<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, 2000
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.)
15326 Alton Parkway, Irvine, CA 92618-2338
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (949) 789-1600
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 1, 2000: 28,738,380
<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
The consolidated 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, 1999.
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<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
----------- ------------
<S> <C> <C>
Homebuilding:
Revenues $ 232,120 $ 214,480
Cost of sales 190,206 174,641
----------- ------------
Gross margin 41,914 39,839
----------- ------------
Selling, general and administrative expenses 18,450 20,224
Income from unconsolidated joint ventures 907 4,618
Interest expense 429 291
Amortization of excess of cost over net assets acquired 495 495
Other income 34 24
----------- ------------
Homebuilding pretax income 23,481 23,471
----------- ------------
Financial Services:
Revenues 430 590
Income from unconsolidated joint venture 148 198
Other income 49 -
Expenses 817 680
----------- ------------
Financial services pretax income (loss) (190) 108
----------- ------------
Income from continuing operations before income taxes 23,291 23,579
Provision for income taxes (9,396) (9,708)
----------- ------------
Income from continuing operations 13,895 13,871
Income (loss) from discontinued operation, net of income
taxes of $54 in 1999
- (77)
----------- ------------
Net Income $ 13,895 $ 13,794
=========== ============
Basic Net Income Per Share:
Income per share from continuing operations $ 0.48 $ 0.47
Income (loss) per share from discontinued operation - (0.00)
----------- ------------
Net Income Per Share $ 0.48 $ 0.47
=========== ============
Weighted average common shares outstanding 29,052,400 29,636,636
=========== ============
Diluted Net Income Per Share:
Income per share from continuing operations $ 0.48 $ 0.46
Income (loss) per share from discontinued operation - (0.00)
----------- ------------
Net Income Per Share $ 0.48 $ 0.46
=========== ============
Weighted average common and diluted shares outstanding 29,168,978 29,885,871
=========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
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<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
ASSETS
<S> <C> <C>
Homebuilding:
Cash and equivalents $ 3,143 $ 2,865
Other notes and accounts receivable, net 21,070 10,489
Mortgage notes receivable and accrued interest 4,380 4,530
Inventories 733,993 699,489
Investments in and advances to unconsolidated joint ventures 59,875 49,116
Property and equipment, net 2,726 2,656
Deferred income taxes 13,462 12,738
Other assets 12,304 13,350
Excess of cost over net assets acquired, net 14,820 15,315
-------- --------
865,773 810,548
-------- --------
Financial Services:
Cash and equivalents 144 313
Mortgage loans held for sale 14,633 17,554
Other assets 1,430 1,553
-------- --------
16,207 19,420
-------- --------
Total Assets $881,980 $829,968
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable $ 45,715 $ 42,344
Accrued liabilities 71,655 69,437
Revolving credit facility 64,000 23,000
Trust deed notes payable 3,499 3,531
Senior notes payable 298,874 298,847
-------- --------
483,743 437,159
-------- --------
Financial Services:
Accounts payable and accrued liabilities 448 620
Mortgage warehouse line of credit 9,171 10,304
-------- --------
9,619 10,924
-------- --------
Stockholders' Equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized;
none issued - -
Common stock, $.01 par value; 100,000,000 shares authorized;
28,738,380 and 29,208,680 shares outstanding, respectively 287 292
Paid-in capital 273,880 278,701
Retained earnings 114,451 102,892
-------- --------
Total stockholders' equity 388,618 381,885
-------- --------
Total Liabilities and Stockholders' Equity $881,980 $829,968
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated balance sheets.
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<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 13,895 $ 13,794
Adjustments to reconcile net income to net cash provided by
(used in) operating activities of continuing operations:
Discontinued operation - 77
Income from unconsolidated joint ventures (907) (4,618)
Depreciation and amortization 323 300
Amortization of excess of cost over net assets acquired 495 495
Changes in cash and equivalents due to:
Receivables and accrued interest (7,510) 24,774
Inventories (34,477) (37,705)
Deferred income taxes (724) 1,212
Other assets 1,169 1,713
Accounts payable 3,371 5,679
Accrued liabilities 2,055 (5,367)
------------ ------------
Net cash provided by (used in) operating activities of
continuing operations (22,310) 354
------------ ------------
Cash Flows From Investing Activities:
Net additions to property and equipment (393) (307)
Investments in and advances to unconsolidated joint ventures (23,145) (8,016)
Distributions and repayments from unconsolidated joint ventures 13,293 17,132
------------ ------------
Net cash provided by (used in) investing activities (10,245) 8,809
------------ ------------
Cash Flows From Financing Activities:
Net proceeds from (payments on) revolving credit facility 41,000 27,300
Net proceeds from (payments on) mortgage warehouse line of credit (1,133) (9,499)
Principal payments on senior notes and trust deed notes payable (32) (36,002)
Dividends paid (2,336) (1,481)
Repurchase of common shares (4,872) -
Proceeds from the exercise of stock options 37 41
------------ ------------
Net cash provided by (used in) financing activities 32,664 (19,641)
------------ ------------
Net change in cash from discontinued operation - 5,626
------------ ------------
Net increase (decrease) in cash and equivalents 109 (4,852)
Cash and equivalents at beginning of period 3,178 53,194
------------ ------------
Cash and equivalents at end of period $ 3,287 $ 48,342
============ ============
Summary of Cash Balances:
Continuing operations $ 3,287 $ 4,586
Discontinued operation - 43,756
------------ ------------
$ 3,287 $ 48,342
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest - continuing operations $ 5,540 $ 8,543
Income taxes 4,300 9,500
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
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<PAGE>
STANDARD PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
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, 2000 and December 31,
1999, and the results of operations and cash flows for the periods presented.
Unless the context otherwise requires, the terms "we", "us" and "our" refer
to Standard Pacific Corp. and its subsidiaries.
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, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Total interest incurred during the period $ 8,027 $ 8,729
Less: Interest capitalized as a cost of real estate
under development 7,598 8,438
------------ ------------
Interest expensed $ 429 $ 291
============ ============
Interest previously capitalized as a cost of real estate
under development, included in cost of sales $ 5,002 $ 5,385
============ ============
Capitalized interest in ending inventories $ 23,982 $ 18,208
============ ============
</TABLE>
3. Statement of Cash Flows
-----------------------
Cash flows from the discontinued operation have been presented as a
separate line item in the accompanying consolidated statements of cash flows.
The net change in cash for the discontinued operation presented in the
statements of cash flows for the three-month period ended March 31, 1999
reflects the net change in the cash balance of our savings and loan subsidiary,
which was sold in May 1999.
4. 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, we will be
required to recognize all derivatives as either assets or liabilities in the
consolidated balance sheets and measure these instruments at fair value. We are
required to adopt FAS 133 effective January 1, 2001. We have not yet quantified
the impact of adopting FAS 133.
-5-
<PAGE>
5. Reclassifications
-----------------
Certain reclassifications have been made to the 1999 consolidated financial
statements to conform with current period presentation.
6. Net Income Per Share
--------------------
We compute 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,
-----------------------------------------------------------------
2000 1999
------------------------------- -------------------------------
Income Shares EPS Income Shares EPS
-------- ---------- ------- -------- ---------- -------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic Net Income Per Share:
Income available to common
stockholders from
continuing operations $13,895 29,052,400 $0.48 $13,871 29,636,636 $0.47
Effect of dilutive stock options - 116,578 - 249,235
------- ---------- ------- ----------
Diluted income per share from
continuing operations $13,895 29,168,978 $0.48 $13,871 29,885,871 $0.46
======= ========== ===== ======= ========== =====
</TABLE>
7. Discontinued Operations
-----------------------
In May 1997, the Board of Directors adopted a plan of disposition (the
"Plan") for our savings and loan subsidiary ("Savings"). Pursuant to the Plan,
we 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 were 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, we entered into a definitive agreement to sell the remainder of Savings'
business, including Savings' charter, which closed on May 31, 1999. An after tax
net gain of $618,000, or $.02 per diluted share, was recorded in the 1999 second
quarter as a result of this sale. Proceeds from the sale of Savings were
approximately $8.8 million before transaction and other related costs. Savings
has been accounted for as a discontinued operation and the results of its
operations have been segregated in the accompanying 1999 consolidated income
statements.
Interest income from the discontinued operation totaled approximately
$782,000 for the three month period ended March 31, 1999.
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<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,
----------------------------
2000 1999
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Homebuilding:
Revenues $232,120 $214,480
Cost of sales 190,206 174,641
-------- --------
Gross margin 41,914 39,839
-------- --------
Gross margin percentage 18.1% 18.6%
-------- --------
Selling, general and administrative expenses 18,450 20,224
Income from unconsolidated joint ventures 907 4,618
Interest expense 429 291
Amortization of excess of cost over net assets acquired 495 495
Other income 34 24
-------- --------
Homebuilding pretax income 23,481 23,471
-------- --------
Financial Services:
Revenues 430 590
Income from unconsolidated joint venture 148 198
Other income 49 -
Expenses 817 680
-------- --------
Financial services pretax income (loss) (190) 108
-------- --------
Income from continuing operations before income taxes $ 23,291 $ 23,579
======== ========
</TABLE>
Operating Data
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
New Homes Delivered:
Southern California 235 194
Northern California 174 168
-------- --------
Total California 409 362
-------- --------
Dallas 58 39
Austin 37 28
Houston 9 36
-------- --------
Total Texas 104 103
-------- --------
Arizona 183 188
-------- --------
Consolidated total 696 653
Unconsolidated joint ventures (Southern California) 17 -
-------- --------
Total 713 653
======== ========
Average Selling Price:
California deliveries (excluding joint ventures) $428,966 $442,132
Texas deliveries $254,686 $224,488
Arizona deliveries $163,470 $160,864
Combined (excluding joint ventures) $333,117 $326,825
Combined (including joint ventures) $337,126 $326,825
</TABLE>
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<PAGE>
Operating Data - (continued)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net New Orders:
Southern California 341 318
Northern California 328 276
-------- --------
Total California 669 594
-------- --------
Dallas 75 63
Austin 68 39
Houston 14 35
-------- --------
Total Texas 157 137
-------- --------
Arizona 243 204
-------- --------
Consolidated total 1,069 935
Unconsolidated joint ventures (Southern California) 44 -
-------- --------
Total 1,113 935
======== ========
Average Selling Communities during the quarter:
Southern California 20 19
Northern California 14 14
Texas 22 17
Arizona 13 10
Unconsolidated joint ventures (Southern California) 3 -
-------- --------
Total 72 60
======== ========
<CAPTION>
At March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Backlog (in units):
Southern California 448 501
Northern California 327 355
-------- --------
Total California 775 856
-------- --------
Dallas 100 75
Austin 70 48
Houston 9 30
-------- --------
Total Texas 179 153
-------- --------
Arizona 387 384
-------- --------
Consolidated total 1,341 1,393
Unconsolidated joint ventures (Southern California) 73 -
-------- --------
Total backlog 1,414 1,393
======== ========
Backlog at quarter end (estimated dollar value
in thousands) $477,393 $461,789
======== ========
Building Sites Owned or Controlled:
California 8,223 9,614
Texas 2,318 2,538
Arizona 3,978 3,671
-------- --------
Total 14,519 15,823
======== ========
</TABLE>
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<PAGE>
Income from continuing operations for the 2000 first quarter increased to
$13,895,000, or $0.48 per diluted share, compared to $13,871,000, or $0.46 per
diluted share, for the year earlier period.
Net income for the 2000 first quarter including the discontinued operation
increased to $13,895,000, or $0.48 per diluted share, compared to $13,794,000,
or $0.46 per diluted share, for the 1999 first quarter. The discontinued
operation in 1999 reflects our former savings and loan subsidiary, which was
sold during the 1999 second quarter for an after tax gain of $618,000, or $0.02
per diluted share.
First quarter 2000 earnings before interest, taxes, depreciation and
amortization ("EBITDA") was $29.8 million compared to $31.5 million for the same
period in 1999.
Homebuilding
Homebuilding revenues in the 2000 first quarter increased 8 percent to
$232.1 million from $214.5 million in the year earlier period. The higher
revenue total was due to a 7 percent increase in new home deliveries (exclusive
of joint ventures) coupled with a 2 percent increase in the average home selling
price to $333,000. During the quarter ended March 31, 2000, we delivered 426 new
homes in California, an 18 percent increase over the prior year period.
Deliveries were up 30 percent in Southern California and up 4 percent in
Northern California. Our Arizona operation delivered 183 new homes in the 2000
first quarter which was in line with the strong level of deliveries generated in
the year earlier period. Deliveries in our Dallas and Austin divisions improved
significantly from the previous year period as reflected by their 49 percent and
32 percent gains, respectively, while deliveries in Houston declined by 27
homes.
During the 2000 first quarter the average home price in California declined
3 percent from the year earlier period to $429,000, reflecting a shift in
product mix. The average home price in Texas was up 13 percent to $255,000
reflecting a greater proportion of deliveries from our Dallas and Austin
operations where prices are generally higher than in Houston. The average home
price in Arizona was up slightly to $163,000.
The homebuilding gross margin percentage for the 2000 first quarter was
18.1 percent, down 50 basis points from the prior year first quarter, but up 60
basis points over the 1999 fourth quarter gross margin percentage. First quarter
deliveries were impacted by rising labor and material costs experienced in 1999
which are beginning to moderate.
Selling, general and administrative expenses as a percentage of revenues
for the 2000 first quarter were 7.9 percent compared to 9.4 percent for the same
period last year. The fluctuation in SG&A expenses as a percentage of revenues
is primarily due to the timing of certain sales and marketing costs incurred in
connection with the opening of new communities. In addition, many general and
administrative expenses are typically fixed in nature and decline as a
percentage of revenues in a growing revenue environment.
Income from unconsolidated joint ventures for the 2000 first quarter was
generated from the delivery of 17 homes in the initial phase of our 390 home
three-project joint venture in Fullerton, California in Orange County. The joint
venture income in the prior year first quarter was generated from land sales
from our Talega land development joint venture in South Orange County. We are
expecting to recognize additional joint venture income from land sales in each
of these ventures during the year.
-9-
<PAGE>
Net new home orders for the 2000 first quarter were up 19 percent over the
year earlier period to a first quarter record of 1,113 new homes on a 20 percent
increase in average community count. Orders were up 21 percent in Southern
California on a 21 percent increase in average community count, up 19 percent in
Northern California on a flat community count, up 15 percent in Texas on a 29
percent increase in active selling communities and up 19 percent in Arizona on a
30 percent increase in active selling communities.
Our backlog of presold homes at March 31, 2000 stood at 1,414 homes, with
an estimated sales value of approximately $477.4 million, up 3 percent from the
1999 first quarter backlog value.
We are planning to open approximately 55 to 60 new communities in 2000
compared to 43 in 1999, of which approximately 30 to 35 will be located in
California, 10 in Texas and 15 in Arizona. Assuming there are no significant
changes in the economy, consumer confidence or interest rates, we expect to be
in a position to increase unit deliveries in 2000.
Financial Services
Revenues from our financial services subsidiary for the 2000 first quarter
were down 27 percent from the year earlier period despite a modest increase in
the number and dollar value of loans sold during the quarter. The reduction in
revenues from the year earlier period reflects lower margins realized on sales
of mortgage loans due to increased competitive pressures, as well as a one-time
gain recognized in the 1999 first quarter from the pay-off of a commercial loan.
The rise in operating expenses reflects the increase in overhead from expanding
our mortgage banking operations in California.
The financial services joint venture income reflects the operating results
of our mortgage banking venture with Wells Fargo Bank in Arizona and Texas.
Other financial services income represents earnings from our new title
insurance operation in Texas, which began serving as a title insurance agent and
offering title examination services in September 1999.
Recent Development
On April 14, 2000, we entered into a definitive agreement to acquire The
Writer Corporation, a publicly-traded Denver-based homebuilder ("Writer"), for a
purchase price of $3.35 per share of Writer common stock, or a total of
approximately $26.7 million, plus the assumption of approximately $27.7 million
of indebtedness. The acquisition consideration will be payable in a combination
of cash and Standard Pacific common stock, with Writer's public shareholders
being entitled to elect to receive up to the entire purchase price in cash,
subject to certain limitations. Writer is a longtime homebuilder in the Denver
metropolitan area, and more recently has expanded its operations into the
emerging Fort Collins/Northern Colorado market. For the year ended December 31,
1999, Writer had revenues of $82 million and delivered 383 new homes.
Under the terms of the proposed acquisition, Writer's stockholders will
receive, at their election, a combination of cash and/or Standard Pacific common
stock valued at $3.35 per share of Writer common stock. Not more than 60
percent and not less than 50 percent of the aggregate consideration will be paid
in shares of Standard Pacific common stock. Standard Pacific's shares will be
valued based on their average trading price for a 20 day period prior to
consummation of the merger, provided that in no event will the shares be valued
at less than $11.00 per share or more than $13.50 per share. In the event the
-10-
<PAGE>
option to elect cash is oversubscribed, Writer's directors, officers and 15
percent shareholders have agreed to accept shares of Standard Pacific common
stock.
Consummation of the transaction is subject to customary conditions,
including registration with the Securities and Exchange Commission and approval
of Writer's stockholders. No assurances can be given that the transaction will
be consummated.
Liquidity and Capital Resources
Our homebuilding operations' principal uses of cash have been for operating
expenses, land acquisitions, construction expenditures, market expansion
(including through acquisitions), principal and interest payments on debt, share
repurchases 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.
In August 1999, we amended our unsecured revolving credit facility with our
bank group to, among other things, increase the commitment to $450 million,
extend the maturity date one year to July 31, 2003 and revise certain financial
and other covenants. This agreement contains a borrowing base provision and
financial covenants which may limit the amount we may borrow under the revolving
credit facility. At March 31, 2000, we had borrowings of $64 million
outstanding under this facility.
To fund mortgage loans through our financial services subsidiary, we have a
$40 million revolving mortgage warehouse credit facility with a bank. Mortgage
loans are generally held for a short period of time and are typically sold to
investors within 15 days following funding. Borrowings, which are LIBOR based,
are secured by the related mortgage loans held for sale. The facility, which
has a current maturity date of May 31, 2000, also contains certain financial
covenants. We are in discussions with the bank regarding extending the maturity
date of this facility, which we anticipate being completed before May 31, 2000.
In October 1998, the Securities and Exchange Commission declared effective
our $300 million universal shelf registration statement on Form S-3. The
universal shelf registration statement permits the issuance of common stock,
preferred stock, debt securities and warrants. We currently have $200 million
available under the universal shelf.
From time to time, purchase money mortgage financing is used to finance
land acquisitions. At March 31, 2000 and December 31, 1999, we had
approximately $3.5 million outstanding in trust deed notes payable.
Additionally, as a form of off balance sheet financing and for other
strategic purposes, joint venture structures are used on selected projects.
This type of structure, in which the joint venture typically obtains secured
construction and development financing, minimizes the use of funds from our
revolving credit facility and other corporate financing sources. We plan to
continue using these types of arrangements to finance the development of
properties as opportunities arise.
-11-
<PAGE>
We paid an $.08 per share common dividend, or an aggregate dividend of $2.3
million, during the quarter ended March 31, 2000, which represents a 60 percent
increase from our 1999 fourth quarter cash dividend of $.05 per share. Common
stock dividends are paid at the discretion of our Board of Directors and are
dependent upon various factors, including earnings, cash flows, capital
requirements and operating and financial conditions, including our overall level
of leverage. Additionally, our revolving credit facility and public notes
impose restrictions on the amount of dividends we may be able to pay. On April
25, 2000, our Board of Directors declared a quarterly cash dividend of $.08 per
share of common stock. This dividend is to be paid on May 26, 2000 to
shareholders of record on May 12, 2000.
In April 2000, our Board of Directors increased the aggregate stock
repurchase limit of our previously announced stock buyback plan from $25 million
to $35 million. During the quarter ended March 31, 2000, we repurchased 476,300
shares of common stock for approximately $4.9 million pursuant to this plan.
From the inception of the plan through March 31, 2000, we have repurchased an
aggregate of approximately 2.4 million shares of common stock for approximately
$19.7 million, leaving a balance of approximately $15.3 million available for
future share repurchases.
We have no other material commitments or off balance sheet financing
arrangements that under current market conditions are expected to materially
affect our future liquidity.
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 bank debt. Both our mortgage banking
subsidiary, Family Lending, and our mortgage banking joint venture, SPH
Mortgage, seek to manage interest rate risk with respect to loan commitments and
loans held for sale by preselling loans on a best efforts basis. To enhance
potential returns on the sale of mortgage loans, Family Lending has begun
selling a portion of its mortgage loans on a non-presold mandatory delivery
basis during the quarter ended March 31, 2000. To hedge its interest rate risk
associated with extending interest rate commitments to customers prior to
selling closed loans to investors, Family Lending has entered into forward sale
commitments of mortgage-backed securities during the first quarter ended March
31, 2000. While our hedging strategy of buying and selling mortgage-backed
securities should assist us in mitigating risk associated with selling loans on
a mandatory delivery basis, these instruments involve elements of market risk
which could result in losses on loans sold in this manner if not hedged
properly. In January 2000, Family Lending retained a third party advisory firm
to assist with selling loans on a mandatory delivery basis and entering into
forward sale commitments of mortgage-backed securities.
Other than entering into forward sale commitments of mortgage-backed
securities described above, there have been no other material changes in our
market risk exposure since December 31, 1999. Please see our Annual Report on
Form 10-K for the year ended December 31, 1999 for further discussion related to
our market risk exposure.
-12-
<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:
. rising labor and material costs in 1999 which we believe are beginning to
moderate;
. expected additional joint venture income from land sales during 2000;
. our backlog of homes and their estimated sales value;
. planned new home community openings;
. our prospects for continued growth in unit volume in 2000;
. the anticipated extension of our financial services subsidiary's mortgage
warehouse credit facility;
. 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 likely effect on our future liquidity of our existing material
commitments and off balance sheet financing arrangements; and
. our exposure to market risks, including fluctuations in interest rates.
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; and
. adverse weather conditions and natural disasters.
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 10-K for the year ended December 31, 1999
for a further discussion of these and other risks and uncertainties applicable
to our business.
-13-
<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, 2000 By: /s/ Stephen J. Scarborough
-----------------------------
Stephen J. Scarborough
Chief Executive Officer and
President
Dated: May 12, 2000 By: /s/ Andrew H. Parnes
-----------------------------
Andrew H. Parnes
Vice President - Finance,
Treasurer and Chief
Financial Officer
-14-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Change in Securities
None
Item 3. Default upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger dated as of April 14, 2000
among Standard Pacific Corp., The Writer Corporation, and
TWC Acquisition Corp. incorporated by reference to Exhibit
2.1 of the Registrant's Registration Statement on Form S-4
(file no. 333-37014).
3.1 Bylaws of Registrant incorporated by reference to Exhibit
3.5 of the Registrant's Registration Statement on Form S-4
(file no. 333-37014).
10.1 Standard Pacific Corp. 2000 Stock Incentive Plan
incorporated by reference to Exhibit 10.8 of the
Registrant's Registration Statement on Form S-4 (file no.
333-37014).
27. Financial Data Schedule.
(b) Current Reports on Form 8-K
None
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 2000 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-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 3,287 0
<SECURITIES> 0 0
<RECEIVABLES> 40,083 0
<ALLOWANCES> 0 0
<INVENTORY> 733,993 0
<CURRENT-ASSETS> 0<F1> 0
<PP&E> 6,103 0
<DEPRECIATION> 3,377 0
<TOTAL-ASSETS> 881,980 0
<CURRENT-LIABILITIES> 0<F1> 0
<BONDS> 298,874 0
0 0
0 0
<COMMON> 287 0
<OTHER-SE> 388,331 0
<TOTAL-LIABILITY-AND-EQUITY> 881,980 0
<SALES> 232,120 214,480
<TOTAL-REVENUES> 232,747 215,268
<CGS> 190,206 174,641
<TOTAL-COSTS> 18,855 16,781
<OTHER-EXPENSES> (34) (24)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 429 291
<INCOME-PRETAX> 23,291 23,579
<INCOME-TAX> 9,396 9,708
<INCOME-CONTINUING> 13,895 13,871
<DISCONTINUED> 0 (77)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 13,895 13,794
<EPS-BASIC> $0.48 $0.47
<EPS-DILUTED> $0.48 $0.46
<FN>
<F1>AMOUNTS FOR CURRENT ASSETS AND CURRENT LIABILITIES ARE NOT PRESENTED HERE AS
THE BALANCE SHEET PRESENTED IS UNCLASSIFIED.
</FN>
</TABLE>
