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Standard Pacific Corp. (NYSE:SPF)

Update Call

March 20, 2008 5:30 pm ET

Executives

Andrew H. Parnes - Chief Financial Officer & Executive Vice President, Finance

Jeffrey V. Peterson - Chairman, President & Chief Executive Officer

Ronald R. Foell - Director

Scott D. Stowell - Chief Operating Officer

Clay A. Halvorsen - Executive Vice President, General Counsel & Secretary

Lloyd H. McKibbin - Vice President & Treasurer

Analysts

Michael Rehaut – JP Morgan

Susan Mccleary – UBS

Carl Reichardt - Wachovia Capital Markets, LLC

Dave [Decosta] – Lehman Brothers

[Vicki Bryan - Guinea Credit]

Ken Goldberg – [Lidian]

Mike [Helster] – Honeywell

Operator

Good day everyone and welcome to the Standard Pacific conference call. Today’s call is being recorded. At this time I’d like to turn the conference over to Mr. Andy Parnes, Executive Vice President and Chief Financial Officer. Please go ahead sir.

Andrew H. Parnes

Good afternoon and thank you for joining us to discuss today’s announcement regarding management changes. On the call with me today are Jeff Peterson who has been elected by our Board of Directors as Chairman, President and Chief Executive Officer; Ron Foell who becomes in effect our lead independent Director and also was among the company’s founders; and members of our management team, Scott Stowell, Chief Operating Officer; Clay Halvorsen, General Counsel; and Lloyd McKibbin, Treasurer, all of whom will be available for questions at the end of this call.

Today’s press release is available on PR Newswire as well as the Standard Pacific Investor Relations website at www.StandardPacificHomes.com. Please note that today’s conference call is being recorded and a replay of this call will be available beginning at 5:30 pm PT via telephone at 888-203-1112 or 719-457-0820 for international callers. Pass code for both numbers is 4189058. The comments on this call including comments during the question-and-answer session will contain forward-looking statements and as such are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC specifically our reports on Forms 10-K, 10-Q which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. Finally before I turn the call over let me note that the purpose of this call is to introduce Jeff. Although we will open up the call to your questions we won’t be in a position at this time to address a lot of questions. Jeff will be meeting this afternoon with key groups starting with our employees. As a result this call will be not more than 20 minutes.

I would now like to turn the call over to Jeff Peterson, our new Chairman, President and Chief Executive Officer.

Jeffrey V. Peterson

I feel very honored to be here today and I’d like to thank the rest of the management team that is here with me that Andy has introduced. Also to thank all of you who are on the call for joining us on such short notice particularly on the eve of Good Friday.

As you know earlier this afternoon we issued a press announcing that Steve Scarborough has retired as the company’s Chief Executive Officer and a member of the Board of Directors. I am quite honored to accept the reins from Steve and to have the opportunity to take Standard Pacific through this stage in the company’s evolution. Over the past seven years I’ve been fortunate enough to have sat on the company’s Board of Directors and through that I have gotten to know and to work with most of the members of the company’s management team. I think it goes without saying that this is an exceptionally strong management team in terms of talent, depth and breadth and I have already begun to collaborate with them and I’m looking forward to their support as we address the current challenges and advance our business forward. As I said in today’s release the current operating environment calls for a sense of urgency. In this regard we are addressing priorities and a long term strategy while at the same time maintaining our short term strategy of cash generation, inventory reduction and improving liquidity.

With me on the call today is Ron Foell and Ron was a founder of Standard Pacific in the 1960’s, has served on the company’s Board since then and I’d like to invite Ron to make some comments on behalf of the Board of Directors.

Ron

Good afternoon ladies and gentlemen. Given the importance of today’s announcement I appreciate this opportunity to share with you some of our Board’s thinking. To start, the Board would like to take this opportunity to thank Steve for all he has accomplished during the past 27 years with the company. Over the decades the quality of his character and leadership has always been very impressive to me and in addition he has played a key role in building Standard Pacific Corp. into a major homebuilding company. We all wish Steven the very best in the future. The Board was pleased to accept that Jeff accepted the role as President and Chief Executive Officer. As the lead independent Director Jeff has become deeply immersed in our business, he has learned the company’s history and values and in the Boardroom he has demonstrated a keen insight into our business in the larger environment in which the company operates. The Board is confident that these factors will help him and us to make a smooth transition. Before I turn the call back to Jeff I would like to emphasize that we all recognize that we are basing a number of critical issues and challenges and the Board has charged Jeff with acting decisively and with a sense of urgency.

Jeff, I’ll turn it back to you.

Jeffrey V. Peterson

As Ron was saying it’s very important that we recognize that we’re facing a number of problems today and acknowledge the need for solutions. We also believe it’s equally important to recognize Standard Pacific’s strengths. This is a company with significant market positions, a tradition of building great homes and communities and having an outstanding staff of employees at every level in the organization. As a Board member I have seen firsthand the quality of our operating executives and now as I’m rolling up my sleeves at Standard Pacific I will work closely with the members of this team, including Scott, our Chief Operating Officer; all of our Regional Presidents; Andy Parnes, our CFO; Lloyd McKibbin, our Treasurer; Clay Halvorsen, our General Counsel along with all the other members of the management team. This isn’t going to be an undertaking of one but an undertaking of many. Our first goal is to be in certain and to make certain that the transition is as seamless as possible for our employees, our customers, our suppliers, our financial partners and our shareholders. Secondly it is to ensure the continuity of this business and its operations.

As I mentioned earlier I have already commenced meetings with the management team to establish our priorities and to construct a long term vision. Again our focus in the short term will not change and the team has done an exceptional job under difficult market conditions. We will continue to focus on working to improve our balance sheet and we will move forward to build a long term vision for the company. We will move quickly and decisively and I am certain that the Board’s sense of urgency will rapidly spread throughout this organization. As Andy said at the outset this is going to be a short call, I wish we had more time today but as you heard we have an agenda to meet with a number of employees immediately after this call. I am due to meet with these employees and I’m not yet in a position to address all of your substantive questions because I’m still getting my arms around a lot of issues here.

I feel it’s important to introduce myself and to begin our conversation together. I will look forward to speaking with you again soon and most likely the next will be our quarterly call to discuss our financial results.

With that I’d like to open it to questions.

Question-And-Answer Session

Operator

(Operator Instructions) We’ll take our first question from Michael Rehaut with JP Morgan.

Michael Rehaut – JP Morgan

I have two questions, the first just I think addresses some of the language that was used just before by Jeff in particular who mentioned a few times a sense of urgency, acting decisively, moving quickly perhaps more quickly than the last six months and maybe that’s really ultimately what the first question I’m getting at is, have things changed or was there an issue of pace that was lacking in the past several months that you feel needs to be kind of the pace of things needs to increase or have things deteriorated that much further that there is sort of a higher level of urgency than perhaps what the challenges and progress to some degree that it appeared you were making in terms of cash flow generation in 3 and 4Q?

Jeffrey V. Peterson

Mike, my view on this is I think the management team has one a spectacular job in addressing the short term objectives. As you’ve noted the cash generation, the inventory reductions, improving liquidity. As you know but in managing and growing a business you have to look beyond the short term strategies. You have to have a long term vision, you have to have everybody in alignment towards that long term vision and there are a whole host of things we need to address and to have a sense of urgency in accomplishing. So it is to that end of not only working with the current management team in continuing to focus on the short term issues but also to look to Scott and his team to move forward on building the business and that is something that’s Steve’s vision, it’s something that needs a sense of priority and a sense of urgency and that is what the mandate from the Board is to move forward with here.

Operator

We’ll take our next question from David Goldberg with UBS.

Susan Mccleary – UBS

Hi it’s actually Susan Mccleary for David. I was just wondering if you could walk through your priorities in the first 100 days as you now move into the CEO role.

Jeffrey V. Peterson

Well, let’s see. I’ve been in the Chair CEO President role for about 4 hours now and, Susan, I’d love to say I have my first 100 days laid out. I have the next week laid out, but we have a lot to work towards before I have the first 100 days. But definitely that is a priority and definitely you’re going to see a number of things that I’m certain I’ll be communicating back with both what we’ve accomplished and what we’re looking to accomplish once I’ve gotten my arms around everything here.

Operator

We’ll take our next question from Carl Reichardt with Wachovia Securities.

Carl Reichardt - Wachovia Capital Markets, LLC

I wondered if you guys can give us an update on the status of your negotiations ongoing with the bank group right now for your credit agreement?

Andrew H. Parnes

We’re not in a position to comment on that. That really wasn’t the purpose of the call, Carl, and when we have more information to report on that we’ll discuss that but we’re not in a position to do that today.

Operator

We’ll take our next question from Dave Decosta with Lehman Brothers.

Dave Decosta – Lehman Brothers

My question is the retirement by Steven, was it voluntary, was it performance related, is this a personal thing? It just seems like this announcement was really sudden.

Jeffrey V. Peterson

Dave, I think it’s a policy of the company not to comment on personnel or personal matters. This is a resignation by Steven, or I’d say a retirement. Steve has submitted his retirement. Certainly this is something he’s given consideration to but I don’t know when he first started to formulate his thoughts but certainly it’s something that the Board has accepted and that has resulted in the election of myself to succeed Steve.

Operator

We’ll take our next question from Vicki Bryan with Guinea Credit.

Vicki Bryan - Guinea Credit

I was wondering was this related in any way to advice or suggestions that came from your connection with Miller [Buckbar]?

Jeffrey V. Peterson

No.

Operator

We’ll take our next question from Ken Goldberg with Lidian.

Ken Goldberg – Lidian

Jeff, I can appreciate you are just beginning to formulate a plan but I would have to believe that the Board must have had a number of things regarding their long term strategic vision that may have differed from the direction the company has been headed. Maybe you can elaborate on a few of those because like a lot of people have mentioned there’s really a lack of information so far. I think that people may want to hear regarding what’s really going on.

Jeffrey V. Peterson

Sure, Ken. I understand your comment there and as you know I have been on the Board for the past seven year. I have been lead Director since 2004. We’ve had as any Board we focus considerably on governance issues, we focus on operations, we focus on management, all the things that are requisite for effective Board to do. We have had off sites, we have had meetings to discuss strategy but a lot of that has been occluded by the recent market environment. It’s been a very challenging market environment which has taken a lot of what you would consider to be strategy discussions, making them a lower priority to the higher priority of our short term operations. We believe we’re now at a point in time where we need to again refocus on a vision and a longer term strategy because we’re at where we are today and I think the management team has done an exemplary job on the short term basis. We’re still delivering homes and we have a positive margin and things such as that on these homes but the reality is we now have to start focusing on a longer term basis and to have a defined strategy and have a defined vision to do that so we know where we’re going to go to from here. I don’t have that strategy today. I will be working closely with the management team. We’ll be collaborating with the Board on this and developing this strategy and I think the other thing that’s underscored here Ken established a sense of urgency. This is something that we’re going to move forward with aggressively and immediately and not table it for another day or another quarter.

Operator

We’ll take our next question as a follow from Michael Rehaut with JP Morgan.

Michael Rehaut – JP Morgan

I guess my question just kind of circles back to we understand that you can’t comment on personnel matters but just kind of begin focusing so much on this sense of urgency and decisiveness. I think it’s important to just be sure and understand whether or not in the last few months there’s been a greater deterioration because as far as obviously just at the mid-February timeframe coming off a solid fourth quarter cash flow generation it appeared that you have your debt obligations lined up in terms of covering those for the next 18 months or so, we just want to make sure that this sense of urgency that you keep referring to doesn’t underscore anything let’s say that have put yourselves in a more difficult position since then.

Andrew H. Parnes

Mike, I don’t think that’s the case. I think it’s very clear what we were able to accomplish in the second half of last year to put us in a position where we significantly enhanced our liquidity and we’re very pleased with the progress that we’ve been able to make. Getting back to Jeff’s prepared comments we’ve been very pleased with what we’ve been able to accomplish and our near term focus really isn’t going to change. It is a very intense focus on reducing our inventory levels and generating cash and improving our liquidity situation and I don’t think we could have done a better job. I think we’ve done an outstanding job and we’re going to continue to focus on that and I think Jeff’s references to kind of urgency probably have more of a relationship to some of our longer term focuses, but in the near term I think we’re very much staying the course that I think we’ve been very successfully on over the last several quarters.

Operator

(Operator Instructions)

Jeffrey V. Peterson

Operator, I would think that we are probably down to maybe two additional questions before we’re going to have to terminate the call.

Operator

We will no next to a follow up with Michael Rehaut with JP Morgan.

Michael Rehaut – JP Morgan

I guess I’m the last one standing. Jeff, just on your new agreement to become CEO is there a number of years that to the extent that you’ve signed a new contract that you plan to stay on? Can you give us a sense of is this for you a two to three year type engagement, a five to eight year engagement? We understand that you’re 62 at this point.

Jeffrey V. Peterson

You’ve got the age right. Mike, in terms of the term it is totally open ended. The fact of the matter is I know the company quite well, I have the confidence as you heard from Ron of the Board. I believe I am developing and have established a good rapport with the management team and there is not a specific timeline here. It’s not to say it’s an interim or an acting role but it’s a full time responsibility and we’re looking at very long term type of undertakings here. So it is not something we’ve gone into with a calendar but rather with a mandate and a sense of responsibility and urgency.

Operator

And we will take our final question from Mike Helster with Honeywell.

Mike Helster – Honeywell

I just wanted to confirm kind of straight out the thinking here is not take the company into bankruptcy any time soon or change the strategy I think that was told to investors back in the November-December timeframe.

Jeffrey V. Peterson

I don’t think it’s appropriate to comment on that at this call. The purpose of this call was for me to be introduced to you. There’s a whole host of things as I said that we were going to be addressing and I think I should leave it just that.

Operator

And that does conclude our question-and-answer session.

Jeffrey V. Peterson

Thank you all for joining us this afternoon and as I stated earlier I look forward to speaking with you as we navigate our way through what I feel is a very challenging climate and that we build the company and the value for the shareholders moving forward. And if you have any questions feel free to call Andy or Lloyd or even call me. I’m open, it’s an open door and the phone rings. So we’re ready to respond and we’re hard at work. Thank you very much.

Operator

That does conclude today’s conference. We do thank you for your participation. You may disconnect at this time.

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