088  
    
 
 
 

 

12

Balance Sheet Data

(Dollars in thousands, except per share amounts)

 

     At December 31,
  
     2005
     2004
  

Stockholders’ equity per share

    $ 25.91     $ 19.66  

Ratio of total debt to total book capitalization(1)

      49.4 %     46.8 %

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

      46.5 %     40.8 %

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

      2.1 x     1.9 x

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

      1.9 x     1.5 x

Homebuilding interest capitalized in inventories owned

    $ 80,988     $ 58,620  

Homebuilding interest capitalized as a percentage of inventories owned

      2.8 %     2.8 %
(1) Total debt at December 31, 2005 and 2004 includes $123.4 million and $81.9 million, respectively, of indebtedness of the Company’s financial services subsidiary and $43.2 million and $29.6 million, respectively, of indebtedness included in liabilities from inventories not owned.

 

(2) Net homebuilding debt reflects the offset of $13.8 million and $136.7 million in cash and equivalents at December 31, 2005 and 2004, respectively, against homebuilding debt of $1,528.4 million and $1,049.4 million, respectively. Adjusted net homebuilding debt at December 31, 2005 and 2004 is further adjusted to exclude $123.4 million and $81.9 million, respectively, of indebtedness of the Company’s financial services subsidiary and $43.2 million and $29.6 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.

 

13

STANDARD PACIFIC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Dollars in thousands)

 

     December 31,
2005
   

December 31,

2004

     (Unaudited)     
ASSETS              

Homebuilding:

              

Cash and equivalents

    $ 18,824    $ 141,697

Trade and other receivables

      74,986      27,049

Inventories:

              

Owned

      2,928,850      2,111,868

Not owned

      590,315      268,028

Investments in and advances to unconsolidated joint ventures

      285,760      205,429

Deferred income taxes

      58,681      37,981

Goodwill and other intangibles, net

      120,396      85,849

Other assets

      60,052      33,857
    
  
       4,137,864      2,911,758
    
  

Financial Services:

              

Cash and equivalents

      9,799      9,107

Mortgage loans held for sale

      129,835      88,570

Other assets

      3,344      3,798
    
  
       142,978      101,475
    
  

Total Assets

    $ 4,280,842    $ 3,013,233
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY              

Homebuilding:

              

Accounts payable

    $ 115,082    $ 96,470

Accrued liabilities

      345,294      286,125

Liabilities from inventories not owned

      48,737      32,390

Revolving credit facility

      183,100      —  

Trust deed and other notes payable

      97,031      26,340

Senior notes payable

      1,099,153      874,068

Senior subordinated notes payable

      149,124      149,026
    
  
       2,037,521      1,464,419
    
  

Financial Services:

              

Accounts payable and other liabilities

      2,246      2,127

Mortgage credit facilities

      123,426      81,892
    
  
       125,672      84,019
    
  

Total Liabilities

      2,163,193      1,548,438
    
  

Minority Interests

      378,490      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; 67,129,010 and 67,234,698 shares outstanding, respectively

      671      672

Additional paid-in capital

      405,638      418,591

Retained earnings

      1,332,850      902,732
    
  

Total Stockholders’ Equity

      1,739,159      1,321,995
    
  

Total Liabilities and Stockholders’ Equity

    $ 4,280,842    $ 3,013,233
    
  

 

14