Exhibit 99.1
News Release
Standard Pacific Corp. Reports 2009 Third Quarter Results
IRVINE, CALIFORNIA, October 29, 2009. Standard Pacific Corp. (NYSE:SPF) today announced operating results for its third quarter ended September 30, 2009. Homebuilding revenues for the 2009 third quarter were $327.4 million (including $57.5 million in land sale revenues), down 18% from $400.3 million last year. The Company generated a net loss of $23.8 million, or $0.10 per diluted share, versus a net loss of $369.9 million, or $2.54 per diluted share, for the year earlier period. The 2009 third quarter results included asset impairment charges of $7.8 million, which related primarily to the sale of a podium building and land, versus $368.4 million in impairments in the prior year period. The 2009 third quarter results also included $10.1 million in debt and other restructuring charges and a $9.3 million charge related to the deferred tax asset generated during the quarter. Excluding asset impairment and restructuring charges, the Company generated a 2009 third quarter net loss of approximately $3.6 million*, or $0.01 per diluted share.*
During the quarter, the Company generated $112.6 million of cash flows from operations, driven primarily from a $104.0 million decrease in inventories (including $56.2 million related to the sale of a podium building and land). The Company ended the quarter with $806.8 million of homebuilding cash (including $283.3 million of restricted cash, $257.6 million of which was held in escrow related to the issuance of $280 million of 10¾% senior notes due 2016). On October 9, 2009, the Company completed a refinancing transaction pursuant to which it utilized the $257.6 million of net proceeds from the issuance of the 10¾% senior notes due 2016 and cash on hand to repurchase approximately $133.4 million, $122.0 million and $3.4 million of senior notes due 2010, 2011 and 2013, respectively. The Company also exchanged $32.8 million of its 2012 senior subordinated convertible notes during the quarter for approximately 7.6 million shares of common stock at an effective price of $4.30 per share. Finally, the Company repaid the remaining $37.1 million balance on its Term Loan A credit facility, the $22.9 million balance on its revolving credit facility, $51.3 million of other indebtedness and assumed $52.1 million of joint venture recourse debt during the quarter. In connection with these financing transactions, the Company recorded an $8.8 million non-cash loss on the early extinguishment of debt.
As a result of these transactions, the Company reduced the amount of senior notes, revolving credit facility and Term Loan A indebtedness that was scheduled to mature before 2013 from $528 million to $180 million ($15 million in 2010, $49 million in 2011 and $116 million in 2012). Since just prior to the closing of the MatlinPatterson transaction in June 2008, the Company has reduced the principal amount of its total homebuilding and joint venture recourse debt by over $725 million from $2.0 billion to $1.27 billion and has reduced the amount of homebuilding and joint venture recourse debt maturing prior to 2013 from $1.33 billion to $322 million (including $180 million of senior notes, $97 million of project specific debt and $45 million of joint venture recourse debt related to three joint ventures).
Ken Campbell, the Company’s President and CEO stated, “With over $500 million of cash in the bank, anticipated near-term positive cash flows from operations and the significant reduction in the amount of our debt that is scheduled to mature in the next three years, we believe we have ample liquidity to acquire land assets to support our growth when the upturn in the housing market occurs.”
Mr. Campbell continued, “Holding our gross margins at 18% and our SG&A rate at 15% during the quarter is not great performance, but gives a good indication of the margins built into our inventory and positions us reasonably well for significant improvements in profitability with only small improvements in the housing market.”
Homebuilding Operations
The Company generated a homebuilding pretax loss for the 2009 third quarter of $24.8 million compared to a pretax loss of $389.4 million in the year earlier period. The Company’s homebuilding pretax loss for the 2009 third quarter included $7.8 million of asset impairment charges, $8.8 million of loss on early extinguishment of debt and $1.6 million in restructuring charges. The decrease in pretax loss was primarily the result of a $360.5 million decrease in impairment charges and a $33.2 million decrease in the Company’s SG&A expenses. These changes were partially offset by a $9.3 million reduction in gross margin (excluding impairments), an $8.7 million increase in non-capitalized interest expense and a $7.0 million increase in loss on early extinguishment of debt.
Homebuilding revenues decreased 18% to $327.4 million during the 2009 third quarter primarily due to a 25% decrease in new home deliveries to 893 homes and a 9% decline in consolidated average home price to $302,000. These decreases were offset in part by a $52.1 million increase in land sale revenues in the 2009 third quarter. The Company’s average home price was flat with the 2009 second quarter at $302,000 and was slightly positive on a same community basis.
The Company’s homebuilding gross margin (including land sales) for the 2009 third quarter was 13.0% compared to a negative 51.9% in the prior year period. The 2009 third quarter gross margin included $7.7 million in inventory impairment charges, which were included in cost of land sales and related to the sale of a podium building in Southern California and a land sale in Florida. Excluding land sales and the related inventory impairment charges, the Company’s 2009 third quarter gross margin from home sales would have been 18.6%* versus 14.1%* for the 2008 third quarter. The 450 basis point increase in the year-over-year adjusted gross margin was driven primarily by higher margins in California and lower direct construction costs as a result of value engineering and the rebidding of contracts.
The Company’s 2009 third quarter selling, general and administrative (“SG&A”) expenses (including Corporate G&A) decreased $33.2 million, or 43%, from the year earlier period resulting in an SG&A rate of 13.3% versus 19.2% in the prior year period. The Company’s 2009 third quarter results included approximately $1.5 million in homebuilding restructuring charges related to severance and lease terminations, all of which was included in the Company’s SG&A expenses. Excluding land sale revenues and restructuring charges, the Company’s 2009 third quarter SG&A rate was 15.6%* versus 18.7%* for the 2008 third quarter despite a 32% decrease in home sale revenues.
Net new orders (excluding joint ventures and discontinued operations) for the 2009 third quarter decreased 3% from the 2008 third quarter to 893 new homes on a 28% decrease in the number of average active selling communities from the prior year period from 186 to 134. The Company’s cancellation rate for the three months ended September 30, 2009 was 15%, down from 16% for the 2009 second quarter and 26% for the 2008 third quarter. The Company’s monthly sales absorption rate for the 2009 third quarter was 2.2 per community, up from the prior year third quarter rate of 1.7 per community, but down from 2.7 per community for the 2009 second quarter. The improvement in the Company’s sales absorption rate during the quarter as compared to the 2008 third quarter was due to increases in most of its markets on a per community basis with absorption rates relatively better in California, Arizona and Florida.
The dollar value of the Company’s backlog (excluding joint ventures) decreased 17% to $329.7 million, or 995 homes, as compared to the 2008 third quarter value, but was up 7% from the 2009 second quarter backlog value.
Earnings Conference Call
A conference call to discuss the Company’s 2009 third quarter will be held at 1:00 p.m. Eastern Time Friday, October 30, 2009. The call will be broadcast live over the Internet and can be accessed through the Company’s website at http://standardpacifichomes.com/ir. The call will also be accessible via telephone by dialing (888) 213-3752 (domestic) or (913) 981-5510 (international); Passcode: 5369884. The entire audio transmission with the synchronized slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 5369884.
About Standard Pacific
Standard Pacific, one of the nation’s largest homebuilders, has built more than 108,000 homes during its 43-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The Company provides mortgage financing and title services to its homebuyers through Standard Pacific Mortgage 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: trends in new home orders, deliveries, average home price and backlog; anticipated cash flows and future profitability; the sufficiency of our liquidity to support growth; and the future condition of the housing market. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company’s control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions of terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our credit agreements, public notes, and private term loans and our ability to comply with their covenants and repay such debt as it comes due; a negative change in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company’s business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company’s mortgage banking operations; future business decisions and the Company’s ability to successfully implement the Company’s operational and other strategies; litigation and warranty claims; and other risks discussed in the Company’s filings with the Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 and subsequent Quarterly Reports on Form 10-Q. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
Contact:
John Stephens, SVP & CFO (949) 789-1641, jstephens@stanpac.com or
Lloyd McKibbin, SVP & Treasurer (949) 789-1603, lmckibbin@stanpac.com.
| | *Please see “Reconciliation of Non-GAAP Financial Measures” on page 8. |
###
(Note: Tables follow)
KEY STATISTICS AND FINANCIAL DATA**
| | | | As of or For the Three Months Ended |
| | | | | | | | | | % or | | | | | % or |
| | | | September 30, | | September 30, | | Percentage | | June 30, | | Percentage |
| | | | 2009 | | 2008 | | Change | | 2009 | | Change |
| | | | (Dollars in thousands, except average selling price) |
| Operating Data: | | | | | | | | | | | | |
| Deliveries (1) | | 893 | | | 1,188 | | (25%) | | | 942 | | (5%) |
| Average selling price (1) | $ | 302,000 | | $ | 332,000 | | (9%) | | $ | 302,000 | | 0% |
| Homebuilding revenues | $ | 327,411 | | $ | 400,340 | | (18%) | | $ | 289,672 | | 13% |
| Gross margin % | | 13.0% | | | (51.9%) | | 64.9% | | | 13.5% | | (0.5%) |
| Gross margin % from home sales (excluding impairments)* | | 18.6% | | | 14.1% | | 4.5% | | | 18.5% | | 0.1% |
| Impairments and write-offs | $ | 7,814 | | $ | 368,354 | | (98%) | | $ | 21,270 | | (63%) |
| Restructuring charges | $ | 1,315 | | $ | 4,181 | | (69%) | | $ | 5,504 | | (76%) |
| SG&A % | | 13.3% | | | 19.2% | | (5.9%) | | | 15.9% | | (2.6%) |
| SG&A % (excluding restructuring charges and land sales)* | | 15.6% | | | 18.7% | | (3.1%) | | | 14.6% | | 1.0% |
| | | | | | | | | | | | | | | |
| Net new orders (1) | | 893 | | | 921 | | (3%) | | | 1,169 | | (24%) |
| Monthly sales absorption rate per community (1) | | 2.2 | | | 1.7 | | 29% | | | 2.7 | | (19%) |
| Cancellation rate (1) | | 15% | | | 26% | | (11%) | | | 16% | | (1%) |
| Average active selling communities (1) | | 134 | | | 186 | | (28%) | | | 144 | | (7%) |
| Backlog (homes) (1) | | 995 | | | 1,248 | | (20%) | | | 982 | | 1% |
| Backlog (dollar value) (1) | $ | 329,661 | | $ | 395,657 | | (17%) | | $ | 308,540 | | 7% |
| | | | | | | | | | | | | | | |
| Cash flows (uses) from operating activities | $ | 112,572 | | $ | 31,933 | | 253% | | $ | 68,595 | | 64% |
| Cash flows (uses) from investing activities | $ | (9,241) | | $ | (11,111) | | (17%) | | $ | (10,128) | | (9%) |
| Cash flows (uses) from financing activities | $ | (147,732) | | $ | 116,719 | | (227%) | | $ | (32,681) | | 352% |
| Land purchases | $ | 21,595 | | $ | 9,267 | | 133% | | $ | 7,857 | | 175% |
| Adjusted Homebuilding EBITDA (2) | $ | 31,749 | | $ | 13,126 | | 142% | | $ | 32,963 | | (4%) |
| Homebuilding interest incurred | $ | 26,218 | | $ | 34,428 | | (24%) | | $ | 26,797 | | (2%) |
| Homebuilding interest capitalized to inventories owned | $ | 12,836 | | $ | 28,890 | | (56%) | | $ | 14,106 | | (9%) |
| Homebuilding interest capitalized to investments | | | | | | | | | | | | |
in unconsolidated joint ventures | $ | 749 | | $ | 1,600 | | (53%) | | $ | 956 | | (22%) |
| | | | | | | | | | | | | | | |
| | | | As of |
| | | | September 30, 2009 | | June 30, 2009 | | % or Percentage Change | | December 31, 2008 | | % or Percentage Change |
| | | | (Dollars in thousands, except per share amounts) |
| Balance Sheet Data: | | | | | | | | | | | | |
| Homebuilding cash (including restricted cash) | $ | 806,766 | | $ | 573,038 | | 41% | | $ | 626,379 | | 29% |
| Inventories owned | $ | 1,074,153 | | $ | 1,115,556 | | (4%) | | $ | 1,262,521 | | (15%) |
| Building sites owned or controlled | | 20,020 | | | 22,012 | | (9%) | | | 24,136 | | (17%) |
| Homes under construction (1) | | 1,106 | | | 1,041 | | 6% | | | 1,326 | | (17%) |
| Completed specs (excluding podium projects) (1) | | 163 | | | 258 | | (37%) | | | 589 | | (72%) |
| Completed specs - podium projects (1) | | 193 | | | 193 | | 0% | | | - | | - |
| Deferred tax asset valuation allowance | $ | 691,464 | | $ | 682,186 | | 1% | | $ | 654,107 | | 6% |
| Homebuilding debt | $ | 1,451,336 | | $ | 1,275,300 | | 14% | | $ | 1,486,437 | | (2%) |
| Joint venture recourse debt | $ | 45,189 | | $ | 112,141 | | (60%) | | $ | 173,894 | | (74%) |
| Stockholders' equity | $ | 349,591 | | $ | 346,512 | | 1% | | $ | 407,941 | | (14%) |
| Stockholders' equity per share (including as-converted | | | | | | | | | | | | |
| preferred stock) (3) | $ | 1.40 | | $ | 1.44 | | (3%) | | $ | 1.70 | | (18%) |
| Total debt to book capitalization (4) | | 81.0% | | | 79.3% | | 1.7% | | | 79.2% | | 1.8% |
| Adjusted net homebuilding debt to book capitalization (5) | | 65.0% | | | 67.1% | | (2.1%) | | | 68.0% | | (3.0%) |
*Please see “Reconciliation of Non-GAAP Financial Measures” on page 8.
**Please see “Notes to Key Statistics and Financial Data” beginning on page 9.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(2008 as Adjusted(1))
| | | | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | | | 2009 | | 2008 | | 2009 | | 2008 |
| | | | | (Dollars in thousands, except per share amounts) |
| Homebuilding: | | | | | | | | | | | |
| | Home sale revenues | $ | 269,873 | | $ | 394,942 | | $ | 760,312 | | $ | 1,145,608 |
| | Land sale revenues | | 57,538 | | | 5,398 | | | 66,306 | | | 13,609 |
| | | Total revenues | | 327,411 | | | 400,340 | | | 826,618 | | | 1,159,217 |
| | Cost of home sales | | (219,641) | | | (548,622) | | | (661,211) | | | (1,462,654) |
| | Cost of land sales | | (65,147) | | | (59,375) | | | (75,578) | | | (97,704) |
| | | Total cost of sales | | (284,788) | | | (607,997) | | | (736,789) | | | (1,560,358) |
| | | | Gross margin | | 42,623 | | | (207,657) | | | 89,829 | | | (401,141) |
| | | | Gross margin % | | 13.0% | | | (51.9%) | | | 10.9% | | | (34.6%) |
| | Selling, general and administrative expenses | | (43,695) | | | (76,894) | | | (142,100) | | | (235,473) |
| | Loss from unconsolidated joint ventures | | (1,960) | | | (91,937) | | | (4,449) | | | (130,322) |
| | Interest expense | | (12,633) | | | (3,938) | | | (35,409) | | | (3,938) |
| | Loss on early extinguishment of debt | | (8,824) | | | (1,841) | | | (3,457) | | | (11,339) |
| | Other income (expense) | | (305) | | | (7,100) | | | (1,309) | | | (10,145) |
| | | | Homebuilding pretax loss | | (24,794) | | | (389,367) | | | (96,895) | | | (792,358) |
| Financial Services: | | | | | | | | | | | |
| | Revenues | | 3,762 | | | 2,492 | | | 10,095 | | | 10,897 |
| | Expenses | | (2,753) | | | (3,106) | | | (9,009) | | | (11,063) |
| | Income from unconsolidated joint ventures | | - | | | 284 | | | 119 | | | 659 |
| | Other income | | 19 | | | 17 | | | 108 | | | 128 |
| | | | Financial services pretax income (loss) | | 1,028 | | | (313) | | | 1,313 | | | 621 |
| Loss from continuing operations before income taxes | | (23,766) | | | (389,680) | | | (95,582) | | | (791,737) |
| (Provision) benefit for income taxes | | (33) | | | 19,840 | | | (298) | | | (42,030) |
| Loss from continuing operations | | (23,799) | | | (369,840) | | | (95,880) | | | (833,767) |
| Loss from discontinued operations, net of income taxes | | (45) | | | (69) | | | (569) | | | (2,005) |
| Net loss | | | (23,844) | | | (369,909) | | | (96,449) | | | (835,772) |
| Less: Net loss allocated to preferred stockholders | | 14,500 | | | 165,213 | | | 59,022 | | | 188,354 |
| Net loss available to common stockholders | $ | (9,344) | | $ | (204,696) | | $ | (37,427) | | $ | (647,418) |
| | | | | | | | | | | | | | | |
| Basic loss per share: | | | | | | | | | | | |
| | Continuing operations | $ | (0.10) | | $ | (2.54) | | $ | (0.40) | | $ | (8.59) |
| | Discontinued operations | | - | | | - | | | - | | | (0.02) |
| | Basic loss per share | $ | (0.10) | | $ | (2.54) | | $ | (0.40) | | $ | (8.61) |
| | | | | | | | | | | | | | | |
| Diluted loss per share: | | | | | | | | | | | |
| | Continuing operations | $ | (0.10) | | $ | (2.54) | | $ | (0.40) | | $ | (8.59) |
| | Discontinued operations | | - | | | - | | | - | | | (0.02) |
| | Diluted loss per share | $ | (0.10) | | $ | (2.54) | | $ | (0.40) | | $ | (8.61) |
| | | | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | |
| | Basic | | | 95,250,351 | | | 80,681,394 | | | 93,731,253 | | | 75,155,044 |
| | Diluted | | 243,063,137 | | | 145,800,364 | | | 241,544,039 | | | 97,019,962 |
__________________
| (1) | Certain 2008 amounts have been retroactively adjusted to reflect the adoption of APB No. 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement).” |
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share amounts)
(2008 as Adjusted(1))
| | | | | | | September 30, | | | December 31, |
| | | | | | | 2009 | | | 2008 |
| ASSETS | (unaudited) | | | |
| Homebuilding: | | | | | | | |
| | Cash and equivalents | $ | 523,474 | | $ | 622,157 |
| | Restricted cash | | | 283,292 | | | 4,222 |
| | Trade and other receivables | | 17,677 | | | 21,008 |
| | Inventories: | | | | | | | |
| | | Owned | | | | 1,074,153 | | | 1,262,521 |
| | | Not owned | | | 33,389 | | | 42,742 |
| | Investments in unconsolidated joint ventures | | 38,548 | | | 50,468 |
| | Deferred income taxes | | 10,383 | | | 14,122 |
| | Other assets | | | | 21,263 | | | 145,567 |
| | | | | | | | 2,002,179 | | | 2,162,807 |
| Financial Services: | | | | | | |
| | Cash and equivalents | | 6,524 | | | 3,681 |
| | Restricted cash | | | 2,295 | | | 4,295 |
| | Mortgage loans held for sale | | 42,625 | | | 63,960 |
| | Mortgage loans held for investment | | 10,734 | | | 11,736 |
| | Other assets | | | | 4,373 | | | 4,792 |
| | | | | | | | 66,551 | | | 88,464 |
| Assets of discontinued operations | | 159 | | | 1,217 |
| | | | | Total Assets | $ | 2,068,889 | | $ | 2,252,488 |
| | | | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | |
| Homebuilding: | | | | | | | |
| | Accounts payable | | $ | 22,928 | | $ | 40,225 |
| | Accrued liabilities | | | 179,473 | | | 216,418 |
| | Liabilities from inventories not owned | | 22,440 | | | 24,929 |
| | Revolving credit facility | | - | | | 47,500 |
| | Secured project debt and other notes payable | | 96,816 | | | 111,214 |
| | Senior notes payable | | 1,251,193 | | | 1,204,501 |
| | Senior subordinated notes payable | | 103,327 | | | 123,222 |
| | | | | | | | 1,676,177 | | | 1,768,009 |
| Financial Services: | | | | | | |
| | Accounts payable and other liabilities | | 1,731 | | | 3,657 |
| | Mortgage credit facilities | | 38,798 | | | 63,655 |
| | | | | | | | 40,529 | | | 67,312 |
| Liabilities of discontinued operations | | 854 | | | 1,331 |
| | | | | Total Liabilities | | 1,717,560 | | | 1,836,652 |
| | | | | | | | | | | |
| Equity: | | | | | | | | | |
| | Stockholders' Equity: | | | | | |
| | | Preferred stock, $0.01 par value; 10,000,000 shares authorized; 450,829 shares issued and outstanding | | | | | |
| | | | at September 30, 2009 and December 31, 2008, respectively | | 5 | | | 5 |
| | | Common stock, $0.01 par value; 600,000,000 shares authorized; 105,119,880 and 100,624,350 shares | | | | | |
| | | | issued and outstanding at September 30, 2009 and December 31, 2008, respectively | | 1,051 | | | 1,006 |
| | | Additional paid-in capital | | 1,028,624 | | | 996,492 |
| | | Accumulated deficit | | (663,291) | | | (566,842) |
| | | Accumulated other comprehensive loss, net of tax | | (16,798) | | | (22,720) |
| | | | Total Stockholders' Equity | | 349,591 | | | 407,941 |
| | Noncontrolling Interests | | 1,738 | | | 7,895 |
| | | Total Equity | | | 351,329 | | | 415,836 |
| | | | | Total Liabilities and Equity | $ | 2,068,889 | | $ | 2,252,488 |
__________________
| (1) | Certain 2008 amounts have been retroactively adjusted to reflect the adoption of APB No. 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement).” |
REGIONAL OPERATING DATA
| | | | | Three Months Ended September 30, |
| | | | | 2009 | | 2008 |
| | | | | Homes | | Avg. Selling Price | | Homes | | Avg. Selling Price |
| New homes delivered: | | | | | | | | | | | |
| | California | | 347 | | $ | 442,000 | | | 435 | | $ | 482,000 |
| | Arizona | | 75 | | | 202,000 | | | 132 | | | 215,000 |
| | Texas (1) | | 82 | | | 269,000 | | | 165 | | | 291,000 |
| | Colorado | | 37 | | | 312,000 | | | 62 | | | 358,000 |
| | Nevada | | 5 | | | 226,000 | | | 22 | | | 278,000 |
| | Florida | | 235 | | | 181,000 | | | 220 | | | 206,000 |
| | Carolinas | | 112 | | | 216,000 | | | 152 | | | 233,000 |
| | | | Consolidated total | | 893 | | | 302,000 | | | 1,188 | | | 332,000 |
| | Unconsolidated joint ventures | | 15 | | | 548,000 | | | 66 | | | 578,000 |
| | Discontinued operations | | 1 | | | 130,000 | | | 14 | | | 176,000 |
| | Total (including joint ventures) | | 909 | | $ | 306,000 | | | 1,268 | | $ | 343,000 |
| | | | | Three Months Ended September 30, | | |
| | | | | 2009 | | 2008 | | |
| | | | | Homes | | Avg. Selling Communities | | Homes | | Avg. Selling Communities | | % Change Same Store |
| Net new orders: | | | | | | | | | |
| | California | 377 | | 49 | | 340 | | 60 | | 36% |
| | Arizona | 79 | | 7 | | 100 | | 13 | | 47% |
| | Texas (1) | 96 | | 19 | | 117 | | 29 | | 25% |
| | Colorado | 34 | | 6 | | 54 | | 8 | | (16%) |
| | Nevada | 2 | | 2 | | 15 | | 2 | | (87%) |
| | Florida | 189 | | 28 | | 168 | | 45 | | 81% |
| | Carolinas | 116 | | 23 | | 127 | | 29 | | 15% |
| | | | Consolidated total | 893 | | 134 | | 921 | | 186 | | 35% |
| | Unconsolidated joint ventures | 28 | | 5 | | 49 | | 11 | | 26% |
| | Discontinued operations | 1 | | - | | 8 | | - | | - |
| | Total (including joint ventures) | 922 | | 139 | | 978 | | 197 | | 34% |
| | | | | At September 30, |
| | | | | 2009 | | 2008 |
| | Homes | | Value | | Homes | | Value |
| Backlog ($ in thousands): | | | | | | | | | | | |
| | California | | 424 | | $ | 190,185 | | | 384 | | $ | 177,890 |
| | Arizona | | 102 | | | 21,815 | | | 140 | | | 30,413 |
| | Texas | | | 137 | | | 42,849 | | | 219 | | | 64,950 |
| | Colorado | | 60 | | | 18,022 | | | 103 | | | 31,609 |
| | Nevada | | 1 | | | 213 | | | 14 | | | 3,408 |
| | Florida | | 161 | | | 31,457 | | | 261 | | | 57,880 |
| | Carolinas | | 110 | | | 25,120 | | | 127 | | | 29,507 |
| | | | Consolidated total | | 995 | | | 329,661 | | | 1,248 | | | 395,657 |
| | Unconsolidated joint ventures | | 22 | | | 10,722 | | | 49 | | | 35,443 |
| | Total (including joint ventures) | | 1,017 | | $ | 340,383 | | | 1,297 | | $ | 431,100 |
__________________
| (1) | Texas excludes the San Antonio division, which is classified as a discontinued operation. |
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
The table set forth below reconciles the Company's earnings (loss) for the three months ended September 30, 2009 and 2008 to earnings (loss) excluding the after-tax impairment, restructuring, loss on early extinguishment of debt and deferred tax asset valuation charges:
| | Three Months Ended September 30, |
| | 2009 | | 2008 |
| | (Dollars in thousands, except per share amounts) |
| | | | | | |
| Net income (loss) | $ | (23,844) | | $ | (369,909) |
| Add: Impairment charges, net of income taxes | | 4,774 | | | 225,064 |
| Add: Restructuring charges, net of income taxes | | 804 | | | 2,555 |
| Add: Loss on early extinguishment of debt, net of income taxes | | 5,391 | | | 1,125 |
| Add: Deferred tax asset charge | | 9,278 | | | 134,088 |
| Net income (loss), as adjusted | $ | (3,597) | | $ | (7,077) |
| | | | | | |
| Diluted earnings (loss) per share | $ | (0.01) | | $ | (0.05) |
| Diluted shares outstanding | | 243,063,137 | | | 145,800,364 |
The table set forth below reconciles the Company's homebuilding gross margin percentage and gross margin percentage from home sales for the three months ended September 30, 2009 and 2008, and June 30, 2009, excluding housing inventory impairment charges:
| | Three Months Ended |
| | September 30, 2009 | | Gross Margin % | | September 30, 2008 | | Gross Margin % | | June 30, 2009 | | Gross Margin % |
| | (Dollars in thousands) |
| | | | | | | | | | | | | | | |
| Homebuilding gross margin | $ | 42,623 | | 13.0% | | $ | (207,657) | | (51.9%) | | $ | 39,108 | | 13.5% |
| Less: Land sale revenues | | (57,538) | | | | | (5,398) | | | | | (5,466) | | |
| Add: Cost of land sales | | 65,147 | | | | | 59,375 | | | | | 5,696 | | |
| Gross margin from home sales | | 50,232 | | 18.6% | | | (153,680) | | (38.9%) | | | 39,338 | | 13.8% |
| Add: Housing inventory impairment charges | | - | | | | | 209,228 | | | | | 13,129 | | |
| Gross margin from home sales, as adjusted | $ | 50,232 | | 18.6% | | $ | 55,548 | | 14.1% | | $ | 52,467 | | 18.5% |
The table set forth below reconciles the Company’s SG&A rate for the three months ended September 30, 2009 and 2008, and June 30, 2009 to the SG&A rate excluding restructuring charges and the SG&A rate excluding land sale revenues and restructuring charges:
| | Three Months Ended |
| | September 30, 2009 | | SG&A% (excl. land sales) | | September 30, 2008 | | SG&A% (excl. land sales) | | June 30, 2009 | | SG&A% (excl. land sales) |
| | (Dollars in thousands) |
| | | | | | | | | | | | | | | |
| Selling, general and administrative expenses | $ | 43,695 | | 16.2% | | $ | 76,894 | | 19.5% | | $ | 46,026 | | 16.2% |
| Less: Restructuring charges | | (1,495) | | (0.6%) | | | (2,977) | | (0.8%) | | | (4,650) | | (1.6%) |
| Selling, general and administrative expenses, | | | | | | | | | | | | | |
| excluding restructuring charges | $ | 42,200 | | 15.6% | | $ | 73,917 | | 18.7% | | $ | 41,376 | | 14.6% |
We believe that the measures described above, which exclude the effect of impairment, tax valuation and restructuring charges, and loss on early extinguishment of debt, are useful to investors as they provide investors with a perspective on the underlying operating performance of the business by isolating the impact of charges related to impairments, tax valuation and restructuring charges, and loss on early extinguishment of debt. However, it should be noted that such measures are not GAAP financial measures. Due to the significance of the GAAP components excluded, such measures should not be considered in isolation or as an alternative to operating performance measures prescribed by GAAP.
NOTES TO KEY STATISTICS AND FINANCIAL DATA
| (1) | Excludes unconsolidated joint ventures and discontinued operations. |
| (2) | Adjusted Homebuilding EBITDA means net income (loss) (plus cash distributions of income from unconsolidated joint ventures) before (a) income taxes, (b) homebuilding interest expense (c) expensing of previously capitalized interest included in cost of sales, (d) impairment charges, (e) (gain) loss on early extinguishment of debt (f) homebuilding depreciation and amortization, (g) amortization of stock-based compensation, (h) income (loss) from unconsolidated joint ventures and (i) income (loss) from financial services subsidiary. Other companies may calculate Adjusted Homebuilding EBITDA (or similarly titled measures) differently. We believe Adjusted Homebuilding EBITDA information is useful to investors as one measure of the Company’s 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. |
For the three and twelve months ended September 30, 2009 and 2008, and three months ended June 30, 2009, EBITDA and Adjusted Homebuilding EBITDA from continuing and discontinued operations was calculated as follows:
| | | | Three Months Ended | | LTM Ended September 30, |
| | | | September 30, 2009 | | September 30, 2008 | | June 30, 2009 | | 2009 | | 2008 |
| | | | (Dollars in thousands) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | $ | (23,844) | | $ | (369,909) | | $ | (23,133) | | $ | (494,292) | | $ | (1,276,776) |
| | Provision (benefit) for income taxes | | - | | | (19,886) | | | - | | | (47,678) | | | 55,883 |
| | Homebuilding interest amortized to cost of sales and interest expense | | 35,681 | | | 25,867 | | | 33,590 | | | 129,526 | | | 115,359 |
| | Homebuilding depreciation and amortization | | 672 | | | 1,438 | | | 711 | | | 3,356 | | | 6,931 |
| | Amortization of stock-based compensation | | 1,651 | | | 5,174 | | | 4,079 | | | 8,037 | | | 20,671 |
| EBITDA | | 14,160 | | | (357,316) | | | 15,247 | | | (401,051) | | | (1,077,932) |
| Add: | | | | | | | | | | | | | | | |
| | Cash distributions of income from unconsolidated joint ventures | | - | | | 229 | | | 326 | | | 1,530 | | | 1,402 |
| | Impairment charges | | 7,814 | | | 276,105 | | | 13,129 | | | 472,734 | | | 938,986 |
| | (Gain) loss on early extinguishment of debt | | 8,824 | | | 1,841 | | | (176) | | | 7,812 | | | 9,380 |
| Less: | | | | | | | | | | | | | | | |
| | Income (loss) from unconsolidated joint ventures | | (1,960) | | | (91,653) | | | (5,459) | | | (25,542) | | | (209,703) |
| | Income (loss) from financial services subsidiary | | 1,009 | | | (614) | | | 1,022 | | | 1,180 | | | 374 |
| Adjusted Homebuilding EBITDA | $ | 31,749 | | $ | 13,126 | | $ | 32,963 | | $ | 105,387 | | $ | 81,165 |
The table set forth below reconciles net cash provided by (used in) operating activities, from continuing and discontinued operations, calculated and presented in accordance with GAAP, to Adjusted Homebuilding EBITDA:
| | | | Three Months Ended | | LTM Ended September 30, |
| | | | September 30, 2009 | | September 30, 2008 | | June 30, 2009 | | 2009 | | 2008 |
| | | | (Dollars in thousands) |
| | | | | | | | | | | | | | | |
| Net cash provided by (used in) operating activities | $ | 112,572 | | $ | 31,933 | | $ | 68,595 | | $ | 375,353 | | $ | 545,946 |
| Add: | | | | | | | | | | | | | | | |
| | Provision (benefit) for income taxes | | - | | | (19,886) | | | - | | | (47,678) | | | 55,883 |
| | Deferred tax valuation allowance | | (9,278) | | | (134,088) | | | (8,913) | | | (162,280) | | | (529,185) |
| | Homebuilding interest amortized to cost of sales and interest expense | | 35,681 | | | 25,867 | | | 33,590 | | | 133,420 | | | 115,359 |
| Less: | | | | | | | | | | | | | | | |
| | Income (loss) from financial services subsidiary | | 1,009 | | | (614) | | | 1,022 | | | 1,180 | | | 374 |
| | Depreciation and amortization from financial services subsidiary | | 169 | | | 188 | | | 171 | | | 700 | | | 837 |
| | Loss on disposal of property and equipment | | 1 | | | 901 | | | 675 | | | 3,230 | | | 2,340 |
| Net changes in operating assets and liabilities: | | | | | | | | | | | | | | |
| | | Trade and other receivables | | (2,191) | | | 1,442 | | | (7,666) | | | (15,287) | | | (40,315) |
| | | Mortgage loans held for sale | | (16,071) | | | 14,446 | | | 8,854 | | | (20,039) | | | (22,969) |
| | | Inventories-owned | | (103,969) | | | (58,537) | | | (95,734) | | | (303,581) | | | (330,984) |
| | | Inventories-not owned | | 324 | | | 6,154 | | | 460 | | | (5,715) | | | 5,344 |
| | | Deferred income taxes | | 9,277 | | | 124,936 | | | 8,913 | | | 169,218 | | | 206,136 |
| | | Other assets | | 1,997 | | | 18,669 | | | 1,599 | | | (94,995) | | | (4,624) |
| | | Accounts payable | | (540) | | | 1,264 | | | 10,336 | | | 42,877 | | | 50,535 |
| | | Accrued liabilities | | 5,126 | | | 1,401 | | | 14,797 | | | 39,204 | | | 33,590 |
| Adjusted Homebuilding EBITDA | $ | 31,749 | | $ | 13,126 | | $ | 32,963 | | $ | 105,387 | | $ | 81,165 |
NOTES TO KEY STATISTICS AND FINANCIAL DATA (Continued)
| (3) | The pro forma common shares outstanding include the as-converted Series B Preferred Stock. In addition, this calculation excludes 3.9 million shares as of September 30, 2009, and 7.8 million shares as of June 30, 2009 and December 31, 2008, issued under a share lending agreement related to the Company’s 6% Convertible Senior Subordinated Notes issued on September 28, 2007. During the 2009 third quarter, 3.9 million of the shares issued under the share lending agreement were returned to the Company. The Company believes that the pro forma stockholders’ equity per common share information is useful to investors as a measure to determine the book value per common share after giving effect of the issuance of Preferred Shares assuming full conversion to common stock and excluding shares outstanding under the share lending agreement. This is a non-GAAP financial measure and due to the significance of items adjusted and excluded from this calculation, such measure should not be considered in isolation or as an alternative to operating performance measures. The following table reconciles actual common shares outstanding to pro forma common shares outstanding used to calculate pro forma stockholders’ equity per share: |
| | September 30, 2009 | | June 30, 2009 | | December 31, 2008 |
| | | | | | | | | |
| Actual common shares outstanding | | 105,119,880 | | | 101,110,072 | | | 100,624,350 |
| Add: Conversion of Preferred shares to common shares | | 147,812,786 | | | 147,812,786 | | | 147,812,786 |
| Less: Common shares outstanding under share lending facility | | (3,919,904) | | | (7,839,809) | | | (7,839,809) |
| Pro forma common shares outstanding | | 249,012,762 | | | 241,083,049 | | | 240,597,327 |
| | | | | | | | | |
| Stockholders' equity (actual amounts rounded to nearest thousand) | $ | 349,591,000 | | $ | 346,512,000 | | $ | 407,941,000 |
| Divided by pro forma common shares outstanding | ÷ | 249,012,762 | | ÷ | 241,083,049 | | ÷ | 240,597,327 |
| Pro forma stockholders' equity per common share | $ | 1.40 | | $ | 1.44 | | $ | 1.70 |
| (4) | Total debt at September 30, 2009, June 30, 2009 and December 31, 2008 includes $38.8 million, $55.6 million and $63.7 million, respectively, of indebtedness of the Company’s financial services subsidiary. |
| (5) | Adjusted net homebuilding debt excludes indebtedness of the Company’s financial services subsidiary and additionally reflects the offset of cash and equivalents in excess of $5 million. We believe that the adjusted net homebuilding debt to total book capitalization ratio is useful to investors as a measure of the Company’s ability to obtain financing. This is a non-GAAP ratio and other companies may calculate this ratio differently. For purposes of the ratio of adjusted net homebuilding debt to total book capitalization, total book capitalization is adjusted net homebuilding debt plus stockholders’ equity. Adjusted net homebuilding debt is calculated as follows: |
| | | | September 30, | | June 30, | | December 31, |
| | | | 2009 | | 2009 | | 2008 |
| | | | | (Dollars in thousands) |
| | | | | | | | | | | |
| Total consolidated debt | $ | 1,490,134 | | $ | 1,330,940 | | $ | 1,550,092 |
| Less: | | | | | | | | | |
| | Financial services indebtedness | | (38,798) | | | (55,640) | | | (63,655) |
| | Homebuilding cash in excess of $5 million | | (801,766) | | | (568,038) | | | (621,386) |
| Adjusted net homebuilding debt | $ | 649,570 | | $ | 707,262 | | $ | 865,051 |
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