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Home Builder Replaces Two Top Executives

Management: Standard Pacific of Costa Mesa, after big yearly loss, names new president and chief financial officer. Analyst says latter change 'is not good news' and 'raises questions.'


COSTA MESA — In a top-level shake-up, home builder Standard Pacific Corp., which posted a big loss last year, said Monday that it has replaced its president and its chief financial officer.

The company named as president Stephen J. Scarborough, 47, a 15-year employee who earlier this year had been promoted to executive vice president and elected to the board. It promoted its treasurer, Andrew H. Parnes, 38, to chief financial officer.

The Costa Mesa-based home builder replaced both Ronald R. Foell, 65, its longtime president, and April J. Morris, 42, its chief financial officer and one of the few high-ranking female executives in the industry.

Foell, who served as president for 27 years, resigned effective Sept. 30. But he will continue to serve as a director.

While the change in presidents was not surprising to analysts, given Foell's age, the announcement of a new financial officer unnerved some of those who follow the publicly traded home builder.

"This is not good news. Any time a chief financial officer resigns without any clear reasons, it raises questions," said Steve Percoco, analyst with Lark Research in Rahway, N.J. "They still have some problems and I'm concerned."

Morris, who has been with the company for eight years, is resigning as vice president of finance, chief financial officer and secretary effective Aug. 30 to "pursue her own career goals," the company said in a prepared statement. Suzanne C. Himes was elected to fill the post of corporate secretary.

Sources said that Morris resigned because of a conflict over her job duties under the new president.

"They are losing a very capable CFO, but that doesn't mean she can't be replaced," said Larry Horan, an analyst with Prudential Securities. "The more important thing is who will replace their [chief executive]. This company really needs some new strategy and vision that will help it resume growth."

The company's stock fell 25 cents a share Wednesday to close at $6 on the New York Stock Exchange.

The company plans to continue "with what has been done in the past here," Parnes said. "I don't see much of a change in our financial direction. We have a solid relationship with our lenders."

Arthur E. Svendsen, Standard Pacific's chief executive, called the shake-up a "healthy thing."

"Morris was really capable of doing more than CFO, and she wanted to pursue those opportunities," he said.

At 72, Svendsen wouldn't say how long he planned to remain as chief executive. But he said that he will step down as a director next year or the following year.

Pacific Standard, one of the nation's 50 largest home builders and one of California's top 10, lost $27.4 million last year as the sluggish real estate market hampered housing sales.

More recently, the company's results improved as sales increased. For the second quarter, the company reported a profit of $2.2 million, an 83% increase from last year's second quarter.

Other analysts said they were concerned about heavy losses at the company's savings and loan subsidiary, Standard Pacific Savings in Newport Beach.

The S&L has been awash in a sea of red ink, losing $5 million in the past two years. For more than a year, the company has been considering liquidating the thrift.

"We're evaluating all our options with the thrift right now," Parnes said. "We're disposing of the assets. It's a possibility we could close it down, but we haven't made a decision on that."

The parent company has several housing projects for sale in Orange County cities including Tustin, Mission Viejo, Irvine and Orange.

"They build some pretty good houses," said Al Gobar, a real estate consultant in Brea. He said the company's Anaheim Hills project of single-family homes is selling briskly.

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