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Executives

Steve Scarborough - Chairman, President and CEO

Andy Parnes - EVP and CFO

Lloyd McKibbin - VP and Treasurer

Analysts

Larry Taylor - Credit Suisse

Ivy Zelman - Zelman Associates

Dave Goldberg - UBS

Wayne Cooperman - Cobalt Capital

Tim Jones - Wasserman Associates

Michael Rehaut - JP Morgan

Alex Barron - Agency Trading Group

Sue Berliner - Bear Stearns

Jim Wilson - JMP

Paul Carpenter - Summerford Management

Herman Shaw - JP Morgan

James Eustice - Churchill Pacific

Carl Reichardt - Wachovia

John Sykes - Nomura

Peter Simon - Morgan Stanley

Cheryl Vengula - Independence United

Scott Matthew - Lazard Capital

David Dock- Dock Partners

Standard Pacific Corp.(SPF) Q4 2007 Earnings Call February 5, 2008 11:00 AM ET

Operator

Please stand by we are about to begin.

Good day everyone. Welcome to today's Standard Pacific Corp. 2007 fourth quarter and fiscal year end Earnings Call. Today's call is being recorded. At this time I'd like to turn the call over to Lloyd McKibbin. Please go ahead sir.

Lloyd McKibbin - Vice President & Treasurer

Thank you and good morning. Welcome to Standard Pacific 2007 fourth quarter Earnings Call and webcast. A formal presentation will be followed by a question-and-answer period. Out of respect for your time, we ask that each caller's questions be limited to one and a follow up. I'm now going to read a notice regarding forward-looking statements.

This conference call and accompanying slide presentation contains forward-looking statements, including statements about the company's outlook, markets, orders, backlog, land position, operating strategy, maximum NOL carry back, estimated joint venture remargin payments, intent to commence discussions with our bank group, potential for additional impairments and potential exit from additional joint ventures, as well as statements regarding our expected overhead savings, positive cash flow, tax refund and increase in borrowing debt. Repayment of 2008 senior notes, decline in interest coverage ratio, control and reduction of spec homes, joint venture cash flow reductions, management of starts and reduction of land acquisitions and land development spending.

In general, any statements contained in these materials that are not statements of historical facts should be considered forward-looking statement. We caution you that forward-looking statements involve risks and uncertainties and there are a number of factors, which could cause our actual results to differ materially from those that are contained in or implied by these statements.

For a list of certain of these factors, please see our press release of February 04, 2008 and our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. Copies of these documents are readily available including on our website at www.standardpacifichomes.com or from the company upon request.

Both the presentation and Q&A sessions are being recorded and can be replayed via the internet by going to standardpacifichomes.com and visiting our investor relations section. The recorded presentation will be available for replay by 3:00 pm Pacific time this afternoon, and will be available until March 6, 2008. The audio portion may also be replayed by dialing 888-348-4629 and entering pass code number 979199.

Our presenters this morning are Steve Scarborough, Chairman, CEO and President of Standard Pacific and Andy Parnes, Executive Vice President and CFO of Standard Pacific.

Now, I would like to hand the call over to Steve Scarborough.

Steve Scarborough

Thank you, Lloyd, and good morning. We appreciate your participation on today’s call. As we manage our business through these challenging times in the home building industry, we have been focused on reducing our level of consolidated inventories generating cash, paying down debt and improving our liquidity. And I am pleased to report that we continue to make important progress on this front in the fourth quarter.

During the quarter we generated $348 million in cash flow from operating activities, and we ended the year with $219 million in cash on our balance sheet. In the process we were able to reduce consolidated debt by over $250 million, lowering the balance outstanding on our revolving credit facility to $90 million. And we began to retire our senior notes due in October, purchasing $25 million of the notes at a discount during the quarter.

In addition, within the month we expect to receive a tax refund of $235 million in cash, as a result of the company’s NOL carry back for the federal income taxes paid in 2005. Next slide, to support our financial objectives and to strengthen our position as we entered 2008, we were focused on a number of operating initiatives companywide.

During the quarter we were successful in scaling back our joint venture portfolio by exiting six partnerships. And during the year we reduced the number of lots held in joint venture by 45%. Moreover, the absolute level of joint venture debt declined year-over-year by 39% to $771 million.

Partly as a result of these efforts and with a conversion of our backlog in the sale of excess land, we have reduced our inventory of owned and control lots by 43% during the year. We sold approximately 6000 lots in the fourth quarter, which generated $268 million in cash including tax related benefits.

During the quarter we also consolidated our Sarasota operations with our Tampa division, marking the sixth division consolidation this year. In addition, we tightened our geographic footprint by substantially exceeding two non-core markets, Tucson and San Antonio. And finally, we continue to make the difficult but necessary adjustments to the company's overhead and cost structure to right size the organization in response to lower volume levels anticipated going forward.

As a result of these efforts, we believe that we are in a stronger position to respond to current market realities as we begin the New Year. However, to accomplish these goals we incurred additional impairments which in combination with the $180 million FAS 109, deferred tax assets charge the company was required to take it year end, cost us to breach our consolidated tangible net worth covenant contained in our revolving credit facility. The company has obtained a waiver any default rising from the non-compliance through March 30, 2008. And we intend to immediately comment discussions with our banks to amend our covenant package.

At this time, I will turn the presentation over to Andy Parnes for an in-depth review of our financial results for the quarter and for the year, Andy.

Andy Parnes

Thank you, Steve. Please join me on slide number five. For the 2007 fourth quarter, the company generated a net loss of $440.9 million or $6.80 per share, versus a net loss of $98.4 million or $1.53 per share the previous year. The year-over-year decline was driven by the following factors from continuing operations. A 20% decrease in homebuilding revenues, a negative homebuilding gross margin of 17% resulting from $276 million of the inventory impairment charges, a $36 million increase in homebuilding joint venture loss, which reflects $68.5 million of joint venture inventory impairment charges, an $18.4 million increase in other expense, which includes a $36.4 million goodwill impairment charge, and a $11.8 million deposit write-off charge.

A $180.5 million deferred tax asset valuation allowance and a 190 basis point increase in our SG&A rate. The company recorded a total of $433.5 million of pretax impairments and write-offs in the quarter, including $40.6 million related to discontinued operations detail of which we will review in a moment compared to $290.7 million in the 2006 fourth quarter.

Excluding the impairment and tax reserve charges, we would have earned $4.8 million or $0.07 per share during the fourth quarter. Please refer to the exhibit at the end of the presentation for reconciliation between net income and earnings per share before and after the impairment and other charges.

Slide number six provides more detail on the impairment charges reported during the fourth quarter. We continue to review every project each quarter for impairments including projects not yet started or opened. For the vast majority of the projects that were impaired this quarter, we experienced the following conditions during the quarter which contributed to the impairment charges. Further home price declines and losses on lots sold are held for sale. Until market conditions stabilize, the company may continue to incur additional inventory impairment charges.

As you can see from the numbers on this slide nearly 50% of the fourth quarter charges stemmed from land sold or held for sale. While these charges were steep, we expect to generate $268 million in cash from these land sales including the related tax benefits. The company sold 5,613 lots during the quarter including 3,342 lots related to the dispositions in Tucson and San Antonio. The $211 million land sale impairment charge also reflected an additional 1,900 lots held for sale.

The lot sales during the quarter included dispositions primarily in the Bay area, Phoenix, Tampa and Las Vegas. The impairment charges related to ongoing projects covered 43 projects, and the joint venture impairments related to 22 projects and were most significant in Inland Empire and Southern California, Phoenix, Tampa and the Bay Area in Northern California. The company incurred write-offs related to goodwill, related to acquisitions in Florida and the Carolinas.

Slide number seven is intended to give you a sense of the aggregate level of the inventory impairments recorded by us since January 1, 2006, including joint ventures and the percentage of lots written down thus far, based on our December 31, 2006 lot position. As you can see we have impaired 71% of our own lot position including both ongoing projects and land sold or held for sale. In addition we have impaired 41% of our joint venture loss since January 01, 2006.

Now turning to Slide 8, the 20% decrease in fourth quarter homebuilding revenues from continuing operations to $934 million was primarily attributable to a 23% decrease in new home deliveries, combined with a 6% decrease in our consolidated average home price. These decreases were partially offset by a $90 million year-over-year increase in land sale revenues from continuing operations.

Our backlog conversion for the quarter was 83%, and reflected our strong focus on selling standing and nearly completed homes. Our next slide, Slide 9 shows deliveries by state. In California, consolidated new home deliveries increased 11% from the prior year period. Deliveries were up 4% in Southern California, reflecting the improvement in order activity in the second half of 2007, relative to the extremely week conditions in the second half of 2006. While also still at depressed levels, deliveries increased 38% in northern California and were driven by a similar change in order trends in the second half of '07, as compared to the same period in '06.

In the Southwest, new home deliveries decreased 45% led by a 69% decline in Arizona, reflecting the continued weakening in order activity in the state. New home deliveries were down 30% in Texas, driven primarily by a softening of demand in Austin and Dallas. New home deliveries in the company's Southeast region were down 33%, due primarily to a 54% year-over-year decline in Florida, as a result of continued weakening in housing demand.

In the Carolinas, deliveries were up 14% from the year earlier period, driven by a higher delivery total in both the company's Raleigh and Sherwood operations. Slide 10 demonstrates that our consolidated average home price dropped 6% year-over-year in the fourth quarter to 384,000, primarily due to an increase in the level of incentives and discounts required to sell homes in California, Florida and Arizona, which was offset in part by changes in the company’s product and geographic delivery mix.

Moving to Slide 11, the company's negative gross margin percentage from its homebuilding segment was driven by the $276 million of inventory impairment charges related to ongoing projects in land sold or held for sale, as well as continued margin pressure from increased levels of incentives and discounts used to sell homes. Excluding the impact of land sales and their related impairments, the company’s gross margin from home sales would have been 2.5% and further excluding ongoing project inventory impairments, the home sales gross margin would have been 14.1% versus 20.1% last year.

Please refer to the exhibit at the end of the presentation, which reconciles the gross margin percentage for the homebuilding segment to that excluding land sales and impairment charges. The company’s higher SG&A rate for the quarter was driven by the lower revenue base from which to spread the G&A [crossover], combined with increased levels of advertising and co-broker commissions. With that being said, our absolute level of fourth quarter G&A expenses excluding the non-cash components was lower by $12 million year-over-year.

Our leaner overhead structure is a result of division consolidations, market exits, and intense focus on spending in our efforts to right size the organization. While our SG&A rate for the full year is up versus 2006, our rate is comparable to many of our larger peers.

On Slide 12, I would like to direct your attention to the left hand side of the slide. You will see that we generated $656 million of cash flow from operating activities over the last 12 months, which was partially offset by a $198 million of cash used for investing activities, and as result of this was a reduction in our consolidated unsecured homebuilding debt of $148 million over this period combined with a year-over-year increase in cash on our balance sheet of $199 million.

For the fourth quarter EBITDA was down 53% to $78 million driven by the lower level of pre-tax profits after adjusting for the non-cash impairment charges. For the fiscal year, we generated $299 million of EBITDA compared with $706 million in the prior year. Please refer to the next slide for definition of EBITDA and a reconciliation of EBITDA to operating cash flow.

At quarter end, our adjusted net homebuilding debt-to-capital ratio stood at 61.1% up from the previous quarter due to the reduction in our equity from the fourth quarter inventory impairment charges and $180 million deferred tax asset valuation allowance. Our total debt-to-capital ratio, which includes indebtedness of our financial services subsidiary and FIN 46 liabilities, was 66.2%. Please refer to the exhibit at the end of the presentation for a reconciliation of total debt-to-adjusted net homebuilding debt.

Our LTM interest covered ratio was 2.2 down from 4.8 last year and 2.7 last quarter. It is expected that our interest covered ratio will continue to decline during 2008. At December 31, 2007, we had utilized nearly 136 million of capacity under our revolving credit facility including $46 million of letters of credit. Our additional borrowing base capacity at December 31 was approximately 150 million. Please note that upon receipt of tax refund which is estimated to be $235 million, our borrowing base cushion will be increased by a corresponding amount.

We have also included for your reference the calculated and required ratios and amounts through the bank revolvers debt equity and consolidated tangible net worth covenants. We were under the required minimum consolidated tangible net worth amount as of 12/31/07 as a result of the deferred tax asset reserve of $180 million. Accordingly, we sought and received a waiver from our banks through March 30, 2008 related to any covenant violation as a result of the FAS 109 deferred tax asset reserve.

The purpose of slide 15 is to give you a better sense of our joint venture portfolio including additional detail on our 10 largest homebuilding and land development joint ventures. All of this information will be included in our fourth coming 10-K for further references. We thought it would be helpful to give you a sense of the size, balance sheet composition including leverage and credit enhancements associated with these 10 ventures. These 10 ventures represent over 80% of the total combined JV assets and debt. The total leverage of these 10 ventures is less than 49% while the leverage for all of our joint venture is almost 50%.

The company has made meaningful progress with respect to its joint ventures. The company exited six joint ventures during the fourth quarter for aggregate net cash payments totaling approximately $3 million. In addition, the company accelerated the take down of lots from one Southern California venture while acquiring a share of unstarted lots from another Southern California joint venture, both moves designed to maximize tax cash flow benefits.

As a result of these actions, combined with activity in previous quarters, the joint venture saw their absolute level of joint venture debt, including discontinued operations, decline year-over-year by 39% to $771 million. And we expect the joint venture debt level to continue to decrease in 2008.

Since the end of 2006, the Company has reduced the number of losses in its joint ventures, including discontinued operations, by 45%. Looking ahead, the Company will continue to carefully monitor its joint venture portfolio.

During the fourth quarter Standard Pacific made joint venture load remargin payments of approximately $46 million. The Company estimates its share of additional remargin obligations currently to be $45 million to $55 million based on present asset values. These amounts, which are reflected in the Company's cash flow projections, do not reflect the impact of any further reductions in asset values which may continue until market conditions stabilize and also do not reflect additional ordinary course Joint Venture capital contributions, also reflected in our cash flow projections, related to acquisitions, development and construction costs, loan step downs, and load maturities.

In addition, during the fourth quarter Standard Pacific unwound the Joint Venture in California that we mentioned in our last earnings release by paring the interest of its joint venture partners and paying off approximately $40 million of the related joint venture debt. Over the course of this downturn the Company may find it necessary to exit additional joint ventures, which maybe accomplished by acquiring our partner's interest, disposing of our interest or other means. We are not currently in discussions with any of our joint venture partners to acquire their interest.

On slide 17, we have included certain data regarding loans originated by our mortgage subsidiary for the current in year earlier periods. Generally, product mix continues to shift to a higher percentage of conforming loans to the tightened liquidity in the jumbo market, also the level of "Alt-A" and subprime loans continues to decrease as those markets also continue to experience limited sources for this type of product.

Now, I'd like to turn the call back over to Steve for a review of other operating (inaudible). Thank you

Steve Scarborough

Thank you, Andy. On slide 18, we see that net new orders companywide from continuing operations excluding joint ventures for the 2007 fourth quarter decreased to 11% to 1,002 new homes for a monthly sales rate of approximately 1.5 per community. The Company's consolidated cancellation rate for the 2007 fourth quarter was 37% compared to 44% on the 2006 fourth quarter, and 35% in the 2007 third quarter. While the Company's cancellation rate as a percentage of beginning backlog for the 2007 fourth quarter was 25% compared to 22% in the year earlier period.

The overall decrease in that new orders during the 2007 fourth quarter, resulted primarily from decreases in orders in Texas, the Carolinas, and Colorado and to lesser extent a decline in California. These decreases were partially offset by modest order increases in Florida and Arizona.

Our absolute sales absorption rates continue to reflect difficult housing conditions in most of our markets resulting from reduced housing affordability, higher mortgage interest rates and the growing levels of completed new and existing homes available for sale including an increasing level of foreclosure properties in the marketplace.

These conditions have been magnified by the tightening of available mortgage credit for homebuyers, including increased pricing for jumbo loans in the substantial reduction in availability of "Alt-A" mortgage products. All of these conditions have resulted in the declining home price environment which is contributed to an erosion of homebuyer confidence.

Moving to slide 19, as housing market conditions began to erode in 2006, our cancellation rate increased meaningfully resulting in a higher level of spec homes across the Company. Our level of spec homes peaked at12.9 homes per community at the end of June, 2006 and has been steadily at around eight to nine homes per community over the past three quarters and is down 27%, when compared to the total specs per community at December 31, 2006.

During the past year, we intensified our review of specs starts in an effort to balance our corporate inventory objectives with our divisions requirement to maintain an appropriate level of homes that can be sold and closed in a relatively short period of time which many buyers prefer today. We will continue to carefully monitor our level of specs starts in an attempt to control and ultimately reduce the number of completed spec homes companywide.

On slide 20, we show the progress that we have made over the past two years to reduce our lot positions. We closed the year with approximately 35,000 lots owned and controlled companywide, down from 61,000 lots during the same period last year. Over the past two years, we have achieved the 53% decrease in our total lot position owned and controlled. In our lots owned declined 37% over the past two years to just under 22,000 lots. These results were achieved across a number of fronts. We have been able to sell lots to third parties from both our on balance sheet projects as well as from our joint ventures in an effort to generate cash, reduce future cash outflows and reduce inventory levels.

In addition, we have walk away from a number of lot option and land purchase contracts in order to save future cash outflows. We've also exited a number of joint ventures which will also result in future cash flow reduction. I would like to spend a moment to reiterate and reinforce the important progress that we have made during the quarter to reduce our debt and improve our liquidity.

On slide 21, you can see that we reduced our debt by $251 million in the fourth quarter through paying down the revolver by $163 million, repurchasing $24 million of our 6.5% senior notes, and paying down our $66 million in trust deed notes. Given our cash on hand and expected cash flow in 2008, we see no reason why we cannot retire the remaining 6.5% senior notes due in October. We talked a little bit earlier that to address our liquidity going forward, we acquired waiver from our bank group through March 30 and will begin discussions shortly to amend our current covenant package.

In summary, we have taken productive steps to strengthen our cash position in 2007, and we will continue to maintain our focus on cash generation and cash management in 2008, by generating sales and deliveries, balancing our price volume and margin objectives, managing starts, minimizing land acquisitions, reducing land development spending, and when necessary lowering overhead through staff reductions and division consolidations.

We were cash flow positive during 2007, and we believe we will end 2008 cash flow positive as well; although, we will likely to be cash flow negative excluding the tax refund for the first quarter, which is traditionally a lower volume period for the company. I want to commend our team for their accomplishments in 2007 under very difficult conditions. There's a great deal of work left to be done but we are ready to take it on.

That closes our formal presentation, and I want to thank you for your time today. We will now open the call to your question.

Question-and-Answer Session

Thank you. (Operator Instructions). And we will take our first question. Your line is open please go ahead.

Larry Taylor - Credit Suisse

Hi this is Larry Taylor from Credit Suisse can you hear me?

Andy Parnes

Yes we can.

Larry Taylor - Credit Suisse

Great. Couple of questions one on the JV front, you say that you are not in active discussions with the JVs and you did provide a little bit of an outlook. But I wonder if you could give us some more color in terms of how you expect things may unfold there without asking you to be too specific, but just to help us understand your strategy in terms of going forward with the JVs.

Andy Parnes

Well we've taken a good hard look at all of our joint ventures. As we mentioned we did exit six during the quarter, we're looking carefully to maximize our cash flow, and looking at the JVs is one aspect of that. But we can exit a JV with a minimal like initial cash impact that can save cash down the road through eliminating potential future re-margin exposure, just normal capital infusions., we think that makes a lot of sense.

We've also looked at unwinding some JVs or I should say may be accelerating the takedown of land from JVs, primarily to take advantage of the tax losses that were embedded in those assets as a result of impairments. We did two such transactions like that during the fourth quarter, and those transactions are also accretive to our borrowing base as well.

We wanted to have consolidating and unwinding I believe four joint ventures last year, but we had partners that weren’t committed to the ventures. We have taken care of those, those did consume [cash], and even in spite of that we did generate a significant amount of cash during the year. So a lot of progress made. We expect to continue to see the level of JV debt decrease this year through either normal debt reductions, or in some cases, just the lots out of the JVs and putting those on our balance sheet.

So the JV debt I think is down about $500 million from the end of last year and we expect that to meaningfully reduce this year as well.

Larry Taylor - Credit Suisse

Great, thank you, and then one very quick question. How important were the change in the agency limit for confirming more (inaudible) you guys given the price point that you sell at.

Steve Scarborough

I think Larry that could be a very impactful for us particularly in California, which is as you know a big market for our company; just raising the limits particularly in areas like the Inland Empire would we think help considerably.

Operator

And we'll take our next question.

Unidentified Analyst

Hey guys can you hear me?

Steve Scarborough

Yes.

Unidentified Analyst

Hi. Wanted to just ask you a little bit, if could comment on kind of ….

Steve Scarborough

Is this Andrew?

Unidentified Analyst

Yes.

Steve Scarborough

Okay

Unidentified Analyst

I wanted to see if you could potentially comment on some more recent market trends that you saw in the overall housing market, and if there is anything to note whether reduced home prices/reduced rates have kind of spurred any additional sales or additional interest in your community.

Steve Scarborough

Andrew, it's probably a little early, as you can appreciate just in January you are getting a good read on that, but I could mention to you that for the month of January our sales as far as our company targets were on target, but year-over-year there're off about 39%. Cancellations for January are running lower than we've seen recently at about 28%, cancellations interestingly in Florida down to about 19%, and Arizona in the range of 24%. Cancellations are a little bit higher in California. So again I think you know we need to get in to February to have a little better sense of how buyers are reacting to rates and conditions in the market place.

Unidentified Analyst

Sure. Okay. And I guess my only question was, with regards to the credit facility obviously good that you got a waiver, I was curious if you could talk a little bit about what you guys think might be the outcome obviously with what sort of preliminary discussions you might have had with your lenders or what you envision potentially being in various types of covenant changes that might happen going forward.

Andy Parnes

I think it a little premature to comment on that. We really haven't had much of an opportunity to chat with our lenders. As you can appreciate the waiver process went very quickly and we got it in the midst of closing our year-end books and we hadn't had the opportunity to share our business plan with the lenders yet. So, we really haven't started that process in earnest, so I think we'll have a better feel for that over the ensuing month or two.

Operator

(Operator Instructions). And we'll take our next question.

Steve Scarborough

Okay go ahead

Ivy Zelman - Zelman Associates

I am sorry I didn't hear my name, its Ivy Zelman guys with Zelman Associates. I just wanted to see if you can help us. Your cash flow numbers for '08 seemed relatively conservative and if you can help us see what the expectations for absorptions or you're going to assume that you stay it to 1.5 per community and if you can also elaborate on your expectations for development spend relative to '07 please.

Steve Scarborough

Yes. Hi Ivy. As far as our absorption targets, we do expect that they will be, and we are modeling that they quite possibly could be lower than what we experienced last year. You'll recall that during the year last year we averaged about 2.3 sales per community on average, and it tailed off a little bit at the latter part of the year, and we are modeling in the range of 1.5 to 2, depending on how conditions unfold during the year. So certainly we are looking at lower volume levels going forward.

And as far as land development spend, I think we are in a fairly fortunate position in that regard in the sunset of the lots that are currently underdevelopment for the company, approximately 80% are finished. So we don’t have the requirement or the need to spend significant amount of development cost to bring those lots through.

Andy Parnes

I think Ivy, the amount we are going to spend on land development in '08 is going to be about a third of what we spent in ’07, so a pretty meaningful reduction.

Ivy Zelman - Zelman Associates

Great. Well, good job on the cash guys. Thanks.

Steve Scarborough

Thank you.

Operator

And we'll take our next question.

Unidentified Analyst

Hi it's [Dan from Oppenheim]. Just a quick question for you, talking about the decline in the spec homes in the overall. Wondering with the increase in cancellation rates in California, how are the specs regionally, if there is any color you can provide there?

Andy Parnes

Are you talking about the standing specs?

Unidentified Analyst

Yes

Andy Parnes

Okay. They did increase a little bit in California from where they were in the prior quarter, and they are up just a little bit from where they were at the end of last year.

The absolute level outstanding unit is down year-over-year, but kind of locations have shifted around a little bit. There are some markets that just naturally have a higher level of spec units like in Carolina and Texas. We traditionally carry a higher level of specs. I would say the areas right now that probably have maybe excess back -- kind of above our targets would be in Southern California and maybe a little bit in Florida, particularly Southwest Florida.

Unidentified Analyst

Got it. And so, are you anticipating doing something on the sales and pricing side to clear that inventory in those markets?

Andy Parnes

Yeah. That's definitely a focus for the Company. We're energized to monetize the cash, some credit in those positions and we do think that is still relatively low level at around three per community. So it's manageable but it is a very big focus for our operators across the Company.

Steve Scarborough

No, I think the other thing too is just carefully restricting starts. So we can burn through the outstanding units just to normal sales.

Operator

And we'll take our next question.

Dave Goldberg - UBS

Hi. It's Dave Goldberg from UBS. Good morning.

Steve Scarborough

Hi, David.

Dave Goldberg - UBS

I was wondering if you could -- maybe follow-up on Dan's question a little bit, to get an idea of the change in unfold completed home, I know we have the net number, how much net investment but maybe what was added to that and how much you sold, I mean with possibility looks like on the spec homes that were finishing you sold in the quarter?

Andy Parnes

You know I don't have a roll forward in front of me, but one of the things we do look at every quarter is an ageing of our standing units and the ageing of our standing units hasn't really changed. If anything in some markets, its probably done a little bit better. So I think the standing units that you are seeing are, what I would call, kind of fresh units. Its not that these are units that are staying out they are for long periods of time and as Steve had mentioned in his prepared comments, we're finding there are lot of buyers today are looking for a very short escrow anywhere from 30 to 60 days.

So we -- I think in order to hit our sales objectives, we do need to keep some level of standing units on hand. And I don't think we're that far from kind of a good target for us. We could be a little heavy, but I wouldn't see that there is a need to cut this dramatically. Again, I think the market dynamic today is such that we need to keep some standing units in more normal conditions, buyers like -- they don't mind the six-month escrow pick in their home and their lot and waiting for the home to get built.

Today, because a lot of buyers are trying to sell their existing home first and buying their new home later. They really don't have a much of the window to accomplish that.

Dave Goldberg - UBS

Great. And then follow-up. I was wondering, Andy, if you can just go over the remargining aspects that were in the press release, 45 plus million. I am sorry that was last quarter, I guess it was 45 to 55 this quarter. Just how you guys think about that, what kind of stress test you do around in maybe some ranges? If conditions do deteriorate more where could that number be in terms of how much one have to remargin?

Andy Parnes

Well, we take a fresh look at that every quarter. Lloyd McKibbin and his treasury teams spend a good deal of time analyzing each of our joint ventures and in making that assessment and we tried to take a very realistic view of the joint ventures and we do stress test it and in some cases we anticipate further declines.

With that being said, a lot of it is just a function of the temperament of the appraiser when he approaches it, and we've seen some appraisals come out extremely conservative and numbers that are hard to rationalize but it is what it is and in some case the appraisals have come in above where our estimates came in at.

I think one thing to keep in mind though is just the absolute level of debt reduction we've seen in our joint ventures. Again a $0.5 billion or so decline from the end of 2006 and we continue to expect that number to decrease. So I think just the pool of remargin debt that's out there has been shrinking and we expect it to continue to do so going forward.

Operator

And we'll take our next question.

Andy Parnes

Go ahead.

Wayne Cooperman - Cobalt Capital

Can you hear me? Because they are not telling who has the next question.

Andy Parnes

No, we can hear you. I think there is kind of a technical glitch here today that the operator doesn't know who it is. So it's -- go ahead.

Wayne Cooperman - Cobalt Capital

Okay. It's Wayne Cooperman.

Andy Parnes

Hi, Wayne.

Wayne Cooperman - Cobalt Capital

I'm just kind of curious if you could elaborate a bit of a longer term strategy. I mean how long can you keep shrinking inventories and generating cash and sort of where do you go from here after that?

Andy Parnes

Wayne, hard to predict where this market is going but we feel like we've made the appropriate steps in consolidating divisions. I think we've right-sized the company appropriately. And we think that we've adjusted the values in our lots appropriately such that we are in a good position to bring lots through during the next several years at lower volume levels.

Wayne Cooperman - Cobalt Capital

I mean you think you'll add profitable margins?

Andy Parnes

I think it will be a challenge on the profit side for the next year or so. But we believe that through our cash generation, alternately we'll be in a position to reinvest in these markets where the land has been repriced and that's going to be the foundation for our profits going forward.

Wayne Cooperman - Cobalt Capital

Okay. Thanks.

Operator

And we'll take our next question.

Steve Scarborough

Go ahead. Question?

Tim Jones - Wasserman Associates

Tim Jones. Can you hear me?

Steve Scarborough

Yes. Hi, Tim, how are you doing?

Tim Jones - Wasserman Associates

I’m fine. Thank you. Congratulations to all of you on that tax refund. What a pleasant surprise.

Steve Scarborough

Thank you

Tim Jones - Wasserman Associates

Yeah. I know you gave the borrowing base in the slide show, but I didn't catch it. I am not watching the slide show. What was your borrowing base at yearend?

Andy Parnes

We had a $150 million of cushion in the borrowing base. So we had seen $136 million utilized. So the borrowing base would have been about $180 million, I am sorry, $280 million.

Tim Jones - Wasserman Associates

280?

Andy Parnes

280, less the 136 that we drew giving us cushion of about a $150 million.

Tim Jones - Wasserman Associates

So, you got the cushion of, okay, 150 and of course, you're going to get the 235, once you get the cash.

Andy Parnes

That's right. Then that will increase the borrowing base cushion.

Tim Jones - Wasserman Associates

That will be nice. A question about -- just a second. There is proposal, I don't know who are standing now from the Senate to take their tax loss carry forward back from two years to five years. Do you know or have a feeling where that stood, that's obvious that they bail out the pains, but I think it would have a meaningful impact on your operation?

Andy Parnes

Yeah. That is something that I think will be coming to ahead here within the next few days. I believe the Senate is going to vote tomorrow on their version of the stimulus package. And the homebuilding group and the NAHP have been working diligently to try to get some extended carry back in there, and again, it has been a very dynamic in fluid process but that obviously would be very beneficial but that does indeed get included in that stimulus package.

Tim Jones - Wasserman Associates

They couldn't just exclude the homebuilders and do it for the banks.

Andy Parnes

Yeah. I know there is a number of industries that they are looking at and one would think that the homebuilding industry would be one that should be very serving of that today.

Tim Jones - Wasserman Associates

Okay. And lastly, you did $250 million of the cash flow in the fourth quarter, like each about $650 for the year, did you give a cash flow projection for next year?

Andy Parnes

Well, we did not. We made a very broad statement that we believe we'll generate at least enough cash during the year to cover the remaining redemption of the 2008 notes.

Operator

And we will take our next question.

Michael Rehaut - JP Morgan

Hi. This is Mike Rehaut from JP Morgan. How are you?

Steve Scarborough

Hi, Mike. How are you doing?

Michael Rehaut - JP Morgan

Good. New twist on the conference calls here, mechanism that is. Anyway, my first question relates to the pricing that you are seeing our there, it is interesting that from a closing perspective, your price was flattish year-over-year despite coming down nicely, flattish year-over-year despite coming down sequentially. I was wondering if you would look at orders, we backed into an order price down pretty strongly year-over-year. Are you aware you need to be and given that you are expecting absorptions to perhaps to continue to fall here? Do you get even more aggressive on price from here or how are you looking at where your position relative to the marketplace?

Steve Scarborough

Mike, we obviously every month we're looking very aggressively at how we're positioned relative to our competition in our markets and you can see from various from market-to-market and our competitors' strategies can change readily. So we're very focused on that at the very highest level of our operations in our divisions, I believe that we are in a very sound competitive environment as far as our pricing as we speak you may know that in many of our markets we've seen considerable erosion of price particularly in the California, Arizona and further markets where we had seen a pretty big run up in price. So it's our sense that there has been a quite a bit of erosion a large in many markets we've gone back to 2004 pricing. Example, what we've seen and markets say like San Diego this last year prices have year-over-year were off say anywhere from 5% to 15% in our projects and in the quarter maybe 3% to 5%. So it seems like in the San Diego market that the pricing erosion has slowed somewhat, the target project where that’s going to go forward but during this last quarter it was fairly modest. And the East Bay of the Northern California year-over-year and in many of our projects we saw about 25% to 30% erosion in price and 10% of that was in the last quarter so that market is still stabilizing as far as where the price is going to end up. So again it's various by market, we keep it very current as far as our competition and we intend to balance our margin and price and volume goals through adjusting price to stay competitive and meet our absorption targets.

Michael Rehaut - JP Morgan

Thanks for that. Second question just on the JV debt that that remains [indicative]. Give us that number again and give us expense for how much is the recourse or subject to completion on maintenance guarantees and what the portion of that debt is or the JVs portion of the debt would be of JVs that are from partnered with the large either public builders or what you would consider to be more stable our financial partners?

Andy Parnes

Okay the total JV debt at the end of the year was $771 million and then of that we have $283 million where we are jointly and severely responsible for re-margin and $117 where we are severely responsible for the re-margins so that's a total of $408 million of the $771 million. We do have a couple of joint venture loans that are non-recourse including, if you refer back to the slide the November 2005 land investors that's a $182 million of the $771 million and that's that the fourth party joint venture that we're involved in Las Vegas. So I think that covered your question.

Operator

And we will take our next question.

Alex Barron - Agency Trading Group

Yeah this is Alex Barron with Agency Trading Group.

Steve Scarborough

Hi Alex.

Alex Barron - Agency Trading Group

Hi Andy. Hi Steve. Wanted to ask you guys if you had the number of communities you guys impaired this quarter as well as the total for the year?

Steve Scarborough

I have the number we impaired for the quarter here. We impaired 43 ongoing projects, 18 that we either sold or held for sale on 22 Joint Venture communities for a total of 83 and I don’t have the number for the full year handy. I do have it back in my office if you want to call me later I can get that for you.

Alex Barron - Agency Trading Group

Okay I will. Were any of those re-impairs or were they all first time this quarter?

Steve Scarborough

There were some that were re-impaired. Again I don’t know how many I would say the minority of a more re-impaired. Not a majority of it.

Operator

And we'll take our next question.

Sue Berliner - Bear Stearns

Hi it's Sue Berliner with Bear Stearns. Great job on the cash flow. I just wanted to focus, I don’t know if you can provide an update like you did with the markets for January in terms of where your cash stands now or your bank outstanding stand now and just kind of go over why there was such a large portion of trust notes payable on this past quarter?

Steve Scarborough

That we paid off?

Sue Berliner - Bear Stearns

Yes.

Steve Scarborough

I believe the bulk of that came from the Joint Venture that we consolidated at the end of the third quarter that we unwound during the fourth quarter that the debt related to that was $60 million so that was 60 of the 66. Without getting into kind of our day to day cash balance we did indicate, at least Steve indicated in his comments that during the first quarter excluding the tax refund we do expect to be cash flow negative. And that really isn’t unusual considering end of the low seasonal volume that we generate during the quarter. And we did have a couple of lot take downs from Joint Ventures in January that did require some use of cash as well. So it is off from where we were at the end of the quarter.

Sue Berliner - Bear Stearns

And I guess just the second question would be in terms of your cash flow guidance in excess of paying off the October maturity, what is that coming from, does it include any of the any tax refunds, land sales what is it made up off?

Andy Parnes

The tax refund is included in there you know we're anticipating some level of land sales this year although our expectation is its probably going to be quite a bit less than it was in 2007. I think that’s going to be a pretty fluid analysis for us.

Operator

And we'll take our next question.

Jim Wilson - JMP

Hi it's Jim Wilson at JMP.

Steve Scarborough

Hi Jim.

Jim Wilson - JMP

I lets see I guess my two questions were both looking at the regional information. Why don't you a little color on how margins before impairments looked by your regional markets on Sunday you gave a number of 14% for the entire company for Q4?

Andy Parnes

You know what I don't have that I don't have it adjusted for the impairments, so Jim I don't have that handy.

Jim Wilson - JMP

Okay that’s right. And then the other was just looking at I mean you had pretty good sales comps in terms of units Q3 and I know obviously you have got prices pretty aggressively and they are still fairly stable for Q4. I was wondering is there -- could you give a little color on any material changing and pricing strategy in any of your regions from what you saw in Q3 react to the credit crunch to what you did in Q4 -- further did in Q 4.

Steve Scarborough

Jim again that did vary depending on markets as we indicated to relative to standing units, we are pretty aggressively pricing to monetize those units during the quarter so there was a little bit of a more aggressive posture taken in some of the divisions in an effort to reduce our inventories. But I wouldn’t say measurably different but again [we are seeing] very cramped with our competitors and trying to stay within a range of absorption that is built into our models.

Jim Wilson - JMP

Okay. Thanks.

Operator

And we will take our next question.

Steve Scarborough

Go ahead.

Paul Carpenter - Summerford Management

It is Paul Carpenter from Summerford Management. I had a question about the way you measure EBITDA for home building EBITDA and it looks as if the land sales, and excuse me if I am not as fast to speak as some of the other questioners. But let's take the land sale. Land sales are included home building EBITDA. Can you break our, as you get the cash flow generation, targets for next year, are the range that you have given which is helpful. The amount that you expect to receive from land sales and the amount that you would expect to generate from actual sales of homes.

Steve Scarborough

In 2008?

Paul Carpenter - Summerford Management

Great I believe you said that in 2008 you expect to have enough sufficient cash to retire those notes maturing in October so that to me sounds like a bit of cash flow projection.

Andy Parnes

It is, and that is about all the granularity that we are going to be providing. We haven’t thought in any more specific than that in terms of deliveries, revenues, land sales and so forth.

Operator

And we will take our next question

Steve Scarborough

Go ahead

Herman Shaw - JP Morgan

Hi, [Herman Shaw] with J. P. Morgan. Hello.

Steve Scarborough

Good morning.

Herman Shaw - JP Morgan

Good morning, hi. Questions, just first thing on the revolver, you guys, you talked about you had a borrowing base availability of 150 plus, and obviously, this tax on refund. During the wavier period, not that you have a need for it, but are you able to draw on it?

Steve Scarborough

Yes.

Herman Shaw - JP Morgan

And you are?

Steve Scarborough

Yes.

Herman Shaw - JP Morgan

Okay. And the second thing, just to confirm and want to make sure that I am hearing it properly. You are talking about the $235 million tax refund in February, so that will be pro forma for your December cash, would be talking about something to the tune of $450 million of cash on balance sheet?

Steve Scarborough

If you record it that at the end of the year, that's right, yes.

Herman Shaw - JP Morgan

Okay, great. Just wanted to make sure I heard that right. Thanks.

Operator

And we will take our next question

Steve Scarborough

Go ahead.

James Eustice - Churchill Pacific

This is James Eustice, Churchill Pacific. Can you just tell me the nature of what you have left for the trust fees?

Andy Parnes

I think there is a couple of seller notes that are left, and that's typically what would be in that account would be seller related notes where we buy land and the seller takes back the note. There could be Lloyd, 2, 3, 4 of them in there.

Lloyd McKibbin

Yeah, I would say handful. There was that bigger amount previously as we consolidated the JV.

Andy Parnes

But they are typically seller related financing.

James Eustice - Churchill Pacific

And what's the remaining balance from …

Andy Parnes

I think it's about $35 million, yeah, $35 million.

James Eustice - Churchill Pacific

And would those be senior to like the notes in your terms loans?

Andy Parnes

Well. They’re generally non-recourse notes secured by the underlying property which related to the transaction. And those assets related to the -- those trusty notes would not been borrowing base eligible assets.

James Eustice - Churchill Pacific

And just one final question the instead of the one that you took out in this quarter those were just as you said just related to JV's or land selling notes?

Andy Parnes

Yeah one of them was -- the vast majority of them were related to one joint venture that we paid off during the quarter then they may have been either one note paid off or payment made against I can't remember about maybe 6 million.

James Eustice - Churchill Pacific

All right appreciate it thank you.

Operator

And we’ll take our next question.

Steve Scarborough

Go ahead.

Carl Reichardt - Wachovia

Hi it's Carl Reichardt from Wachovia. Hi Andy. Hi Steve.

Steve Scarborough

Hey Carl.

Carl Reichardt - Wachovia

I just had a question about store count for ’08. Andy as you guys are looking at it I am thinking about your SG&A will be due. What are your plans for your store count it has come down a little bit less than from some of your peers?

Steve Scarborough

It’ll will clearly comedown in 2008. We’re going to be opening a fraction of the communities in ’08 that we opened in ’07 so it won't come down.

Carl Reichardt - Wachovia

Do you have a magnitude for me?

Andy Parnes

Again Carl that’s a pretty fluid number but it's not going to be an insignificant reduction. We ended the year with 226 communities we should get under 200 preferably.

Steve Scarborough

Excluding joint ventures.

Carl Reichardt - Wachovia

Okay and then has there been any notable that for the last three or four months any differentiation between excluding geography between lower end price points, entry level stuff versus sort of more traditional standard specific mid end price [reforms]. Has there been any kind of absorption differential that you’ve noted?

Steve Scarborough

We’ve had as you might expect with the pricing of Jumbo loans a little bit of an erosion and softness in the upper end and so that is one trend that we’ve seen in California but other than that I think it's been very much the same as far as the demand for the lower price product and mid-range product not being measurably different across the country.

Operator

And we'll take our next question.

John Sykes - Nomura

Yeah, hi, it's John Sykes with Nomura.

Steve Scarborough

Hi, John.

John Sykes - Nomura

Hi, how is everything?

Steve Scarborough

Good.

John Sykes - Nomura

I had a question on your tax refund number. That doesn't factor in any benefits from the upcoming legislation or accelerating take downs or joint ventures where you might, I guess, benefit from capital losses or that type of thing, right? So, your 235 doesn't include anything like that at this point, beyond what you saw on '07?

Andy Parnes

It does not reflect any change in a well carry back provision and that nothing has been signed into law yet. We did have some joint venture transactions during the fourth quarter where we accelerated land takedowns for the purpose of taking advantage of the impairments that were previously embedded in those lots.

John Sykes - Nomura

Right, okay.

Andy Parnes

So, taking the lots out, allowed us to then deduct those impairments on our track record. So, there is some element of that refund that reflects those JV impairment losses.

John Sykes - Nomura

Just, with respect to the impairments, was that sort of a differential on cost versus current price value or was it more what you guys thought it was worth at that point relative to what you thought it was worth when you got involved with it on the JV side?

Steve Scarborough

We analyze the JV impairments the same way we do on our balance sheet and we’re not required to take any impairment until the operating numbers turned negative once we have operating loss and when we take on an impairment and it could very well be that there is a difference between our analysis and the appraisal. The operating analysis were FAS 144s based upon undiscounted cash flow whereas appraisal, will use some type of discounting method which could come up with a different valuation.

Operator

And we will take our next question

Peter Simon - Morgan Stanley

Hi, this is [Peter Simon] with Morgan Stanley.

Steve Scarborough

Good afternoon.

Peter Simon - Morgan Stanley

Good afternoon. I wanted to follow-up on your sales absorption rate target, trying to reconcile that with what I’m seeing in the number of units in backlog if that 1300 units there and your new orders trending around at 1000 units per quarter to achieve the target of 1.5 to 2 absorption rate without relying on speculative units which you regarded to earlier in your call, it’s seems like you would be expecting significant increases in the orders in ’08? Can you please elaborate on that?

Steve Scarborough

I think when you said trending for the quarter, the first quarter is typically a lower rate and the fourth quarter was at about 1000 sales, so that’s a lower rate than we would expect getting into the heat of the new season. And without getting into specifics we did indicate in the press release how we expect our deliveries this year are going to be down from where they were in ’07.

Peter Simon - Morgan Stanley

And you have some guidance how much that will be down?

Steve Scarborough

No. We haven’t got anything specific.

Peter Simon - Morgan Stanley

And do you have an idea of how many homes you would need to sell during 2008 to make the redemption on the [results] of ’08 maybe SG&A current on the interest and other fixed charges?

Steve Scarborough

We know what that number is but that is not again something that we share publicly.

Operator

And we will take our next question.

Cheryl Vengula - Independence United

Hi, [Cheryl Vengula, Independence United]. I just wanted to clarify something on your JV bank debt. Now is that bank debt secured or unsecured?

Andy Parnes

It is all secured against the specific properties within the joint venture.

Cheryl Vengula - Independence United

Okay.

Andy Parnes

I would characterize it as pretty traditional project type of financing, A&D loans, construction loans that type of thing.

Cheryl Vengula - Independence United

Okay. And the higher mortgage limit on conforming loans, is that something if it's a done deal or waiting for that to happen?

Andy Parnes

I believe part of that is part of the stimulus package that is still pending in Congress so I don’t know if that has, I don’t think it has been finalized yet, I think we should be finding out here probably within the next week or so.

Operator

And we will take our next question.

Steve Scarborough

Go ahead.

Unidentified Analyst

Can you hear me?

Steve Scarborough

Yes.

Unidentified Analyst

Regarding your, revolver if you have to provide collateral for that, which other debt instrument will you have to provide collateral for?

Steve Scarborough

It really depends on the nature of the collateral that we will have to provide to the revolver. In fact, that is what we do. We do have some [carbouts] in our public notes that do allow us to provide some level of wins without having to provide that to the public note holders.

Unidentified Analyst

Could you get a little more specific, which level would trigger that?

Steve Scarborough

Well there is I believe there's generally three baskets within the public note indentures. One is just kind of a general lean basket that ranges from $50 million to $100 million. There is also a model home lean basket that allows us to lean or model homes and I believe that balance was about $160 million or $170 million at the end of the year. And then there is another basket that allows in certain circumstances security on projects acquired, developed or constructed.

Operator

And we'll take our next question.

Unidentified Analyst

Hi two questions, one is just more on high level. Can you give us a sense for sort of from here what you think home price need come down by in each year markets to get back to a level of equilibrium? And then secondly, I don't know if you've ever disclosed this, but can you tell us how much the land spend was in 2007?

Steve Scarborough

Yeah, as far as the land spend in 2007 it was about half of what we had spent in 2006. And then this year we expect that level to be at least half of what we spent in 2007. So it's coming down --

Unidentified Analyst

How about a dollar number?

Steve Scarborough

Significantly.

Unidentified Analyst

Can we get a dollar number.

Steve Scarborough

I think we talked about in '06 of having spent about $900 million, so it gives you an idea. And as far as prices, again that's hard to speculate on. Again we talked about that earlier, (inaudible) trying on what our competitors are doing. We've been selling at prices and rates that we've modeled in our plan our cash flow plan and that we'll need to stay current on where prices are going, again at various end markets. And in many of our markets we've seen 25% to 30% reductions in price has been very significant. And with those price reductions in many cases, we've seen a pick up in sales absorption rates.

Operator

And we will take our next question.

Scott Matthew - Lazard Capital

Hi good morning guys this is [Scott Matthew with Lazard Capital].

Steve Scarborough

Hi Scott.

Scott Matthew - Lazard Capital

Hi I just want to step back bigger picture, want to think about I know you've disclosed your backlog in terms of value, but I just wanted if you could just generalize for us just overall land position and inventory position right now by value. California versus outside of California and then may be drove a little bit in to what you think California may be more coastal versus more inland.

Andy Parnes

We'll have most of that information in the upcoming 10-K. California has always been representative of a disproportionate share of our inventory, it's going to be about half of our total inventory at the end of the year. Our total loaned inventory is going to be about $2.1 billion, and about $1.1 of that is in California, and then the rest would be spread throughout the Florida, Arizona, Texas markets with Florida being the largest.

Southern California is about two-thirds of the total California. So that kind of give you may be a state by state geography. And then within California, I don't have that kind of broken up between coastal and non coastal, but we have a larger presence in the coastal markets and the land is more expensive in the coastal market. So that would lead one to believe that a good chunk of California real estate value would be located in the coastal markets.

Scott Matthew - Lazard Capital

Thanks that's helpful. And then I just wanted to ask quickly, just kind of get a feel for how two different projects were going. I think and correct me if I am wrong, is it the Dadourian and [Paivista] was one of the previous JVs that you did take in but was nearing completion and sales were about to accelerate, and that’s the property, I hope I am talking about is the one that’s tucked inside the five. Was curious if those properties were selling and how that was progressing?

Steve Scarborough

(Inaudible) we did not consolidate Scott, that's still a joint-venture.

Andy Parnes

I think it's the Tempo project...

Steve Scarborough

Tempo, we did and we were successful and taking that to market and I think we've sold a majority of the units. We might have 15 or so.

Andy Parnes

Yeah I don’t have the exact numbers, but we have sold of most of the units there and sales have gone well.

Operator

And we will take our final question.

David Dock- Dock Partners

This is [David Dock from Dock Partners]. If the [stimulus] bill includes the carry back from two to five years to extend their carry back. Do you think that’s going to add pressure on the price of land for a time? In other words will people who have taken write-offs now try to effectuate that from a tax point of view by actually selling the land?

Andy Parnes

I don’t know if that’s necessarily the case. I think companies are going to be selling positions that they deem excess at the time, and you have to carefully balance the cash benefit to what that does to your equity. May be at the end of the day there's a still an [erosion] equity to sell some of these properties. I think you just need to carefully balance your cash needs, how you are positioned relative to your covenants, what were your land position as relative to your needs and then what you would consider excess plan that is disposable at any point of time.

David Dock- Dock Partners

What level in your inventories is land that’s really raw land at this point?

Andy Parnes

Of the 2.1 billion of inventory that we own, about half of that is land or land that is developed, so the other half would be work-in-process in model homes. And Steve mentioned earlier that a very high percentage of our land is represented by finished lots. I think it's about 80% of our

David Dock- Dock Partners

80% of lots under development are finished, so there's a very small percentage that's either raw or either being developed.

Operator

And that does conclude the questions-and-answer session today. At this time, I would like to turn the call back over to our speakers for any additional or closing remarks.

Steve Scarborough

Yes, thank you very much. We want to thank you all for your participation on the call this morning. You've heard that we had a good quarter as far as executing on our cash generation and cash management strategies, and we look forward to updating you as the next quarter closes. So again we appreciate your attention this morning.

Operator

And once again that does conclude today's call. We do appreciate your participation. You may disconnect at this time. Thank you.

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