<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 May 4, 1999: 29,643,980
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
PART I FINANCIAL INFORMATION
The consolidated condensed financial statements included herein have been
prepared by Standard Pacific Corp. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information normally included in the financial statements prepared in accordance
with generally accepted accounting principles has been omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
1
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Homebuilding:
Revenues $ 214,480 $ 96,911
Cost of sales 174,641 79,917
---------- ----------
Gross margin 39,839 16,994
---------- ----------
Selling, general and administrative expenses 20,224 9,167
Income from unconsolidated joint ventures 4,618 951
Interest expense 291 272
Amortization of excess of cost over net assets acquired 495 245
Other income 24 49
---------- ----------
Homebuilding pretax income 23,471 8,310
---------- ----------
Financial Services:
Revenues 590 261
Income from unconsolidated joint venture 198 -
Expenses 680 246
---------- ----------
Financial services pretax income 108 15
---------- ----------
Income from continuing operations before income taxes 23,579 8,325
Provision for income taxes (9,708) (3,492)
---------- ----------
Income from continuing operations 13,871 4,833
Income (loss) from discontinued operation, net of income
taxes of $54 and $15, respectively (77) (65)
---------- ----------
Net Income $ 13,794 $ 4,768
========== ==========
Basic Net Income Per Share:
Income per share from continuing operations $ 0.47 $ 0.16
Income (loss) per share from discontinued operation (0.00) (0.00)
---------- ----------
Net Income Per Share $ 0.47 $ 0.16
========== ==========
Weighted average common shares outstanding 29,636,636 29,690,809
========== ==========
Diluted Net Income Per Share:
Income per share from continuing operations $ 0.46 $ 0.16
Income (loss) per share from discontinued operation (0.00) (0.00)
---------- ----------
Net Income Per Share $ 0.46 $ 0.16
========== ==========
Weighted average common and diluted shares outstanding 29,885,871 30,161,837
========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed statements.
2
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Homebuilding:
Cash and equivalents $ 4,524 $ 13,413
Other notes and accounts receivable, net 11,428 25,279
Mortgage notes receivable and accrued interest 4,968 5,061
Inventories 751,176 713,446
Investments in and advances to unconsolidated joint ventures 33,907 38,405
Property and equipment, net 3,519 3,512
Deferred income taxes 9,572 10,784
Other assets 6,415 8,210
Excess of cost over net assets acquired, net 16,798 17,293
-------- --------
842,307 835,403
-------- --------
Financial Services:
Cash and equivalents 62 1,651
Mortgage loans held for sale 8,511 19,341
Other assets 2,002 1,920
-------- --------
10,575 22,912
-------- --------
Net assets of discontinued operation 7,970 8,047
-------- --------
Total Assets $860,852 $866,362
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable $ 27,668 $ 22,015
Accrued liabilities 58,503 63,777
Revolving credit facility 232,200 204,900
Trust deed notes payable 4,822 21,187
Senior notes payable 198,770 218,382
-------- --------
521,963 530,261
-------- --------
Financial Services:
Accounts payable and accrued liabilities 503 596
Mortgage warehouse line of credit 1,327 10,826
-------- --------
1,830 11,422
-------- --------
Stockholders' Equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized;
none issued - -
Common stock, $.01 par value; 100,000,000 shares authorized;
29,637,480 and 29,629,480 shares outstanding, respectively 296 296
Paid-in capital 283,665 283,598
Retained earnings 53,098 40,785
-------- --------
Total stockholders' equity 337,059 324,679
-------- --------
Total Liabilities and Stockholders' Equity $860,852 $866,362
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed balance sheets.
3
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 13,794 $ 4,768
Adjustments to reconcile net income to net cash provided by (used in)
operating activities of continuing operations:
Discontinued operation 77 65
Depreciation and amortization 300 193
Amortization of excess of cost over net assets acquired 495 245
Changes in cash and equivalents due to:
Receivables and accrued interest 24,774 4,903
Inventories (37,705) (54,157)
Deferred income taxes 1,212 631
Other assets 1,713 154
Accounts payable 5,679 (856)
Accrued liabilities (5,367) 920
-------- --------
Net cash provided by (used in) operating activities of continuing operations 4,972 (43,134)
-------- --------
Cash Flows From Investing Activities:
Net additions to property and equipment (307) (219)
Net distributions from (investments in) unconsolidated joint ventures 4,498 (4,643)
Proceeds from the sale of discontinued operation - 1,087
-------- --------
Net cash provided by (used in) investing activities 4,191 (3,775)
-------- --------
Cash Flows From Financing Activities:
Net proceeds from (payments on) bank credit facility 27,300 (19,000)
Net proceeds from (payments on) mortgage warehouse line of credit (9,499) -
Net proceeds from the issuance of senior notes - 97,571
Principal payments on senior notes and trust deed notes payable (36,002) (20,012)
Dividends paid (1,481) (1,187)
Proceeds from the exercise of stock options 41 503
-------- --------
Net cash provided by (used in) financing activities (19,641) 57,875
-------- --------
Net cash provided by (used in) discontinued operation 5,626 (23,421)
-------- --------
Net increase (decrease) in cash and equivalents (4,852) (12,455)
Cash and equivalents at beginning of period 53,194 53,337
-------- --------
Cash and equivalents at end of period $ 48,342 $ 40,882
======== ========
Summary of Cash Balances:
Continuing operations $ 4,586 $ 19,347
Discontinued operation 43,756 21,535
-------- --------
$ 48,342 $ 40,882
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed statements.
4
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - continuing operations $8,543 $ 4,789
Income taxes 9,500 1,200
Supplemental Disclosures of Noncash Activities:
Trust deed note receivable issued in connection with the sale of land $ - $10,253
Expenses capitalized in connection with the issuance of the 8% senior
notes due 2008 - 1,750
Income tax benefit credited in connection with shares of common stock
issued pursuant to stock options exercised 26 387
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed statements.
5
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
1. Basis of Presentation
---------------------
In the opinion of management, the financial statements reflect all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position as of March 31, 1999 and December 31,
1998, and the results of operations and cash flows for the periods presented.
2. Capitalization of Interest
--------------------------
The following is a summary of interest capitalized and expensed related to
inventories for the three-month periods ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
<S> <C> <C>
1999 1998
------------------ ------------------
(Dollars in thousands)
Total interest incurred during the period $ 8,729 $ 6,178
Less: Interest capitalized as a cost of real estate under 8,438 5,906
development ------------------ ------------------
Interest expense $ 291 $ 272
================== ==================
Interest previously capitalized as a cost of real estate
under development, included in cost of sales $ 5,385 $ 3,867
================== ==================
Capitalized interest in ending inventories $ 18,208 $ 15,751
================== ==================
</TABLE>
3. Recent Accounting Pronouncement
-------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). Under the provisions of FAS 133, the Company
will be required to recognize all derivatives as either assets or liabilities in
the statements of financial position and measure these instruments at fair
value. The Company is required to adopt FAS 133 effective January 1, 2000.
Currently, the Company does not have any instruments that would qualify as
derivatives under FAS 133. Accordingly, the Company does not believe that FAS
133 would have a material impact on its financial position or results of
operations at this time.
4. Reclassifications
-----------------
Certain reclassifications have been made to the 1998 financial statements
to conform with current period presentation.
6
<PAGE>
5. Net Income Per Share
--------------------
The Company computes net income per share in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings per Share" (FAS 128). This
statement requires the presentation of both basic and diluted net income per
share for financial statement purposes. Basic net income per share is computed
by dividing income available to common stockholders by the weighted average
number of common shares outstanding. Diluted net income per share includes the
effect of the potential shares outstanding, including dilutive stock options
using the treasury stock method. The table set forth below reconciles the
components of the basic net income per share calculation to diluted net income
per share.
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
-------------------------------------------------------------------------------------
1999 1998
---------------------------------------- ----------------------------------------
Income Shares EPS Income Shares EPS
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands, except per share amounts)
Basic Net Income Per Share:
Income available to common
stockholders before
discontinued operation $ 13,871 29,636,636 $ 0.47 $ 4,833 29,690,809 $ 0.16
Effect of dilutive stock options - 249,235 - 471,028
------------------------- ----------------------
Diluted net income per share from
continuing operations $ 13,871 29,885,871 $ 0.46 $ 4,833 30,161,837 $ 0.16
======================================== =======================================
</TABLE>
6. 10 1/2% Senior Notes due 2000
-----------------------------
On September 30, 1998, the Company completed its tender offer and consent
solicitation for a portion of its 10 1/2% Senior Notes due 2000. In connection
with the tender offer, the Company repurchased and retired approximately $31.5
million of its 10 1/2% Senior Notes, leaving a balance of approximately $19.6
million remaining. On March 1, 1999, the Company repaid the balance of the 10
1/2% Senior Notes outstanding under the annual sinking fund payment provision of
the indenture.
7. Discontinued Operations
-----------------------
In May 1997, the Company's Board of Directors adopted a plan of disposition
(the "Plan") for the Company's savings and loan subsidiary ("Savings"). Pursuant
to the Plan, the Company sold substantially all of Savings' mortgage loan
portfolio in June 1997. The proceeds from the sale of the mortgages were used to
pay off substantially all of the outstanding balances of Federal Home Loan Bank
advances with the remaining amount temporarily invested until the savings
deposits are sold along with Savings' remaining assets. The gain generated from
the sale of this mortgage loan portfolio, net of related expenses, was not
material. In August 1998, the Company entered into a definitive agreement to
sell the remainder of Savings' business, including Savings' charter, subject to
certain conditions including regulatory approval. In April 1999, the Office of
Thrift Supervision ("OTS") approved the sale, subject to certain additional
conditions. 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.
Savings has been accounted for as a discontinued operation and the results of
its operations and net assets have been segregated in the accompanying
consolidated condensed financial statements.
Interest income from the discontinued operation totaled approximately
$782,000 and $874,000 for the three-month periods ended March 31, 1999 and 1998,
respectively.
7
<PAGE>
The components of the net assets of the discontinued operation included in the
accompanying consolidated condensed balance sheets as of March 31, 1999 and
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
At March 31, 1999 At December 31, 1998
----------------------- -----------------------
(Dollars in thousands)
Assets:
<S> <C> <C>
Cash and equivalents $ 43,756 $ 38,130
Investment securities available for sale 5,140 15,649
Accrued interest receivable 201 244
Property and equipment, net 69 62
Deferred income taxes 366 274
Investment in FHLB stock 9,094 8,971
Other assets 4 73
----------------------- -----------------------
Total assets-- discontinued operation $ 58,630 $ 63,403
----------------------- -----------------------
Liabilities:
Savings accounts $ 49,097 $ 53,878
Accounts payable and accrued liabilities 1,563 1,478
----------------------- -----------------------
Total liabilities-- discontinued operation 50,660 55,356
----------------------- -----------------------
Net assets of discontinued operation $ 7,970 $ 8,047
======================= =======================
</TABLE>
8. Subsequent Event
----------------
In April 1999, the Company issued $100 million of 8 1/2% Senior Notes due
April 1, 2009 (the "8 1/2% Senior Notes"). The 8 1/2% Senior Notes were issued
at par. These notes are senior unsecured obligations and rank equally with the
Company's other existing senior unsecured indebtedness. The 8 1/2% Senior
Notes contain restrictive covenants which, among other things, impose certain
limitations on the ability of the Company to (1) incur additional indebtedness,
(2) create liens, (3) make restricted payments, as defined, and (4) sell assets.
The 8 1/2% Senior Notes are redeemable at the option of the Company, in whole or
in part, any time after April 1, 2004 at 104.25 percent of par, with the call
price reducing ratably to par on April 1, 2007. Net proceeds after offering
expenses were approximately $97.8 million and were used to repay a portion of
the balance outstanding under the Company's revolving credit facility.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, the terms "we," "us" and "our" refer
to Standard Pacific Corp. and its subsidiaries.
Results of Operations
Selected Financial Information
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------
1999 1998
---------------------- ---------------------
(Dollars in thousands)
<S> <C> <C>
Homebuilding:
Revenues $214,480 $96,911
Cost of sales 174,641 79,917
---------------------- ---------------------
Gross margin 39,839 16,994
---------------------- ---------------------
Gross margin percentage 18.6% 17.5%
---------------------- ---------------------
Selling, general and administrative expenses 20,224 9,167
Income from unconsolidated joint ventures 4,618 951
Interest expense 291 272
Amortization of excess of cost over net assets acquired 495 245
Other income 24 49
---------------------- ---------------------
Homebuilding pretax income 23,471 8,310
---------------------- ---------------------
Financial Services:
Revenues 590 261
Income from unconsolidated joint venture 198 -
Expenses 680 246
---------------------- ---------------------
Financial services pretax income 108 15
---------------------- ---------------------
Income from continuing operations before income taxes $ 23,579 $ 8,325
====================== =====================
</TABLE>
Operating Data
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------
1999 1998
--------------------- ---------------------
(Dollars in thousands, except
average selling prices)
<S> <C> <C>
New Homes Delivered:
Southern California 194 146
Northern California 168 80
--------------------- --------------------
Total California 362 226
--------------------- --------------------
Dallas/Austin 67 44
Houston 36 34
--------------------- --------------------
Total Texas 103 78
--------------------- --------------------
Arizona 188 -
--------------------- --------------------
Consolidated total 653 304
Unconsolidated joint ventures (California) - 19
Total 653 323
===================== ====================
Average Selling Price:
California deliveries (excluding joint ventures) $442,132 $347,709
Texas deliveries $224,488 $211,943
Arizona deliveries $160,864 $ -
Combined (excluding joint ventures) $326,825 $312,874
Combined (including joint ventures) $326,825 $313,841
</TABLE>
9
<PAGE>
Operating Data - continued
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------
1999 1998
--------------------- ----------------------
<S> <C> <C>
Net New Orders:
Southern California 318 415
Northern California 276 170
--------------------- ---------------------
Total California 594 585
--------------------- ---------------------
Dallas/Austin 102 76
Houston 35 37
--------------------- ---------------------
Total Texas 137 113
--------------------- ---------------------
Arizona 204 -
--------------------- ---------------------
Consolidated total 935 698
Unconsolidated joint ventures (California) - 7
--------------------- ---------------------
Total 935 705
===================== =====================
</TABLE>
<TABLE>
<CAPTION>
At March 31,
----------------------------------------------------
1999 1998
--------------------- ----------------------
<S> <C> <C>
Backlog (in units):
Southern California 501 539
Northern California 355 241
--------------------- ----------------------
Total California 856 780
--------------------- ----------------------
Dallas/Austin 123 98
Houston 30 55
--------------------- ----------------------
Total Texas 153 153
--------------------- ----------------------
Arizona 384 -
--------------------- ----------------------
Consolidated total 1,393 933
Unconsolidated joint ventures (California) - 15
--------------------- ----------------------
Total backlog 1,393 948
===================== ======================
Backlog at Quarter End (estimated dollar value in thousands) $461,789 $335,893
===================== ======================
Active Selling Communities at Quarter End:
California 35 25
Texas 16 19
Arizona 11 -
Unconsolidated joint ventures (California) - 3
--------------------- ----------------------
Total 62 47
===================== ======================
Building Sites Owned or Controlled:
California 9,614 8,745
Texas 2,538 1,642
Arizona 3,671 -
--------------------- ----------------------
Total 15,823 10,387
===================== ======================
</TABLE>
10
<PAGE>
Income from continuing operations for the quarter ended March 31, 1999
increased 187 percent to $13,871,000, or $0.46 per diluted share, compared to
$4,833,000, or $0.16 per diluted share for the year earlier period. The
significant increase in earnings was principally attributable to record first
quarter revenues and deliveries coupled with continued improvement in the
homebuilding gross margin percentage. This strong performance reflects the
continued strength of the California housing market as well as solid
contributions from our Texas and Arizona operations.
Net income for the 1999 first quarter including the discontinued operation
increased 189 percent to $13,794,000, or $0.46 per diluted share, compared to
$4,768,000, or $0.16 per diluted share in the 1998 first quarter. The
discontinued operation includes our savings and loan subsidiary which is pending
disposition pursuant to a definitive sale agreement. In April 1999, the Office
of Thrift Supervision ("OTS") approved the sale of the thrift subject to certain
conditions. We currently estimate that both the disposition of the thrift and
the operating results for the period through disposition will not result in a
significant gain or loss.
Homebuilding
Homebuilding revenues increased 121 percent in the 1999 first quarter to
$214.5 million from $96.9 million in the year earlier period. The revenue
increase was due to a 115 percent increase in new home deliveries to a record
653 new homes (excluding joint ventures) coupled with a 4 percent increase in
the average home price to $326,825. Deliveries were up in all regions led by a
60 percent increase in California (excluding joint ventures), followed by a 32
percent increase in Texas. The improvement in Texas was primarily due to
increased deliveries from our Dallas operation resulting from the addition of
new, well-located communities. Deliveries from our new Arizona operations
totaled 188 homes for the 1999 first quarter. The increase in the average home
price primarily reflects the delivery of larger, more expensive homes in
California as well as general price increases generated from the strong housing
demand in California. The average selling price in California for the 1999
first quarter was up 27 percent to $442,132 compared to $347,709 for the 1998
first quarter.
The average cost per new home delivery for the 1999 first quarter was up 3
percent over the 1998 first quarter as a result of the delivery of larger, more
expensive homes and higher pricing due to strong demand for housing in
California, which was partially offset by the lower priced homes delivered in
Arizona and Texas.
Our homebuilding gross margin percentage for the 1999 first quarter
improved 110 basis points to 18.6 percent reflecting higher margins generated in
California resulting from the delivery of larger, more expensive homes and
higher pricing due to strong demand for housing, improved gross margins from our
Texas operations due to newer, more attractive locations, and overall
efficiencies derived from increased operating volume.
Selling, general and administrative expenses for the 1999 first quarter
declined slightly as a percentage of revenues to 9.4 percent from 9.5 percent in
the year earlier period. The modest decline relative to the significant
increase in revenues was a result of higher sales and marketing costs incurred
in the 1999 first quarter related to the planned opening of approximately 60 new
communities throughout the year.
Income from unconsolidated joint ventures increased significantly due to
the profits generated from the Talega land development joint venture in south
Orange County with Catellus Residential and Starwood Capital which began its lot
sale program in late 1998.
11
<PAGE>
Amortization of excess of cost over net assets acquired for the 1999 first
quarter relates to both the 1997 northern California acquisition, as well as the
third quarter 1998 acquisition of our Arizona operation. The amortization
expense for the 1998 first quarter includes only the northern California
acquisition.
Net new orders for the 1999 first quarter were up 33 percent over the prior
year first quarter to a record 935 new homes. Orders were up modestly in
California where the number of active selling communities during the quarter
remained fairly consistent with the prior year period, while orders in Texas
were up 21 percent despite a slight decline in the active selling community
count. In addition, our Arizona operations generated 204 net new orders.
Within California, we experienced a 62 percent increase in orders in northern
California and a 25 percent decline in orders in southern California. This
decrease in southern California was primarily due to the strong level of demand
in the prior year period and the timing of new project openings in 1999 which
will be weighted more heavily towards the second and third quarters. Our
backlog at March 31, 1999 stood at a record 1,393 homes, with an estimated sales
value of approximately $461.8 million, a 37 percent increase over the 1998 first
quarter backlog value. In addition, we are planning on opening approximately 46
new communities throughout the balance of 1999, 30 of which are planned for
California, 10 for Texas and 6 for Arizona. These new openings coupled with the
strong backlog at March 31, 1999, should position us for continued growth in
unit volume for the balance of 1999.
In addition, we continue to control a diversified portfolio of buildable
lots consistent with our general goal of maintaining a three to four year
supply. At March 31, 1999, our land holdings totaled approximately 15,800 lots
owned or controlled, 9,600 of which were located in California.
Financial Services
During the first quarter, our California mortgage banking operations saw
their net loan originations increase 45 percent over the 1998 fourth quarter
volume level contributing to a 43 percent improvement in the mortgage pipeline
total at quarter end. These levels and trends are expected to put this start-up
operation in a position to be profitable before year end.
In addition, our mortgage banking joint venture with Norwest Bank currently
serves our Arizona homebuyers. This venture is in the process of expanding into
Texas to provide mortgages to our Dallas, Austin and Houston homebuyers.
12
<PAGE>
Liquidity and Capital Resources
Our homebuilding operations' principal uses of cash have been for operating
expenses, land acquisitions, construction expenditures, market expansion,
principal and interest payments on debt and dividends to our shareholders. Cash
requirements have been provided from internally generated funds and outside
borrowings, including a bank revolving credit facility and public note
offerings. Our mortgage banking subsidiary uses cash from internal funds and a
mortgage warehouse credit facility to fund its mortgage lending operations.
Based on our current business plan and our desire to carefully manage our
leverage, we believe that these sources of cash, are sufficient to finance our
current working capital requirements and other needs.
Borrowings outstanding under our unsecured revolving credit facility
totaled $232.2 million at March 31, 1999 versus $204.9 million at December 31,
1998. The total commitment under the revolving credit facility is $400 million
and has a maturity date of July 31, 2002.
To fund mortgage loans through our financial services subsidiary, we have
in place a $15 million revolving mortgage warehouse credit facility with a bank.
Mortgage loans are held for a short period of time and are typically sold to
investors within approximately 30 days following funding. Borrowings are secured
by the related mortgage loans held for sale and contain a LIBOR based pricing.
The facility, which has a maturity date of May 31, 1999, requires our financial
services subsidiary to comply with certain financial covenants. We are in
discussions with our bank regarding extending the maturity date of this facility
as well as increasing the total commitment to provide the capacity for growth
within our financial services operations.
On September 30, 1998, we repurchased and retired approximately $31.5
million of our 10 1/2% Senior Notes in connection with our tender offer and
consent solicitation, leaving a balance of approximately $19.6 million
remaining. On March 1, 1999, we repaid the balance of these notes under the
annual sinking fund payment provision of the indenture.
From time to time, we use purchase money mortgage financing to finance land
acquisitions. At March 31, 1999, we had approximately $4.8 million outstanding
under trust deed notes payable, a decrease of $16.4 million from December 31,
1998.
Additionally, as a form of off-balance-sheet financing and for other
purposes, on selected projects we use joint ventures which obtain secured
construction financing. This type of structure minimizes the use of funds from
our revolving credit facility and other financing sources. We plan to continue
using these types of arrangements to finance the development of properties as
opportunities arise.
We did not repurchase any shares of our common stock during the quarter
ended March 31, 1999 pursuant to the previously announced common stock
repurchase program. However, since the inception of our stock buyback plan, we
have repurchased an aggregate of 1,425,051 shares of our common stock for
approximately $9.6 million, leaving a balance of approximately $10.4 million
available under the repurchase program.
We paid approximately $1.5 million in dividends to our stockholders during
the quarter ended March 31, 1999. Common stock dividends are paid at the
discretion of our Board of Directors and are dependent upon various factors,
including our earnings, cash flow, capital requirements and operating and
financial condition. Additionally, certain senior credit and debt agreements
impose restrictions on the amount of dividends we may be able to pay. On April
28, 1999, our Board of Directors declared a quarterly cash dividend of $.05 per
share of common stock. The dividend will be payable on May 28, 1999 to
stockholders of record on May 14, 1999.
13
<PAGE>
In October 1998, we had declared effective by the Securities and Exchange
Commission a $300 million universal shelf registration statement on Form S-3.
The universal shelf registration statement permits us to issue, from time to
time, up to an aggregate of $300 million of our common stock, preferred stock,
debt securities and warrants as market conditions permit.
In April 1999, we utilized a portion of our universal shelf and issued $100
million of 8 1/2% Senior Notes due April 1, 2009 (the "8 1/2% Senior Notes").
The 8 1/2% Senior Notes were issued at par. These notes are senior unsecured
obligations and rank equally with our other existing senior unsecured
indebtedness. The 8 1/2% Senior Notes contain restrictive covenants which,
among other things, impose certain limitations on our ability to (1) incur
additional indebtedness, (2) create liens, (3) make restricted payments, as
defined, and (4) sell assets. The 8 1/2% Senior Notes are redeemable at our
option, in whole or in part, at any time after April 1, 2004 at 104.25 percent
of par, with the call price reducing ratably to par on April 1, 2007. Net
proceeds after offering expenses were approximately $97.8 million and were used
to repay a portion of the balance outstanding under our revolving credit
facility.
We have no material commitments or off-balance-sheet financing arrangements
that would tend to affect our future liquidity.
Year 2000 Issue
The "Year 2000 issue" is a general term used to describe the problems which
may arise from the inability of systems to properly recognize a year that begins
with "20" instead of the familiar "19." If not corrected, many computer
applications could fail or miscalculate the data being processed.
We utilize a number of computer information systems in conjunction with our
homebuilding and mortgage banking operations. All of our homebuilding
operations are on computer software applications that are year 2000 compliant.
Our mortgage banking subsidiary, Family Lending Services, Inc., utilizes a
service bureau for its application systems. This service bureau has advised us
that its systems are year 2000 compliant. The financial institution partner in
our mortgage banking joint venture has advised us that both its and the joint
venture's computer information systems are year 2000 compliant.
During 1998, we upgraded our hardware, including but not limited to,
procuring a new AS400 mid-range computer, installing a Company-wide computer
area network, and making numerous upgrades to various personal computer
operating systems. As a result, we believe that all of our critical computer
hardware, including personal computer operating systems and peripheral
equipment, is also year 2000 compliant. Any remaining non-critical computer
hardware and peripheral equipment is scheduled to be substantially year 2000
compliant by the middle of 1999.
In addition, we have evaluated, or are in the process of assessing, all
other non-information technology internal office systems. We anticipate that
this assessment will be substantially completed by the middle of 1999.
We are also in the process of surveying our significant vendors,
subcontractors, suppliers and financial institutions to assess their state of
readiness for the Year 2000. Third parties significant to our operations
include our bank group, escrow and title companies, subcontractors and
suppliers, and a third-party payroll service. Responses and non-responses will
be reviewed over the next quarter, with this part of our Year 2000 evaluation
anticipated to be substantially completed by the middle of 1999. We cannot
currently determine to what extent the Year 2000 issue will affect these or
other third parties, such as governmental agencies on which we are dependent for
zoning, building permits and related matters or, consequently, our business.
Also, we could be materially impacted by widespread economic or financial market
disruptions as a result of year 2000 failure in other parties, industries or
countries.
14
<PAGE>
We are in the process of formulating our year 2000 contingency plan which
is anticipated to be substantially complete by the third quarter of 1999.
We completed certain systems conversions and network upgrades as part of
our normal course of business as there was a need to upgrade the existing
information systems irrespective of the Year 2000 issue. Including the cost of
these conversions and upgrades, we estimate that we have expended approximately
$1.3 million on addressing Year 2000 issues to date and estimate that we will
incur approximately an additional $200,000 in such costs.
At present, we do not believe the Year 2000 issue will have a material
adverse effect on our business operations or financial performance. There can
be no assurance, however, that the Year 2000 issue will not adversely affect us.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks related to fluctuations in interest rates on
our mortgage loans receivable and debt. Currently, we do not utilize interest
rate swaps, forwards or option contracts on financial instruments.
There have been no material changes in our market risk exposure since
December 31, 1998. Please see our Annual Report on Form 10-K for the year ended
December 31, 1998 for further discussion related to our market risk exposure.
15
<PAGE>
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, which represent our expectations or
beliefs concerning future events, including, but not limited to, statements
regarding:
. our backlog of homes and their estimated sales value;
. continued growth in unit volume for the balance of 1999;
. the adequacy of our inventory of building sites;
. our expansion plans for Family Leading and SPH Mortgage and the expected
profitability of Family Lending;
. our discussions regarding the future terms of Family Lending's mortgage
warehouse credit facility;
. planned new home community openings;
. the sufficiency of our cash provided by internally generated funds and
outside borrowings;
. our planned continued use of joint ventures as a financing structure;
. the gain or loss to be recognized from the planned disposition of Savings
and the operating results of Savings for the period through disposition;
. the likely effect on our future liquidity of our existing material
commitments and off-balance-sheet financing arrangements;
. our Year 2000 compliance and the expected impact of the Year 2000 issue on
our business operations and financial performance;
. the expected impact of various accounting statements on our financial
position and results of operations; and
. our exposure to market risks, including fluctuations in interest rates.
16
<PAGE>
We caution that these statements are further qualified by important factors
that could cause actual results to differ materially from those in the forward-
looking statements, including, without limitation, the following:
. changes in local and general economic and market conditions, including
consumer confidence;
. changes in interest rates and the availability of construction and
mortgage financing;
. changes in costs and availability of material, supplies and labor;
. the cyclical and competitive nature of homebuilding;
. the availability of debt and equity capital;
. changes in the availability of suitable undeveloped land at reasonable
prices;
. governmental regulation;
. adverse weather conditions and natural disasters; and
. adverse consequences of the Year 2000 issue.
Results actually achieved thus may differ materially from expected results
included in these and any other forward-looking statements contained herein.
Please see our Annual Report on Form 1O-K for the year ended December 31, 1998
for a further discussion of these and other risks and uncertainties applicable
to our business.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANDARD PACIFIC CORP.
(Registrant)
Dated: May 12, 1999 By: \s\ Arthur E. Svendsen
----------------------
Arthur E. Svendsen
Chairman of the Board and
Chief Executive Officer
Dated: May 12, 1999 By: \s\ Andrew H. Parnes
--------------------
Andrew H. Parnes
Vice President - Finance,
Treasurer and Chief
Financial Officer
18
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Change in Securities
On April 27, 1999, our Board of Directors amended our Bylaws to
clarify that the advance notice requirement for stockholder
proposals applies to both special and annual meetings of
stockholders.
Effective as of May 12, 1999, together with First Chicago Trust
Company of New York, as rights agent, we entered into an
Amendment No. 1 to Rights Agreement pursuant to which our Rights
Agreement dated as of December 31, 1991 (the "Rights Agreement")
was amended to delete the "dead hand" provisions providing that
only Independent Directors (as defined in the Rights Agreement)
can act to redeem the Rights (as defined in the Rights Agreement)
or take certain other actions.
Item 3. Default upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Bylaws of Standard Pacific Corp.
4.1 Amendment No. 1 to Rights Agreement, effective as of May 12,
1999, between Standard Pacific Corp. and First Chicago Trust
Company of New York, as rights agent.
27.1 Financial Data Schedule.
(b) Current Reports on Form 8-K
None
19
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EXHIBIT 3.1
STANDARD PACIFIC CORP.
a Delaware corporation
BYLAWS
ARTICLE I: Offices
SECTION 1.1 Registered Office. The registered office of Standard Pacific
-----------------
Corp. (the "Corporation") shall be at Corporate Trust Center, 1209 Orange
Street, City of Wilmington, County of New Castle, State of Delaware, and the
name of the registered agent in charge thereof shall be The Corporation Trust
Company.
SECTION 1.2 Principal Office. The principal office for the transaction of
----------------
the business of the Corporation shall be at 1565 West MacArthur Boulevard, Costa
Mesa, California 92626. The Board of Directors of the Corporation (the "Board")
is hereby granted full power and authority to change said principal office from
one location to another.
SECTION 1.3 Other Offices. The Corporation may also have an office or
-------------
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II: Meetings of Stockholders
SECTION 2.1 Place of Meetings. All annual meetings of stockholders and
-----------------
all other meetings of stockholders shall be held either at the principal office
of the Corporation or at any other place within or without the State of Delaware
that may be designated by the Board pursuant to authority hereinafter granted to
the Board.
SECTION 2.2 Annual Meetings. Annual meetings of stockholders of the
---------------
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings may be held at such
time and place and on such date as the Board shall determine by resolution.
SECTION 2.3 Special Meetings. Special meetings of stockholders of the
----------------
Corporation for any purpose or purposes may
<PAGE>
only be called in accordance with the provisions of the Certificate of
Incorporation.
SECTION 2.4 Notice of Meetings. Except as otherwise required by law,
------------------
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 days nor more than 60 days before the date of the meeting
to each stockholder of record entitled to vote at such meeting by delivering a
typewritten or printed notice thereof to such stockholder personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to such stockholder at such stockholder's post office address furnished
by such stockholder to the Secretary of the Corporation for such purpose, or, if
such stockholder shall not have furnished an address to the Secretary for such
purpose, then at such stockholder's post office address last known to the
Secretary, or by transmitting a notice thereof to such stockholder at such
address by telegraph, cable, wireless or fax. Except as otherwise expressly
required by law, no publication of any notice of a meeting of stockholders shall
be required. Every notice of a meeting of stockholders shall state the place,
date and hour of the meeting and, in the case of a special meeting, shall also
state the purpose for which the meeting is called. Notice of any meeting of
stockholders shall not be required to be given to any stockholder to whom notice
may be omitted pursuant to applicable Delaware law or who shall have waived such
notice, and such notice shall be deemed waived by any stockholder who shall
attend such meeting in person or by proxy, except a stockholder who shall attend
such meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Except as otherwise expressly required by law, notice of
any adjourned meeting of stockholders need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken.
SECTION 2.5 Quorum. Except as otherwise required by law, the holders of
------
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of
stockholders of the Corporation or any adjournment thereof. Subject to the
requirement of a larger percentage vote contained in the Certificate of
Incorporation, these Bylaws or by statute, the stockholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding any withdrawal of stockholders that may leave
less than a quorum remaining, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
In the absence of a quorum at any meeting or any adjournment thereof, a majority
in voting interest of the stockholders present in person or by proxy and
2
<PAGE>
entitled to vote thereat or, in the absence therefrom of all the stockholders,
any officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time. At any such adjourned meeting at which
a quorum is present, any business may be transacted that might have been
transacted at the meeting as originally called.
SECTION 2.6 Voting.
------
(A) Each stockholder shall, at each meeting of stockholders, be
entitled to vote in person or by proxy each share of the stock of the
Corporation that has voting rights on the matter in question and that shall
have been held by such stockholder and registered in such stockholder's
name on the books of the Corporation:
(i) on the date fixed pursuant to Section 6.5 of these Bylaws as the
record date for the determination of stockholders entitled to notice
of and to vote at such meeting; or
(ii) if no such record date shall have been so fixed, then (a) at
the close of business on the day next preceding the day upon which
notice of the meeting shall be given or (b) if notice of the meeting
shall be waived, at the close of business on the day next preceding
the day upon which the meeting shall be held.
(B) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election
of directors in such other corporation is held, directly or indirectly, by
the Corporation, shall neither be entitled to vote nor be counted for
quorum purposes. Persons holding stock of the Corporation in a fiduciary
capacity shall be entitled to vote such stock. Persons whose stock is
pledged shall be entitled to vote, unless in the transfer by the pledgor on
the books of the Corporation the pledgor shall have expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or the pledgee's
proxy, may represent such stock and vote thereon. - Stock having voting
power standing of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance
with the provisions of the Delaware General Corporation Law.
3
<PAGE>
(C) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by such stockholder's proxy appointed by an
instrument in writing, subscribed by such stockholder or by such
stockholder's attorney thereunto authorized and delivered to the secretary
of the meeting; provided, however, that no proxy shall be voted or acted
upon after three years from its date unless said proxy shall provide for a
longer period. The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the
same unless such stockholder shall in writing so notify the secretary of
the meeting prior to the voting of the proxy. At any meeting of
stockholders, all matters, except as otherwise provided in the Certificate
of Incorporation, in these Bylaws or by law, shall be decided by the vote
of a majority in voting interest of the stockholders present in person or
by proxy and entitled to vote thereat and thereon, a quorum being present.
The vote at any meeting of stockholders on any question need not be by
ballot, unless so directed by the chairman of the meeting. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by such
stockholder's proxy, if there be such proxy, and it shall state the number
of shares voted.
SECTION 2.7 List of Stockholders. The Secretary of the Corporation shall
--------------------
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of such stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 2.8 Judges. If at any meeting of stockholders a vote by written
------
ballot shall be taken on any question, the chairman of such meeting may appoint
a judge or judges to act with respect to such vote. Each judge so appointed
shall first subscribe an oath faithfully to execute the duties of a judge at
such meeting with strict impartiality and according to the best of such judge's
ability. Such judges shall decide upon the qualification of the voters and
shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is
4
<PAGE>
completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The judges
need not be stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which such officer shall have a material interest.
SECTION 2.9 Advance Notice of Stockholder Proposals and Stockholder
-------------------------------------------------------
Nominations.
- -----------
(A) At any meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the Board or (ii) by any stockholder of the Corporation who
complies with the notice procedures set forth in this Section 2.9(A). For
business to be properly brought before any meeting of the stockholders by a
stockholder, the stockholder must have given notice thereof in writing to
the Secretary of the Corporation not less than 90 days in advance of such
meeting or, if later, the seventh day following the first public
announcement of the date of such meeting. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to
bring before the meeting (1) a brief description of the business desired to
be brought before the meeting and the reasons for conducting such business
at the meeting, (2) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (3) the
class and number of shares of the Corporation that are beneficially owned
by the stockholder, and (4) any material interest of the stockholder in
such business. In addition, the stockholder making such proposal shall
promptly provide any other information reasonably requested by the
Corporation. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any meeting of the stockholders except in
accordance with the procedures set forth in this Section 2.9. The Chairman
of any such meeting shall direct that any business not properly brought
before the meeting shall not be considered.
(B) Nominations for the election of directors may be made by the Board
or by any stockholder entitled to vote in the election of directors;
provided, however, that a stockholder may nominate a person for election as
a director at a meeting only if written notice of such stockholder's intent
to make such nomination has been given to the Secretary of the Corporation
not later than 90 days in advance of such meeting or, if later, the seventh
day following the first public announcement of the date of such
5
<PAGE>
meeting. Each such notice shall set forth: (i) the name and address of the
stockholder who intends to make the nomination and of the person or persons
to be nominated; (ii) a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting and nominate the
person or persons specified in the notice; (iii) a description of all
arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder; (iv)
such other information regarding each nominee proposed by such stockholder
as would be required to be included in a proxy statement filed pursuant to
the proxy rules of the United States Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, by the Board; and
(v) the consent of each nominee to serve as a director of the Corporation
if so elected. In addition, the stockholder making such nomination shall
promptly provide any other information reasonably requested by the
Corporation. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 2.9(B). The Chairman of any meeting of stockholders shall
direct that any nomination not made in accordance with these procedures be
disregarded.
ARTICLE III: Board of Directors
SECTION 3.1 General Powers. Subject to any requirements in the
--------------
Certificate of Incorporation, these Bylaws, and of the Delaware General
Corporation Law as to action which must be authorized or approved by the
stockholders, any and all corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be under the
direction of, the Board to the fullest extent permitted by law. Without
limiting the generality of the foregoing, it is hereby expressly declared that
the Board shall have the following powers, to wit:
(A) to select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, the Certificate of Incorporation or these Bylaws,
fix their compensation, and require from them security for faithful
service;
(B) to conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, the
6
<PAGE>
Certificate of Incorporation or these Bylaws (as the same may be amended
from time to time), as it may deem best;
(C) to change the location of the registered office of the Corporation
in Section 1.1 hereof; to change the principal office and the principal
office for the transaction of the business of the Corporation from one
location to another as provided in Section 1.2 hereof; to fix and locate
from time to time one or more subsidiary offices of the Corporation within
or without the State of Delaware as provided in Section 1.3 hereof; to
designate any place within or without the State of Delaware for the holding
of any meeting or meetings of stockholders; and to adopt, make and use a
corporate seal, and to prescribe the forms of certificates of stock, and to
alter the form of such seal and of such certificates from time to time, and
in its judgment as it may deem best, provided such seal and such
certificate shall at all times comply with the provisions of law;
(D) to authorize the issue of shares of stock of the Corporation from
time to time, upon such terms and for such considerations as may be lawful;
(E) to borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor; and
(F) by resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees of the Board,
each consisting of one or more directors, to serve at the pleasure of the
Board, and to prescribe the manner in which proceedings of such committee
or committees shall be conducted.
SECTION 3.2 Number and Term of Office. The authorized number of directors
-------------------------
of the Corporation shall be nine until this Section 3.2 is amended by a
resolution duly adopted by the Board or by the stockholders of the Corporation,
in either case in accordance with the provisions of Article XIV of the
Certificate of Incorporation. Directors need not be stockholders. Each of the
directors of the Corporation shall hold office until such director's successor
shall have been duly elected and shall qualify or until such director shall
resign or shall have been removed in the manner provided in these Bylaws.
SECTION 3.3 Election of Directors. The directors shall be elected by the
---------------------
stockholders of the Corporation, and at each election the persons receiving the
greater number of votes, up to
7
<PAGE>
the number of directors then to be elected, shall be the persons then elected.
The election of directors is subject to any provisions contained in the
Certificate of Incorporation relating thereto, including any provisions for a
classified Board.
SECTION 3.4 Resignations. Any director of the Corporation may resign at
------------
any time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.5 Vacancies. Except as otherwise provided in the Certificate of
---------
Incorporation, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum, or by a sole remaining director; provided, however, that whenever
the holders of any class or series of shares are entitled to elect one or more
directors, any vacancy or newly created directorship of such class or series may
be filled by a majority of the directors elected by such class or series then in
office, or by a sole remaining director so elected. Each director so chosen to
fill a vacancy shall hold office until such director's successor shall have been
elected and shall qualify or until such director shall resign or shall have been
removed. No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
SECTION 3.6 Place of Meeting. The Board or any committee thereof may hold
----------------
any of its meetings at such place or places within or without the State of
Delaware as the Board or such committee may from time to time by resolution
designate or as shall be designated by the person or persons calling the meeting
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board or such
committee can hear each other, and such participation shall constitute presence
in person at such meeting.
SECTION 3.7 Regular Meetings. Regular meetings of the Board may be held
----------------
at such times as the Board shall from time to time by resolution determine. If
any day fixed for a regular meeting shall be a legal holiday at the place where
the meeting is to be held, then the meeting shall be held at the same hour and
place on the next succeeding business day not a legal
8
<PAGE>
holiday. Except as provided by law, notice of regular meetings need not be
given.
SECTION 3.8 Special Meetings. Special meetings of the Board for any
----------------
purpose or purposes shall be called at any time by the Chairman of the Board or,
if the Chairman of the Board is absent or unable or refuses to act, by the Chief
Executive Officer or the President. Except as otherwise provided by law or by
these Bylaws, written notice of the time and place of special meetings shall be
delivered personally or by facsimile transmission to each director, or sent to
each director by mail or by other form of written communication, charges
prepaid, addressed to such director at such director's address, or in the case
of facsimile transmission at the facsimile number, as it is shown upon the
records of the Corporation, or, if it is not so shown on such records and is not
readily ascertainable, at the place in which the meetings of the directors are
regularly held. In case such notice is mailed or telegraphed, it shall be
deposited in the United States mail or delivered to the telegraph company in the
County in which the principal office for the transaction of the business of the
Corporation is located at least 48 hours prior to the time of the holding of the
meeting. In case such notice is delivered personally or by facsimile
transmission as above provided, it shall be delivered at least 24 hours prior to
the time of the holding of the meeting. Such mailing, telegraphing, delivery or
facsimile transmission as above provided shall be due, legal and personal notice
to such director. Except where otherwise required by law or by these Bylaws,
notice of the purpose of a special meeting need not be given. Notice of any
meeting of the Board shall not be required to be given to any director who is
present at such meeting, except a director who shall attend such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 3.9 Quorum and Manner of Acting. Except as otherwise provided in
---------------------------
these Bylaws, the Certificate of Incorporation or by applicable law, the
presence of a majority of the authorized number of directors shall be required
to constitute a quorum for the transaction of business at any meeting of the
Board, and all matters shall be decided at any such meeting, a quorum being
present, by the affirmative vote of a majority of the directors present. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, provided any action taken is
approved by at least a majority of the required quorum for such meeting. In the
absence of a quorum, a majority of directors present at any meeting may adjourn
the same from time to time until a quorum shall be present. Notice of any
adjourned
9
<PAGE>
meeting need not be given. The directors shall act only as a Board, and the
individual directors shall have no power as such.
SECTION 3.10 Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or of such committee.
SECTION 3.11 Compensation. Directors who are not employees of the
------------
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and, in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including for attendance
at each meeting of a committee of the Board. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent, employee, or otherwise, and receiving
compensation therefor.
SECTION 3.12 Committees. By resolution adopted by a majority of the
----------
authorized number of directors, the Board may designate an executive committee,
an audit committee and a stock option committee and such other committees as it
shall determine. Each committee shall consist of two or more of the members of
the Board and shall serve at the pleasure of the Board. Each such committee
shall be governed by a charter adopted by a majority of the authorized number of
directors. To the extent provided in any such charter and subject to any
restrictions or limitations on the delegation of power and authority imposed by
applicable law, any such committee shall have and may exercise all the powers
and authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Any such committee shall keep written minutes of
its meetings and report the same to the Board at the next regular meeting of the
Board. Unless the Board or these Bylaws shall otherwise prescribe the manner of
proceedings of any such committee, meetings of such committee may be regularly
scheduled in advance and may be called at any time by the chairman of the
committee or by any two members thereof; otherwise, the provisions of these
Bylaws with respect to notice and conduct of meetings of the Board shall govern
committees of the Board and actions by such committees.
ARTICLE IV: Officers
SECTION 4.1 Officers. The officers of the Corporation shall be a Chief
--------
Executive Officer, a President, one or more Vice
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Presidents (the number thereof and their respective titles to be determined by
the Board), a Secretary, a Treasurer, a Controller and such other officers as
may be appointed at the discretion of the Board in accordance with the
provisions of Section 4.3 hereof. The Board may appoint a Chairman of the Board
and, if the Board so designates, the Chairman of the Board may be an officer of
the Corporation. Any number of offices may be held by the same person.
SECTION 4.2 Election. The officers of the Corporation, except such
--------
officers as may be appointed or elected in accordance with the provisions of
Sections 4.3 or 4.5 hereof, shall be chosen annually by the Board at the first
meeting thereof held after the annual meeting of stockholders, and each officer
shall hold office until such officer shall resign or shall be removed or
otherwise disqualified to serve, or until such officer's successor shall be
elected and qualified.
SECTION 4.3 Other Officers. In addition to the officers chosen annually
--------------
by the Board at its first meeting, the Board also may appoint or elect such
other officers as the business of the Corporation may require, each of whom
shall have such authority and perform such duties as are provided in these
Bylaws or as the Board may from time to time specify and each of whom shall hold
office until such officer shall resign or shall be removed or otherwise
disqualified to serve, or until such officer's successor shall be elected and
qualified.
SECTION 4.4 Removal and Resignation. Any officer may be removed, either
-----------------------
with or without cause, by resolution of the Board passed by a majority of the
directors at the time in office, at any regular or special meeting of the Board,
or, except in case of an officer chosen by the Board, by any officer upon whom
such power of removal may be conferred by the Board.
SECTION 4.5 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular appointments to such office.
ARTICLE V: Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.1 Execution of Contracts. The Board, except as in these Bylaws
----------------------
otherwise provided, may authorize any officer or officers, or agent or agents,
to enter into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or
11
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engagement or to pledge its credit or to render it liable for any purpose or in
any amount.
SECTION 5.2 Checks, Drafts, Etc. All checks, drafts or other orders for
-------------------
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board. Each such officer, assistant, agent or attorney shall
give such bond, if any, as the Board may require.
SECTION 5.3 Deposits. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President or the
Treasurer (or any other officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation who shall from time to time
be determined by the Board) may endorse, assign and deliver checks, drafts and
other orders for the payment of money which are payable to the order of the
Corporation.
SECTION 5.4 General and Special Bank Accounts. The Board may from time to
---------------------------------
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI: Shares and Their Transfer
SECTION 6.1 Certificates for Stock. Every owner of stock of the
----------------------
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class or
series of shares of the stock of the Corporation owned by such owner. The
certificates representing shares of such stock shall be numbered in the order in
which they shall be issued and shall be signed in the name of the Corporation by
the Chairman of the Board, the Chief Executive Officer, the President or any
Vice President, and by the Secretary or the Treasurer. Any or all of the
signatures on the
12
<PAGE>
certificates may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon, any
such certificate, shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may nevertheless
be issued by the Corporation with the same effect as though the person who
signed such certificate, or whose facsimile signature shall have been placed
thereupon, were such officer, transfer agent or registrar at the date of issue.
A record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number and
class or series of shares represented by such certificates, respectively, and
the respective dates thereof, and in case of cancellation, the respective dates
of cancellation. Every certificate surrendered to the Corporation for exchange
or transfer shall be cancelled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 6.4
hereof.
SECTION 6.2 Transfers of Stock. Transfers of shares of stock of the
------------------
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by such holder's attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 6.3 hereof, and upon surrender
of the certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be so expressed in the
entry of transfer if, when the certificate or certificates shall be presented to
the Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6.3 Regulations. The Board may make such rules and regulations as
-----------
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 6.4 Lost, Stolen, Destroyed, and Mutilated Certificates. In any
---------------------------------------------------
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the
13
<PAGE>
Corporation in such form and in such sum as the Board may direct; provided,
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board, it is proper so to do.
SECTION 6.5 Fixing Date for Determination of Stockholders of Record. In
-------------------------------------------------------
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any other
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more than 60
days prior to any other action. If in any case involving the determination of
stockholders for any purpose other than notice of or voting at a meeting of
stockholders the Board shall not fix such a record date, then the record date
for determining stockholders for such purpose shall be the close of business on
the day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII: Indemnification
SECTION 7.1 Scope of Indemnification. The Corporation shall indemnify, in
------------------------
the manner and to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereinafter be amended (the "Delaware
Law"), and by the Certificate of Incorporation, any person (or the estate of any
person) who is or was a party, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding, whether or not by
or in the right of the Corporation, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise. The indemnification provided herein
shall not be deemed to limit the right of the Corporation to indemnify any other
person to the fullest extent permitted by the Delaware Law, nor shall it be
deemed exclusive of any other rights to which any person seeking indemnification
from the Corporation may be entitled under any agreement, vote of stockholders
or disinterested directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office. The Corporation may enter into indemnification agreements with any one
or more of its directors,
14
<PAGE>
officers, employees and agents upon resolution duly adopted by the Board of
Directors. Such agreements may indemnify such persons to the fullest extent
permissible under law.
ARTICLE VIII: Miscellaneous
SECTION 8.1 Seal. The Board shall adopt a corporate seal, which shall be
----
in the form of a circle and shall bear the name of the Corporation and words
showing that the Corporation was incorporated in the State of Delaware.
SECTION 8.2 Waiver of Notices. Whenever notice is required to be given by
-----------------
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 8.3 Amendments. Except as otherwise provided herein or in the
----------
Certificate of Incorporation, these Bylaws or any of them may be altered,
amended, repealed or rescinded and new Bylaws may be adopted by the Board, or by
the stockholders at any annual or special meeting of stockholders provided that
notice of such proposed alteration, amendment, repeal, rescission or adoption is
given in the notice of such meeting.
SECTION 8.4 Representation of Other Corporations. The Chairman of the
------------------------------------
Board, the Chief Executive Officer, the President or the Secretary or any Vice
President of the Corporation is authorized to vote, represent and exercise on
behalf of the Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the Corporation. The
authority herein granted to said officers to vote or represent on behalf of the
Corporation any and all shares held by the Corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
person authorized so to do by proxy or power of attorney duly executed by such
officers.
SECTION 8.5 Jurisdiction for Stockholder Suits. Any action brought by any
----------------------------------
stockholder against the Corporation or against any officer, director, employee,
agent or advisor of the Corporation, including without limitation any such
action brought on behalf of the Corporation, shall be brought solely in a court
of competent jurisdiction located in the State of Delaware.
15
<PAGE>
EXHIBIT 4.1
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment No. 1 (this "Amendment") to Rights Agreement (the "Rights
Agreement") is effective as of May 12, 1999 by and between Standard Pacific
Corp., a Delaware corporation (the "Corporation"), and First Chicago Trust
Company of New York (the "Rights Agent"). Capitalized terms used herein but not
defined herein shall have their defined meanings set forth in the Rights
Agreement.
BACKGROUND
A. The Corporation and Manufacturers Hanover Trust Company of California,
as the original rights agent, entered into the Rights Agreement effective as of
December 31, 1991.
B. The Rights Agent was appointed as successor rights agent as of
September 30, 1997.
C. The Rights Agreement provides that the Independent Directors have
certain powers to the exclusion of other directors.
D. The parties wish to amend the terms of the Rights Agreement to
eliminate the concept and powers of the Independent Directors.
E. Section 27 of the Rights Agreement provides that a majority, but no
less that three, of the "Independent Directors" may amend the Rights Agreement.
All the directors currently constituting the Board of Directors of the
Corporation are "Independent Directors" under the terms of the Rights Agreement,
and, on April 27, 1999, the Board of Directors, at a duly noticed meeting,
approved the amendment of the Rights Agreement by unanimous vote.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. The Table of Defined Terms is hereby amended by deleting the term
"Independent Director" therefrom.
2. Section 1(l) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"[This Section intentionally left blank.]"
3. Section 1(p) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(p) "Redemption Date" shall mean the date of the action of the Board of
Directors directing the Company to redeem the Rights pursuant to Section
23(a) hereof or exchange the Rights pursuant to Section 24(a) hereof."
<PAGE>
4. Section 1(z) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(z) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter acquires Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company
equal to 1% or more of the Voting Shares then outstanding and thereupon or
thereafter Beneficially Owns 15% or more of the Voting Shares of the
Company then outstanding; provided, however, that the term "15%
Stockholder" shall not include: (i) the Company, any wholly owned
Subsidiary of the Company, any employee benefit plan of the Company or of a
Subsidiary of the Company, or any Person holding Voting Shares for or
pursuant to the terms of any such employee benefit plan; (ii) Arthur E.
Svendsen; (iii) any currently existing or subsequently established trust of
which Mr. Svendsen is the settlor , any trustee of any such trust (in such
capacity), or any beneficiary of any such trust (in such capacity and/or as
the recipient of Voting Shares distributed by any such trust; (iv) Standard
Pacific, L.P.; or (v) any Person if such Person would not otherwise be a
15% Stockholder but for a reduction in the number of outstanding Voting
Shares resulting from a stock repurchase program or other similar plan of
the Company or from a self tender offer of the Company, which plan or
tender offer commenced on or after the date hereof, provided, however, that
the term "15% Stockholder" shall include such Person from and after the
first date upon which (A) such Person, since the date of the commencement
of such plan or tender offer, shall have acquired Beneficial Ownership of,
in the aggregate, a number of Voting Shares of the Company equal to 1% or
more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 15% or more of the Voting Shares of the Company then
outstanding. In calculating the percentage of the outstanding Voting
Shares that are Beneficially Owned by a Person for purposes of this
subsection (z), Voting Shares that are Beneficially Owned by such Person
shall be deemed outstanding, and Voting Shares that are not Beneficially
Owned by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights (other
than Rights), warrants or options shall not be deemed outstanding. Any
determination made by the Board of Directors as to whether any Person is or
is not a 15% Stockholder shall be conclusive and binding upon all holders
of Rights."
5. Section 3(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) "Distribution Date" shall mean the date, after the date hereof, that
is the earliest of (i) the tenth Business Day (or such later day as shall
be designated by the Board of Directors) following the date of the
commencement of, or the first public announcement of the intent of any
Person (other than the Company, any wholly owned Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company, any Person holding Common Shares for or pursuant to the terms of
any such employee benefit plan, or Arthur E. Svendsen) to commence, a
tender offer or exchange offer, the consummation of which would cause any
Person to become a 15% Stockholder,
2
<PAGE>
(ii) the date of the first Section 11(a)(ii) Event or (iii) the date of the
first Section 13(a) Event."
6. Section 3(h) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 15% Stockholder or
any of its Affiliates or Associates or to any Person if the Rights Agent
has been notified by the Company that the Rights held by such Person are
Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. Any determination made by the Board of Directors as to whether
any Common Shares are or were Beneficially Owned at any time by a 15%
Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights."
7. Section 7(b) is hereby amended to replace the phrase "Manufacturers
Hanover Trust Company of California, 300 South Grand Avenue, Second Floor, Los
Angeles, CA 90071" in the first sentence with the phrase "First Chicago Trust
Company of New York, 525 Washington Boulevard, Third Floor, Jersey City, New
Jersey 07310."
8. Section 7(e) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(e) Prior to the Distribution Date, if the Board of Directors shall have
determined that such action adequately protects the interests of the
holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred Shares that would otherwise be issuable
(after the Close of Business on the Distribution Date) upon the exercise of
each Right and payment of the Exercise Price, (i) cash, (ii) other equity
securities of the Company, (iii) debt securities of the Company, (iv) other
property or (v) any combination of the foregoing, in each case having an
aggregate Current Market Price equal to the aggregate Current Market Price
of the Preferred Shares for which substitution is made. Subject to Section
7(d) hereof, in the event that the Company takes any action pursuant to
this Section 7(e), such action shall apply uniformly to all outstanding
Rights."
9. Section 23(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors may, at its option, direct the
Company to redeem all, but not less than all, of the then outstanding
Rights at a redemption price of $.01 per Right, as such redemption price
shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the "Redemption
Price"), and the Company shall so redeem the Rights."
3
<PAGE>
10. Section 23(b) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
(b) Immediately upon the action of the Board of Directors directing the
Company to redeem the Rights pursuant to subsection (a) of this Section 23,
or at such time and date thereafter as the Board of Directors may specify,
and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Within 10
Business Days after the date of such action, the Company shall give notice
of such redemption to the holders of Rights by mailing such notice to all
holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice
that is mailed in the manner herein provided shall be deemed given, whether
or not the holder receives such notice, but neither the failure to give any
such notice nor any defect therein shall affect the legality or validity of
such redemption. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may, directly or
indirectly, redeem, acquire or purchase for value any Rights in any manner
other than that specifically set forth in Section 24 hereof or in this
Section 23, and other than in connection with the purchase of Common Shares
prior to the earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event."
11. Section 24(a) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) At any time after the 15% Ownership Date and prior to the first date
thereafter upon which a 15% Stockholder, together with all Affiliates and
Associates of such 15% Stockholder, shall be the Beneficial Owner of 50% or
more of the Voting Shares then outstanding, the Board of Directors may, at
its option, direct the Company to exchange all, but not less than all, of
the then outstanding Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(d) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, as such
exchange ratio shall be appropriately adjusted to reflect any stock split,
stock dividend, or similar transaction involving Preferred Shares or Common
Shares that occurs after the date hereof (the "Exchange Ratio"), and the
Company shall so exchange the Rights."
12. Section 24(b) is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(b) Immediately upon the action of the Board of Directors directing the
Company to exchange the Rights pursuant to subsection (a) of this Section
24, or at such time and date thereafter as the Board of Directors may
specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holder of a Right shall be to receive a number of Common Shares equal to
the Exchange Ratio. Within 10 Business Days after the date of such action,
the Company shall give notice of such exchange to the holders of Rights by
mailing such
4
<PAGE>
notice to all holders of Rights at their last addresses as they appear upon
the registry books of the Rights Agent or, if prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares.
Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives such notice, but neither the
failure to give any such notice nor any defect therein shall affect the
legality or validity of such exchange. Each such notice of exchange shall
state the method by which the Rights will be exchanged for Common Shares.
Neither the Company nor any of its Affiliates or Associates may, directly
or indirectly, redeem, acquire or purchase for value any Rights in any
manner other than that specifically set forth in Section 23 hereof or in
this Section 24, and other than in connection with the purchase of Common
Shares prior to the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event."
13. Section 26 is hereby amended to replace the address "Manufacturers
Hanover Trust Company of California, 300 South Grand Avenue, Second Floor, Los
Angeles, CA 90071 Attention: _________________" for notice to the rights agent
with the address "First Chicago Trust Company of New York, 525 Washington
Boulevard, Third Floor, Jersey City, New Jersey 07310 Attention: Corporate
Events."
14. Section 27 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(a) The Board of Directors may, from time to time, without the approval
of any holders of Rights, direct the Company and the Rights Agent to
supplement or amend any provision of this Agreement in any manner, whether
or not such supplement or amendment is adverse to any holder of Rights, and
the Company and the Rights Agent shall so supplement or amend such
provision; provided, however, that from and after the earliest of (i) the
date of the first Section 11(a)(ii) Event, (ii) the date of the first
Section 13(a) Event, (iii) the Redemption Date or (iv) the Expiration Date,
this Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights
other than a 15% Stockholder or a Surviving Person."
15. Exhibit C is hereby deleted in its entirety and Exhibit C attached
hereto and incorporated herein by reference is inserted in lieu thereof.
16. Except as expressly set forth in this Amendment, all other terms of
the Rights Agreement shall remain in full force and effect.
17. This Amendment shall for all purposes be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and performed entirely within such state.
18. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the Corporation and the Rights Agent have executed this
Amendment effective as of the date first above written.
Attest: STANDARD PACIFIC CORP.
By: /s/ CLAY A. HALVERSON By: /s/ ANDREW H. PARNES
---------------------------- ----------------------------
Name: Clay A. Halverson Name: Andrew H. Parnes
-------------------------- --------------------------
Title: Vice President Title: Vice President-Finance
------------------------- -------------------------
FIRST CHICAGO TRUST COMPANY
Attest: OF NEW YORK
By: /s/ MARY E. GARCIA By: /s/ JOANNE GOROSTIOLA
---------------------------- ----------------------------
Name: Mary E. Garcia Name: Joanne Gorostiola
-------------------------- --------------------------
Title: Customer Service Officer Title: Assistant Vice President
------------------------- -------------------------
6
<PAGE>
EXHIBIT C
SUMMARY OF THE RIGHTS
The Board of Directors of Standard Pacific Corp. (the "Company") has
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of common stock, par value $.01 per share, of the
Company (the "Common Shares") . The dividend was payable at midnight on
December 31, 1991 (the "Record Date") to the holders of record of Common Shares
as of such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of December
31, 1991 by and between the Company and First Chicago Trust Company of New York,
as Rights Agent (the "Rights Agent"), as amended by Amendment no. 1 to Rights
Agreement, dated as of May 12, 1999.
1. Common Share Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a) the Rights
shall not be exercisable, (b) the Rights shall be attached to and trade only
together with the Common Shares and (c) the stock certificates representing
Common Shares shall also represent the Rights attached to such Common Shares.
Common Share certificates issued after the Record Date and prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.
2. Distribution Date
The "Distribution Date" is the earliest of (a) the tenth business day
following the date of the first public announcement that any person (other than
the Company or certain related entities) has become the beneficial owner of 15%
or more of the then outstanding Common Shares (such person is a "15%
Stockholder" and the date of such public announcement is the "15% Ownership
Date"), (b) the tenth business day (or such later day as shall be designated by
the Board of Directors) following the date of the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would cause any person to become a 15% Stockholder or (c)
the first date, on or after the 15% Ownership Date, upon which the Company is
acquired in a merger or other business combination in which the Company is not
the surviving corporation or in which the outstanding Common Shares are changed
into or exchanged for stock or assets of another person, or upon which 50% or
more of the Company's consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business). In calculating the
percentage of outstanding Common Shares that are beneficially owned by any
person, such person shall be deemed to beneficially own any Common Shares
issuable upon the exercise, exchange or conversion of any options, warrants or
other securities beneficially owned by such person; provided, however, that such
Common Shares issuable upon such exercise shall not be deemed outstanding for
the purpose of calculating the percentage of
<PAGE>
Common Shares that are beneficially owned by any other person. Notwithstanding
the foregoing, if any person is the beneficial owner of at least 15% of the
outstanding Common Shares on the date of the Rights Agreement, or thereafter
becomes the beneficial owner of at least 15% of the outstanding Common Shares as
a result of any increase in the number of Common Shares issuable upon the
exercise, exchange or conversion of outstanding securities, or any decrease in
the number of outstanding Common Shares resulting from any stock repurchase plan
or self tender offer of the Company, then such person shall not be deemed a "15%
Stockholder" until such person thereafter acquires beneficial ownership of, in
the aggregate, a number of additional Common Shares equal to 1% or more of the
then outstanding Common Shares.
Upon the close of business on the Distribution Date, the Rights shall
separate from the Common Shares, Right certificates shall be issued and the
Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
3. Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. Expiration of Rights
The Rights shall expire on December 31, 2001 unless earlier redeemed or
exchanged.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged, they may be
exercised, at the option of the holders, pursuant to paragraphs (a), (b) or (c)
below. No Right may be exercised more than once or pursuant to more than one of
such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by a 15%
Stockholder or that was attached to a Common Share that is subject to an option
beneficially owned by a 15% Stockholder shall be void.
(a) Right to Purchase Preferred Shares. From and after the close of
----------------------------------
business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Series A Junior Participating Cumulative Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares"), at an exercise price of $40 (the
"Exercise Price"). Prior to the Distribution Date, the Company may substitute
for all or any portion of the Preferred Shares that would otherwise be issuable
upon exercise of the Rights, cash, assets or other securities having the same
aggregate value as such Preferred Shares. The
2
<PAGE>
Preferred Shares are nonredeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock, whether issued before or
after the issuance of the Preferred Shares. The Preferred Shares may not be
issued except upon exercise of Rights. The holder of a Preferred Share is
entitled to receive when, as and if declared, the greater of (i) cash and non-
cash dividends in an amount equal to 100 times the dividends declared on each
Common Share or (ii) a preferential annual dividend of $1.00 per Preferred Share
($.01 per one one-hundredth of a Preferred Share). In the event of liquidation,
the holders of Preferred Shares shall be entitled to receive a liquidation
payment in an amount equal to the greater of (1) $1.00 per Preferred Share ($.01
per one one-hundredth of a Preferred Share), plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to
100 times the aggregate amount to be distributed per Common Share. Each
Preferred Share has 100 votes, voting together with the Common Shares. In the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, the holder of a Preferred Share shall be entitled to receive 100
times the amount received per Common Share. The rights of the Preferred Shares
as to dividends, voting and liquidation preferences are protected by
antidilution provisions. It is anticipated that the value of one one-hundredth
of a Preferred Share should approximate the value of one Common Share.
(b) Right to Purchase Common Shares of the Company. From and after the
----------------------------------------------
close of business on the tenth business day following the 15% Ownership Date,
each Right (other than a Right that has become void) shall be exercisable to
purchase, at the Exercise Price (initially $40), Common Shares with a market
value equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the Company
shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation. If, on or
---------------------------------------------------------
after the 15% Ownership Date, (i) the Company is acquired in a merger or other
business combination in which the Company is not the surviving corporation, (ii)
the Company is the surviving corporation in a merger or other business
combination in which all or part of the outstanding Common Shares are changed
into or exchanged for stock or assets of another person or (iii) 50% or more of
the Company's consolidated assets or earning power are sold (other than in
transactions in the ordinary course of business), then each Right (other than a
Right that has become void) shall thereafter be exercisable to purchase, at the
Exercise Price (initially $40), shares of common stock of the surviving
corporation or purchaser, respectively, with an aggregate market value equal to
two times the Exercise Price.
6. Adjustments to Prevent Dilution
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Agreement in
order to prevent dilution.
3
<PAGE>
7. Cash Paid Instead of Issuing Fractional Securities
With certain exceptions, no adjustment in the Exercise Price shall be
required until cumulative adjustments require an adjustment of at least 1%. No
fractional securities shall be issued upon exercise of a Right (other than
fractions of Preferred Shares that are integral multiples of one one-hundredth
of a Preferred Share and that may, at the election of the Company, be evidenced
by depositary receipts) and in lieu thereof, an adjustment in cash shall be made
based on the market price of such securities on the last trading date prior to
the date of exercise.
8. Redemption
At any time prior to the earlier of (a) the tenth business day following
the 15% Ownership Date or (b) the first event of the type described in Section
5(c) above, the Board of Directors may, at its option, direct the Company to
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), and the Company shall so redeem the Rights. Immediately
upon such action by the Board of Directors (the date of such action is the
"Redemption Date"), the right to exercise Rights shall terminate and the only
right of the holders of Rights thereafter shall be to receive the Redemption
Price.
9. Exchange
At any time after the 15% Ownership Date and prior to the first date
thereafter upon which a 15% Stockholder shall be the beneficial owner of 50% or
more of the outstanding Common Shares, the Board of Directors may, at its
option, direct the Company to exchange all, but not less than all, of the then
outstanding Rights for Common Shares at an exchange ratio of one Common Share
per Right (the "Exchange Ratio"), and the Company shall so exchange the Rights.
Immediately upon such action by the Board of Directors, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter
shall be to receive a number of Common Shares equal to the Exchange Ratio.
10. No Stockholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, shall have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. Amendment of Rights Agreement
The Board of Directors may, from time to time, without the approval of any
holder of Rights, direct the Company and the Rights Agent to supplement or amend
any provision of the Rights Agreement in any manner, whether or not such
supplement or amendment is adverse to
4
<PAGE>
any holder of Rights, and the Company and the Rights Agent shall so supplement
or amend such provision; provided, however, that from and after the earliest of
(a) the tenth business day following the 15% Ownership Date, (b) the first event
of the type described in Section 5(c) above, or (c) the Redemption Date, the
Rights Agreement shall not be supplemented or amended in any manner that would
materially and adversely affect any holder of outstanding Rights other than a
15% Stockholder.
CA991160.078/3+
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1999 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 4,586 0
<SECURITIES> 0 0
<RECEIVABLES> 24,907 0
<ALLOWANCES> 0 0
<INVENTORY> 751,176 0
<CURRENT-ASSETS> 0<F1> 0
<PP&E> 8,023 0
<DEPRECIATION> 4,504 0
<TOTAL-ASSETS> 860,852 0
<CURRENT-LIABILITIES> 0<F1> 0
<BONDS> 198,770 0
0 0
0 0
<COMMON> 296 0
<OTHER-SE> 336,763 0
<TOTAL-LIABILITY-AND-EQUITY> 860,852 0
<SALES> 214,480 96,911
<TOTAL-REVENUES> 215,268 97,172
<CGS> 174,641 79,917
<TOTAL-COSTS> 16,781 8,707
<OTHER-EXPENSES> (24) (49)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 291 272
<INCOME-PRETAX> 23,579 8,325
<INCOME-TAX> 9,708 3,492
<INCOME-CONTINUING> 13,871 4,833
<DISCONTINUED> (77) (65)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 13,794 4,768
<EPS-PRIMARY> 0.47 0.16
<EPS-DILUTED> 0.46 0.16
<FN>
<F1>Amounts for current assets and current liabilities are not presented here as
the balance sheet presented is unclassified.
</FN>
</TABLE>
