To: orkrious who wrote (54380 ) 5/17/2006 10:13:44 PM From: GraceZ Respond to I heard from a money manager at Merrill Lynch who insisted that the homebuilders had tremendous value in their land holdings and said that I should stick to charts. He said that, just as Eddie Lampert has done with Sears (SHLD:NYSE - commentary - research - Cramer's Take), the homies will unlock all that intrinsic value and the stocks will start moving higher. He argued that the valuation of land holdings remains at the purchase price of that land, irrespective of changes in market value. In some instances, the Company and/or its partners have provided guarantees on debt of certain unconsolidated entities generally on a pro rata basis and to a lesser extent on a joint and several basis. At February 28, 2006, the Company had repayment guarantees of $133.7 million and limited maintenance guarantees of $614.1 million related to unconsolidated entity debt. As of February 28, 2006, the fair market value of the repayment guarantees was insignificant. When the Company and/or its partners provide guarantees, the unconsolidated entity generally receives more favorable terms from its lenders than would otherwise be available to it. The limited maintenance guarantees only apply if an unconsolidated entity defaults on its loan arrangements and the value of the collateral (generally land and improvements) is less than a specified percentage of the loan balance. If the Company is required to make a payment under a limited maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance, the payment would constitute a capital contribution or loan to the unconsolidated entity and increase the Company’s share of any funds the unconsolidated entity distributes. At February 28, 2006, there were no assets held as collateral that, upon the occurrence of any triggering event or condition under a guarantee, the Company could obtain and liquidate to recover all or a portion of the amounts to be paid under a guarantee.
