FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to
-------- ----------
Commission file number 1-10959
STANDARD PACIFIC CORP.
(Exact name of registrant as specified in its charter)
Delaware 33-0475989
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1565 W. MacArthur Blvd., Costa Mesa, CA 92626
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (714) 668-4300
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS
Registrant's shares of common stock outstanding at August 1, 1997: 29,477,681.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
The consolidated condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information normally
included in the financial statements prepared in accordance with generally
accepted accounting principles has been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. The financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands, except per share data)
(Unaudited)
1997 1996
-------------- -------------
HOMEBUILDING AND CORPORATE:
Revenues $ 140,578 $ 101,727
Cost of sales 119,557 89,133
-------------- -------------
Gross margin 21,021 12,594
-------------- -------------
Selling, general and administrative expenses 12,937 9,831
Income from unconsolidated joint ventures 987 1,317
Interest expense 1,374 1,548
Other income 258 370
-------------- -------------
Homebuilding and corporate pretax income 7,955 2,902
-------------- -------------
MANUFACTURING:
Sales 4,246 5,429
Cost of sales 2,659 3,352
-------------- -------------
Gross margin 1,587 2,077
-------------- -------------
Selling, general and administrative expenses 1,500 1,308
Other income 55 11
-------------- -------------
Manufacturing pretax income 142 780
-------------- -------------
Income from continuing operations before income taxes 8,097 3,682
Provision for income taxes (3,323) (1,484)
-------------- -------------
Income from continuing operations 4,774 2,198
Income (loss) from discontinued operations, net of income
taxes of $75 and $(10) for the three months ended
June 30, 1997 and 1996, respectively (107) 13
-------------- -------------
NET INCOME $ 4,667 $ 2,211
============== =============
Net Income Per Share:
Income from continuing operations $ 0.16 $ 0.07
Income (loss) from discontinued operations - -
-------------- -------------
NET INCOME PER SHARE $ 0.16 $ 0.07
============== =============
Weighted average common and equivalent
shares outstanding 29,658,719 30,069,710
============== =============
The accompanying notes are an integral part of these consolidated condensed
statements.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands, except per share data)
(Unaudited)
1997 1996
-------------- -------------
HOMEBUILDING AND CORPORATE:
Revenues $ 251,880 $ 163,311
Cost of sales 215,202 143,524
-------------- -------------
Gross margin 36,678 19,787
-------------- -------------
Selling, general and administrative expenses 22,711 16,525
Income from unconsolidated joint ventures 1,517 3,029
Interest expense 2,848 3,204
Other income 465 529
-------------- -------------
Homebuilding and corporate pretax income 13,101 3,616
-------------- -------------
MANUFACTURING:
Sales 9,598 9,427
Cost of sales 6,030 5,953
-------------- -------------
Gross margin 3,568 3,474
-------------- -------------
Selling, general and administrative expenses 3,126 2,516
Other income 156 61
-------------- -------------
Manufacturing pretax income 598 1,019
-------------- -------------
Income from continuing operations before income taxes 13,699 4,635
Provision for income taxes (5,623) (1,866)
-------------- -------------
Income from continuing operations 8,076 2,769
Income from discontinued operations, net of income
taxes of $(77) and $(12) for the six months ended
June 30, 1997 and 1996, respectively 108 15
-------------- -------------
NET INCOME $ 8,184 $ 2,784
============== =============
Net Income Per Share:
Income from continuing operations $ 0.28 $ 0.09
Income from discontinued operations - -
-------------- -------------
NET INCOME PER SHARE $ 0.28 $ 0.09
============== =============
Weighted average common and equivalent
shares outstanding 29,686,895 30,065,234
============== =============
The accompanying notes are an integral part of these consolidated condensed
statements.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 30, December 31,
1997 1996
--------------- ---------------
ASSETS
Cash and equivalents $ 9,482 $ 5,975
Investment securities held to maturity 5,936 5,329
Mortgage notes receivable and accrued interest 2,952 3,741
Other notes and accounts receivable, net 9,846 11,073
Inventories:
Real estate in process of development and completed model homes 377,650 363,718
Real estate held for sale 8,100 8,927
Manufacturing 1,412 1,432
Property and equipment, at cost, net of accumulated depreciation
and amortization of $6,855 and $6,640, respectively 6,093 6,041
Investments in and advances to unconsolidated joint ventures 13,394 885
Deferred income taxes 13,972 16,481
Deferred charges and other assets 7,058 6,504
------------- -------------
Total assets of continuing operations 455,895 430,106
------------- -------------
Net assets of discontinued operations 21,298 21,002
------------- -------------
TOTAL ASSETS $ 477,193 $ 451,108
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Unsecured notes payable $ 2,000 $ 57,300
Trust deed notes payable 494 4,467
Accounts payable and accrued expenses 29,855 28,991
10-1/2 percent senior notes due 2000 80,000 100,000
8-1/2 percent senior notes due 2007, net 99,308 -
------------- -------------
Total liabilities 211,657 190,758
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares authorized;
none issued - -
Common stock, $.01 par value; 100,000,000 shares authorized;
29,445,181 and 29,629,981 shares outstanding in 1997 and 1996,
respectively 294 296
Paid-in capital 281,914 283,331
Investment securities valuation adjustment 149 (39)
Accumulated deficit (16,821) (23,238)
------------- -------------
Total stockholders' equity 265,536 260,350
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 477,193 $ 451,108
============= =============
The accompanying notes are an integral part of these consolidated condensed
balance sheets.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
--------------------------
1997 1996
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,184 $ 2,784
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 525 356
Amortization of deferred income and discounts 139 79
Net (gain) loss on sale of investments, loans and REO (2,599) (535)
Provision for loan losses 2 465
Changes in cash and equivalents due to:
Inventories (13,085) (21,737)
Receivables and accrued interest 2,752 (2,384)
Investments in and advances to joint ventures (12,509) (178)
Accounts payable and accrued expenses 3,898 696
Deferred income taxes 2,720 952
Other, net 327 335
----------- ----------
Net cash provided by (used in) operating activities $ (9,646) $ (19,167)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of investments and principal repayments $ 31,129 $ 6,961
Net sales of real estate owned 2,377 3,065
Net (additions to) retirements from property and equipment (540) (138)
Purchases of investment securities (27,564) (13,653)
New loan fundings and loan purchases -- (457)
Loan sales and principal repayments from loans 186,951 24,521
----------- ----------
Net cash provided by (used in) investing activities $ 192,353 $ 20,299
----------- ----------
The accompanying notes are an integral part of these consolidated condensed
statements.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
1997 1996
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments on) bank credit facilities $ (55,300) $ 26,750
Net proceeds from the issuance of 8 1/2 percent Senior Notes 96,931 -
Proceeds from deposits to savings accounts 120,339 118,478
Payments on savings account withdrawals (143,494) (147,720)
Interest credited to savings accounts 1,670 2,718
Proceeds from FHLB advances 77,000 -
Principal payments on FHLB advances (168,000) (14,000)
Principal payments on notes and trust deed notes payable (23,973) (4,045)
Dividends paid (1,767) (1,804)
Net change in securities sold subject to agreements to repurchase 9,938 (7,557)
Repurchase of common shares (1,964) -
Proceeds from the exercise of stock options 545 -
--------- ---------
Net cash provided by (used in) financing activities $ (88,075) $ (27,180)
--------- ---------
Net increase (decrease) in cash and equivalents $ 94,632 $ (26,048)
Cash and equivalents at beginning of period 16,234 37,597
--------- ---------
Cash and equivalents at end of period $ 110,866 $ 11,549
========= =========
SUMMARY OF CASH BALANCES:
Homebuilding and manufacturing $ 9,482 $ 2,671
Savings and loan 101,384 8,878
--------- ---------
$ 110,866 $ 11,549
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Noncash transactions:
Expenses capitalized in connection with the issuance of the
8 1/2 percent Senior Notes due 2007 $ 2,375 $ -
Land acquisitions financed by purchase money trust deeds - 11,159
Change in unrealized losses on investment securities
available for sale, net of deferred taxes 282 (134)
Loans receivable foreclosed on, net 1,228 220
Cash paid during the period for:
Interest, all entities $ 15,401 $ 18,109
Income taxes 3,833 556
The accompanying notes are an integral part of these consolidated condensed
statements.
STANDARD PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(Dollar amounts presented in tables are in thousands)
1. Basis of presentation
---------------------
In the opinion of management, the financial statements reflect all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position as of June 30, 1997 and December 31, 1996, and the
results of operations and cash flows for the periods shown.
2. Capitalization of interest
--------------------------
The following is a summary of interest capitalized and expensed related to real
estate inventories for the six month and three month periods ended June 30, 1997
and 1996:
Six Months Ended June 30, Three Months Ended June 30,
------------------------- ---------------------------
Homebuilding and Corporate Operations 1997 1996 1997 1996
------------------------------------- ------------ ---------- ------------ ------------
Total interest incurred during the period $ 8,115 $ 8,904 $ 4,102 $ 4,065
Less: Interest capitalized as a cost of
real estate inventories 5,267 5,700 2,728 2,517
------- ------- ------- -------
Interest expense $ 2,848 $ 3,204 $ 1,374 $ 1,548
======= ======= ======= =======
Interest previously capitalized as a cost
of real estate inventories, included in
homebuilding cost of sales $10,189 $ 9,784 $ 5,705 $ 6,706
======= ======= ======= =======
Interest capitalized in ending inventories $20,220 $28,433 $20,220 $28,433
======= ======= ======= =======
3. Reclassifications
-----------------
Effective January 1, 1997, the Company changed its presentation of selling costs
in its consolidated statements of operations whereby they are now combined with
general and administrative expenses. This presentation is consistent with
industry practice. Previously, the Company included these costs as a component
of cost of sales. The Company reclassified the prior period amounts to conform
with the 1997 presentation.
Additionally, certain other reclassifications have been made to the 1996
financial information to conform with current period presentation.
4. Earnings per share
------------------
Earnings per share for the three month and six month periods ended June 30, 1997
and 1996 were calculated based on the weighted average number of common and
equivalent shares outstanding during the periods. Equivalent shares were
determined by using the treasury stock method, which assumes that all dilutive
securities were exercised and that the proceeds received were applied to
repurchase outstanding shares at the average market prices during the period.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which is required to be adopted by the Company no
later than December 31, 1997. At that time, the Company will be required to
change the method used to compute earnings per share and to restate all prior
periods presented. Under the new requirements primary earnings per share will
be replaced with basic earnings per share and fully diluted earnings per share
will be replaced with diluted earnings per share. Basic earnings per share
excludes the dilutive effect of common stock equivalents, including stock
options. Had earnings per share been calculated under the provisions of the new
standard, both basic and diluted earnings per share would be the same as net
income per share as reflected in the accompanying consolidated statements of
operations for the three month and six month periods ended June 30, 1997 and
1996, respectively.
5. Stock Incentive Plan
--------------------
On May 13, 1997, the stockholders of the Company approved the 1997 Stock
Incentive Plan (the "1997 Plan"). Under the 1997 Plan, the maximum number of
shares of Company common stock that may be issued pursuant to stock option
grants, or other stock based incentive compensation grants, is two million
shares.
6. Discontinued Operations
-----------------------
In May 1997, the Company's Board of Directors adopted a plan (the "Plan") of
disposition for the Company's savings and loan subsidiary ("Savings"). Pursuant
to the Plan and in June 1997, the Company sold substantially all of Savings'
mortgage loan portfolio and entered into a definitive agreement to sell the
remainder of Savings' business, including Savings' charter. The proceeds from
the sale of the mortgages were used to pay off substantially all of the
outstanding balances of Federal Home Loan Bank advances with the remaining
amount temporarily invested until the savings deposits are sold along with
Savings' remaining assets. The definitive sale agreement is subject to, among
other things, the approval of the Office of Thrift Supervision. Savings has been
accounted for as a discontinued operation and, accordingly, the results of its
operations have been segregated in the accompanying consolidated statements of
operations. Management currently estimates that both the disposition of Savings
under the Plan and the operating results of Savings for the period through the
disposition will not result in a significant gain or loss to the Company.
-2-
As a consequence of the decision to dispose of Savings, the assets and
liabilities of this discontinued operation have been classified in the
accompanying consolidated condensed balance sheets as "Net assets of
discontinued operations." Discontinued operations have not been segregated in
the accompanying consolidated condensed statements of cash flows.
Interest income from these discontinued operations was $8,631,000 and
$10,380,000 for the six month periods ended June 30, 1997 and 1996,
respectively, and $4,117,000 and $5,067,000 for the three month periods ended
June 30, 1997 and 1996, respectively.
The components of net assets of discontinued operations included in the
accompanying consolidated condensed balance sheets at June 30, 1997 and
December 31, 1996 are as follows:
At June 30, At December 31,
1997 1996
------------ -----------------
(Dollars in Thousands)
Assets:
Cash and equivalents $101,384 $ 10,259
Investment securities available for sale 38,314 42,401
Mortgage notes receivable and accrued interest, net 12,894 199,135
Property and equipment, at cost, net of accumulated
depreciation of $731 and $869, respectively 164 227
Real estate acquired in settlement of loans, net 1,028 2,079
Deferred income taxes 1,370 1,581
Investment in FHLB stock 8,205 7,958
Other assets 2,697 1,633
-------- --------
Total assets--savings and loan $166,056 $265,273
-------- --------
Liabilities:
Savings accounts $111,328 $132,813
FHLB advances 18,000 109,000
Securities sold subject to agreements to purchase 9,938 -
Accounts payable and accrued expenses 5,492 2,458
-------- --------
Total liabilities--savings and loan 144,758 244,271
-------- --------
Net assets of discontinued operations $ 21,298 $ 21,002
======== ========
-3-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DISCUSSION OF OPERATIONS BY SEGMENT
- -----------------------------------
Homebuilding and Corporate Segment
A comparative summary of operating results for homebuilding and corporate
operations for the six month and three month periods ended June 30, 1997 and
1996 is as follows (dollar amounts in thousands):
Six Months Ended June 30, Three Months Ended June 30,
------------------------------ -------------------------------
1997 1996 1997 1996
------------- ----------- ------------- -------------
Revenues $251,880 $163,311 $140,578 $101,727
Cost of sales 215,202 143,524 119,557 89,133
-------- -------- -------- --------
Gross margin 36,678 19,787 21,021 12,594
-------- -------- -------- --------
Gross margin percentage 14.6% 12.1% 15.0% 12.4%
-------- -------- -------- --------
Selling, general and administrative expenses 22,711 16,525 12,937 9,831
Income from unconsolidated joint ventures 1,517 3,029 987 1,317
Interest expense 2,848 3,204 1,374 1,548
Other income 465 529 258 370
-------- -------- -------- --------
Homebuilding and corporate pretax income $ 13,101 $ 3,616 $ 7,955 $ 2,902
======== ======== ======== ========
A summary of residential housing key operating data for the six month and three
month periods ended June 30, 1997 and 1996 is as follows:
Six Months Ended June 30, Three Months Ended June 30,
----------------------------- -------------------------------
1997 1996 1997 1996
------------- ----------- ------------- -------------
New homes delivered:
California 673 466 376 308
Texas 181 161 101 89
Joint ventures (California) 29 100 13 41
-------- -------- -------- --------
Total 883 727 490 438
-------- -------- -------- --------
Average Selling Price:
California deliveries (excluding
joint ventures) $320,073 $283,253 $317,766 $276,179
Texas deliveries $192,642 $183,153 $198,610 $184,261
Combined (excluding joint ventures) $293,065 $257,550 $292,536 $255,573
Combined (including joint ventures) $294,406 $251,991 $296,398 $254,571
Net new orders 1,111 1,024 450 488
Backlog at quarter end 714 603 714 603
-4-
During the quarter ended June 30, 1997, the Company delivered 490 new homes
(including 13 homes delivered by the Company's unconsolidated joint ventures) at
an average selling price of $296,398 compared to 438 new homes (including 41
homes delivered by the Company's unconsolidated joint venture) at an average
selling price of $254,571 for the 1996 second quarter.
Homebuilding revenues for the quarter ended June 30, 1997 increased by
approximately 38.2 percent from the year earlier period, while cost of sales
attributed to residential housing increased by approximately 34.1 percent over
the same period. The jump in homebuilding revenues of approximately $38.9
million over the 1996 second quarter resulted primarily from an increase of
$20.4 million due to a 20 percent increase in unit deliveries, an increase of
$17.6 million due to a 14.5 percent rise in the average selling price of homes
delivered, with the balance attributable to an increase in improved lot sales.
The Company's Northern California, San Diego and Ventura County divisions
experienced strong growth in unit deliveries, increasing a combined 24 percent
over the prior year second quarter, while deliveries from the Company's Orange
County division remained consistent with the strong level of deliveries
generated in the 1996 second quarter. The increase in the average selling price
resulted from a greater distribution of homes delivered in the $400,000 to
$800,000 price range in California. The Company anticipates its average selling
price in the next few quarters to remain near the $300,000 level.
Residential housing cost of sales for the quarter ended June 30, 1997 increased
by approximately $30.4 million over the 1996 second quarter primarily as a
result of an increase of $17.9 million due to a greater number of homes
delivered, an increase of $11.8 million attributable to a higher average cost of
new homes delivered and an increase of approximately $700,000 related to
improved lot cost of sales.
The homebuilding gross margin percentage increased from 12.4 percent in the
second quarter of 1996 to 15.0 percent in the second quarter of 1997. The
improved margin reflects the strong housing market in certain of the Company's
California markets and the Company's inventory of well located projects in
those locations.
Selling, general and administrative expenses for the homebuilding and corporate
segment decreased as a percentage of revenues from 9.7 percent in the second
quarter of 1996 to 9.2 percent for the quarter ended June 30, 1997. This
decrease is attributable to the fixed level of certain general and
administrative expenses, as well as a reduction in selling costs as a percent of
revenues due to the improving housing market in California.
Income from the unconsolidated joint ventures decreased from $1.3 million in the
second quarter of 1996 to $987,000 in the second quarter of 1997 primarily as a
result of the reduction in joint venture deliveries between periods.
-5-
Interest incurred for the quarter ended June 30, 1997 was $4.1 million of which
$2.7 million was capitalized to real estate inventories compared to $4.1 million
incurred for the quarter ended June 30, 1996 of which $2.5 million was
capitalized.
Although Company-wide orders for the quarter were down approximately 8 percent
from the year earlier period, the Company ended the quarter with a backlog of
714 homes, an 18 percent increase over the previous year period and the highest
second quarter level since 1989. More significantly, the dollar value of the
backlog increased by 36 percent over the year earlier level to $229.4 million.
Net new orders for the second quarter decreased slightly from the year earlier
period to 450 homes. This decline resulted primarily from higher than expected
orders in the fourth quarter of 1996 and the first quarter of 1997, which had
the effect of reducing the Company's inventory of homes available for sale in
the second quarter of 1997. The Company is planning on opening 10 to 12 new
projects in California through the end of the year.
Inventory Financing Sources
- ---------------------------
Sources of financing for the Company's real estate inventories at June 30, 1997
were: unsecured debt 47% and equity 53%.
Manufacturing Segment
A summary of operations for the manufacturing segment (Panel Concepts, Inc.)
for the six month and three month periods ended June 30, 1997 and 1996 is as
follows (dollar amounts in thousands):
Six Months Ended June 30, Three Months Ended June 30,
------------------------------ -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Sales $ 9,598 $ 9,427 $ 4,246 $ 5,429
Cost of sales 6,030 5,953 2,659 3,352
------- ------- ------- -------
Gross margin 3,568 3,474 1,587 2,077
------- ------- ------- -------
Gross margin percentage 37.2% 36.9% 37.4% 38.3%
------- ------- ------- -------
Selling, general and
administrative expenses 3,126 2,516 1,500 1,308
Other income (1) 321 194 143 79
------- ------- ------- -------
Manufacturing pretax income $ 763 $ 1,152 $ 230 $ 848
======= ======= ======= =======
___________________________
(1) Includes intersegment income of approximately $165,000 and $133,000 for
the six months ended June 30, 1997 and 1996, respectively, and $88,000 and
$68,000 for the three months ended June 30, 1997 and 1996, respectively. These
intersegment transactions are eliminated in consolidation with no effect on
consolidated earnings.
Sales for the quarter ended June 30, 1997 decreased 21.8 percent to $4.2 million
from $5.4 million in the prior year second quarter. The decrease in sales can
be attributed, in part, to the introduction of a new product line at the end of
the second quarter which had the effect of depressing sales of existing products
during the quarter in anticipation of the new line.
The Company's long-term strategy is to focus on its core homebuilding business.
As a result, the Company is evaluating its options with respect to Panel
Concepts, Inc.
-6-
Financial Condition and Liquidity
- ---------------------------------
In June 1997, the Company issued $100 million of 8 1/2 percent Senior Notes
due in 2007. The notes were issued at a discount to yield approximately 8.6
percent. The Senior Notes are subject to certain restrictive financial
covenants, which among other things, impose certain limitations on the ability
of the Company to (i) incur additional indebtedness, (ii) create liens, (iii)
pay dividends, and (iv) sell assets. These notes are callable at the Company's
option commencing June 15, 2002 at a premium of 104.25% of par value, with the
call price reducing ratably to par on June 15, 2005. Net proceeds to the Company
after offering expenses were approximately $96.9 million. The Company used the
net proceeds to repay the indebtedness outstanding under the Company's unsecured
revolving credit facility.
Unsecured notes payable (excluding the 8 1/2 percent Senior Notes due 2007 and
the 10 1/2 percent Senior Notes due 2000) totaled $2.0 million at June 30, 1997
versus $57.3 million at December 31, 1996. Total commitments available under the
Company's revolving credit facility aggregated $200 million at June 30, 1997, of
which a total of approximately $195 million was unused and available for
additional borrowings under the terms and conditions of the agreement. In August
1997, the Company and its bank group amended the unsecured revolving credit
facility to, among other things, increase the commitment to $275 million and
increase the term of the facility from three years to four years.
On March 1, 1997, the Company made its first of three annual $20 million sinking
fund payments on the 10 1/2 percent Senior Notes due in 2000.
Pursuant to the previously announced common stock repurchase program, the
Company repurchased 25,000 shares of its common stock during the second quarter
for approximately $177,250. As of June 30, 1997, the Company had repurchased an
aggregate of 1,285,750 shares of its common stock for approximately $8.3
million, leaving a balance of approximately $11.7 million available to be
repurchased under the repurchase program.
On July 29, 1997, the Board of Directors increased the Company's quarterly
dividend from $.03 to $.04 per share of common stock. The cash dividend will be
payable on August 28, 1997 to shareholders of record on August 14, 1997.
Cash requirements for the homebuilding, manufacturing and corporate segments
were provided from internally generated funds and outside borrowings,
principally the bank revolving credit facility and the net proceeds from the
issuance of the 8 1/2 percent Senior Notes. Management believes that these
sources of cash, as well as capital available through the public debt and equity
markets, are sufficient to finance its current and future working capital
requirements and other needs.
-7-
STATEMENT REGARDING FORWARD LOOKING DISCLOSURE
The foregoing "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which represent the Company's
expectations or beliefs concerning future events, including, but not limited to,
the following: statements regarding the price range of future homes constructed
by the Company; statements regarding a strong housing market in certain of the
Company's California markets; statements regarding the Company's inventory of
well located projects in certain California markets; statements regarding the
homebuilding segment's backlog of homes; statements regarding the number of new
projects anticipated to be opened in California through the end of the year; and
statements regarding the sufficiency of the Company's cash provided by
internally generated funds and outside borrowings. The Company cautions that
these statements are further qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements, including, without limitation, the following: change in the demand
for new homes attributable to the cyclical and competitive nature of the
homebuilding business; changes in general economic conditions; uncertainty in or
changes in the continued availability of suitable undeveloped land at reasonable
prices; adverse local market conditions; existing and changing governmental
regulations, including regulations concerning environmental matters and the
permitting process for home construction; increases in prevailing interest
rates; the level of real estate taxes and energy costs; the cost of materials
and labor; the availability of construction financing and home mortgage
financing attractive to the purchasers of homes; the availability of financing
to homebuilders; and inclement weather and other natural disasters. Results
actually achieved thus may differ materially from expected results included in
these and any other forward looking statements contained herein.
-8-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANDARD PACIFIC CORP.
(Registrant)
Dated: August 8, 1997 By: /s/ ARTHUR E. SVENDSEN
----------------------
Arthur E. Svendsen
Chairman of the Board and
Chief Executive Officer
Dated: August 8, 1997 By: /s/ ANDREW H. PARNES
----------------------
Andrew H. Parnes
Vice President of Finance, Treasurer
and Principal Financial and
Accounting Officer
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PART II OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Change in Securities
None
Item 3. Default upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting held on May 13, 1997, the Company's
stockholders re-elected Ronald R. Foell, Robert J. St.Lawrence and Donald H.
Spengler, as directors of the Company. In addition, the term of office of the
following directors continued after the Annual Meeting: Arthur E. Svendsen,
Stephen J. Scarborough, William H. Langenberg, Dr. James L. Doti and Keith D.
Koeller. At the Annual Meeting, the Company's stockholders also approved the
1997 Stock Incentive Plan and the Amended and Restated Management Incentive
Bonus Plan for the Company's Chief Executive Officer and President. Voting at
the meeting was as follows:
Votes Cast Votes Cast Votes Broker
Matter For Against Withheld Non-Votes
- ---------------------------------------- ---------- ---------- -------- ---------
Election of Ronald R. Foell 24,697,068 -- 346,179 --
Election of Robert J. St.Lawrence 24,677,344 -- 365,903 --
Election of Donald H. Spengler 24,688,394 -- 354,853 --
Approval of 1997 Stock Incentive Plan 17,295,360 1,941,545 487,178 5,319,164
Approval of the Amended and
Restated Management Incentive
Bonus Plan 23,305,861 1,230,157 507,229 --
Item 5. Other Information
None
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.8 Sixth Amended and Restated Revolving Credit Agreement dated
as of August 8, 1997, among the Company, Bank of America
National Trust and Savings Association, The First National
Bank of Chicago, Credit Lyonnais Los Angeles Branch, Fleet
National Bank, Sanwa Bank California, Comerica Bank and PNC
Bank, National Association.
11. Statement of computation of earnings per share.
27. Financial Data Schedule.
(b) Current Reports on Form 8-K
(i) Form 8-K dated June 11, 1997 reporting (i) the Company's
intention to offer up to $100 million of senior notes due
2007 pursuant to the Company's effective shelf registration
statement and (ii) the adoption of a plan of disposition for
the Company's savings and loan subsidiary, Standard Pacific
Savings, F.A.
(ii) Form 8-K dated June 16, 1997 filing certain documents in
connection with the Company's offering of $100 million 8 1/2
percent Senior Notes due 2007.
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