Exhibit 99.1

LOGO

Shea Homes Reports Fourth Quarter and Full Year 2014 Results

Walnut, California, February 19, 2015

Shea Homes, one of America’s largest private homebuilders, today reported results for the fourth quarter and year ended December 31, 2014.

Three Months Ended December 31, 2014 Highlights and Comparisons to Three Months Ended December 31, 2013

•

Net income attributable to Shea Homes was $59.7 million compared to $73.8 million, a 19% decrease. The 2014 fourth quarter results reflect $9.0 million of inventory impairment charges and a $13.4 million legal charge, both of which were included in cost of sales. Excluding these charges, net income after tax would have been $16.9 million higher.

•

Home sales orders were 436 compared to 361, a 21% increase

•

Active selling communities averaged 66 compared to 60

•

Home sales per community were 6.6, or 2.2 per month, compared to 6.0, or 2.0 per month, a 10% increase

•

Cancellation rate was 18.7% compared to 21.0%

•

Backlog units were 918 compared to 849, an 8% increase

•

Backlog sales value was $551.7 million compared to $466.6 million, an 18% increase

•

Average selling price in backlog was $601,000 compared to $550,000, a 9% increase

•

Total revenues were $419.9 million compared to $340.0 million, a 23% increase

•

House revenues were $412.1 million* compared to $315.5 million*, a 31% increase

•

Home deliveries were 715 compared to 636, a 12% increase

•

Average selling price of home deliveries was $576,000 compared to $496,000, a 16% increase

•

Gross margin was 19.7% compared to 25.1%, reflecting the 2014 fourth quarter impairment and legal charges noted above

•

House gross margin was 24.8%* compared to 23.4%*

•

SG&A expenses were $28.6 million (6.8% of revenues) compared to $27.0 million (7.9% of revenues)

•

Income tax expense/(benefit) was $1.7 million compared to $(15.8) million

•

Adjusted EBITDA was $101.0 million* compared to $81.9 million*

•

Unrestricted cash at December 31, 2014 was $236.9 million compared to $206.2 million at December 31, 2013

Page 1

Year Ended December 31, 2014 Highlights and Comparisons to Year Ended December 31, 2013

•

Net income attributable to Shea Homes was $133.4 million compared to $125.9 million, a 6% increase. The 2014 results reflect $9.0 million of inventory impairment charges and a $16.9 million legal charge, both of which were included in cost of sales. Excluding these charges, net income after tax would have been $19.0 million higher.

•

Home sales orders were 2,054 compared to 1,828, a 12% increase

•

Active selling communities averaged 64 compared to 58

•

Home sales per community were 32.1, or 2.7 per month, compared to 31.5, or 2.6 per month, a 2% increase

•

Cancellation rate was 15.8% compared to 15.4%

•

Total revenues were $1,140.6 million compared to $930.6 million, a 23% increase

•

House revenues were $1,120.0 million* compared to $894.3 million*, a 25% increase

•

Home deliveries were 1,985 compared to 1,890, a 5% increase

•

Average selling price of home deliveries was $564,000 compared to $473,000, a 19% increase

•

Gross margin was 22.4% compared to 23.8%, reflecting the 2014 impairment and legal charges noted above

•

House gross margin was 24.5%* compared to 23.2%*

•

SG&A expenses were $118.4 million (10.4% of revenues) compared to $104.4 million (11.2% of revenues)

•

Income tax expense/(benefit) was $18.2 million compared to $(14.1) million

•

Adjusted EBITDA was $234.8 million* compared to $185.8 million*

*	See “Reconciliation of Non-GAAP Financial Measures” beginning on page 10

Page 2

For the 2014 fourth quarter, new home sales orders were 436 compared to 361 in the 2013 fourth quarter, a 21% increase, primarily due to a 10% increase in our wholly-owned active selling communities and a higher sales rate per community in our Northern California and Mountain West segments. Overall, demand for new homes remained healthy in our Southern California, San Diego, Northern California and Mountain West segments, while we saw an improvement in demand in our South West segment and, specifically, in our Phoenix communities, which have been more sluggish until recently.

At December 31, 2014, our backlog was 918 homes compared to 849 at December 31, 2013, an 8% increase, which was primarily attributable to the higher level of sales during the fourth quarter. For the 2014 fourth quarter, the Company’s cancellation rate was 18.7% compared to 21.0% in the 2013 fourth quarter.

For the 2014 fourth quarter, net income attributable to Shea Homes was $59.7 million compared to $73.8 million in the 2013 fourth quarter. This decrease was primarily due to a $2.8 million decrease in gross margin (primarily due to the $9.0 million in impairment charges for two communities in our South West segment, and a $13.4 million legal charge), a $4.5 million increase in selling expense, and a $17.5 million increase in tax expense, partially offset by a $3.0 million decrease in general and administrative expenses and a $7.4 million increase in equity income from unconsolidated joint ventures. The increase in income tax expense is primarily due to a $15.6 million income tax benefit in 2013 for the reversal of our deferred tax asset valuation allowance. Net income after tax for the 2014 fourth quarter excluding the impairment and legal charges would have been $16.9 million higher.

For the 2014 fourth quarter, total revenues were $419.9 million compared to $340.0 million in the 2013 fourth quarter, a 23% increase, and house revenues were $412.1 million* for the 2014 fourth quarter compared to $315.5 million* in the 2013 fourth quarter, a 31% increase. The increase in house revenues was primarily attributable to a 12% increase in deliveries, driven by higher totals in our Southern California and San Diego segments, and an increase in average selling price to $576,000 from $496,000, a result of general home price increases in most segments, and a greater percentage of deliveries from our Southern California segment, which has a higher average selling price than our other segments.

For the 2014 fourth quarter, total gross margin was 19.7% compared to 25.1% in the 2013 fourth quarter, a 600 basis point (bp) decrease, and house gross margin was 24.8%* for the 2014 fourth quarter compared to 23.4%* in the 2013 fourth quarter, a 110 bp increase. The lower total gross margin reflects the impairment and legal charges noted above. For the 2014 fourth quarter, our house gross margin excluding interest was 30.4%* compared to 29.6%* in the 2013 fourth quarter.

For the 2014 fourth quarter, SG&A expenses were $28.6 million (6.8% of revenues) compared to $27.0 million (7.9% of revenues) in the 2013 fourth quarter. This increase was primarily due to higher volume related costs, such as advertising and model costs. However, our SG&A rate was lower as we continue to leverage our fixed overhead costs over a larger revenue base.

For the 2014 fourth quarter, net operating cash flows were $70.6 million compared to $76.6 million in the 2013 fourth quarter. This decrease was primarily due to higher land acquisition, land development and house construction costs, partially offset by higher cash receipts from home deliveries. For the 2014 fourth quarter, land acquisition and land development spending were $179.0 million compared to $88.0 million in the 2013 fourth quarter; and cash receipts from home deliveries were $412.1 million for the 2014 fourth quarter compared to $315.5 million in the 2013 fourth quarter.

For the year ended December 31, 2014, net income attributable to Shea Homes was $133.4 million compared to $125.9 million for the year ended December 31, 2013. The year over year increase in full year results was primarily attributable to a $34.4 million increase in gross margin (from higher revenues, partially offset by a $9.0 million impairment charge, primarily for two communities in our South West segment, and a $16.9 million legal charge), a $10.2 million increase in equity income from unconsolidated joint ventures, a $5.2 million increase in our reinsurance transaction results (as a result of the 2009 PIC Transaction, see page 10), and a $4.5 million decrease in interest expense. These increases were partially offset by a $13.9 million increase in selling, general and administrative expenses and a $32.3 million increase in income tax expense. The decrease in interest expense was attributable to higher qualified assets, and the increase in income tax expense was attributable to a $15.6 million income tax benefit recorded in 2013 for the reversal of our deferred tax asset valuation allowance. Net income after tax for the 2014 full year excluding the impairment and legal charges would have been $19.0 million higher.

Page 3

For the year ended December 31, 2014, net operating cash flows were $2.5 million compared to $(47.9) million for the year ended December 31, 2013. This improvement was primarily attributable to increased cash receipts from home deliveries, partially offset by higher land acquisition, land development and house construction costs. For the year ended December 31, 2014, land acquisition and land development spending was $453.3 million compared to $329.5 million for the year ended December 31, 2013; and cash receipts from home deliveries were $1,120.0 million for the year ended December 31, 2014 compared to $894.3 million for the year ended December 31, 2013.

The note receivable from J.F. Shea Co., Inc., which had a balance of $11.6 million at September 30, 2014, was paid in full at December 31, 2014. In January 2014, we acquired property from a related party under common control for $4.4 million cash, assumption of a $1.3 million net liability and estimated future revenue participation payments of $19.6 million. The $25.3 million of consideration was recorded as an equity distribution to our owners and, accordingly, resulted in a reduction in equity during the year.

Earnings Conference Call

A conference call to discuss the Company’s 2014 fourth quarter results will be held at 1:00 p.m., Eastern time, February 20, 2015. The call will be broadcast live over the internet and can be accessed through the Company’s website at http://www.sheahomes.com/investor. The call will also be accessible by dialing (866) 318-8617 (domestic) or (617) 399-5136 (international); Passcode 54131203. The audio transmission with the slide presentation will be available on our website for replay 2 to 3 hours following the live broadcast. A replay of the presentation will be available by the end of the day and for 31 days thereafter.

About Shea Homes Limited Partnership

Shea Homes is one of the largest private homebuilders in the nation. Since its founding in 1968, Shea Homes has delivered almost 94,000 homes. Shea Homes builds homes with quality craftsmanship and designs that fit varied lifestyles and budgets. Over the past several years, Shea Homes has been recognized as a leader in customer satisfaction with a reputation for design, quality and service. For more about Shea Homes and its communities, visit www.sheahomes.com.

The preceding summary of the financial results of Shea Homes Limited Partnership and its subsidiaries does not purport to be complete and is qualified in its entirety by reference to the consolidated financial statements of Shea Homes Limited Partnership and its subsidiaries, available on our website at: http://www.sheahomes.com/investor.

This news release contains forward-looking statements and information relating to Shea Homes Limited Partnership and its subsidiaries, such as the strength or weakness of the housing market, which are based on the beliefs of, as well as assumptions made by, and information currently available to, our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “anticipate,” “appear” and “project” and similar expressions, as they relate to Shea Homes Limited Partnership and its subsidiaries are intended to identify forward-looking statements. These statements reflect our management’s current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of Shea Homes Limited Partnership’s and its subsidiaries’ control and are difficult to forecast and that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: changes in employment levels; changes in the availability of financing for homebuyers; changes in interest rates; changes in consumer confidence; changes in levels of new and existing homes for sale; changes in demographic trends; changes in housing demand; changes in home prices; elimination or reduction of the tax benefits associated with owning a home; litigation risks associated with home warranty and construction defect and other claims; and various other factors, both referenced and not referenced above, and included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described as anticipated, believed, estimated, expected, intended, planned or projected. Except as required by law, Shea Homes Limited Partnership and its subsidiaries neither intend nor assume any obligation to revise or update these forward-looking statements, which speak only as of their dates. Shea Homes Limited Partnership and its subsidiaries nonetheless reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

Contact: Andrew Parnes, CFO @ 909-594-0954 or andy.parnes@sheahomes.com

Page 4

KEY OPERATIONAL AND FINANCIAL DATA

(dollars in thousands)


	At or For the Three Months Ended December 31,									At or For the Year Ended December 31,
	2014			2013			Change			2014			2013			Change
	(unaudited)			(unaudited)						(unaudited)			(unaudited)
Operating Data:
Revenues	$	419,919		$	340,031			23	%	$	1,140,606		$	930,610			23	%
Gross margin %		19.7	%		25.1	%		(540) bp’s			22.4	%		23.8	%		(140) bp’s
Homebuilding revenues ^(a) *	$	419,801		$	339,806			24	%	$	1,140,025		$	929,697			23	%
Homebuilding gross margin % ^(a) *		19.6	%		25.1	%		(550) bp’s			22.4	%		23.7	%		(130) bp’s
House revenues *	$	412,122		$	315,488			31	%	$	1,120,019		$	894,305			25	%
House gross margin*	$	102,023		$	73,765			38	%	$	273,912		$	207,828			32	%
House gross margin % *		24.8	%		23.4	%		140 bp’s			24.5	%		23.2	%		130 bp’s
Adjusted house gross margin % excluding interest in cost of sales *		30.4	%		29.6	%		80 bp’s			30.4	%		29.9	%		50 bp’s
SG&A expenses	$	28,557		$	26,993			6	%	$	118,350		$	104,418			13	%
SG&A % of total revenues		6.8	%		7.9	%		(110) bp’s			10.4	%		11.2	%		(80) bp’s
Net income attributable to Shea Homes	$	59,682		$	73,751			-19	%	$	133,436		$	125,947			6	%
Adjusted EBITDA ^(b)*	$	100,999		$	81,879			23	%	$	234,792		$	185,801			26	%
Interest incurred	$	17,112		$	16,726			2	%	$	68,204		$	67,048			2	%
Interest capitalized to inventory	$	16,606		$	15,825			5	%	$	64,697		$	59,699			8	%
Interest capitalized to investments in joint ventures	$	347		$	805			-57	%	$	2,912		$	2,278			28	%
Interest expense	$	159		$	96			66	%	$	595		$	5,071			-88	%
Interest in cost of sales^(c)	$	23,644		$	20,434			16	%	$	68,780		$	60,448			14	%

Other Data ^(d):
Home sales orders (units)		436			361			21	%		2,054			1,828			12	%
Home deliveries (units)		715			636			12	%		1,985			1,890			5	%
Average selling price	$	576		$	496			16	%	$	564		$	473			19	%
Average active selling communities		66			60			10	%		64			58			10	%
Home sales orders per community		6.6			6.0			10	%		32.1			31.5			2	%
Cancellation rate		18.7	%		21.0	%					15.8	%		15.0	%
Backlog at end of period (units)		918			849			8	%
Backlog at end of period (est. sales value)	$	551,727		$	466,638			18	%
Backlog at end of period (est. average selling price)	$	601		$	550			9	%
Lots owned or controlled (units)		19,552			18,930			3	%
Homes under construction (units)^(e)		907			843			8	%

(a)

Homebuilding revenue and gross margin include house, land and other homebuilding activities.

(b)

See page 10 for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

(c)

As previously capitalized to house and land.

(d)

Represents consolidated activity only; excludes unconsolidated joint ventures.

(e)

Homes under construction includes completed homes.

*	See “Reconciliation of Non-GAAP Financial Measures” beginning on page 10.

Page 5

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	December 31, 2014		December 31, 2013
	(unaudited)

Assets
Cash and cash equivalents	$	236,902	$	206,205
Restricted cash		426		1,189
Accounts and other receivables, net		147,508		147,499
Receivables from related parties, net		6,403		31,313
Inventory		1,173,585		1,013,272
Investments and advances to unconsolidated joint ventures		42,764		48,785
Other assets, net		59,122		57,070

Total assets	$	1,666,710	$	1,505,333


Liabilities and equity
Liabilities:
Notes payable	$	761,404	$	751,708
Other liabilities		350,448		308,168

Total liabilities		1,111,852		1,059,876

Total equity		554,858		445,457

Total liabilities and equity	$	1,666,710	$	1,505,333

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)


	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues	$	419,919		$	340,031		$	1,140,606		$	930,610
Cost of sales		(337,355	)		(254,643	)		(885,018	)		(709,412	)

Gross margin		82,564			85,388			255,588			221,198

Selling, general and administrative expenses		(28,557	)		(26,993	)		(118,350	)		(104,418	)
Interest expense		(159	)		(96	)		(595	)		(5,071	)
Other income (expense), net		7,480			(357	)		14,969			129

Income before income taxes		61,328			57,942			151,612			111,838

Income tax benefit (expense)		(1,658	)		15,802			(18,213	)		14,101

Net income		59,670			73,744			133,399			125,939
Less: Net loss attributable to non-controlling interests		12			7			37			8

Net income attributable to Shea Homes	$	59,682		$	73,751		$	133,436		$	125,947

Page 6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Operating activities
Net income	$	59,670		$	73,744		$	133,399		$	125,939
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on reinsurance transaction		(1,002	)		(412	)		(7,177	)		(2,011	)
Depreciation and amortization expense		4,542			3,296			12,630			10,608
Inventory impairment		9,035			—			9,035			—
Distribution of earnings from unconsolidated joint ventures		9,365			1,100			18,790			7,100
Other operating activities, net		(7,383	)		(471	)		(12,054	)		(1,189	)
Changes in operating assets and liabilities:
Inventory		(8,717	)		27,027			(178,700	)		(185,596	)
Payables and other liabilities		7,942			(3,495	)		28,375			14,231
Other operating assets		(2,876	)		(24,207	)		(1,844	)		(16,949	)

Net cash provided by (used in) operating activities		70,576			76,582			2,454			(47,867	)

Investing activities
Proceeds from sale of investments		10			2			184			3,165
Net collections on promissory notes from related parties		15,968			1,067			25,183			4,104
Distributions from (investments in) unconsolidated joint ventures, net		12,035			(5,757	)		9,609			(22,073	)

Net cash provided by (used in) investing activities		28,013			(4,688	)		34,976			(14,804	)

Financing activities
Net decrease in notes payable		(969	)		(8,887	)		(3,308	)		(10,880	)
Contributions from owners		—			—			945			—
Distributions to owners		—			—			(4,385	)		—
Other financing activities, net		—			—			15			—

Net cash provided by (used in) financing activities		(969	)		(8,887	)		(6,733	)		(10,880	)


Net increase (decrease) in cash and cash equivalents		97,620			63,007			30,697			(73,551	)
Cash and cash equivalents at beginning of period		139,282			143,198			206,205			279,756

Cash and cash equivalents at end of period	$	236,902		$	206,205		$	236,902		$	206,205

Page 7

SEGMENT OPERATING DATA

(dollars in thousands)

(unaudited)


	Three Months Ended December 31,								Year Ended December 31,
	2014				2013				2014				2013
	Homes Delivered		Avg. Selling Price		Homes Delivered		Avg. Selling Price		Homes Delivered		Avg. Selling Price		Homes Delivered		Avg. Selling Price
Home deliveries:
Southern California		170	$	759		92	$	775		481	$	812		271	$	757
San Diego		115		622		80		550		252		568		256		490
Northern California		133		721		141		575		385		668		456		510
Mountain West		156		458		143		448		356		458		372		444
South West		141		313		178		305		511		324		510		312
East		—		—		2		374		—		—		25		262

Total consolidated		715	$	576		636	$	496		1,985	$	564		1,890	$	473

Southern California		42	$	477		11	$	337		107	$	417		47	$	293
Northern California		26		531		19		484		60		524		31		510
Mountain West		22		402		21		363		73		390		55		368
East		50		304		31		262		96		290		69		258

Total unconsolidated joint ventures		140	$	414		82	$	349		336	$	394		202	$	335

Total		855	$	550		718	$	479		2,321	$	540		2,092	$	460


	Three Months Ended December 31,								Year Ended December 31,
	2014				2013				2014				2013
	Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities
Home sales orders:
Southern California		107		11		97		8		514		11		308		6
San Diego		43		9		51		7		254		9		249		7
Northern California		75		12		54		14		376		13		359		13
Mountain West		84		14		61		14		424		12		367		15
South West		105		18		98		17		447		18		536		16
East		22		2		—		—		39		1		9		1

Total consolidated		436		66		361		60		2,054		64		1,828		58

Southern California		15		5		11		3		111		4		46		4
Northern California		12		4		11		4		52		4		44		2
Mountain West		13		5		8		5		91		5		67		5
South West		14		—		—		—		14		—		—		—
East		21		3		22		2		120		3		83		2

Total unconsolidated joint ventures		75		17		52		14		388		16		240		13

Total		511		83		413		74		2,442		80		2,068		71

Page 8

SEGMENT OPERATING DATA (continued)

(dollars in thousands)

(unaudited)


	December 31,
	2014						2013
	Backlog Units		Estimated Backlog Sales Value		Estimated Avg. Selling Price		Backlog Units		Estimated Backlog Sales Value		Estimated Avg. Selling Price
Backlog:
Southern California		193	$	166,087	$	861		160	$	139,059	$	869
San Diego		102		71,164		698		100		50,223		502
Northern California		135		100,946		748		144		94,605		657
Mountain West		275		140,995		513		207		100,186		484
South West		174		56,293		324		238		82,565		347
East		39		16,242		416		—		—		—

Total consolidated		918	$	551,727	$	601		849	$	466,638	$	550

Southern California		30	$	14,257	$	475		26	$	9,383	$	361
Northern California		15		8,865		591		23		12,562		546
Mountain West		41		17,935		437		23		9,413		409
South West		14		6,983		499		—		—		—
East		74		22,221		300		50		14,447		289

Total unconsolidated joint ventures		174	$	70,261	$	404		122	$	45,805	$	375

Total		1,092	$	621,988	$	570		971	$	512,443	$	528


	December 31,
	2014		2013
Lots owned or controlled:
Southern California		1,628		1,890
San Diego		838		640
Northern California		4,033		3,731
Mountain West		9,519		9,841
South West		2,261		2,063
East		1,273		765

Total consolidated		19,552		18,930
Unconsolidated joint ventures		4,935		4,455

Total		24,487		23,385


Lots by ownership type:
Owned for homebuilding		7,033		6,277
Owned and held for sale		3,176		3,313
Optioned or subject to contract for homebuilding		6,309		6,306
Optioned or subject to contract held for sale		3,034		3,034
Joint venture		4,935		4,455

Total		24,487		23,385

Page 9

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(dollars in thousands)

(unaudited)

In this earnings release, we utilize certain financial measures that, in each case, are not recognized under GAAP. We present these measures because we believe they and similar measures are useful to investors in evaluating a company’s operating performance and financing structure and, in certain cases, because they could be used to determine compliance with contractual covenants or as one measure of the Company’s ability to service debt and obtain financing. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with GAAP, they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The following table reconciles revenues, cost of sales and gross margins, as reported and prepared in accordance with GAAP, to the non-GAAP measures house revenues, house cost of sales, house gross margin and house gross margin percentage, which exclude land sales, impairments and other transactions, and to adjusted house revenues, adjusted house cost of sales, adjusted house gross margin and adjusted house gross margin percentage, which add back interest in house cost of sales.


	Three Months Ended December 31, 2014												Three Months Ended December 31, 2013
	Revenue			Cost of Sales			Gross Margin $			Gross Margin %			Revenue			Cost of Sales			Gross Margin $			Gross Margin %
Total	$	419,919		$	(337,355	)	$	82,564			19.7	%	$	340,031		$	(254,643	)	$	85,388			25.1	%
Less: Other		(118	)		—			(118	)		—			(225	)		—			(225	)		—

Homebuilding		419,801			(337,355	)		82,446			19.6	%		339,806			(254,643	)		85,163			25.1	%
Less: Land		(5,197	)		2,221			(2,976	)		57.3	%		(21,572	)		12,201			(9,371	)		43.4	%
Less: Impairment		—			9,035			9,035						—			—			—
Less: Other homebuilding		(2,482	)		16,000			13,518			—			(2,746	)		719			(2,027	)		—

House	$	412,122		$	(310,099	)	$	102,023			24.8	%	$	315,488		$	(241,723	)	$	73,765			23.4	%

Add: Interest in house cost of sales ^(a)		—			23,273			23,273			—			—			19,695			19,695			—

Adjusted house excluding interest in cost of sales	$	412,122		$	(286,826	)	$	125,296			30.4	%	$	315,488		$	(222,028	)	$	93,460			29.6	%


	Year Ended December 31, 2014												Year Ended December 31, 2013
	Revenue			Cost of Sales			Gross Margin $			Gross Margin %			Revenue			Cost of Sales			Gross Margin $			Gross Margin %
Total	$	1,140,606		$	(885,018	)	$	255,588			22.4	%	$	930,610		$	(709,412	)	$	221,198			23.8	%
Less: Other		(581	)		—			(581	)		—			(913	)		—			(913	)		—

Homebuilding		1,140,025			(885,018	)		255,007			22.4	%		929,697			(709,412	)		220,285			23.7	%
Less: Land		(14,028	)		8,493			(5,535	)		39.5	%		(31,462	)		17,726			(13,736	)		43.7	%
Less: Impairment		—			9,035			9,035						—			—			—
Less: Other homebuilding		(5,978	)		21,383			15,405			—			(3,930	)		5,209			1,279			—

House	$	1,120,019		$	(846,107	)	$	273,912			24.5	%	$	894,305		$	(686,477	)	$	207,828			23.2	%

Add: Interest in house cost of sales ^(a)		—			66,951			66,951			—			—			59,142			59,142			—

Adjusted house excluding interest in cost of sales	$	1,120,019		$	(779,156	)	$	340,863			30.4	%	$	894,305		$	(627,335	)	$	266,970			29.9	%

(a)	Interest incurred is generally capitalized to inventory, then expensed in cost of sales as related units close.

Page 10

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)

(in thousands)

(unaudited)

The following table calculates the non-GAAP measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income as reported and prepared in accordance with GAAP. Adjusted EBITDA is net income, plus distributions of earnings from joint ventures and non-guarantor subsidiaries, before (a) income taxes, (b) depreciation and amortization, (c) expensing of previously capitalized interest included in costs of sales and in equity in income (loss) from unconsolidated joint ventures, (d) interest expense, (e) impairment charges and project write-offs and abandonments, (f) realized gain on sale of investments, (g) deferred gain recognition from the amortization of deferred gain resulting from a series of novation and reinsurance transactions entered into by Partners Insurance Company, a wholly-owned subsidiary (“PIC Transaction”), and (h) income (loss) from joint ventures and non-guarantor subsidiaries. Other companies may calculate Adjusted EBITDA (or similarly titled measures) differently.


	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013

Net income	$	59,670		$	73,744		$	133,399		$	125,939
Adjustments:

Income tax expense (benefit)		1,658			(15,802	)		18,213			(14,101	)
Depreciation and amortization expense		4,542			3,296			12,630			10,608
Interest in cost of sales		23,644			20,434			68,780			60,448
Interest in equity in income (loss) from unconsolidated joint ventures		1,947			360			2,444			1,189
Interest expense		159			96			595			5,071

EBITDA		91,620			82,128			236,061			189,154

Adjustments:
Impairment charge		9,035			—			9,035			—
Project write-offs and abandonments		641			854			1,303			1,436
Realized gain on sale of investments		—			—			—			(15	)
Deferred gain recognition from PIC Transaction		(1,002	)		(412	)		(7,177	)		(2,011	)
Income from joint ventures and non-guarantor subsidiaries		(5,394	)		(2,142	)		(20,912	)		(13,146	)
Distributions of earnings from joint ventures and non-guarantor subsidiaries		6,048			1,447			16,414			10,378
Other		51			4			68			5


Adjusted EBITDA	$	100,999		$	81,879		$	234,792		$	185,801

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Shea Homes Limited Partnership 8-K