10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________ 

FORM 10-Q

______________________________________ 

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-31625

______________________________________ 

WILLIAM LYON HOMES

(Exact name of registrant as specified in its charter)

______________________________________ 

Delaware	33-0864902
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
4695 MacArthur Court, 8th Floor Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 833-3600

______________________________________ 

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  ý    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨
		Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ý    No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding at November 1, 2017
Common stock, Class A, par value $0.01	28,007,366
Common stock, Class B, par value $0.01	3,813,884

WILLIAM LYON HOMES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016 (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statement of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60
PART II. OTHER INFORMATION		61
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	63
Item 6.	Exhibits	64
SIGNATURES		65
EXHIBIT INDEX		66

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this Quarterly Report on Form 10-Q, as well as some statements by the Company in periodic press releases and information included in oral statements or other written statements by the Company are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934, as amended. Statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “hopes”, and similar expressions constitute forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; home deliveries and backlog conversion; financial resources and condition; cash needs and liquidity; minority interest from our homebuilding joint ventures; timing of project openings; leverage ratios and compliance with debt covenants; revenues and average selling prices of deliveries; sales price ranges for active and future communities; global and domestic economic conditions; market and industry trends; cycle times; profitability and gross margins; cost of revenues; selling, general and administrative expenses and leverage; interest expense; inventory write-downs; unrecognized tax benefits; land acquisition spending and timing; debt maturities; business and operational strategies and the anticipated effects thereof; anticipated debt paydowns; the Company's ability to achieve tax benefits and utilize its tax attributes; sales pace; effects of home buyer cancellations; community count; joint ventures; the Company's ability to acquire land and pursue real estate opportunities; the Company's ability to gain approvals and open new communities; the Company's ability to sell homes and properties; the Company's ability to secure materials and subcontractors; the Company's ability to produce the liquidity and capital necessary to expand and take advantage of opportunities; and legal proceedings, insurance and claims. Forward-looking statements are based upon expectations and projections about future events and are subject to assumptions, risks and uncertainties about, among other things, the Company, economic and market factors and the homebuilding industry. There is no guarantee that any of the events anticipated by the forward-looking statements in this quarterly report on Form 10-Q will occur, or if any of the events occur, there is no guarantee what effect it will have on the Company's operations, financial condition or share price. The Company's past performance, and past or present economic conditions in its housing markets, are not indicative of future performance or conditions. Investors are urged not to place undue reliance on forward-looking statements. The Company will not, and undertakes no obligation to, update or revise forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to projections over time unless required by federal securities laws.

Actual events and results may differ materially from those expressed or forecasted in the forward-looking statements due to a number of factors. While it is impossible to identify all such factors, the major risks and uncertainties, and assumptions that are made, that affect the Company's business and may cause actual results to differ materially from those estimated by the Company include, but are not limited to: adverse weather conditions and impact from natural disasters, such as the recent fire activity in Northern California; the availability of skilled subcontractors, labor and homebuilding materials and increased construction cycle times; the availability and timing of mortgage financing; the Company’s financial leverage and level of indebtedness and any inability to comply with financial and other covenants under its debt instruments; continued volatility and worsening in general economic conditions either internationally, nationally or in regions in which the Company operates; changes in governmental laws and regulations and increased costs, fees and delays associated therewith; potential changes to the corporate and individual tax code at the federal, state and local level; worsening in markets for residential housing; the impact of construction defect, product liability and home warranty claims, including the adequacy of self-insurance accruals, and the applicability and sufficiency of the Company’s insurance coverage; defects in manufactured products or other homebuilding materials; decline in real estate values resulting in impairment of the Company’s real estate assets; volatility in the banking industry, credit and capital markets; the timing of receipt of regulatory approvals and the opening of projects; the availability and cost of land for future development; terrorism or other hostilities involving the United States and other geopolitical risks; building moratorium or “slow-growth” or “no-growth” initiatives that could be implemented in states in which the Company operates; changes in mortgage and other interest rates; conditions in the capital, credit and financial markets, including mortgage lending standards and the availability of mortgage financing; changes in generally accepted accounting principles or interpretations of those principles; changes in prices of homebuilding materials; competition for home sales from other sellers of new and resale homes; cancellations and the Company’s ability to convert its backlog into deliveries; the occurrence of events such as landslides, soil subsidence and earthquakes that are uninsurable, not economically insurable or not subject to effective indemnification agreements; increased outside broker costs; changes in governmental laws and regulations and compliance therewith; limitations on the Company’s ability to utilize its tax attributes; whether an ownership change occurred that could, under certain circumstances, have resulted in the limitation of the Company’s ability to offset prior years’ taxable income with net operating losses; and other factors, risks and uncertainties. These and other risks and uncertainties are more fully described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as those factors or conditions described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

1

EXPLANATORY NOTE

In this interim report on Form 10-Q, unless otherwise stated or the context otherwise requires, the “Company,” “we,” “our,” and “us” refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, “Parent” refers to William Lyon Homes, and “California Lyon” refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent.

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except number of shares and par value per share)

	September 30, 2017		December 31, 2016
	(unaudited)		(as adjusted, refer to Note 1)
ASSETS
Cash and cash equivalents — Note 1	$	43,604	$	42,612
Receivables	9,719		9,538
Escrow proceeds receivable	228		85
Real estate inventories — Note 5	1,855,658		1,771,998
Investment in unconsolidated joint ventures — Note 3	8,225		7,282
Goodwill	66,902		66,902
Intangibles, net of accumulated amortization of $4,640 as of September 30, 2017 and December 31, 2016	6,700		6,700
Deferred income taxes	73,597		75,751
Lease right-of-use assets	15,074		13,129
Other assets, net	21,152		17,283
Total assets	$	2,100,859	$	2,011,280
LIABILITIES AND EQUITY
Accounts payable	$	84,116	$	74,282
Accrued expenses	93,140		92,919
Notes payable — Note 6:
Revolving credit facility	50,000		29,000
Seller financing	5,226		24,692
Joint venture notes payable	105,785		102,076
Subordinated amortizing notes due December 1, 2017— Note 6	1,619		7,225
5 3/4% Senior Notes due April 15, 2019 — Note 6	149,226		148,826
8 1/2% Senior Notes due November 15, 2020 — Note 6	—		422,817
7% Senior Notes due August 15, 2022 — Note 6	346,556		346,014
5 7/8% Senior Notes due January 31, 2025 — Note 6	439,221		—
	1,274,889		1,247,851
Commitments and contingencies — Note 12
Equity:
William Lyon Homes stockholders’ equity
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized and no shares issued and outstanding at September 30, 2017 and December 31, 2016	—		—
Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 29,193,050 and 28,909,781 shares issued, 28,043,563 and 27,907,724 shares outstanding at September 30, 2017 and December 31, 2016, respectively	289		290
Common stock, Class B, par value $0.01 per share; 30,000,000 shares authorized; 3,813,884 shares issued and outstanding at September 30, 2017 and December 31, 2016	38		38
Additional paid-in capital	421,626		419,099
Retained earnings	314,031		277,659
Total William Lyon Homes stockholders’ equity	735,984		697,086
Noncontrolling interests — Note 2	89,986		66,343
Total equity	825,970		763,429
Total liabilities and equity	$	2,100,859	$	2,011,280

See accompanying notes to condensed consolidated financial statements

3

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except number of shares and per share data)

(unaudited)

	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Operating revenue
Home sales	$	490,304		$	342,628		$	1,171,791		$	928,982
Construction services — Note 1	35			86			94			3,810
	490,339			342,714			1,171,885			932,792
Operating costs
Cost of sales — homes	(401,700		)	(285,896		)	(973,212		)	(769,705		)
Construction services — Note 1	(35		)	(86		)	(41		)	(3,458		)
Sales and marketing	(21,935		)	(18,246		)	(57,924		)	(51,351		)
General and administrative	(22,951		)	(17,360		)	(61,447		)	(51,879		)
Other	(548		)	198			(1,548		)	(612		)
	(447,169		)	(321,390		)	(1,094,172		)	(877,005		)
Operating income	43,170			21,324			77,713			55,787
Equity in income of unconsolidated joint ventures	1,160			1,435			2,622			3,810
Other (loss) income, net	(365		)	2,050			(12		)	2,803
Income before extinguishment of debt	43,965			24,809			80,323			62,400
Loss on extinguishment of debt	—			—			(21,828		)	—
Income before provision for income taxes	43,965			24,809			58,495			62,400
Provision for income taxes — Note 9	(13,905		)	(8,295		)	(17,480		)	(20,859		)
Net income	30,060			16,514			41,015			41,541
Less: Net income attributable to noncontrolling interests	(2,642		)	(3,445		)	(4,643		)	(4,897		)
Net income available to common stockholders	$	27,418		$	13,069		$	36,372		$	36,644
Income per common share:
Basic	$	0.74		$	0.36		$	0.98		$	1.00
Diluted	$	0.71		$	0.34		$	0.95		$	0.96
Weighted average common shares outstanding:
Basic	37,059,483			36,801,464			37,007,144			36,746,727
Diluted	38,583,341			38,333,027			38,381,292			38,314,021

See accompanying notes to condensed consolidated financial statements

4

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(in thousands)

(unaudited)

	William Lyon Homes Stockholders
	Common Stock					Additional Paid-In					Non- Controlling
	Shares		Amount			Capital			Retained Earnings		Interests			Total
Balance - December 31, 2016	32,724		$	328		$	419,099		$	277,659	$	66,343		$	763,429
Net income	—		—			—			36,372		4,643			41,015
Cash contributions from members of consolidated entities	—		—			—			—		58,829			58,829
Cash distributions to members of consolidated entities	—		—			—			—		(39,829		)	(39,829		)
Repurchases of common stock	(102	)	(1		)	(2,283		)	—		—			(2,284		)
Shares remitted to Company to satisfy employee tax obligations	(76	)	—			(1,450		)	—		—			(1,450		)
Stock based compensation expense	461		—			6,260			—		—			6,260
Balance - September 30, 2017	33,007		$	327		$	421,626		$	314,031	$	89,986		$	825,970

See accompanying notes to condensed consolidated financial statements

5

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Operating activities
Net income	$	41,015		$	41,541
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,426			1,506
Net change in deferred income taxes	2,154			(2		)
Stock based compensation expense	6,260			4,087
Equity in earnings of unconsolidated joint ventures	(2,622		)	(3,810		)
Distributions from unconsolidated joint ventures	1,840			896
Loss on extinguishment of debt	21,828			—
Net changes in operating assets and liabilities:
Restricted cash	—			504
Receivables	(342		)	442
Escrow proceeds receivable	(143		)	3,041
Real estate inventories	(98,980		)	(146,678		)
Other assets	(3,536		)	2,806
Accounts payable	9,834			1,040
Accrued expenses	(1,724		)	11,649
Net cash used in operating activities	(22,990		)	(82,978		)
Investing activities
Collection of related party note receivable	—			6,188
Purchases of property and equipment	(2,416		)	(773		)
Net cash (used in) provided by investing activities	(2,416		)	5,415
Financing activities
Proceeds from borrowings on notes payable	105,109			111,992
Principal payments on notes payable	(101,400		)	(91,250		)
Redemption premium of 8.5% Senior Notes	(19,645		)	—
Principal payments of 8.5% Senior Notes	(425,000		)	—
Proceeds from issuance of 5.875% Senior Notes	446,468			—
Proceeds from borrowings on Revolver	275,000			198,000
Payments on Revolver	(254,000		)	(167,000		)
Principal payments on subordinated amortizing notes	(5,606		)	(5,096		)
Payment of deferred loan costs	(9,794		)	(792		)
Shares remitted to, or withheld by the Company for employee tax withholding	(1,450		)	(918		)
Payments to repurchase common stock	(2,284		)	—
Excess income tax benefit from stock based awards	—			(238		)
Noncontrolling interest contributions	58,829			36,140
Noncontrolling interest distributions	(39,829		)	(12,768		)
Net cash provided by financing activities	26,398			68,070
Net decrease in cash and cash equivalents	992			(9,493		)
Cash and cash equivalents — beginning of period	42,612			50,203
Cash and cash equivalents — end of period	$	43,604		$	40,710
Supplemental disclosures:
Cash paid during the period for income taxes	$	17,079		$	6,914
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	5,213		$	1,353
Issuance of note payable related to land acquisition	$	—		$	32,419
Accrued deferred loan costs	$	—		$	43

See accompanying notes to condensed consolidated financial statements

6

WILLIAM LYON HOMES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Basis of Presentation and Significant Accounting Policies

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand) and Oregon (under the Polygon Northwest brand).

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of September 30, 2017 and December 31, 2016 and revenues and expenses for the three and nine month periods ended September 30, 2017 and 2016. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 2). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2016, which are included in our 2016 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report. Also, refer to the discussion under Change in Accounting Principle below regarding the adoption of the new standard for leases.

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three and nine months ended September 30, 2017, the Company had one and two land parcel sales, respectively, that resulted in a negligible loss for both periods then ended. During the three and nine months ended September 30, 2016, the Company had two and five land parcel sales, respectively, that resulted in a $2.7 million gain for both periods then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability for the nine months ended September 30, 2017 and 2016, are as follows (in thousands):

7

	Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Warranty liability, beginning of period	$	14,174		$	18,117
Warranty provision during period	7,695			7,086
Warranty payments during period	(9,419		)	(10,579		)
Warranty charges related to construction services projects	120			128
Warranty liability, end of period	$	12,570		$	14,752

Interest incurred under the Company’s debt obligations, as more fully discussed in Note 6, is capitalized to qualifying real estate projects under development. Interest activity for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands):

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Interest incurred	$	18,112	$	21,293	$	56,359	$	62,112
Less: Interest capitalized	18,112		21,293		56,359		62,112
Interest expense, net of amounts capitalized	$	—	$	—	$	—	$	—
Cash paid for interest	$	28,374	$	14,898	$	55,532	$	54,576

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with FASB ASC Topic 605 Revenue Recognition (“ASC 605”). Under ASC 605, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

The Company entered into construction management agreements to build, sell and market homes in certain communities. For such services, the Company will receive fees (generally 3 to 5 percent of the sales price, as defined) and may, under certain circumstances, receive additional compensation if certain financial thresholds are achieved.

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments with off-balance sheet risk in the normal course of business which exposes it to credit risks. These financial instruments include letters of credit and obligations in connection with assessment district bonds. These off-balance sheet financial instruments are described in more detail in Note 12.

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of September 30, 2017 and December 31, 2016. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

8

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have six reporting segments, as discussed in Note 4, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

Impact of Recent Accounting Pronouncements

Effective January 1, 2017, the Company adopted Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplified several aspects for the accounting for share-based payment transactions, including the income tax consequences and classification on the statement of cash flows. The Company did not have any previously unrecognized excess tax benefits. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09”), which clarifies existing accounting literature relating to how and when revenue is recognized by an entity. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In doing so, an entity will need to exercise a greater degree of judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017, and is to be applied either retrospectively or using the cumulative effect transition method, with early adoption not permitted.

The Company is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements, but does not anticipate that the adoption will have a material impact on the amount or timing of its revenues. ASU 2014-09 may

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impact the classification and timing of recognition of certain marketing costs and costs associated with obtaining a customer sales contract that the Company incurs in the course of its business. The Company has not concluded its analysis of these costs, but does not anticipate that adoption of the ASU will result in a material change to the Company's financial statements or related disclosures. The Company has not finalized its implementation plan for ASU 2014-09, but expects to employ the cumulative effect transition method.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the potential impact the adoption of ASU 2016-15 will have on its consolidated financial statements.

Change in Accounting Principle

During the second quarter ended June 30, 2017, the Company adopted the provisions of Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"), which amends the existing standards for lease accounting, requiring lessees to recognize most leases on their balance sheets and disclose key information about leasing arrangements. The new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The Company adopted the new standard with a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The adoption is accounted for as a change in accounting principle in conformity with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 250, “Accounting Changes and Error Corrections”.

As a result of the adoption, the most significant changes related to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for office, real estate and equipment operating leases; and (2) the derecognition of previous assets and liabilities for a sale-leaseback transaction that did not qualify for sale accounting under the previous standards.

The Company elected all of the standard's available practical expedients on adoption, including the package of practical expedients and use of hindsight expedient. Consequently, the Company:

–Recognized lease related liabilities within Accrued expenses of $15.6 million as of June 30, 2017, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

The balance sheet as of December 31, 2016 was adjusted using the modified retrospective transition approach which resulted in the following adjusted balances (in thousands):

	December 31, 2016	Lease adoption adjustments		December 31, 2016
				(as adjusted)
Lease right-of-use assets	—	$	13,129	$	13,129
Total assets	1,998,151	13,129		2,011,280
Accrued expenses	79,790	13,129		92,919
Total liabilities and equity	1,998,151	13,129		2,011,280

The Company's existing material leases were all considered operating leases under the new leasing standard and as a result, no adjustment to previously reported lease expense was incurred for prior periods presented.

–Derecognized obligations of $19.8 million relating to cash received from a sale-leaseback transaction that was previously classified within Accrued expenses.

Refer to Note 12 for more details regarding leases as of September 30, 2017 and its comparative period.

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Note 2—Variable Interest Entities and Noncontrolling Interests

As of September 30, 2017 and December 31, 2016, the Company was party to twelve and eleven joint ventures for the purpose of land development and homebuilding activities which we have determined to be VIEs. The Company, as the managing member, has the power to direct the activities of the VIEs since it manages the daily operations and has exposure to the risks and rewards of the VIEs, based upon the allocation of income and loss per the respective joint venture agreements. Therefore, the Company is the primary beneficiary of the joint ventures, and the VIEs were consolidated as of September 30, 2017 and December 31, 2016.

As of September 30, 2017, the assets of the consolidated VIEs totaled $243.7 million, of which $8.8 million was cash and cash equivalents and $250.6 million was real estate inventories. The liabilities of the consolidated VIEs totaled $115.8 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

As of December 31, 2016, the assets of the consolidated VIEs totaled $204.8 million, of which $5.8 million was cash and cash equivalents and $200.7 million was real estate inventories. The liabilities of the consolidated VIEs totaled $107.3 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

Note 3—Investments in Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues	$	5,368		$	5,397		$	13,830		$	14,675
Cost of sales	(2,781		)	(2,521		)	(7,936		)	(7,043		)
Income of unconsolidated joint ventures	$	2,587		$	2,876		$	5,894		$	7,632

Income from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income of our unconsolidated mortgage joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements less any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  For the three and nine months ended September 30, 2017, and 2016, the Company recorded income of $1.2 million and $2.6 million, and $1.4 million and $3.8 million, respectively, from its unconsolidated joint ventures. This income was primarily attributable to our share of income related to mortgages that were generated and issued to qualifying home buyers during the periods.

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

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			September 30, 2017		December 31, 2016
Assets
	Cash		$	12,051	$	10,208
	Loans held for sale		26,929		18,791
	Accounts receivable		585		764
	Other assets		156		56
		Total Assets	$	39,721	$	29,819
Liabilities and Equity
	Accounts payable		$	362	$	694
	Accrued expenses		1,314		1,026
	Credit lines payable		25,706		17,748
	Other liabilities		24		17
	Members equity		12,315		10,334
		Total Liabilities and Equity	$	39,721	$	29,819

Note 4—Segment Information

The Company operates one principal homebuilding business. In accordance with FASB ASC Topic 280, Segment Reporting ("ASC 280"), the Company has determined that each of its operating divisions is an operating segment. The Company’s President and Chief Executive Officer has been identified as the chief operating decision maker. The Company’s chief operating decision maker directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company’s homebuilding operations design, construct and sell a wide range of homes designed to meet the specific needs in each of its markets. As such, in accordance with the aggregation criteria defined by FASB ASC Topic 280, Segment Reporting (“ASC 280”), the Company’s homebuilding operating segments have been grouped into six reportable segments:

California, consisting of operating divisions in i) Southern California, consisting of operations in Orange, Los Angeles, Riverside and San Bernardino counties; and ii) Northern California, consisting of operations in Alameda, Contra Costa, San Joaquin, and Santa Clara counties.

Arizona, consisting of operations in the Phoenix, Arizona metropolitan area.

Nevada, consisting of operations in the Las Vegas, Nevada metropolitan area.

Colorado, consisting of operations in the Denver, Colorado metropolitan area.

Washington, consisting of operations in the Seattle, Washington metropolitan area.

Oregon, consisting of operations in the Portland, Oregon metropolitan area.

Corporate develops and implements strategic initiatives and supports the Company’s operating segments by centralizing key administrative functions such as finance and treasury, information technology, risk management and litigation and human resources.

Segment financial information relating to the Company’s operations was as follows (in thousands):

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	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Operating revenue:
California (1)	$	230,960		$	111,520		$	462,277		$	309,199
Arizona	39,607			28,758			118,695			85,399
Nevada	42,966			49,600			103,448			128,996
Colorado	24,811			35,316			77,149			85,885
Washington	71,788			42,247			185,523			112,512
Oregon	80,207			75,273			224,793			210,801
Total operating revenue	$	490,339		$	342,714		$	1,171,885		$	932,792
(1) Operating revenue in the California segment includes construction services revenue.
	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Income before provision for income taxes:
California	$	31,150		$	10,364		$	53,907		$	28,252
Arizona	3,388			2,542			11,102			7,537
Nevada	4,372			5,291			7,811			12,587
Colorado	969			2,342			2,519			3,643
Washington	6,164			2,899			10,249			6,767
Oregon	10,708			9,466			25,847			27,452
Corporate	(12,786		)	(8,095		)	(31,112		)	(23,838		)
Income before extinguishment of debt	$	43,965		$	24,809		$	80,323		$	62,400
Corporate - Loss on extinguishment of debt	$	—		$	—		$	(21,828	)	$	—
Income before provision for income taxes	$	43,965		$	24,809		$	58,495		$	62,400

	September 30, 2017		December 31, 2016
Homebuilding assets:			(as adjusted, refer to Note 1)
California	$	704,313	$	716,955
Arizona	182,588		191,581
Nevada	218,060		189,248
Colorado	154,422		124,580
Washington	324,358		343,973
Oregon	302,332		238,766
Corporate (1)	214,786		206,177
Total homebuilding assets	$	2,100,859	$	2,011,280

(1) Comprised primarily of cash and cash equivalents, deferred income taxes, receivables, lease right-of-use assets, and other assets.

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Note 5—Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Real estate inventories:
Land deposits	$	61,123	$	50,429
Land and land under development	888,091		1,069,001
Homes completed and under construction	804,338		545,310
Model homes	102,106		107,258
Total	$	1,855,658	$	1,771,998

Note 6—Senior Notes, Secured, and Unsecured Indebtedness

Senior notes, secured, and unsecured indebtedness consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Notes payable:
Revolving credit facility	$	50,000	$	29,000
Seller financing	5,226		24,692
Joint venture notes payable	105,785		102,076
Total notes payable	161,011		155,768
Subordinated amortizing notes	1,619		7,225
Senior notes:
5 3/4% Senior Notes due April 15, 2019	149,226		148,826
8 1/2% Senior Notes due November 15, 2020	—		422,817
7% Senior Notes due August 15, 2022	346,556		346,014
5 7/8% Senior Notes due January 31, 2025	439,221		—
Total senior notes	935,003		917,657
Total notes payable and senior notes	$	1,097,633	$	1,080,650

As of September 30, 2017, the maturities of the Notes payable, Subordinated amortizing notes, 5 ³/₄% Senior Notes, 7% Senior Notes, and 5 ⁷/₈% Senior Notes are as follows (in thousands):

Year Ending December 31,
2017	5,335
2018	47,238
2019	231,806
2020	28,251
2021	—
Thereafter	800,000
	$	1,112,630

Maturities above exclude premium on the 7% Senior Notes of $0.8 million, discount on the 5 ⁷/₈% Senior Notes of $3.3 million, and deferred loan costs on the 5 ³/₄%, 7%, and 5 ⁷/₈% Senior Notes of $12.5 million as of September 30, 2017.

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Notes Payable

Revolving Credit Facility

On July 1, 2016, California Lyon and Parent entered into an amendment and restatement agreement pursuant to which its existing credit agreement providing for a revolving credit facility, as previously amended and restated on March 27, 2015 as described below, was further amended and restated in its entirety (as amended from time to time, the "Second Amended Facility"). The Second Amended Facility amends and restates the Company’s previous $130.0 million revolving credit facility and provides for total lending commitments of $145.0 million. In addition, the Second Amended Facility has an uncommitted accordion feature under which the Company may increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. The Second Amended Facility, among other things, also amended the maturity date of the previous facility to July 1, 2019, provided that the Second Amended Facility will terminate on January 14, 2019 (the “Springing Termination Date”) if, on the Springing Termination Date, the aggregate outstanding principal amount of California Lyon’s 5.75% senior notes due 2019 is equal to or greater than the sum of (a) 50% of the Consolidated EBITDA (as defined in the Second Amended Facility) of California Lyon, Parent, certain of the Parent’s direct and indirect wholly owned subsidiaries (together with California Lyon and Parent, the “Loan Parties”) and their Restricted Subsidiaries (as defined in the Second Amended Facility) for the four-quarter period ending September 30, 2018, plus (b) the Liquidity (as defined in the Second Amended Facility) of the Loan Parties and their consolidated subsidiaries on the Springing Termination Date. Further, the Second Amended Facility amended the maximum leverage ratio covenant to extend the timing of the gradual step-downs. Specifically, pursuant to the Second Amended Facility, the maximum leverage ratio remained at 65% from June 30, 2016 through and including December 30, 2016, decreased to 62.5% on the last day of the 2016 fiscal year, remained at 62.5% from December 31, 2016 through and including June 29, 2017, and was scheduled to further decrease to 60% on the last day of the second quarter of 2017 and to remain at 60% thereafter. The Second Amended Facility did not revise any of our other financial covenants thereunder.

On June 16, 2017, California Lyon, Parent and the lenders party thereto entered into an amendment to the Second Amended Facility, which amended the maximum leverage ratio to further extend the timing of the gradual step-downs, such that the leverage ratio will remain at 62.5% through and including December 30, 2017, and decrease to 60% on the last day of the 2017 fiscal year and remain at 60% thereafter. The amendment did not revise any of our other financial covenants thereunder.

Prior to the entry into the Second Amended Facility as described above, on March 27, 2015, California Lyon and Parent entered into an amendment and restatement agreement which amended and restated the Company's previous $100 million revolving credit facility and provided for total lending commitments of $130.0 million, an uncommitted accordion feature under which the Company could increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances (up from a maximum aggregate of $125.0 million under the previous facility), as well as a sublimit of $50.0 million for letters of credit, and extended the maturity date of the previous facility by one year to August 7, 2017.

The Second Amended Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $451.0 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65%, which maximum leverage ratio decreased to 62.5% effective as of December 31, 2016 and is scheduled to decrease to 60% effective as of December 31, 2017, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the Second Amended Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The Second Amended Facility contains customary events of default, subject to cure periods in certain circumstances, including: nonpayment of principal, interest and fees or other amounts; violation of covenants; inaccuracy of representations and warranties; cross default to certain other indebtedness; unpaid judgments; and certain bankruptcy and other insolvency events. The occurrence of any event of default could result in the termination of the commitments under the Second Amended Facility and permit the lenders to accelerate payment on outstanding borrowings under the Second Amended Facility and require cash collateralization of outstanding letters of credit. If a change in control (as defined in the Second Amended Facility) occurs, the lenders may terminate the commitments under the Second Amended Facility and require that the Company repay outstanding borrowings under the Second Amended Facility and cash collateralize outstanding letters of credit. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread.

In January 2017, the Company entered into an amendment which modifies the definition of Tangible Net Worth for purposes of calculating the Leverage Ratio covenant under the Second Amended Facility, so as to exclude any reduction in

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Tangible Net Worth (as defined therein) that occurs as a result of the costs related to payment of any call premium or any other costs associated with the refinancing transaction and the redemption of outstanding 8.5% Notes. The Company was in compliance with all covenants under the Second Amended Facility as of September 30, 2017.

Borrowings under the Second Amended Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent's wholly-owned subsidiaries, are secured by a pledge of all equity interests held by such guarantors, and may be used for general corporate purposes. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread. As of September 30, 2017, the commitment fee on the unused portion of the Second Facility accrues at an annual rate of 0.50%. As of September 30, 2017 and December 31, 2016, the Company had $50.0 million and $29.0 million outstanding against the Second Amended Facility, respectively, at effective rates of 6.25% and 4.75%, respectively as well as letters of credit for $0.8 million and $8.0 million, respectively.

Seller Financing

At September 30, 2017, the Company had $5.2 million of notes payable outstanding related to one land acquisition for which seller financing was provided. The note bears interest at a rate of 7% per annum, is secured by the underlying land, and matures in June 2018. During the nine months ended September 30, 2017, the Company paid in full a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum, was secured by the underlying land, and was paid upon maturity in August 2017. This note was entered into with a related party. Refer to Note 8 for more details regarding the related party transaction.

Joint Venture Notes Payable

The Company and certain of its consolidated joint ventures have entered into notes payable agreements. These loans will be repaid with proceeds from closings and are secured by the underlying projects. The issuance date, facility size, maturity date and interest rate are listed in the table below as of September 30, 2017 (in millions):

Issuance Date	Facility Size		Outstanding			Maturity	Current Rate
March, 2016	$	33.4	$	16.7		September, 2018	4.24	%	(1)
January, 2016	35.0		31.8			February, 2019	4.48	%	(2)
November, 2015	42.5		19.3			May, 2018	5.25	%	(1)
July, 2015	15.0		3.6			July, 2018	4.75	%	(3)
November, 2014	7.0		3.7		(4)	November, 2017	4.75	%	(3)
November, 2014	15.0		—			November, 2017	4.75	%	(3)
March, 2014	26.0		2.4			April, 2018	4.24	%	(1)
July, 2017	46.2		28.3			August, 2020	4.46	%	(5)
	$	220.1	$	105.8

(1) Loan bears interest at the Company's option of either LIBOR +3.0% or the prime rate +1.0%.

(2) Loan bears interest at LIBOR +3.25%.

(3) Loan bears interest at the prime rate +0.5%.

(4) The Company anticipates paying the borrowings in full upon the maturity date from proceeds from homes closed in the respective project.

(5) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

The joint venture notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of September 30, 2017.

Subordinated Amortizing Notes

On November 21, 2014, in order to pay down amounts borrowed under the senior unsecured bridge loan facility entered into in conjunction with the Polygon Acquisition, the Company completed its public offering and sale of 1,000,0006.50% tangible equity units (“TEUs”, or "Units"), sold for a stated amount of $100 per Unit, featuring a 17.5% conversion premium.  On December 3, 2014, the Company sold an additional 150,000 TEUs pursuant to an over-allotment option granted to the underwriters. Each TEU is a unit composed of two parts: 

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• a prepaid stock purchase contract (a “purchase contract”); and

• a senior subordinated amortizing note (an “amortizing note”).

Unless settled earlier at the holder’s option, each purchase contract will automatically settle on December 1, 2017 (the "mandatory settlement date"), and the Company will deliver not more than 5.2247 shares of Class A Common Stock and not less than 4.4465 shares of Class A Common Stock on the mandatory settlement date, subject to adjustment, based upon the applicable settlement rate and applicable market value of Class A Common Stock.

Each amortizing note had an initial principal amount of $18.01, bears interest at the annual rate of 5.50% and has a final installment payment date of December 1, 2017. On each March 1, June 1, September 1 and December 1, commencing on March 1, 2015, William Lyon Homes will pay equal quarterly installments of $1.6250 on each amortizing note (except for the March 1, 2015 installment payment, which was $1.8056 per amortizing note). Each installment will constitute a payment of interest and a partial repayment of principal. The amortizing notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, other than borrowings under the Amended Facility and the Company's secured project level financing, which will be senior in right of payment to the obligations under the amortizing notes, in each case to the extent of the value of the assets securing such indebtedness.

Each TEU may be separated into its constituent purchase contract and amortizing note on any business day during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the Units to, but excluding, the third scheduled trading day immediately preceding the mandatory settlement date. Prior to separation, the purchase contracts and amortizing notes may only be purchased and transferred together as Units. The net proceeds received from the TEU issuance were allocated between the amortizing note and the purchase contract under the relative fair value method, with amounts allocated to the purchase contract classified as additional paid-in capital. As of September 30, 2017 and December 31, 2016, the amortizing notes had an unamortized carrying value of $1.6 million and $7.2 million, respectively.

Senior Notes

5 ³/₄% Senior Notes Due 2019

On March 31, 2014, California Lyon completed its private placement with registration rights of 5.75% Senior Notes due 2019 (the "5.75% Notes"), in an aggregate principal amount of $150 million. The 5.75% Notes were issued at 100% of their aggregate principal amount. In August 2014, we exchanged 100% of the initial 5.75% Notes for notes that are freely transferable and registered under the Securities Act of 1933, as amended (the “Securities Act”).

As of September 30, 2017, the outstanding principal amount of the 5.75% Notes was $150 million, excluding deferred loan costs of $0.8 million. The 5.75% Notes bear interest at a rate of 5.75% per annum, payable semiannually in arrears on April 15 and October 15, and mature on April 15, 2019. The 5.75% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.75% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $450 million in aggregate principal amount of 5.875% Senior Notes due 2020 and $350 million in aggregate principal amount of 7.00% Notes due 2019, each as described below. The 5.75% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.75% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

8 ¹/₂% Senior Notes Due 2020

On November 8, 2012, California Lyon completed its private placement with registration rights of 8.5% Senior Notes due 2020, (the "initial 8.5% notes"), in an aggregate principal amount of $325 million. The initial 8.5% Notes were issued at 100% of their aggregate principal amount. In July 2013, we exchanged 100% of the initial 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

On October 24, 2013, California Lyon completed its private placement with registration rights of an additional $100.0 million in aggregate principal amount of its 8.5% Senior Notes due 2020 (the “additional 8.5% Notes”, and together with the initial 8.5% notes, the "8.5% Notes" ) at an issue price of 106.5% of their aggregate principal amount, plus accrued interest from and including May 15, 2013, resulting in net proceeds of approximately $104.7 million. In February 2014, we exchanged 100% of the additional 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

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During the nine months ended September 30, 2017, Parent, through California Lyon, used the net proceeds from its private placement with registration rights of 5.875% Senior Notes due 2025, as further described below, to purchase $395.6 million of the outstanding aggregate principal amount of the 8.5% Notes, pursuant to a cash tender offer and consent solicitation. Subsequently, the Company used the remaining proceeds, together with cash on hand, for the retirement of the remaining outstanding 8.5% Notes, such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. The Company incurred certain costs related to the early extinguishment of debt of the 8.5% Notes during the nine months ended September 30, 2017 in an amount of $21.8 million, which is included in the Consolidated Statement of Operations as Loss on extinguishment of debt.

7% Senior Notes Due 2022

On August 11, 2014, WLH PNW Finance Corp. (“Escrow Issuer”), completed its private placement with registration rights of 7.00% Senior Notes due 2022 (the “initial 7.00% Notes”), in an aggregate principal amount of $300 million. The initial 7.00% Notes were issued at 100% of their aggregate principal amount. On August 12, 2014, in connection with the consummation of the Polygon Acquisition, Escrow Issuer merged with and into California Lyon, and California Lyon assumed the obligations of the Escrow Issuer under the initial 7.00% Notes and the related indenture by operation of law (the “Escrow Merger”). Following the Escrow Merger, California Lyon is the obligor under the initial 7.00% Notes. In January 2015, we exchanged 100% of the initial 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

On September 15, 2015, California Lyon completed its private placement with registration rights of an additional $50.0 million in aggregate principal amount of its 7.00% Senior Notes due 2022 (the “additional 7.00% Notes”, and together with the initial 7.00% Notes, the "7.00% Notes") at an issue price of 102.0% of their principal amount, plus accrued interest from August 15, 2015, resulting in net proceeds of approximately $50.5 million. In January 2016, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017 the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.8 million and deferred loan costs of $4.2 million. The 7.00% Notes bear interest at a rate of 7.00% per annum, payable semiannually in arrears on February 15 and August 15, and mature on August 15, 2022. The 7.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 7.00% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019, as described above, and $450 million in aggregate principal amount of 5.875% Senior Notes due 2020, as described below. The 7.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 7.00% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the 8.5% Notes such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017, the outstanding principal amount of the 5.875% Notes was $450 million, excluding unamortized discount of $3.3 million and deferred loan costs of $7.5 million. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019 and $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

18

On or after January 31, 2020, California Lyon may redeem all or a portion of the 5.875% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount), set forth below plus accrued and unpaid interest to the redemption date, if redeemed during the 12-month period commencing on each of the dates indicated below:

Year	Percentage
January 31, 2020	102.938	%
January 31, 2021	101.469	%
January 31, 2022	100.734	%
January 31, 2023 and thereafter	100.000	%

Prior to January 31, 2020, the 5.875% Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a "make-whole" premium, and accrued and unpaid interest to, the redemption date.

In addition, any time prior to January 31, 2020, California Lyon may, at its option on one or more occasions, redeem the 5.875% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 5.875% Notes issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 105.875%, plus accrued and unpaid interest to the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

Senior Notes Covenant Compliance

The indentures governing the 5.75% Notes, the 7.00% Notes, and the 5.875% Notes contain covenants that limit the ability of Parent, California Lyon, and their restricted subsidiaries to, among other things: (i) incur or guarantee certain additional indebtedness; (ii) pay dividends, distributions, or repurchase equity or make payments in respect of subordinated indebtedness; (iii) make certain investments; (iv) sell assets; (v) incur liens; (vi) enter into agreements restricting the ability of the Company’s restricted subsidiaries to pay dividends or transfer assets; (vii) enter into transactions with affiliates; (viii) create unrestricted subsidiaries; and (viii) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to a number of important exceptions and qualifications as described in the indentures. The Company was in compliance with all such covenants as of September 30, 2017.

19

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of September 30, 2017 and December 31, 2016; consolidating statements of operations for the three and nine months ended September 30, 2017 and 2016; and consolidating statements of cash flows for the nine month periods ended September 30, 2017 and 2016, of (a) William Lyon Homes, as the parent, or “Delaware Lyon”, (b) William Lyon Homes, Inc., as the subsidiary issuer, or “California Lyon”, (c) the guarantor subsidiaries, (d) the non-guarantor subsidiaries and (e) William Lyon Homes, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate Delaware Lyon, with California Lyon and its guarantor and non-guarantor subsidiaries.

Delaware Lyon owns 100% of all of its guarantor subsidiaries and all guarantees are full and unconditional, joint and several. As a result, in accordance with Rule 3-10 (d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries as of September 30, 2017 and December 31, 2016, and for the nine month periods ended September 30, 2017 and 2016.

The consolidating balance sheet as of December 31, 2016 was adjusted to reflect the adoption of ASU 2016-02 (see Note 1).

20

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	34,727		$	(328	)	$	9,205		$	—		$	43,604
Receivables	—		4,048			1,760			3,911			—			9,719
Escrow proceeds receivable	—		228			—			—			—			228
Real estate inventories	—		900,390			697,824			257,444			—			1,855,658
Investment in unconsolidated joint ventures	—		8,075			150			—			—			8,225
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		73,597			—			—			—			73,597
Lease right-of-use assets	—		15,074			—			—			—			15,074
Other assets, net	—		18,762			1,896			494			—			21,152
Investments in subsidiaries	735,984		(18,249		)	(575,925		)	—			(141,810		)	—
Intercompany receivables	—		—			241,160			—			(241,160		)	—
Total assets	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859
LIABILITIES AND EQUITY
Accounts payable	$	—	$	48,450		$	25,061		$	10,605		$	—		$	84,116
Accrued expenses	—		88,318			4,719			103			—			93,140
Notes payable	—		55,226			—			105,785			—			161,011
Subordinated amortizing notes	—		1,619			—			—			—			1,619
5  3/4% Senior Notes	—		149,226			—			—			—			149,226
7% Senior Notes	—		346,556			—			—			—			346,556
5 7/8% Senior Notes	—		439,221			—			—			—			439,221
Intercompany payables	—		158,338			—			82,822			(241,160		)	—
Total liabilities	—		1,286,954			29,780			199,315			(241,160		)	1,274,889
Equity
William Lyon Homes stockholders’ equity (deficit)	735,984		(236,091		)	396,150			(18,249		)	(141,810		)	735,984
Noncontrolling interests	—		(2		)	—			89,988			—			89,986
Total liabilities and equity	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859

21

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2016

(as adjusted)

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	36,204		$	272		$	6,136		$	—		$	42,612
Receivables	—		2,989			3,303			3,246			—			9,538
Escrow proceeds receivable	—		85			—			—			—			85
Real estate inventories	—		910,594			645,341			216,063			—			1,771,998
Investment in unconsolidated joint ventures	—		7,132			150			—			—			7,282
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		75,751			—			—			—			75,751
Lease right-of-use assets	—		13,129			—			—			—			13,129
Other assets, net	—		15,779			1,089			415			—			17,283
Investments in subsidiaries	697,086		(23,736		)	(573,650		)	—			(99,700		)	—
Intercompany receivables	—		—			252,860			—			(252,860		)	—
Total assets	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280
LIABILITIES AND EQUITY
Accounts payable	$	—	$	52,380		$	16,416		$	5,486		$	—		$	74,282
Accrued expenses	—		88,185			4,636			98			—			92,919
Notes payable	—		50,713			2,979			102,076			—			155,768
Subordinated amortizing notes	—		7,225			—			—			—			7,225
5 3/4% Senior Notes	—		148,826			—			—			—			148,826
8 1/2% Senior Notes	—		422,817			—			—			—			422,817
7% Senior Notes	—		346,014			—			—			—			346,014
Intercompany payables	—		177,267			—			75,593			(252,860		)	—
Total liabilities	—		1,293,427			24,031			183,253			(252,860		)	1,247,851
Equity
William Lyon Homes stockholders’ equity (deficit)	697,086		(241,291		)	364,727			(23,736		)	(99,700		)	697,086
Noncontrolling interests	—		—			—			66,343			—			66,343
Total liabilities and equity	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280

22

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	211,317		$	218,033		$	60,954		$	—		$	490,304
Construction services	—		35			—			—			—			35
Management fees	—		(1,899		)	—			—			1,899			—
	—		209,453			218,033			60,954			1,899			490,339
Operating costs
Cost of sales	—		(165,392		)	(181,184		)	(53,225		)	(1,899		)	(401,700		)
Construction services	—		(35		)	—			—			—			(35		)
Sales and marketing	—		(7,904		)	(11,521		)	(2,510		)	—			(21,935		)
General and administrative	—		(19,171		)	(3,780		)	—			—			(22,951		)
Other	—		(635		)	86			1			—			(548		)
	—		(193,137		)	(196,399		)	(55,734		)	(1,899		)	(447,169		)
Income from subsidiaries	27,418		6,162			—			—			(33,580		)	—
Operating income	27,418		22,478			21,634			5,220			(33,580		)	43,170
Equity in income from unconsolidated joint ventures	—		819			341			—			—			1,160
Other income (expense), net	—		47			(4		)	(408		)	—			(365		)
Income before provision for income taxes	27,418		23,344			21,971			4,812			(33,580		)	43,965
Provision for income taxes	—		(13,905		)	—			—			—			(13,905		)
Net income	27,418		9,439			21,971			4,812			(33,580		)	30,060
Less: Net income attributable to noncontrolling interests	—		—			—			(2,642		)	—			(2,642		)
Net income available to common stockholders	$	27,418	$	9,439		$	21,971		$	2,170		$	(33,580	)	$	27,418

23

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	105,962		$	181,594		$	55,072		$	—		$	342,628
Construction services	—		86			—			—			—			86
Management fees	—		(1,541		)	—			—			1,541			—
	—		104,507			181,594			55,072			1,541			342,714
Operating costs
Cost of sales	—		(84,652		)	(151,306		)	(48,397		)	(1,541		)	(285,896		)
Construction services	—		(86		)	—			—			—			(86		)
Sales and marketing	—		(6,205		)	(9,774		)	(2,267		)	—			(18,246		)
General and administrative	—		(14,268		)	(3,091		)	(1		)	—			(17,360		)
Other	—		140			69			(11		)	—			198
	—		(105,071		)	(164,102		)	(50,676		)	(1,541		)	(321,390		)
Income from subsidiaries	13,069		3,548			—			—			(16,617		)	—
Operating income (loss)	13,069		2,984			17,492			4,396			(16,617		)	21,324
Equity in income from unconsolidated joint ventures	—		1,140			295			—			—			1,435
Other income (expense), net	—		2,550			(19		)	(481		)	—			2,050
Income (loss) before provision for income taxes	13,069		6,674			17,768			3,915			(16,617		)	24,809
Provision for income taxes	—		(8,295		)	—			—			—			(8,295		)
Net income (loss)	13,069		(1,621		)	17,768			3,915			(16,617		)	16,514
Less: Net income attributable to noncontrolling interests	—		—			—			(3,445		)	—			(3,445		)
Net income (loss) available to common stockholders	$	13,069	$	(1,621	)	$	17,768		$	470		$	(16,617	)	$	13,069

24

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	505,006		$	535,828		$	130,957		$	—		$	1,171,791
Construction services	—		94			—			—			—			94
Management fees	—		(3,501		)	—			—			3,501			—
	—		501,599			535,828			130,957			3,501			1,171,885
Operating costs
Cost of sales	—		(408,420		)	(445,737		)	(115,554		)	(3,501		)	(973,212		)
Construction services	—		(41		)	—			—			—			(41		)
Sales and marketing	—		(21,479		)	(29,241		)	(7,204		)	—			(57,924		)
General and administrative	—		(49,285		)	(12,161		)	(1		)	—			(61,447		)
Other	—		(1,786		)	232			6			—			(1,548		)
	—		(481,011		)	(486,907		)	(122,753		)	(3,501		)	(1,094,172		)
Income from subsidiaries	36,372		13,328			—			—			(49,700		)	—
Operating income	36,372		33,916			48,921			8,204			(49,700		)	77,713
Equity in income from unconsolidated joint ventures	—		1,743			879			—			—			2,622
Other income (expense), net	—		1,072			(10		)	(1,074		)	—			(12		)
Income before extinguishment of debt	36,372		36,731			49,790			7,130			(49,700		)	80,323
Loss on extinguishment of debt	—		(21,828		)	—			—			—			(21,828		)
Income (loss) before provision for income taxes	36,372		14,903			49,790			7,130			(49,700		)	58,495
Provision for income taxes	—		(17,480		)	—			—			—			(17,480		)
Net income (loss)	36,372		(2,577		)	49,790			7,130			(49,700		)	41,015
Less: Net income attributable to noncontrolling interests	—		—			—			(4,643		)	—			(4,643		)
Net income (loss) available to common stockholders	$	36,372	$	(2,577	)	$	49,790		$	2,487		$	(49,700	)	$	36,372

25

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	344,459		$	494,597		$	89,926		$	—		$	928,982
Construction services	—		3,810			—			—			—			3,810
Management fees	—		(2,587		)	—			—			2,587			—
	—		345,682			494,597			89,926			2,587			932,792
Operating costs
Cost of sales	—		(276,481		)	(411,339		)	(79,298		)	(2,587		)	(769,705		)
Construction services	—		(3,458		)	—			—			—			(3,458		)
Sales and marketing	—		(18,080		)	(26,731		)	(6,540		)	—			(51,351		)
General and administrative	—		(41,749		)	(10,129		)	(1		)	—			(51,879		)
Other	—		(587		)	(14		)	(11		)	—			(612		)
	—		(340,355		)	(448,213		)	(85,850		)	(2,587		)	(877,005		)
Income from subsidiaries	36,644		7,472			—			—			(44,116		)	—
Operating income	36,644		12,799			46,384			4,076			(44,116		)	55,787
Equity in income from unconsolidated joint ventures	—		3,001			809			—			—			3,810
Other income (expense), net	—		3,873			(34		)	(1,036		)	—			2,803
Income (loss) before provision for income taxes	36,644		19,673			47,159			3,040			(44,116		)	62,400
Provision for income taxes	—		(20,859		)	—			—			—			(20,859		)
Net income (loss)	36,644		(1,186		)	47,159			3,040			(44,116		)	41,541
Less: Net income attributable to noncontrolling interests	—		—			—			(4,897		)	—			(4,897		)
Net income (loss) available to common stockholders	$	36,644	$	(1,186	)	$	47,159		$	(1,857	)	$	(44,116	)	$	36,644

26

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,526	)	$	2,452		$	4,366		$	(29,808	)	$	2,526		$	(22,990	)
Investing activities
Purchases of property and equipment	—			(1,781		)	(572		)	(63		)	—			(2,416		)
Investments in subsidiaries	—			7,841			2,275			—			(10,116		)	—
Net cash provided by (used in) investing activities	—			6,060			1,703			(63		)	(10,116		)	(2,416		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			105,109			—			105,109
Principal payments on notes payable	—			—			—			(101,400		)	—			(101,400		)
Redemption premium of 8.5% Senior Notes	—			(19,645		)	—			—			—			(19,645		)
Principal payments of 8.5% Senior Notes	—			(425,000		)	—			—			—			(425,000		)
Proceeds from issuance of 5.875% Senior Notes	—			446,468			—			—			—			446,468
Proceeds from borrowings on Revolver	—			275,000			—			—			—			275,000
Payments on Revolver	—			(254,000		)	—			—			—			(254,000		)
Principal payments on subordinated amortizing notes	—			(5,606		)	—			—			—			(5,606		)
Payment of deferred loan costs	—			(9,794		)	—			—			—			(9,794		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(1,450		)	—			—			—			(1,450		)
Payments to repurchase common stock	—			(2,284		)	—			—			—			(2,284		)
Noncontrolling interest contributions	—			—			—			58,829			—			58,829
Noncontrolling interest distributions	—			—			—			(39,829		)	—			(39,829		)
Advances to affiliates	—			—			(18,367		)	3,000			15,367			—
Intercompany receivables/payables	2,526			(13,678		)	11,698			7,231			(7,777		)	—
Net cash provided by (used in) financing activities	2,526			(9,989		)	(6,669		)	32,940			7,590			26,398
Net (decrease) increase in cash and cash equivalents	—			(1,477		)	(600		)	3,069			—			992
Cash and cash equivalents - beginning of period	—			36,204			272			6,136			—			42,612
Cash and cash equivalents - end of period	$	—		$	34,727		$	(328	)	$	9,205		$	—		$	43,604

27

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,931	)	$	18,174		$	(35,182	)	$	(65,970	)	$	2,931		$	(82,978	)
Investing activities
Collection of related party note receivable	—			6,188			—			—			—			6,188
Purchases of property and equipment	—			(809		)	56			(20		)	—			(773		)
Investments in subsidiaries	—			(1,727		)	46,801			—			(45,074		)	—
Net cash provided by (used in) investing activities	—			3,652			46,857			(20		)	(45,074		)	5,415
Financing activities
Proceeds from borrowings on notes payable	—			2,211			—			109,781			—			111,992
Principal payments on notes payable	—			(10,440		)	—			(80,810		)	—			(91,250		)
Proceeds from borrowings on Revolver	—			198,000			—			—			—			198,000
Payments on revolver	—			(167,000		)	—			—			—			(167,000		)
Principal payments on subordinated amortizing notes	—			(5,096		)	—			—			—			(5,096		)
Payment of deferred loan costs	—			(792		)	—			—			—			(792		)
Shares remitted to or withheld by Company for employee tax withholding	—			(918		)	—			—			—			(918		)
Excess income tax benefit from stock based awards	—			(238		)	—			—			—			(238		)
Noncontrolling interest contributions	—			—			—			36,140			—			36,140
Noncontrolling interest distributions	—			—			—			(12,768		)	—			(12,768		)
Advances to affiliates	—			—			(4,479		)	11,056			(6,577		)	—
Intercompany receivables/payables	2,931			(46,182		)	(9,391		)	3,922			48,720			—
Net cash provided by (used in) financing activities	2,931			(30,455		)	(13,870		)	67,321			42,143			68,070
Net (decrease) increase in cash and cash equivalents	—			(8,629		)	(2,195		)	1,331			—			(9,493		)
Cash and cash equivalents - beginning of period	—			44,332			2,723			3,148			—			50,203
Cash and cash equivalents - end of period	$	—		$	35,703		$	528		$	4,479		$	—		$	40,710

28

Note 7—Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), the Company is required to disclose the estimated fair value of financial instruments. As of September 30, 2017 and December 31, 2016, the Company used the following assumptions to estimate the fair value of each type of financial instrument for which it is practicable to estimate:

• Notes payable—The carrying amount is a reasonable estimate of fair value of the notes payable because market rates are unchanged since inception and/or the outstanding balance at quarter end is expected to be repaid within one year.

• Subordinated amortizing notes—The Subordinated amortizing notes are traded over the counter and their fair values were based upon quotes from industry sources.

•     5 ³/₄% Senior Notes due April 15, 2019 —The 5 ³/4% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 8 ¹/2% Senior Notes due November 15, 2020 —The 8 ¹/2% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 7% Senior Notes due August 15, 2022 —The 7% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 5 ⁷/₈ Senior Notes due January 31, 2025 —The 5 ⁷/8% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

The following table excludes cash and cash equivalents, restricted cash, receivables and accounts payable, which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. The estimated fair values of financial instruments are as follows (in thousands):

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	161,011	$	161,011	$	155,768	$	155,768
Subordinated amortizing notes	1,619		1,700		7,225		7,478
5 3/4% Senior Notes due 2019	149,226		151,875		148,826		151,125
8 1/2% Senior Notes due 2020	—		—		422,817		444,125
7% Senior Notes due 2022	346,556		362,250		346,014		363,125
5 7/8% Senior Notes due 2025	439,221		462,375		—		—

ASC 820 establishes a framework for measuring fair value, expands disclosures regarding fair value measurements and defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The Company used Level 3 to measure the fair value of its Notes payable, and Level 2 to measure the fair value of its Senior notes and Subordinated amortizing notes. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The three levels of the hierarchy are as follows:

• Level 1—quoted prices for identical assets or liabilities in active markets;

• Level 2—quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3—valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

29

Note 8—Related Party Transactions

In August 2016 the Company acquired certain lots within a master planned community located in Aurora, Colorado, for an overall purchase price of approximately $9.3 million, from an entity managed by an affiliate of Paulson & Co., Inc. (“Paulson”). WLH Recovery Acquisition LLC, which is affiliated with, and managed by affiliates of Paulson, held over 5% of Parent’s outstanding Class A common stock during the nine months ended September 30, 2017. A portion of the acquisition price for the lots was paid in the form of a seller note with a principal amount of approximately $3.0 million, which was paid upon maturity in August 2017. The Company believes that the transaction, including the terms of the seller note, was on terms no less favorable than it would have agreed to with unrelated parties.

Note 9—Income Taxes

Since inception, the Company has operated solely within the United States. The Company’s effective income tax rate was 31.6% and 29.9%, and 33.4% and 33.4% for the three and nine months ended September 30, 2017 and 2016, respectively. The significant drivers of the effective tax rate are the loss on extinguishment of debt resulting from the retirement of the 8.5% Notes (see Note 6), allocation of income to noncontrolling interests and the domestic production activities deduction.

Management assesses its deferred tax assets to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. At September 30, 2017, the Company had no valuation allowance recorded.

At September 30, 2017, the Company had no remaining federal net operating loss carryforwards and $56.5 million of remaining state net operating loss carryforwards. State net operating loss carryforwards begin to expire in 2031. In addition, as of September 30, 2017, the Company had unused federal and state built-in losses of $52.1 million and $7.3 million, respectively. The five year testing period for built-in losses expires in 2017 and the unused built-in loss carryforwards begin to expire in 2032. The Company had AMT credit carryovers of $1.4 million at September 30, 2017, which have an indefinite life.

FASB ASC Topic 740,Income Taxes (“ASC 740”), prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities. The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes. The Company has no unrecognized tax benefits.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal income tax examination for calendar tax years ended 2013 through 2016 and forward. The Company is subject to various state income tax examinations for calendar tax years ended 2009 through 2016 and forward.

Note 10—Income Per Common Share

Basic and diluted income per common share for the three and nine months ended September 30, 2017 and 2016 were calculated as follows (in thousands, except number of shares and per share amounts):

30

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Basic weighted average number of common shares outstanding	37,059,483		36,801,464		37,007,144		36,746,727
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,523,858		636,633		1,374,148		672,364
Tangible equity units	—		894,930		—		894,930
Diluted average shares outstanding	38,583,341		38,333,027		38,381,292		38,314,021
Net income available to common stockholders	$	27,418	$	13,069	$	36,372	$	36,644
Basic income per common share	$	0.74	$	0.36	$	0.98	$	1.00
Dilutive income per common share	$	0.71	$	0.34	$	0.95	$	0.96
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	240,000		240,000		240,000		240,000
Warrants	—		1,907,551		—		1,907,551

Note 11—Stock Based Compensation

We account for share-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at the fair value on the date of grant. Compensation expense for awards with performance based conditions is recognized over the vesting period once achievement of the performance condition is deemed probable.

During the three months ended September 30, 2017, the Company granted 6,434 shares of time-based restricted stock and during the nine months ended September 30, 2017, the Company granted 259,677 shares of time-based restricted stock and 553,909 shares of performance based restricted stock. On the Consolidated Balance Sheets and Statement of Equity, the Company considers unvested shares of restricted stock to be issued, but not outstanding.

The Company recorded total stock based compensation expense during the three and nine months ended September 30, 2017 and 2016 of $3.1 million and $6.3 million, and $1.5 million and $4.1 million, respectively.

Performance-Based Restricted Stock Awards

With respect to the performance based restricted stock awards granted to certain employees during the nine months ended September 30, 2017, the actual number of such shares of restricted stock that will be earned (the “Earned Shares”) is subject to the Company’s achievement of pre-established performance targets as of the end of the 2017 fiscal year. For each of the aforementioned awards, one-third of the Earned Shares will vest on March 1st of each of 2018, 2019 and 2020, subject to each grantee’s continued service through each vesting date. Based on the probability assessment as of September 30, 2017, management determined that the currently available data was sufficient to support that the achievement of the minimum threshold for one of the performance targets is probable, and as such, compensation expense of $1.5 million has been recognized for these awards to date.

Time-Based Restricted Stock Awards

With respect to the restricted stock awards granted to certain employees during the three months ended September 30, 2017, representing 6,434 shares of restricted stock, all shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on July 27th of each of 2018 and 2019, in each case subject to each grantee’s continued service through each vesting date. With respect to the restricted stock awards granted to certain employees and non-employee directors during the nine months ended September 30, 2017, representing 259,677 shares of restricted stock, 172,857 of such shares are subject to a vesting schedule pursuant to which one-third of the shares will vest on March 1st of each of 2018, 2019 and 2020, 45,111 of such shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on March 1st of each of 2018 and 2019, and 6,434 of such shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on July

31

27th of each of 2018 and 2019, in each case subject to each grantee’s continued service through each vesting date, and 35,275 of such shares vest in equal quarterly installments on each of June 1, 2017, September 1, 2017, December 1, 2017 and March 1, 2018, subject to each grantee’s continued service on the board through each vesting date.

Note 12—Commitments and Contingencies

The Company’s commitments and contingent liabilities include the usual obligations incurred by real estate developers in the normal course of business. In the opinion of management, these matters will not have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

The Company is a defendant in various lawsuits related to its normal business activities. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of September 30, 2017, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized on our condensed consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings, and as appropriate, adjust them to reflect (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

The Company had outstanding performance and surety bonds of $209.6 million at September 30, 2017, related principally to its obligations for site improvements at various projects. The Company does not believe that draws upon these bonds, if any, will have a material effect on the Company’s financial position, results of operations or cash flows. As of September 30, 2017, the Company had $181.0 million of project commitments relating to the construction of projects.

See Note 6 for additional information relating to the Company’s guarantee arrangements.

The Company has entered into various purchase option agreements with third parties to acquire land. As of September 30, 2017, the Company has made non-refundable deposits of $61.1 million. The Company is under no obligation to purchase the land, but would forfeit remaining deposits if the land were not purchased. The total remaining purchase price under the option agreements is $455.4 million as of September 30, 2017.

Lease Obligations

As described more fully in Note 1, as of April 1, 2017, the Company adopted the provisions of ASU 2016-02 and recognized lease obligations and associated ROU assets for its existing non-cancelable leases. Lease obligations, as included in Accrued expenses on the consolidated balance sheets, were $15.9 million as of September 30, 2017 and $13.1 million as of December 31, 2016. The Company has non-cancelable operating leases primarily associated with office facilities, real estate and office equipment, in addition to one related sublease for an office facility. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

32

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Lease cost
Operating lease cost	$	1,646		$	1,006		$	4,405		$	2,874
Sublease income	(29		)	(29		)	(87		)	(87		)
Total lease cost	$	1,617		$	977		$	4,318		$	2,787
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,621		$	811		$	3,879		$	2,410
Right-of-use assets obtained in exchange for new operating lease liabilities	$	155		$	740		$	5,213		$	1,353
Weighted-average discount rate	6.6		%	6.6		%	6.6		%	6.6		%

	September 30, 2017	December 31, 2016
Weighted-average remaining lease term (in years)	3.79	5.16

The table below shows the future minimum payments under non-cancelable operating leases at September 30, 2017 (in thousands).

Year Ending December 31,
2017	$	1,703
2018	6,673
2019	3,740
2020	2,556
2021	2,398
Thereafter	1,782
Total	$	18,852

Note 13—Subsequent Events

No events have occurred subsequent to September 30, 2017, that would require recognition or disclosure in the Company’s financial statements.

33

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

WILLIAM LYON HOMES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The Company is one of the largest Western U.S. regional homebuilders. Headquartered in Newport Beach, California, the Company is primarily engaged in the design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada, Colorado, Oregon, and Washington. The Company’s core markets include Orange County, Los Angeles, the Inland Empire, the San Francisco Bay Area, Phoenix, Las Vegas, Denver, Portland, and Seattle. The Company has a distinguished legacy of more than 60 years of homebuilding operations, over which time it has sold in excess of 101,000 homes. For the nine months ended September 30, 2017 (the "2017 period"), the Company had revenues from homes sales of $1,171.8 million, a 26% increase from $929.0 million for the nine months ended September 30, 2016 (the "2016 period"), which includes results from all reportable operating segments. The Company had net new home orders of 2,656 homes in the 2017 period, a 20% increase from 2,211 in the 2016 period, while the average sales price ("ASP") for homes closed increased 9% to $537,300 in the 2017 period from $494,400 in the 2016 period.

The following discussion of results of operations and financial condition contains forward-looking statements reflecting current expectations that involve risks and uncertainties. See the section titled, “CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS” included elsewhere in this Quarterly Report on Form 10-Q. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in such section.

Basis of Presentation

The accompanying condensed consolidated financial statements included herein have been prepared under U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), and the rules and regulations of the Securities and Exchange Commission (the "SEC"), and are presented on a going concern basis, which assumes the Company will be able to operate in the ordinary course of its business and realize its assets and discharge its liabilities for the foreseeable future.

Results of Operations

In the nine months ended September 30, 2017, the Company delivered 2,181 homes, with an ASP of approximately $537,300, and recognized home sales revenue of $1,171.8 million. The Company generated net income available to common shareholders of $36.4 million for the nine months ended September 30, 2017, and income per share of $0.98. The Company's net income was largely reduced by loss from extinguishment of debt of $21.8 million from the refinance of Senior Notes during the period. The Company continues to see positive trends in orders, price appreciation in certain projects, and our average sales price of homes in backlog is approximately $578,900 as of September 30, 2017, which is 8% higher than the average sales price of homes closed for the nine months ended September 30, 2017 of $537,300.

As of September 30, 2017, the Company's average community count for the nine month period then ended was 85 locations. We had a consolidated backlog of 1,208 homes sold but not closed, with an associated sales value of $699.3 million, representing a 13% increase in units, and a 18% increase in dollar value, as compared to the backlog at September 30, 2016.

Homebuilding gross margin percentage and adjusted homebuilding gross margin percentage was 16.9% and 22.5%, respectively, for the nine months ended September 30, 2017, as compared to 17.1% and 23.5%, respectively, for the nine months ended September 30, 2016.

Comparisons of the Three Months Ended September 30, 2017 to September 30, 2016

Revenues from homes sales increased 43% to $490.3 million during the three months ended September 30, 2017, compared to $342.6 million during the three months ended September 30, 2016. The increase in revenue is primarily due to the 26% increase in the number of homes closed during the 2017 period, in addition to a 13% increase in average sales price. The number of net new home orders for the three months ended September 30, 2017 increased 19% to 774 homes from 651 homes for the three months ended September 30, 2016.

34

	Three Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount		%
Number of Net New Home Orders
California	238	191	47		25	%
Arizona	124	117	7		6	%
Nevada	66	66	—		—	%
Colorado	82	54	28		52	%
Washington	116	66	50		76	%
Oregon	148	157	(9	)	(6	)%
Total	774	651	123		19	%

The 19% increase in net new homes orders is driven by an increase in monthly absorption to 3.0 sales per month from 2.8 in the prior year period, in addition to a 10% increase in average number of sales locations to 86 average locations in 2017, compared to 78 in the 2016 period, which is driven by the opening of 4 new communities.

	Three Months Ended September 30,				Increase (Decrease)
	2017		2016		%
Cancellation Rates
California	21	%	24	%	(3	)%
Arizona	11	%	16	%	(5	)%
Nevada	19	%	15	%	4	%
Colorado	23	%	16	%	7	%
Washington	17	%	21	%	(4	)%
Oregon	19	%	22	%	(3	)%
Overall	19	%	20	%	(1	)%

Cancellation rates during the 2017 period decreased to 19% from 20% during the 2016 period. Cancellation rates typically are driven by personal factors affecting buyers and may not be indicative of any overarching trends affecting regions. The 7% increase in cancellation rates in Colorado was partially due to a manufactured product issue relating to fire rated I-joists, which was announced by the manufacturer at the beginning of the 2017 third quarter and impacted certain homes in backlog and/or under construction in our Colorado division, and for which we have implemented a remediation program.

	Three Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount		%
Average Number of Sales Locations
California	23	23	—		—	%
Arizona	7	9	(2	)	(22	)%
Nevada	13	12	1		8	%
Colorado	16	10	6		60	%
Washington	11	6	5		83	%
Oregon	16	18	(2	)	(11	)%
Total	86	78	8		10	%

The average number of sales locations for the Company increased to 86 locations for the three months ended September 30, 2017 compared to 78 for the three months ended September 30, 2016, driven by the opening of new communities in Colorado and Washington during 2017. During the period, the Company opened 4 communities, while closing out 7.

35

	Three Months Ended September 30, 2017		Increase (Decrease)
	2017	2016
Quarterly Absorption Rates
California	10.3	8.3	2.0
Arizona	17.7	13.0	4.7
Nevada	5.1	5.5	(0.4)
Colorado	5.1	5.4	(0.3)
Washington	10.5	11.0	(0.5)
Oregon	9.3	8.7	0.6
Overall	9.0	8.3	0.7

The Company's consolidated quarterly absorption rate, representing the number of net new home orders divided by average sales locations for the period, increased for the three months ended September 30, 2017 to 9.0 sales per project from 8.3 in the 2016 period. The increase in absorption rates in California was due to the improvement in sales pace in the Inland Empire sub-market, while the stronger absorption in Arizona was due to strong demand from the needs based entry level buyer, compared to the prior period.

	September 30,		Increase (Decrease)
	2017	2016	Amount		%
Backlog (units)
California	370	327	43		13	%
Arizona	197	252	(55	)	(22	)%
Nevada	120	124	(4	)	(3	)%
Colorado	164	112	52		46	%
Washington	192	57	135		237	%
Oregon	165	199	(34	)	(17	)%
Total	1,208	1,071	137		13	%

The Company’s backlog at September 30, 2017 increased 13% to 1,208 units from 1,071 units at September 30, 2016. The increase is primarily attributable to an increase in net new home orders to 774 in the current period from 651 in the prior year, slightly offset by a higher backlog conversion rate of 66% in current period compared to 62% in the prior period.

	September 30,				Increase (Decrease)
	2017		2016		Amount			%
	(dollars in thousands)
Backlog (dollars)
California	$	294,861	$	260,082	$	34,779		13	%
Arizona	60,467		71,609		(11,142		)	(16	)%
Nevada	81,192		78,285		2,907			4	%
Colorado	69,085		59,451		9,634			16	%
Washington	119,299		36,518		82,781			227	%
Oregon	74,424		85,093		(10,669		)	(13	)%
Total	$	699,328	$	591,038	$	108,290		18	%

The dollar amount of backlog of homes sold but not closed as of September 30, 2017 was $699.3 million, up 18% from $591.0 million as of September 30, 2016. The increase primarily reflects an increase in net new orders as described above, coupled with a 5% increase in the ASP of homes in backlog when compared with the prior period. The increase in the dollar amount of backlog of homes sold but not closed as described above generally results in an increase in operating revenues in the subsequent period as compared to the previous period.

36

In California, the dollar amount of backlog increased 13% to $294.9 million as of September 30, 2017 from $260.1 million as of September 30, 2016, which is primarily attributable to a 13% increase in units in backlog, coupled with the increase in number of net new home orders for the 2017 period of 25% to 238 homes from 191 homes for the 2016 period.

In Arizona, the dollar amount of backlog decreased 16% to $60.5 million as of September 30, 2017 from $71.6 million as of September 30, 2016, which is primarily attributable to a 22% decrease in the number of homes in backlog to 197 at September 30, 2017, from 252 at September 30, 2016 due to stronger backlog conversion and a 23% increase in deliveries. This was largely offset by a 8% increase in the ASP of homes in backlog when compared with the prior period.

In Nevada, the dollar amount of backlog increased 4% to $81.2 million as of September 30, 2017 from $78.3 million as of September 30, 2016, attributable to a 7% increase in average sales price of homes in backlog to $676,600 as of September 30, 2017, from $631,300 as of September 30, 2016, slightly offset by a 3% decrease in units in backlog, to 120 as of September 30, 2017 from 124 as of September 30, 2016.

In Colorado, the dollar amount of backlog increased 16% to $69.1 million as of September 30, 2017 from $59.5 million as of September 30, 2016, which is attributable to a 46% increase in the number of units in backlog, to 164 units as of September 30, 2017, from 112 units as of September 30, 2016. This was slightly offset by a 21% decrease of the ASP of homes in backlog to $421,300 as of September 30, 2017 from $530,800 as of September 30, 2016. Our backlog conversion rate in Colorado for the third quarter was negatively impacted by a manufactured product issue relating to fire rated I-joists, which was announced by the manufacturer at the beginning of the 2017 third quarter and impacted certain homes in backlog and/or under construction, and for which we have implemented a remediation program.

In Washington, the dollar amount of backlog increased 227% to $119.3 million as of September 30, 2017 from $36.5 million as of September 30, 2016, which is attributable to a 237% increase in the number of units in backlog, to 192 units as of September 30, 2017, from 57 units as of September 30, 2016, in addition to a 76% increase in the number of net new home orders for the 2017 period compared to the 2016 period. This was slightly offset by a 3% decrease in the ASP of homes in backlog to $621,300 as of September 30, 2017 from $640,700 as of September 30, 2016.

In Oregon, the dollar amount of backlog decreased 13% to $74.4 million as of September 30, 2017 from $85.1 million as of September 30, 2016, which is primarily attributable to a 17% decrease in the number of units in backlog, to 165 units as of September 30, 2017, from 199 units as of September 30, 2016. This was slightly offset by a 5% increase in the ASP of homes in backlog to $451,100 in the 2017 period from $427,600 in the 2016 period.

	Three Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount		%
Number of Homes Closed
California	300	169	131		78	%
Arizona	133	108	25		23	%
Nevada	74	85	(11	)	(13	)%
Colorado	44	70	(26	)	(37	)%
Washington	116	74	42		57	%
Oregon	184	167	17		10	%
Total	851	673	178		26	%

During the three months ended September 30, 2017, the number of homes closed increased 26% to 851 from 673 in the 2016 period. The increase was primarily attributable to the California, Arizona, Washington and Oregon reporting segments, driven by a higher number of homes in backlog to begin the quarter when compared with the 2016 period. These increases were partially offset by decreases in the Nevada and Colorado reporting segments.

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	Three Months Ended September 30,				Increase (Decrease)
	2017		2016		Amount			%
	(dollars in thousands)
Home Sales Revenue
California	$	230,925	$	111,434	$	119,491		107	%
Arizona	39,607		28,758		10,849			38	%
Nevada	42,966		49,600		(6,634		)	(13	)%
Colorado	24,811		35,316		(10,505		)	(30	)%
Washington	71,788		42,247		29,541			70	%
Oregon	80,207		75,273		4,934			7	%
Total	$	490,304	$	342,628	$	147,676		43	%

The 43% increase in homebuilding revenue is driven by the 26% increase in homes closed discussed above, in addition to the 13% increase in the average sales price of homes closed between the 2017 and 2016 periods.

	Three Months Ended September 30,				Increase (Decrease)
	2017		2016		Amount			%
Average Sales Price of Homes Closed
California	$	769,800	$	659,400	$	110,400		17	%
Arizona	297,800		266,300		31,500			12	%
Nevada	580,600		583,500		(2,900		)	—	%
Colorado	563,900		504,500		59,400			12	%
Washington	618,900		570,900		48,000			8	%
Oregon	435,900		450,700		(14,800		)	(3	)%
Company Average	$	576,200	$	509,100	$	67,100		13	%

The average sales price of homes closed during the 2017 period increased 13% due to an increase in the average sales price of homes closed, primarily driven by product mix, in all reporting segments except Nevada and Oregon.

Gross Margin

Homebuilding gross margins increased to 18.1% for the three months ended September 30, 2017 from 16.6% in the 2016 period, primarily driven by product and geographic mix for home deliveries, as well as new projects with closings above the previous Company averages.

For the comparison of the three months ended September 30, 2017 and the three months ended September 30, 2016, adjusted homebuilding gross margin percentage, which excludes previously capitalized interest included in cost of sales as well as the effect of adjustments recorded in relation to purchase accounting, was 23.6% for the 2017 period compared to 22.2% for the 2016 period. The increase was primarily a result of the increase in homebuilding gross margins described above coupled with the increase in the impact of interest in cost of sales.

Adjusted homebuilding gross margin is a non-GAAP financial measure. The Company believes this information is meaningful as it isolates the impact that interest and purchase accounting have on homebuilding gross margin and permits investors to make better comparisons with the Company's competitors, who also break out and adjust gross margins in a similar fashion. For comparative purposes purchase accounting is the net adjustment in basis related to the acquisition of our Colorado, Washington and Oregon operating divisions. See table set forth below reconciling this non-GAAP measure to homebuilding gross margin.

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	Three Months Ended September 30,
	2017			2016
	(dollars in thousands)
Home sales revenue	$	490,304		$	342,628
Cost of home sales	401,700			285,896
Homebuilding gross margin	88,604			56,732
Homebuilding gross margin percentage	18.1		%	16.6		%
Add: Interest in cost of sales	22,923			13,543
Add: Purchase accounting adjustments	4,252			5,687
Adjusted homebuilding gross margin	$	115,779		$	75,962
Adjusted homebuilding gross margin percentage	23.6		%	22.2		%

Sales and Marketing, General and Administrative

	Three Months Ended September 30,				As a Percentage of Home Sales Revenue
	2017		2016		2017		2016
	(dollars in thousands)
Sales and Marketing	$	21,935	$	18,246	4.5	%	5.3	%
General and Administrative	22,951		17,360		4.7	%	5.1	%
Total Sales and Marketing & General and Administrative	$	44,886	$	35,606	9.2	%	10.4	%

Sales and marketing expense as a percentage of home sales revenue decreased to 4.5% in the 2017 period compared to 5.3% in the 2016 period as a result of higher homebuilding revenue and lower advertising costs due to more efficient advertising spending using social media and mobile applications to offset higher outside broker costs. General and administrative expense as a percentage of home sales revenues decreased to 4.7% in the 2017 period compared to 5.1% in the 2016 period. The decrease is driven by a lower relative cost structure due to the higher revenue and positive operating leverage.

Equity in Income of Unconsolidated Joint Ventures

Equity in income of unconsolidated joint ventures decreased slightly to $1.2 million for the three months ended September 30, 2017 from $1.4 million during the comparable 2016 period.

Other Items

Interest activity for the three months ended September 30, 2017 and September 30, 2016 is as follows (in thousands):

	Three Months Ended September 30,
	2017		2016
Interest incurred	$	18,112	$	21,293
Less: Interest capitalized	18,112		21,293
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	28,374	$	14,898

The decrease in interest incurred for the three months ended September 30, 2017, compared to the interest incurred for the three months ended September 30, 2016, reflects the impact of the effective refinancing transaction on January 31, 2017, in which the Company completed the sale to certain purchasers of $450.0 million in aggregate principal amount of 5.875% Senior Notes due 2025 and concurrent retirement of the remaining outstanding 8.5% Notes, such that the entire aggregate $425.0 million of previously outstanding 8.5% Notes are now retired and extinguished. The Company capitalized all of the interest it incurred during both periods presented due to its qualifying assets exceeding its outstanding debt.

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During the three months ended September 30, 2017 and 2016, the Company sold one land parcel that resulted in a negligible loss and two land parcels that resulted in a $2.7 million gain, respectively.

Provision for Income Taxes

During the three months ended September 30, 2017, the Company recorded a provision for income taxes of $13.9 million, for an effective tax rate of 31.6%. During the three months ended September 30, 2016, the Company recorded a provision for income taxes of $8.3 million for an effective tax rate of 33.4%.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests decreased to $2.6 million during the 2017 period, compared to $3.4 million during the 2016 period.

Net Income Available to Common Stockholders

As a result of the foregoing factors, net income available to common stockholders for the three months ended September 30, 2017 and 2016 was $27.4 million and $13.1 million, respectively.

Lots Owned and Controlled

The table below summarizes the Company’s lots owned and controlled as of the periods presented:

	September 30,		Increase (Decrease)
	2017	2016	Amount		%
Lots Owned
California	1,616	1,625	(9	)	(1	)%
Arizona	4,541	4,877	(336	)	(7	)%
Nevada	2,871	3,131	(260	)	(8	)%
Colorado	1,376	1,544	(168	)	(11	)%
Washington	1,363	1,387	(24	)	(2	)%
Oregon	1,806	1,303	503		39	%
Total	13,573	13,867	(294	)	(2	)%
Lots Controlled (1)
California	915	1,069	(154	)	(14	)%
Arizona	157	—	157		—	%
Nevada	410	51	359		704	%
Colorado	292	232	60		26	%
Washington	797	1,081	(284	)	(26	)%
Oregon	1,800	1,849	(49	)	(3	)%
Total	4,371	4,282	89		2	%
Total Lots Owned and Controlled	17,944	18,149	(205	)	(1	)%

(1) Lots controlled may be purchased by the Company as consolidated projects or may be purchased by newly formed joint ventures.

Total lots owned and controlled has decreased to 17,944 lots owned and controlled at September 30, 2017 from 18,149 lots at September 30, 2016.

Comparisons of the Nine Months Ended September 30, 2017 to September 30, 2016

Revenues from homes sales increased 26% to $1,171.8 million during the nine months ended September 30, 2017, compared to $929.0 million during the nine months ended September 30, 2016. The increase in revenue is primarily due to the 16% increase in the number of homes closed during the 2017 period in addition to the 9% increase in average sales price of homes closed. The number of net new home orders for the nine months ended September 30, 2017 increased 20% to 2,656 homes from 2,211 homes for the nine months ended September 30, 2016.

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	Nine Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount		%
Number of Net New Home Orders
California	783	591	192		32	%
Arizona	401	367	34		9	%
Nevada	236	229	7		3	%
Colorado	229	204	25		12	%
Washington	432	238	194		82	%
Oregon	575	582	(7	)	(1	)%
Total	2,656	2,211	445		20	%

The 20% increase in net new homes orders is driven by a 16% increase in average number of sales locations to 85 average locations in 2017, compared to 73 in the 2016 period due to the opening of 28 new communities, with openings in all reporting segments except Arizona, in addition to an increase in quarterly absorption to 10.4 sales per project from 10.1 in the prior year period.

	Nine Months Ended September 30,				Increase (Decrease)
	2017		2016		%
Cancellation Rates
California	17	%	18	%	(1	)%
Arizona	10	%	10	%	—	%
Nevada	15	%	17	%	(2	)%
Colorado	15	%	13	%	2	%
Washington	15	%	15	%	—	%
Oregon	15	%	15	%	—	%
Overall	15	%	15	%	—	%

Cancellation rates remained consistent at 15% during the 2017 and 2016 periods. Cancellation rates typically are driven by personal factors affecting buyers and may not be indicative of any overarching trends affecting regions.

	Nine Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount	%
Average Number of Sales Locations
California	23	20	3	15	%
Arizona	8	8	—	—	%
Nevada	13	12	1	8	%
Colorado	14	10	4	40	%
Washington	9	6	3	50	%
Oregon	18	17	1	6	%
Total	85	73	12	16	%

The average number of sales locations for the Company increased to 85 locations for the nine months ended September 30, 2017 compared to 73 for the nine months ended September 30, 2016, driven by the opening of new communities in California, Nevada, Colorado, Washington and Oregon during 2017, as the Company continues to convert its land supply into home sites. During the period, the Company opened 28 communities, while closing out 27.

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	Nine Months Ended September 30,		Increase (Decrease)
	2017	2016
Quarterly Absorption Rates
California	11.3	9.9	1.4
Arizona	16.7	15.3	1.4
Nevada	6.1	6.4	(0.3)
Colorado	5.5	6.8	(1.3)
Washington	16.0	13.2	2.8
Oregon	10.6	11.4	(0.8)
Overall	10.4	10.1	0.3

The Company's consolidated quarterly absorption rate, representing the number of net new home orders divided by average sales locations for the period, increased to 10.4 sales per project for the nine months ended September 30, 2017 compared to 10.1 sales per project in the 2016 period. The increase in absorption rates in California was due to the improvement in sales pace in the Inland Empire sub-market, while the strengthening of absorption in Arizona was due to strong demand from the needs based entry level buyer, compared to the prior period.

	Nine Months Ended September 30,		Increase (Decrease)
	2017	2016	Amount		%
Number of Homes Closed
California	637	458	179		39	%
Arizona	408	324	84		26	%
Nevada	175	220	(45	)	(20	)%
Colorado	140	170	(30	)	(18	)%
Washington	292	225	67		30	%
Oregon	529	482	47		10	%
Total	2,181	1,879	302		16	%

During the nine months ended September 30, 2017, the number of homes closed increased 16% to 2,181 from 1,879 in the 2016 period. The increase was primarily attributable to the California, Arizona, Washington and Oregon reporting segments, driven by an increase in average number of sales locations by 16% to 85 average sales locations in the 2017 period compared to 73 average sales locations in the 2016 period. These increases were partially offset by decreases in the Nevada and Colorado reporting segments.

	Nine Months Ended September 30,				Increase (Decrease)
	2017		2016		Amount			%
	(dollars in thousands)
Home Sales Revenue
California	$	462,183	$	305,389	$	156,794		51	%
Arizona	118,695		85,399		33,296			39	%
Nevada	103,448		128,996		(25,548		)	(20	)%
Colorado	77,149		85,885		(8,736		)	(10	)%
Washington	185,523		112,512		73,011			65	%
Oregon	224,793		210,801		13,992			7	%
Total	$	1,171,791	$	928,982	$	242,809		26	%

The 26% increase in homebuilding revenue is driven by the 16% increase in homes closed discussed above, in addition to a 9% increase in the average sales price of homes closed between the 2017 and 2016 periods.

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	Nine Months Ended September 30,				Increase (Decrease)
	2017		2016		Amount			%
Average Sales Price of Homes Closed
California	$	725,600	$	666,800	$	58,800		9	%
Arizona	290,900		263,600		27,300			10	%
Nevada	591,100		586,300		4,800			1	%
Colorado	551,100		505,200		45,900			9	%
Washington	635,400		500,100		135,300			27	%
Oregon	424,900		437,300		(12,400		)	(3	)%
Company Average	$	537,300	$	494,400	$	42,900		9	%

The average sales price of homes closed during the 2017 period increased 9% due to an increase in the average sales price of homes closed, primarily driven by product mix, in all reporting segments except Oregon.

Gross Margin

Homebuilding gross margin remained relatively consistent at 16.9% for the nine months ended September 30, 2017 compared to 17.1% in the 2016 period.

For the comparison of the nine months ended September 30, 2017 and the nine months ended September 30, 2016, adjusted homebuilding gross margin percentage, which excludes previously capitalized interest included in cost of sales as well as the effect of adjustments recorded in relation to purchase accounting, was 22.5% for the 2017 period compared to 23.5% for the 2016 period. The decrease was primarily a result of the decrease in homebuilding gross margins described above coupled with a decrease in the impact of purchase accounting adjustments, which was partially offset by an increase in the impact of interest in cost of sales.

Adjusted homebuilding gross margin is a non-GAAP financial measure. The Company believes this information is meaningful as it isolates the impact that interest and purchase accounting have on homebuilding gross margin and permits investors to make better comparisons with the Company's competitors, who also break out and adjust gross margins in a similar fashion. For comparative purposes purchase accounting is the net adjustment in basis related to the acquisition of our Colorado, Washington and Oregon operating divisions. See table set forth below reconciling this non-GAAP measure to homebuilding gross margin.

	Nine Months Ended September 30,
	2017			2016
	(dollars in thousands)
Home sales revenue	$	1,171,791		$	928,982
Cost of home sales	973,212			769,705
Homebuilding gross margin	198,579			159,277
Homebuilding gross margin percentage	16.9		%	17.1		%
Add: Interest in cost of sales	55,220			39,310
Add: Purchase accounting adjustments	10,063			19,938
Adjusted homebuilding gross margin	$	263,862		$	218,525
Adjusted homebuilding gross margin percentage	22.5		%	23.5		%

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Sales and Marketing, General and Administrative

	Nine Months Ended September 30,				As a Percentage of Home Sales Revenue
	2017		2016		2017		2016
	(dollars in thousands)
Sales and Marketing	$	57,924	$	51,351	4.9	%	5.5	%
General and Administrative	61,447		51,879		5.2	%	5.6	%
Total Sales and Marketing & General and Administrative	$	119,371	$	103,230	10.1	%	11.1	%

Sales and marketing expense as a percentage of home sales decreased to 4.9% in the 2017 period compared to 5.5% in the 2016 period as a result of higher homebuilding revenue as well as lower advertising costs. General and administrative expense as a percentage of home sales revenues decreased to 5.2% in the 2017 period compared to 5.6% in the 2016 period. The decrease is driven by a lower relative cost structure due to the higher revenue and positive operating leverage.

Equity in Income of Unconsolidated Joint Ventures

Equity in income of unconsolidated joint ventures decreased to $2.6 million for the nine months ended September 30, 2017 from $3.8 million during the comparable 2016 period as a result of increased overhead costs incurred.

Other Items

Interest activity for the three months ended September 30, 2017 and September 30, 2016 is as follows (in thousands):

	Nine Months Ended September 30,
	2017		2016
Interest incurred	$	56,359	$	62,112
Less: Interest capitalized	56,359		62,112
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	55,532	$	54,576

The decrease in interest incurred for the nine months ended September 30, 2017, compared to the interest incurred for the nine months ended September 30, 2016, reflects the impact of the effective refinancing transaction on January 31, 2017, in which the Company completed the sale to certain purchasers of $450.0 million in aggregate principal amount of 5.875% Senior Notes due 2025 and concurrent retirement of the remaining outstanding 8.5% Notes, such that the entire aggregate $425.0 million of previously outstanding 8.5% Notes are now retired and extinguished. The Company capitalized all of the interest it incurred during both periods presented due to its qualifying assets exceeding its outstanding debt.

During the nine months ended September 30, 2017 and 2016, the Company sold two land parcels that resulted in a negligible loss and five land parcels that resulted in a $2.7 million gain, respectively.

Provision for Income Taxes

During the nine months ended September 30, 2017, the Company recorded a a provision for income taxes of $17.5 million, for an effective tax rate of 29.9%. During the nine months ended September 30, 2016, the Company recorded a provision for income taxes of $20.9 million for an effective tax rate of 33.4%. The decrease in the current year tax rate is driven by the loss on debt extinguishment recorded in relation to the retirement of the 8.5% Notes.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests decreased to $4.6 million during the 2017 period, compared to $4.9 million during the 2016 period.

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Net Income Available to Common Stockholders

As a result of the foregoing factors, as well as the $14.1 million loss on debt extinguishment, net of tax, net income available to common stockholders for the nine months ended September 30, 2017 was $36.4 million, while net income available to common stockholders for the nine months ended September 30, 2016 was $36.6 million.

Financial Condition and Liquidity

The U.S. housing market has continued to improve from the cyclical low points of the early years of the last real estate cycle. Strong housing markets have been associated with a healthy domestic economy and positive demographic trends, including employment and population growth. The Company has experienced a strong selling season in its first half of the year, with orders up 20%, demonstrating strong growth over 2016, against a backdrop of tight labor markets, fluctuating cycle times, weather challenges, and geo-political changes. As a result, the Company's absorption rates for the three months and nine months ended September 30, 2017 increased when compared to the 2016 period.

The Company benefits from a sizable and well-located lot supply, and as of September 30, 2017, the Company owned 13,573 lots, all of which are entitled, and had options to purchase an additional 4,371 lots. The Company’s lot supply reflects its balanced approach to land investment. The Company has a diverse mix of finished lots available for near-term homebuilding operations and longer-term strategic land positions to support future growth. The Company believes that its current inventory of owned and controlled lots is sufficient to supply the vast majority of its projected future home closings for the next several years. The Company experienced increased cycle times in a number of its operating segments in the start of 2017, and weather delays, availability of qualified trades with the associated delays and cost increases are challenges faced by the Company and the entire homebuilding industry during 2016 and into 2017. The Company continues to implement new strategies to temper the impact of these challenges in an effort to manage cycle times and deliveries.

Since our initial public offering, which raised approximately $163.7 million of net proceeds, the Company has access to the public equity and debt markets, which it has utilized as a significant source of financing for investing in land in our existing markets or financing expansion into new markets, such as the Company’s acquisition of Polygon Northwest Homes during 2014.

The Company provides for its ongoing cash requirements with the proceeds from capital markets transactions, as well as from internally generated funds from the sales of homes and/or land sales. During the nine months ended September 30, 2017, the Company delivered 2,181 homes, and recognized home sales revenue of $1,171.8 million. During the nine months ended September 30, 2017, the Company used cash in operations of $23.0 million, which included investment in land acquisitions of $329.6 million, for net cash generated by operations of $306.6 million, net of investment in land acquisitions. In addition, the Company has the option to use additional outside borrowing, form new joint ventures with partners that could provide a substantial portion of the capital required for certain projects, buy land via lot options or land banking arrangements, and engage in future transactions in the public equity and debt markets. The Company has financed, and may in the future finance, certain projects and land acquisitions with construction loans secured by real estate inventories, seller-provided financing, land banking transactions, and capital markets transactions. The Company may also draw on its revolving line of credit to fund land acquisitions, as discussed below. We believe we are well-positioned with a strong balance sheet and sufficient liquidity for supporting our ongoing operations and growth initiatives.

Tangible Equity Units

On November 21, 2014, in order to pay down amounts borrowed under the senior unsecured bridge loan facility entered into in conjunction with the Polygon Acquisition, the Company completed its public offering and sale of 1,000,0006.50% tangible equity units (“TEUs”, or "Units"), sold for a stated amount of $100 per Unit, featuring a 17.5% conversion premium.  On December 3, 2014, the Company sold an additional 150,000 TEUs pursuant to an over-allotment option granted to the underwriters. Each TEU is a unit composed of two parts: 

• a prepaid stock purchase contract (a “purchase contract”); and

• a senior subordinated amortizing note (an “amortizing note”).

Unless settled earlier at the holder’s option, each purchase contract will automatically settle on December 1, 2017 (the "mandatory settlement date"), and the Company will deliver not more than 5.2247 shares of Class A Common Stock and not less than 4.4465 shares of Class A Common Stock on the mandatory settlement date, subject to adjustment, based upon the applicable settlement rate and applicable market value of Class A Common Stock.

45

Each amortizing note had an initial principal amount of $18.01, bears interest at the annual rate of 5.50% and has a final installment payment date of December 1, 2017. On each March 1, June 1, September 1 and December 1, commencing on March 1, 2015, William Lyon Homes will pay equal quarterly installments of $1.6250 on each amortizing note (except for the March 1, 2015 installment payment, which was $1.8056 per amortizing note). Each installment will constitute a payment of interest and a partial repayment of principal. The amortizing notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, other than borrowings under the Amended Facility and the Company's secured project level financing, which will be senior in right of payment to the obligations under the amortizing notes, in each case to the extent of the value of the assets securing such indebtedness.

Each TEU may be separated into its constituent purchase contract and amortizing note on any business day during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the Units to, but excluding, the third scheduled trading day immediately preceding the mandatory settlement date. Prior to separation, the purchase contracts and amortizing notes may only be purchased and transferred together as Units. The net proceeds received from the TEU issuance were allocated between the amortizing note and the purchase contract under the relative fair value method, with amounts allocated to the purchase contract classified as additional paid-in capital. As of September 30, 2017 and December 31, 2016, the amortizing notes had an unamortized carrying value of $1.6 million and $7.2 million, respectively.

The Company used the net proceeds from the offering of the TEUs to pay down approximately $111.2 million of outstanding debt under a senior unsecured bridge loan facility used to finance the Company's acquisition of Polygon Northwest Homes during 2014.

5 ³/₄% Senior Notes Due 2019

On March 31, 2014, California Lyon completed its offering of 5.75% Senior Notes due 2019 (the "5.75% Notes"), in an aggregate principal amount of $150 million. The 5.75% Notes were issued at 100% of their aggregate principal amount.

As of September 30, 2017, the outstanding principal amount of the 5.75% Notes was $150.0 million, excluding deferred loan costs of $0.8 million. The 5.75% Notes bear interest at a rate of 5.75% per annum, payable semiannually in arrears on April 15 and October 15, and mature on April 15, 2019. The 5.75% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.75% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $350 million in aggregate principal amount of 7.00% Notes and $450 million in aggregate principal amount of 5.875% Senior Notes due 2020, each as described below. The 5.75% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.75% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

8 ¹/₂% Senior Notes Due 2020

On November 8, 2012, California Lyon completed its offering of 8.5% Senior Notes due 2020, (the "initial 8.5% Notes"), in an aggregate principal amount of $325 million. The initial 8.5% Notes were issued at 100% of their aggregate principal amount.

On October 24, 2013, California Lyon completed the sale to certain purchasers of an additional $100.0 million in aggregate principal amount of its 8.5% Senior Notes due 2020 (the “additional 8.5% Notes”, and together with the initial 8.5% notes, the "8.5% Notes" ) at an issue price of 106.5% of their aggregate principal amount, plus accrued interest from and including May 15, 2013, resulting in net proceeds of approximately $104.7 million.

During the nine months ended September 30, 2017, Parent, through California Lyon, used the net proceeds from its private placement with registration rights of 5.875% Senior Notes due 2025, as further described below, to purchase $395.6 million of the outstanding aggregate principal amount of the 8.5% Notes, pursuant to a cash tender offer and consent solicitation. Subsequently, the Company used the remaining proceeds, together with cash on hand, for the retirement of the remaining outstanding 8.5% Notes, such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. The Company incurred certain costs related to the early extinguishment of debt of the 8.5% Notes during the nine months ended September 30, 2017 in an amount of $21.8 million, which is included in the Consolidated Statement of Operations as Loss on extinguishment of debt.

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7 % Senior Notes due 2022

On August 11, 2014, WLH PNW Finance Corp. (“Escrow Issuer”), completed its offering of 7.00% Senior Notes due 2022 (the “initial 7.00% Notes”), in an aggregate principal amount of $300 million. The initial 7.00% Notes were issued at 100% of their aggregate principal amount. On August 12, 2014, in connection with the consummation of the Polygon Acquisition, Escrow Issuer merged with and into California Lyon, and California Lyon assumed the obligations of the Escrow Issuer under the initial 7.00% Notes and the related indenture by operation of law (the “Escrow Merger”). Following the Escrow Merger, California Lyon is the obligor under the initial 7.00% Notes. In January 2015, we exchanged 100% of the initial 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

On September 15, 2015, California Lyon completed its private placement with registration rights of an additional $50.0 million in aggregate principal amount of its 7.00% Senior Notes due 2022 (the “additional 7.00% Notes”, and together with the initial 7.00% Notes, the "7.00% Notes") at an issue price of 102.0% of their principal amount, plus accrued interest from August 15, 2015, resulting in net proceeds of approximately $50.5 million. In January 2016, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017, the outstanding principal amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.8 million and deferred loan costs of $4.2 million. The 7.00% Notes bear interest at a rate of 7.00% per annum, payable semiannually in arrears on February 15 and August 15, and mature on August 15, 2022. The 7.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 7.00% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019, as described above, and $450 million in aggregate principal amount of 5.875% Senior Notes due 2020, as described below. The 7.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 7.00% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the 8.5% Notes such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017, the outstanding principal amount of the 5.875% Notes was $450 million, excluding unamortized discount of $3.3 million and deferred loan costs of $7.5 million. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019 and $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

Senior Notes Covenant Compliance

The indentures governing the 5.75% Notes, the 7.00% Notes, and the 5.875% Notes contain covenants that limit the ability of Parent, California Lyon, and their restricted subsidiaries to, among other things: (i) incur or guarantee certain additional indebtedness; (ii) pay dividends, distributions, or repurchase equity or make payments in respect of subordinated indebtedness; (iii) make certain investments; (iv) sell assets; (v) incur liens; (vi) enter into agreements restricting the ability of the Company’s restricted subsidiaries to pay dividends or transfer assets; (vii) enter into transactions with affiliates; (viii) create unrestricted subsidiaries; and (viii) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to a number of important exceptions and qualifications as described in the Indenture. The Company was in compliance with all such covenants as of September 30, 2017.

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Revolving Credit Facility

On July 1, 2016, California Lyon and Parent entered into an amendment and restatement agreement, pursuant to which its existing credit agreement providing for a revolving credit facility, as previously amended and restated on March 27, 2015 as described below, was further amended and restated in its entirety (as amended from time to time, the “Second Amended Facility”). The Second Amended Facility amends and restates the Company’s previous $130.0 million revolving credit facility and provides for total lending commitments of $145.0 million. In addition, the Second Amended Facility has an uncommitted accordion feature under which the Company may increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. The Second Amended Facility, among other things, also amended the maturity date of the previous facility to July 1, 2019, provided that the Second Amended Facility will terminate on January 14, 2019 (the “Springing Termination Date”) if, on the Springing Termination Date, the aggregate outstanding principal amount of California Lyon’s 5.75% senior notes due 2019 is equal to or greater than the sum of (a) 50% of the Consolidated EBITDA (as defined in the Second Amended Facility) of California Lyon, Parent, certain of the Parent’s direct and indirect wholly owned subsidiaries (together with California Lyon and Parent, the “Loan Parties”) and their Restricted Subsidiaries (as defined in the Second Amended Facility) for the four-quarter period ending September 30, 2018, plus (b) the Liquidity (as defined in the Second Amended Facility) of the Loan Parties and their consolidated subsidiaries on the Springing Termination Date. Further, the Second Amended Facility amended the maximum leverage ratio covenant to extend the timing of the gradual step-downs. Specifically, pursuant to the Second Amended Facility, the maximum leverage ratio remained at 65% from June 30, 2016 through and including December 30, 2016, decreased to 62.5% on the last day of the 2016 fiscal year, remained at 62.5% from December 31, 2016 through and including June 29, 2017, and was scheduled to further decrease to 60% on the last day of the second quarter of 2017 and to remain at 60% thereafter. The Second Amended Facility did not revise any of our other financial covenants thereunder.

On June 16, 2017, California Lyon, Parent and the lenders party thereto entered into an amendment to the Second Amended Facility, which amended the maximum leverage ratio to further extend the timing of the gradual step-downs, such that the leverage ratio will remain at 62.5% through and including December 30, 2017, and decrease to 60% on the last day of the 2017 fiscal year and remain at 60% thereafter. The amendment did not revise any of our other financial covenants thereunder.

Prior to the entry into the Second Amended Facility as described above, on March 27, 2015, California Lyon and Parent entered into an amendment and restatement agreement which amended and restated the Company's previous $100 million revolving credit facility and provided for total lending commitments of $130.0 million, an uncommitted accordion feature under which the Company could increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances (up from a maximum aggregate of $125.0 million under the previous facility), as well as a sublimit of $50.0 million for letters of credit, and extended the maturity date of the previous facility by one year to August 7, 2017.

Borrowings under the Second Amended Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent's wholly-owned subsidiaries, are secured by a pledge of all equity interests held by such guarantors, and may be used for general corporate purposes. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread. As of September 30, 2017, the commitment fee on the unused portion of the Second Facility accrues at an annual rate of 0.50%. As of September 30, 2017 and December 31, 2016, the Company had $50.0 million and $29.0 million outstanding against the Second Amended Facility, respectively, at effective rates of 6.25% and 4.75%, respectively as well as letters of credit for $0.8 million and $8.0 million, respectively.

The Second Amended Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $451.0 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65%, which maximum leverage ratio decreased to 62.5% effective as of December 31, 2016 and is scheduled to decrease to 60% effective as of December 31, 2017, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the Second Amended Facility and can differ in certain respects from comparable GAAP or other commonly used terms.

In connection with the issuance of the Company’s 5.875% Notes to pay off in full the previously outstanding 8.5% Notes in January 2017, the Company entered into an amendment to the Second Amended Facility effective as of January 2017. The amendment modifies the definition of Tangible Net Worth (as defined therein) for purposes of calculating the Leverage Ratio covenant under the Second Amended Facility, so as to exclude any reduction in Tangible Net Worth that occurs as a result of

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the costs related to payment of any call premium or any other costs associated with the refinancing transaction and the redemption of outstanding 8.5% Notes.

The Company was in compliance with all covenants under the Second Amended Facility as of September 30, 2017. The following table summarizes these covenants pursuant to the Second Amended Facility, and our compliance with such covenants as of September 30, 2017:

	Covenant Requirements at			Actual at
Financial Covenant	September 30, 2017			September 30, 2017
Minimum Tangible Net Worth	$	549.9	million	$	766.1	million
Maximum Leverage Ratio	62.5		%	58.1		%
Interest Coverage Ratio; or (1)	1.5x			2.73x
Minimum Liquidity (1)	$	77.4	million	$	137.9	million

(1)    We are required to meet either the Interest Coverage Ratio or Minimum Liquidity, but not both.

Although the Company does not believe it is likely to breach any of the covenants listed above, including the maximum leverage ratio covenant, based on its current expectations and assumptions, there are certain steps that the Company could take to decrease the likelihood of any breach in the event it was determined that a breach was reasonably likely. The Company remains focused on continuing to drive top line revenue growth which it believes will improve cash flow and generate earnings. In addition, there are certain discretionary levers that the Company has the ability to utilize to the extent it is determined that near-term steps are needed to manage to covenant requirements. For example, land acquisition and development is a strategic investment by the Company to support our future growth plans. While the Company intends to continue to acquire land that it believes is accretive to the Company, the Company's currently owned and controlled land position enables it to be selective and nimble in its future acquisition strategy. The Company also has the option to form new joint ventures with partners that could provide a substantial portion of the capital required for certain projects, purchase land through lot options or land banking arrangements, as well as utilizing such financing structures as a means to generate incremental cash flow, or adjust the timing of housing starts. In addition, during the nine months ended September 30, 2017, the Company paid approximately $329.6 million for land and land developments. Such spending related to land owned is a discretionary component that the Company can temper as needed to reduce cash outflow, and it believes it can do so without a significant impact on near-term operating results.

The Second Amended Facility contains customary events of default, subject to cure periods in certain circumstances, including: nonpayment of principal, interest and fees or other amounts; violation of covenants, including those financial covenants identified above; inaccuracy of representations and warranties; cross default to certain other indebtedness; unpaid judgments; and certain bankruptcy and other insolvency events.

The occurrence of any event of default could result in the termination of the commitments under the Second Amended Facility and permit the lenders to accelerate payment on outstanding borrowings under the Second Amended Facility and require cash collateralization of outstanding letters of credit, if we are unable to amend the Second Amended Facility, secure a waiver of the default from the lenders or otherwise cure the default. Further, acceleration of the Second Amended Facility borrowings may result in the acceleration of other debt to which a cross-acceleration or cross-default provision applies, including but not limited to our senior notes as described above to the extent the acceleration is above certain threshold amounts, and the triggering default is not cured or waived or any acceleration rescinded, as well as certain notes payable.

In addition, if a change in control (as defined in the Second Amended Facility) occurs, the lenders may terminate the commitments under the Second Amended Facility and require that the Company repay outstanding borrowings under the Second Amended Facility and cash collateralize outstanding letters of credit.

The Company believes it has access to alternate sources of funding to pay off resulting obligations or replace funding under the Second Amended Facility should there be a likelihood of, or anticipated, breach of any covenants, including cash generated from operations and opportunistic land sales. In addition, the Company has capacity under the restrictive covenants of its senior notes indentures to incur additional indebtedness which it can do through access to the debt capital markets, and the Company believes it can also raise equity in the capital markets.

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Seller Financing

At September 30, 2017, the Company had $5.2 million of notes payable outstanding related to one land acquisition for which seller financing was provided. The note bears interest at a rate of 7% per annum, is secured by the underlying land, and matures in June 2018. During the nine months ended September 30, 2017, the Company paid in full a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum, was secured by the underlying land, and was paid upon maturity in August 2017. This note was entered into with a related party, which is described in more detail in the financial statements.

Joint Venture Notes Payable

    The Company and certain of its consolidated joint ventures have entered into notes payable agreements. The issuance date, facility size, maturity date and interest rate are listed in the table below as of September 30, 2017 (in millions):

Issuance Date	Facility Size		Outstanding			Maturity	Current Rate
March, 2016	$	33.4	$	16.7		September, 2018	4.24	%	(1)
January, 2016	35.0		31.8			February, 2019	4.48	%	(2)
November, 2015	42.5		19.3			May, 2018	5.25	%	(1)
July, 2015	15.0		3.6			July, 2018	4.75	%	(3)
November, 2014	7.0		3.7		(4)	November, 2017	4.75	%	(3)
November, 2014	15.0		—			November, 2017	4.75	%	(3)
March, 2014	26.0		2.4			April, 2018	4.24	%	(1)
July, 2017	46.2		28.3			August, 2020	4.46	%	(5)
	$	220.1	$	105.8

(1)Loan bears interest at the Company's option of either LIBOR +3.0% or the prime rate +1.0%.

(2) Loan bears interest at LIBOR +3.25%.

(3) Loan bears interest at the prime rate +0.5%.

(4) The Company anticipates paying the borrowings in full upon the maturity date from proceeds from homes closed in the respective project.

(5) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

The joint venture notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of September 30, 2017.

Net Debt to Total Capital

The Company’s ratio of net debt to total capital (net of cash) was 56.1% and 57.6% as of September 30, 2017 and December 31, 2016, respectively. The ratio of net debt to total capital (net of cash) is a non-GAAP financial measure, which is calculated by dividing notes payable and Senior Notes, net of cash and cash equivalents, by net book capital (notes payable and Senior Notes, net of cash and cash equivalents, plus total equity). The Company believes this calculation is a relevant and useful financial measure to investors in understanding the leverage employed in its operations, and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. See table set forth below reconciling this non-GAAP measure to the ratio of debt to total capital.

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	September 30, 2017			December 31, 2016
	(dollars in thousands)
Notes payable and Senior Notes	$	1,097,633		$	1,080,650
Total equity	825,970			763,429
Total capital	$	1,923,603		$	1,844,079
Ratio of debt to total capital	57.1		%	58.6		%
Notes payable and Senior Notes	$	1,097,633		$	1,080,650
Less: Cash and cash equivalents	(43,604		)	(42,612		)
Net debt	1,054,029			1,038,038
Total equity	825,970			763,429
Total capital (net of cash)	$	1,879,999		$	1,801,467
Ratio of net debt to total capital (net of cash)	56.1		%	57.6		%

Joint Venture Financing

The Company and certain of its subsidiaries are general partners or members in joint ventures involved in the development and sale of residential projects. As described more fully in Critical Accounting Policies—Variable Interest Entities, certain joint ventures have been determined to be variable interest entities in which the Company is considered the primary beneficiary. Accordingly, the assets, liabilities and operations of these joint ventures have been consolidated with the Company’s financial statements for the periods presented. The financial statements of joint ventures in which the Company is not considered the primary beneficiary are not consolidated with the Company’s financial statements. The Company’s investments in unconsolidated joint ventures are accounted for using the equity method because the Company has a 50% or less voting or economic interest (and thus such joint ventures are not controlled by the Company). Based upon current estimates, substantially all future development and construction costs incurred by the joint ventures will be funded by the venture partners or from the proceeds of construction financing obtained by the joint ventures.

Assessment District Bonds

In some jurisdictions in which the Company develops and constructs property, assessment district bonds are issued by municipalities to finance major infrastructure improvements and fees. Such financing has been an important part of financing master-planned communities due to the long-term nature of the financing, favorable interest rates when compared to the Company’s other sources of funds and the fact that the bonds are sold, administered and collected by the relevant government entity. As a landowner benefited by the improvements, the Company is responsible for the assessments on its land. When the Company’s homes or other properties are sold, the assessments are either prepaid or the buyers assume the responsibility for the related assessments.

Cash Flows—Comparison of the Nine Months Ended September 30, 2017 to the Nine Months Ended September 30, 2016

For the nine months ended September 30, 2017 and 2016, the comparison of cash flows is as follows:

• Net cash used in operating activities decreased to $23.0 million in the 2017 period from $83.0 million in the 2016 period. The change was primarily a result of (i) a net decrease in spending on real estate inventories-owned of $99.0 million in the 2017 period compared to spending of $146.7 million in the 2016 period, (ii) a decrease in accrued expenses of $1.7 million in the 2017 period compared to an increase of $11.6 million in the 2016 period, and (iii) equity in income of unconsolidated joint ventures of $2.6 million in the 2017 period compared to $3.8 million in the 2016 period, offset by (iv) a net increase in accounts payable of $9.8 million in the 2017 period compared to $1.0 million in the 2016 period.

• Net cash used in investing activities was $2.4 million in the 2017 period compared to net cash provided by investing activities of $5.4 million in the 2016 period, primarily driven by collections of related party notes of $6.2 million in the 2016 period with no comparable amount in the 2017 period.

• Net cash provided by financing activities decreased to $26.4 million in the 2017 period from $68.1 million in the 2016 period. The change was primarily the result of (i) principal payments for the 8.5% Senior Notes for $425.0 million in the 2017 period, in addition to its redemption premium for $19.6 million, for which there is no comparable amount in the 2016 period, (ii) net borrowings of notes payable of $3.7 million in the 2017 period, versus net borrowings of $20.7 million in the 2016 period, (iii) net borrowings of $21.0 million against the revolving line of credit in the 2017 period, versus net borrowings of $31.0 million in the 2016 period, (iv) net noncontrolling interest contributions of $19.0 million in the 2017 period versus net contributions of $23.4 million in

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the 2016 period and (v) payment of deferred loan costs of $9.8 million in the 2017 period compared to $0.8 million in the 2016 period, offset by (vi) proceeds from the issuance of the 5.875% Senior Notes for $446.5 million in the 2017 period for which there is no comparable amount in the 2016 period.

Based on capital market access and expected sales volume, the Company believes it has sufficient cash and sources of financing for at least the next twelve months.

Contractual Obligations and Off-Balance Sheet Arrangements

The Company enters into certain off-balance sheet arrangements including joint venture financing, option agreements, land banking arrangements and variable interests in unconsolidated entities. These arrangements are more fully described above and in Notes 2 and 12 of “Notes to Condensed Consolidated Financial Statements.” In addition, the Company is party to certain contractual obligations, including land purchases and project commitments, which are detailed in Note 12 of “Notes to Condensed Consolidated Financial Statements.”

Inflation

The Company’s revenues and profitability may be affected by increased inflation rates and other general economic conditions. In periods of high inflation, demand for the Company’s homes may be reduced by increases in mortgage interest rates. Further, the Company’s profits will be affected by increases in the costs of land, construction, labor and administrative expenses. The Company’s ability to raise prices at such times will depend upon demand and other competitive factors.

Description of Projects and Communities Under Development

The Company’s homebuilding projects usually take two to five years to develop. The following table presents project information relating to each of the Company’s homebuilding operating segments as of September 30, 2017. The section for "Active Projects" includes only projects with lots owned as of September 30, 2017, lots consolidated in accordance with certain accounting principles as of September 30, 2017, in each case, with an estimated year of first delivery of 2017 or earlier, or homes either closed or in backlog as of or for the period ended September 30, 2017. The section for "Future Owned and Controlled" includes projects with lots owned as of September 30, 2017 but with an estimated year of first delivery of 2018 or later, parcels of undeveloped land held for future sale, and lots controlled as of September 30, 2017, in each case aggregated by county. The following table includes certain information that is forward-looking or predictive in nature and is based on expectations and projections about future events. Such information is subject to a number of risks and uncertainties, and actual results may differ materially from those expressed or forecast in the table below. In addition, we undertake no obligation to update or revise the information in the table below to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to projections over time. See "CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS" included in this Quarterly Report on Form 10-Q.

Active Projects (County or City)	Estimated Year of First Delivery	Estimated Number of Homes at Completion (1)	Cumulative Homes Closed as of September 30, 2017 (2)	Backlog at September 30, 2017 (3) (4)	Lots Owned as of September 30, 2017 (5)	Homes Closed for the Period Ended September 30, 2017	Estimated Sales Price Range (6)
CALIFORNIA
Orange County:
Anaheim
Avelina	2017	38	37	1	1	37	(8)
Buena Park
The Covey (7)	2016	67	56	11	11	32	(8)
Cypress
Mackay Place (7)	2016	47	47	—	—	13	(8)
Dana Point
Grand Monarch	2015	37	15	1	22	2	$ 2,604,000 - 2,904,000
Ladera Ranch
Artisan	2015	14	7	2	7	1	$ 2,550,000 - 3,025,000
Irvine
The Vine	2016	106	74	16	32	43	$ 546,000 - 645,000
Calistoga	2016	60	47	8	13	32	$1,230,000 - $1,475,000

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Celadon (7)	2017	79	14	20	65	14	$720,000 - 805,000
Rancho Mission Viejo
Aurora (7)	2016	94	94	—	—	37	(8)
Vireo (7)	2015	90	79	4	11	19	$ 595,000 - 655,000
Briosa (7)	2016	50	7	11	43	6	$ 945,000 - 1,050,000
Rancho Santa Margarita
Dahlia Court	2016	36	28	7	8	28	$ 515,000 - 625,000
Los Angeles County:
Glendora
La Colina Estates	2015	121	23	8	98	4	$ 1,274,000 - 1,654,000
Lakewood
Canvas	2015	72	72	—	—	1	(8)
Claremont
Meadow Park	2017	95	5	4	90	5	$ 460,000 - 585,000
Riverside County:
Riverside
SkyRidge	2014	90	42	22	48	20	$ 510,000 - 560,000
TurnLeaf
Crossings	2014	42	33	5	9	14	$ 498,000 - 528,000
Coventry	2015	42	27	9	15	14	$ 538,000 - 565,000
Cameos	2018	216	—	7	216	—	$ 510,000 - 580,000
Eastvale
Nexus	2015	220	155	18	65	60	$ 353,000 - 402,000
San Bernardino County:
Upland
The Orchards (7)
Citrus Court	2015	77	72	5	5	27	(8)
Citrus Pointe	2015	132	74	16	58	30	$ 362,000 - 392,000
Yucaipa
Cedar Glen	2015	143	143	—	—	10	(8)
Chino
Laurel Lane	2017	70	—	32	70	—	$ 526,000 - 595,000
Alameda County
Livermore
Wayland	2018	54	—	9	54	—	$ 830,000 - 1,015,000
Newark
The Cove	2016	108	35	52	73	27	$ 716,000 - 821,000
The Strand	2016	157	43	27	114	35	$ 772,000 - 887,000
The Banks	2016	120	50	45	70	46	$ 870,000 - 955,000
The Tides	2016	75	41	18	34	37	$ 944,000 - 974,000
The Isles	2016	82	42	12	40	39	$ 1,048,000 - 1,128,000
Contra Costa County:
Pittsburg
Vista Del Mar
Victory II	2014	104	104	—	—	4	(8)
CALIFORNIA TOTAL		2,738	1,466	370	1,272	637

Active Projects (County or City)	Estimated Year of First Delivery	Estimated Number of Homes at Completion (1)	Cumulative Homes Closed as of September 30, 2017 (2)	Backlog at September 30, 2017 (3) (4)	Lots Owned as of September 30, 2017 (5)	Homes Closed for the Period Ended September 30, 2017	Estimated Sales Price Range (6)
ARIZONA

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Maricopa County:
Queen Creek
Meridian
Harvest	2015	448	223	35	225	89	$ 209,990 - 259,990
Homestead	2015	313	98	40	215	42	$ 252,990 - 341,990
Harmony	2015	259	53	26	206	24	$ 281,990 - 304,990
Horizons	2016	161	30	19	131	21	$ 316,990 - 399,990
Mesa
Lehi Crossing
Settlers Landing	2012	235	235	—	—	34	(8)
Wagon Trail	2013	244	231	11	13	79	$ 259,990 - 341,990
Monument Ridge	2013	248	141	35	107	54	$ 301,990 - 423,990
Albany Village	2016	228	51	31	177	43	$ 196,990 - 260,990
Peoria
Rio Vista	2015	197	197	—	—	22	(8)
ARIZONA TOTAL		2,333	1,259	197	1,074	408
NEVADA
Clark County:
Las Vegas
Lyon Estates	2014	81	80	1	1	7	(8)
Tuscan Cliffs	2015	76	31	1	45	4	$ 645,000 - 826,000
Brookshire
Estates	2015	35	32	1	3	5	$ 595,000 - 643,000
Heights	2015	98	74	18	24	36	$ 373,000 - 425,000
Las Vegas - Summerlin
Sterling Ridge
Grand	2014	137	97	13	40	15	$ 920,000 - 1,003,000
Premier	2014	62	62	—	—	2	$ 1,244,000 - 1,357,000
Allegra	2016	88	41	13	47	11	$ 519,000 - 556,000
Silver Ridge	2016	83	23	10	35	11	$ 1,292,500 - 1,500,500
Affinity
Moda (7)	2017	192	4	15	188	4	$247,000 - 316,000
Evoke	2017	117	4	15	113	4	$336,000 - 423,000
Savu (7)	2017	96	—	8	96	—	$410,000 - 489,000
Revo (7)	2017	80	—	3	80	—	$445,000 - 485,000
Henderson
Lago Vista	2016	52	11	7	41	8	$ 790,000 - 878,000
The Peaks	2016	88	6	7	82	6	$ 490,000 - 514,000
Nye County:
Pahrump
Mountain Falls
Series I	2011	242	238	3	4	49	$ 181,500 - 214,150
Series II	2014	187	48	5	139	13	$ 237,500 - 326,500
NEVADA TOTAL		1,714	751	120	938	175
COLORADO
Arapahoe County
Aurora
Southshore
Generations	2014	15	15	—	—	1	(8)

54

Signature	2015	7	7	—	—	1	(8)
The 40's Collection	2016	30	7	—	23	5	$ 423,000 - 497,000
Artistry	2016	61	38	7	23	21	$ 437,000 - 495,000
Signature II	2017	30	5	4	25	5	$482,000 - 533,000
The 42's Collection	2017	79	—	4	79	—	$ 348,000 - 388,000
Centennial
Greenfield: Artistry	2016	35	24	8	11	15	$ 454,000 - 523,000
Douglas County
Castle Rock
Cliffside: Portrait	2014	49	49	—	—	5	(8)
Jefferson County
Arvada
Candelas
Generations	2015	50	45	1	5	11	$ 425,000 - 497,000
Tapestry	2015	26	16	3	10	8	$ 460,000 - 530,000
The 40's Collection	2017	40	—	2	40	—	$ 413,000 - 466,000
The 50's Collection	2017	85	—	4	85	—	$ 450,000 - 510,000
Leydon Rock
Garden	2014	60	48	7	12	13	$ 422,000 - 462,000
Park	2015	74	71	1	3	9	$ 410,000 - 458,000
Larimer County
Timnath
West Village at Timnath Ranch North
Park	2014	92	87	2	5	23	$ 380,000 - 435,000
Sonnet	2014	55	52	—	3	5	$ 398,000 - 470,000
The 40's Collection	2017	55	2	2	53	2	$ 410,000 - 490,000
The 50's Collection	2017	69	—	1	69	—	$ 381,000 - 447,000
Loveland
Lakes at Centerra	2015	194	49	15	39	14	$ 397,000 - 440,000
Denver County
Denver
Avion at Denver Connection
Summit	2017	93	—	17	93	—	$ 342,000 - 382,000
Horizon	2017	191	—	22	191	—	$ 285,000 - 339,000
Alpine	2017	101	—	11	101	—	$ 276,000 - 306,000
Westerly	2017	309	—	39	309	—	$ 250,000 - 278,000
Boulder County
Erie
Flatiron Meadows	2017	98	2	14	34	2	$462,000 - 564,000
COLORADO TOTAL		1,898	517	164	1,213	140

Active Projects (County or City)	Estimated Year of First Delivery	Estimated Number of Homes at Completion (1)	Cumulative Homes Closed as of September 30, 2017 (2)	Backlog at September 30, 2017 (3) (4)	Lots Owned as of September 30, 2017 (5)	Homes Closed for the Period Ended September 30, 2017	Estimated Sales Price Range (6)
WASHINGTON (9)
King County:
Bryant Heights SF	2015	14	14	—	—	2	(8)
Bryant Heights NC	2017	36	—	12	36	—	$589,990 - 914,990
Bryant Heights MF	2016	39	36	2	3	35	$790,990 - 939,990

55

Highcroft at Sammamish	2016	121	92	18	29	55	$ 849,990 - 1,329,990
Peasley Canyon	2016	153	98	26	43	63	$ 389,990 - 497,990
Ridgeview Townhomes	2016	40	40	—	—	34	(8)
High Point Block 34	2017	54	21	25	33	21	$ 497,990 - 739,990
Westridge SF South	2017	72	—	—	21	—	$ 899,990 - 1,284,290
Upton at Crossroads Village (7)	2017	176	—	23	176	—	$ 574,990 - 884,990
The Cottages at North Bend	2017	37	5	18	32	5	$ 489,990 - 739,990
Snohomish County:
Silverlake Center	2015	100	100	—	—	1	(8)
Riverfront	2016	425	82	56	343	76	$ 284,990 - 549,990
Pierce County:
Ovation at Oak Tree (7)	2017	814	—	12	255	—	$ 324,990 - 459,990
WASHINGTON TOTAL		2,081	488	192	971	292
OREGON (9)
Clackamas County:
Villebois Zion III - Townhomes	2014	40	36	—	4	—	$ 269,990 - 309,990
Villebois Zion III - Cottage	2014	46	37	—	9	—	$ 299,990 - 429,990
Villebois Zion III - Alley	2015	51	32	—	19	—	$ 339,990 - 414,990
Villebois V Fasano	2016	93	67	21	26	30	$ 344,990 - 429,990
Grande Pointe at Villebois Alley	2016	40	33	5	7	22	$ 459,990 - 483,990
Grande Pointe at Villebois FL	2016	60	28	10	32	16	$ 529,990 - 599,990
Villebois Lund Cottages	2015	67	67	—	—	31	(8)
Villebois Lund Townhomes	2015	42	42	—	—	14	(8)
Villebois Lund Alley	2016	96	39	4	57	28	$ 349,990 - 464,990
Villebois Village Parcel 80	2016	50	36	12	14	36	$ 259,990 - 309,990
Villebois Village Parcel 83	2016	31	31	—	—	13	(8)
Washington County:
Sequoia Village - Cornelius Pass	2016	157	133	23	24	70	$ 249,990 - 339,990
Twin Creeks	2014	94	94	—	—	2	(8)
Bethany West - Alley	2015	94	87	—	7	1	$ 429,990 - 489,990
Bethany West - Cottage	2015	61	60	—	1	—	$ 389,990 - 429,990
Bethany West - Traditional	2015	82	78	3	4	1	$ 569,990 - 649,990
Bethany West - Townhomes	2017	40	5	14	35	5	$ 569,990 - 664,990
Bethany West - Weisenfluh	2016	36	36	—	—	5	(8)
Bethany Round 2 - Alley	2016	25	22	3	3	22	(8)
Bethany Round 2 - Cottage	2016	13	13	—	—	13	(8)
Bethany Round 2 - Traditional	2016	24	16	4	8	16	$ 569,990 - 609,990
Bull Mountain 1 NW River Terrace - Alley	2017	35	20	9	15	20	$ 399,990 - 429,990
Bull Mountain 1 NW River Terrace - Med/Std/Lrg	2016	116	53	23	53	53	$ 464,990 - 594,990
Bull Mountain 1 NW River Terrace - Townhomes	2017	64	18	17	46	18	$ 269,990 - 294,990
Bull Mountain 2 W River Terrace - Alley	2016	60	60	—	—	26	(8)

56

Bull Mountain 2 W River Terrace - Med/Std	2016	31	31	—	—	19	(8)
Bull Mountain 2 W River Terrace - Townhomes	2016	46	43	3	3	43	(8)
Bull Mountain 7 Dickson	2016	82	37	14	45	22	$ 549,990 - 779,990
Sunset Ridge	2015	104	104	—	—	3	(8)
OREGON TOTAL		1,780	1,358	165	412	529
Future Owned and Controlled (by County)					Lots Owned or Controlled as of September 30, 2017 (10)
CALIFORNIA
Orange County					491
San Diego County					63
Alameda County					409
Contra Costa County					296
ARIZONA
Maricopa County (11)					3,624
NEVADA
Nye County (11)					1,925
Clark County					418
COLORADO
Arapahoe County					139
Boulder County					186
Larimer County					106
Grand County					24
WASHINGTON
King County					556
Pierce County					559
Snohomish County					74
OREGON
Clackamas County					305
Washington County					2,889
TOTAL FUTURE					12,064
GRAND TOTALS		12,544	5,839	1,208	17,944	2,181

(1) The estimated number of homes to be built at completion is approximate and includes home sites in our backlog. Such estimated amounts are subject to change based on, among other things, future site planning, as well as zoning and permit changes, and there can be no assurance that the Company will build these homes. Further, certain projects may include lots that the Company controls, and that are also reflected in "Future Owned and Controlled".

(2) “Cumulative Homes Closed” represents homes closed since the project opened, and may include prior years, in addition to the homes closed during the current year presented.

(3) Backlog consists of homes sold under sales contracts that have not yet closed, and there can be no assurance that closings of sold homes will occur.

(4) Of the total homes subject to pending sales contracts as of September 30, 2017, 1,089 represent homes that are completed or under construction.

(5) Lots owned as of September 30, 2017 include lots in backlog at September 30, 2017.

(6) Estimated sales price range reflects the most recent pricing updates of the base price only and excludes any lot premium, buyer incentive and buyer selected options, which vary from project to project. Sales prices reflect current pricing estimates and might not be indicative of past or future pricing. Further, any potential benefit to be gained from an increase in sales price ranges as compared to previously estimated amounts may be offset by increases in costs, profit participation, and other factors.

57

(7) Project is a joint venture and is consolidated as a VIE in accordance with ASC 810, Consolidation.

(8) Project is completely sold out, therefore the sales price range is not applicable as of September 30, 2017.

(9) The Company's Washington and Oregon segments were acquired on August 12, 2014 as part of the Polygon Acquisition. Estimated number of homes at completion is the number of homes to be built post-acquisition. Homes closed are from acquisition date through September 30, 2017.

(10) Includes projects with lots owned as of September 30, 2017 that are expected to open for sale and have an estimated year of first delivery of 2018 or later, as well as lots controlled as of September 30, 2017, and parcels of undeveloped land held for future sale. Certain lots controlled are under land banking arrangements which may become owned and produce deliveries during 2017. Actual homes at completion may change prior to the marketing and sales of homes in these projects and the sales price ranges for these projects are to be determined and will be based on current market conditions and other factors upon the commencement of active selling. There can be no assurance that the Company will acquire any of the controlled lots reflected in these amounts.

(11) Includes parcels of undeveloped land held for future sale. It is unknown when and if the Company plans to develop homes on this land.

Income Taxes

See Note 9 of “Notes to Condensed Consolidated Financial Statements” for a description of the Company’s income taxes.

Critical Accounting Policies

The Company’s financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and costs and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those which impact its most critical accounting policies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, the Company’s most critical accounting policies are real estate inventories and cost of sales; impairment of real estate inventories; sales and profit recognition; variable interest entities; business combinations; and income taxes. Management believes that there have been no significant changes to these policies during the nine months ended September 30, 2017, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report on Form 10-K for the year ended December 31, 2016.

58

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk for changes in interest rates relates to the Company’s floating rate debt with a total outstanding balance at September 30, 2017 of $155.8 million where the interest rate is variable based upon certain bank reference or prime rates. The average prime rate during the nine months ended September 30, 2017 ranged between 3.75% and 4.25%. Based upon the amount of variable rate debt held by the Company, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the amount of interest expense incurred by the Company by approximately $1.6 million.

The following table presents principal cash flows by scheduled maturity, interest rates and the estimated fair value of our long-term fixed rate debt obligations as of September 30, 2017 (dollars in thousands):

	Years ending December 31,												Thereafter		Total		Fair Value  at September 30, 2017
	2017		2018			2019			2020		2021
Fixed rate debt	$	1,619	$	5,226		$	150,000		$	—	$	—	$	800,000	$	956,845	$	983,426
Interest rate	5.5%		7.0		%	5.75		%	—		—		5.875 - 7.0%		—		—

The Company does not utilize swaps, forward or option contracts on interest rates, foreign currencies or commodities, or other types of derivative financial instruments as of or during the nine months ended September 30, 2017. The Company does not enter into or hold derivatives for trading or speculative purposes.

59

Item 4. Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and, in reaching a reasonable level of assurance, our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures.

Evaluation of Disclosure Controls and Procedures. We carried out an evaluation as of September 30, 2017, under the supervision and with the participation of our management, including our President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based upon their evaluation and subject to the foregoing, our President and Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting. Our management determined that as of September 30, 2017, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

60

WILLIAM LYON HOMES

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various legal proceedings, most of which relate to routine litigation and some of which are covered by insurance. These matters are subject to many uncertainties and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. Nevertheless, in the opinion of the Company’s management, the Company does not have any currently pending litigation of which the outcome will have a material adverse effect on the Company’s operations or financial position.

Item 1A. Risk Factors

You should carefully consider the risks described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2016, as our business, financial condition and results of operations could be adversely affected by any of the risks and uncertainties described therein. There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016. Some statements in this Quarterly Report on Form 10-Q, including statements in the risk factors, constitute forward-looking statements. Please refer to the section titled, “CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS” included elsewhere in this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below summarizes the number of shares of our Class A Common Stock that were repurchased during the three month period ended September 30, 2017.

Month Ended	Total Number of Shares Purchased (1) (2)	Average Price Paid Per Share		Total Number of Shares Purchased from Certain Employees (1)	Total Number of Shares Purchased under the Stock Repurchase Program (2)	Approximate Dollar Value of Shares that may yet be Repurchased under the Stock Repurchase Program
July 31, 2017	—	N/A		—	—	$	50,000,000
August 31, 2017	835	$	23.01	835	—	50,000,000
September 30, 2017	103,099	$	23.34	1,069	102,030	47,718,121
Total	103,934			1,904	102,030

⁽¹⁾ The Company repurchased 1,904 shares from certain employees to facilitate income tax withholding payments pertaining to stock-based compensation awards that vested during the three month period ended September 30, 2017. Such shares were not repurchased pursuant to a publicly announced plan or program.

⁽²⁾ As announced on February 22, 2017, the Board of Directors of the Company has approved a stock repurchase program, authorizing the repurchase of up to an aggregate of $50 million of the Company's Class A common stock. The program allows the Company to repurchase shares of Class A common stock from time to time for cash in the open market or privately negotiated transactions or other transactions, as market and business conditions warrant and subject to applicable legal requirements. The stock repurchase program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time.

Item 3. Defaults Upon Senior Securities

None.

61

Item 4. Mine Safety Disclosure

Not applicable.

62

Item 5. Other Information

Not applicable.

63

Item 6. Exhibits

Exhibit Index

Exhibit No.	Description
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

+

Filed herewith

*

The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

** Pursuant to Rule 406T of Regulation S-T, the XBRL information will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 and will not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those Sections.

64

WILLIAM LYON HOMES

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WILLIAM LYON HOMES,
	a Delaware corporation
Date: November 3, 2017	By:	/S/    COLIN T. SEVERN
		Colin T. Severn
		Senior Vice President, Chief Financial Officer (Principal Accounting Officer and Duly Authorized Signatory)

65

Exhibit Index

Exhibit No.	Description
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

+

Filed herewith

*

The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

** Pursuant to Rule 406T of Regulation S-T, the XBRL information will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 and will not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those Sections.

66

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew R. Zaist, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of William Lyon Homes;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2017	/S/ Matthew R. Zaist
	Matthew R. Zaist
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Colin T. Severn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of William Lyon Homes;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2017	/S/ COLIN T. SEVERN
	Colin T. Severn
	Senior Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew R. Zaist, Chief Executive Officer, President of William Lyon Homes (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ Matthew R. Zaist

Matthew R. Zaist

President and Chief Executive Officer

November 3, 2017

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Colin T. Severn, Chief Financial Officer of William Lyon Homes (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ COLIN T. SEVERN

Colin T. Severn

Senior Vice President, Chief Financial Officer

November 3, 2017

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	WLH
Entity Registrant Name	WILLIAM LYON HOMES
Entity Central Index Key	0001095996
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Common stock, Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		28,007,366
Common stock, Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		3,813,884

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents — Note 1	$ 43,604	$ 42,612
Receivables	9,719	9,538
Escrow proceeds receivable	228	85
Real estate inventories	1,855,658	1,771,998
Investment in unconsolidated joint ventures — Note 3	8,225	7,282
Goodwill	66,902	66,902
Intangibles, net of accumulated amortization of $4,640 as of September 30, 2017 and December 31, 2016	6,700	6,700
Deferred income taxes	73,597	75,751
Lease right-of-use assets	15,074	13,129
Other assets, net	21,152	17,283
Total assets	2,100,859	2,011,280
LIABILITIES AND EQUITY
Accounts payable	84,116	74,282
Accrued expenses	93,140	92,919
Notes payable — Note 6:
Notes payable	161,011	155,768
Total senior notes	1,097,633	1,080,650
Total liabilities	1,274,889	1,247,851
Commitments and contingencies
Equity:
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized and no shares issued and outstanding at September 30, 2017 and December 31, 2016	0	0
Additional paid-in capital	421,626	419,099
Retained earnings	314,031	277,659
Total William Lyon Homes stockholders’ equity	735,984	697,086
Noncontrolling interests	89,986	66,343
Total equity	825,970	763,429
Total liabilities and equity	2,100,859	2,011,280
Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 29,193,050 and 28,909,781 shares issued, 28,043,563 and 27,907,724 shares outstanding at September 30, 2017 and December 31, 2016, respectively
Equity:
Common stock	289	290
Common stock, Class B, par value $0.01 per share; 30,000,000 shares authorized; 3,813,884 shares issued and outstanding at September 30, 2017 and December 31, 2016
Equity:
Common stock	38	38
Senior unsecured loan facility
Notes payable — Note 6:
Total senior notes	1,619	7,225
5 3/4% Senior Notes due April 15, 2019
Notes payable — Note 6:
Total senior notes	149,226	148,826
8 1/2% Senior Notes due November 15, 2020
Notes payable — Note 6:
Total senior notes	0	422,817
7% Senior Notes due August 15, 2022
Notes payable — Note 6:
Total senior notes	346,556	346,014
5 7/8% Senior Notes due January 31, 2025
Notes payable — Note 6:
Total senior notes	439,221	0
Seller financing
Notes payable — Note 6:
Notes payable	5,226	24,692
Joint venture notes payable
Notes payable — Note 6:
Notes payable	105,785	102,076
Revolving Credit Facility | Revolving credit facility
Notes payable — Note 6:
Notes payable	$ 50,000	$ 29,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Intangibles - Accumulated Amortization	$ 4,640	$ 4,640
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, Class A
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	29,193,050	28,909,781
Common stock, shares outstanding (in shares)	28,043,563	27,907,724
Common stock, Class B
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	3,813,884	3,813,884
Common stock, shares outstanding (in shares)	3,813,884	3,813,884
5 3/4% Senior Notes due April 15, 2019
Stated interest rate	5.75%	5.75%
8 1/2% Senior Notes due November 15, 2020
Stated interest rate	8.50%	8.50%
7% Senior Notes due August 15, 2022
Stated interest rate	7.00%	7.00%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Stated interest rate	5.875%

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating revenue
Home sales	$ 490,304	$ 342,628	$ 1,171,791	$ 928,982
Construction services	35	86	94	3,810
Operating revenue	490,339	342,714	1,171,885	932,792
Operating costs
Cost of sales — homes	(401,700)	(285,896)	(973,212)	(769,705)
Construction services	(35)	(86)	(41)	(3,458)
Sales and marketing	(21,935)	(18,246)	(57,924)	(51,351)
General and administrative	(22,951)	(17,360)	(61,447)	(51,879)
Other	(548)	198	(1,548)	(612)
Total operating costs	(447,169)	(321,390)	(1,094,172)	(877,005)
Operating income (loss)	43,170	21,324	77,713	55,787
Equity in income of unconsolidated joint ventures	1,160	1,435	2,622	3,810
Other (loss) income, net	(365)	2,050	(12)	2,803
Income before extinguishment of debt	43,965	24,809	80,323	62,400
Loss on extinguishment of debt	0	0	(21,828)	0
Income (loss) before provision for income taxes	43,965	24,809	58,495	62,400
Provision for income taxes	(13,905)	(8,295)	(17,480)	(20,859)
Net income (loss)	30,060	16,514	41,015	41,541
Less: Net income attributable to noncontrolling interests	(2,642)	(3,445)	(4,643)	(4,897)
Net income available to common stockholders	$ 27,418	$ 13,069	$ 36,372	$ 36,644
Income per common share:
Basic (in USD per share)	$ 0.74	$ 0.36	$ 0.98	$ 1.00
Diluted (in USD per share)	$ 0.71	$ 0.34	$ 0.95	$ 0.96
Weighted average common shares outstanding:
Basic (in shares)	37,059,483	36,801,464	37,007,144	36,746,727
Diluted (in shares)	38,583,341	38,333,027	38,381,292	38,314,021

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CONDENSED CONSOLIDATED STATEMENT OF EQUITY - 9 months ended Sep. 30, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Non-Controlling Interests
Beginning Balance at Dec. 31, 2016	$ 763,429	$ 328	$ 419,099	$ 277,659	$ 66,343
Beginning Balance (in shares) at Dec. 31, 2016		32,724
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	41,015			36,372	4,643
Cash contributions from members of consolidated entities	58,829				58,829
Cash distributions to members of consolidated entities	(39,829)				(39,829)
Repurchases of common stock	(2,284)	$ (1)	(2,283)
Repurchases of common stock (in shares)		(102)
Shares remitted to Company to satisfy employee tax obligations	(1,450)	$ 0	(1,450)
Shares remitted to Company to satisfy employee tax obligations (in shares)		(76)
Stock based compensation expense	6,260	$ 0	6,260
Stock based compensation expense (in shares)		461
Ending Balance at Sep. 30, 2017	$ 825,970	$ 327	$ 421,626	$ 314,031	$ 89,986
Ending Balance (in shares) at Sep. 30, 2017		33,007

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities
Net income	$ 41,015	$ 41,541
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,426	1,506
Net change in deferred income taxes	2,154	(2)
Stock based compensation expense	6,260	4,087
Equity in earnings of unconsolidated joint ventures	(2,622)	(3,810)
Distributions from unconsolidated joint ventures	1,840	896
Loss on extinguishment of debt	21,828	0
Net changes in operating assets and liabilities:
Restricted cash	0	504
Receivables	(342)	442
Escrow proceeds receivable	(143)	3,041
Real estate inventories	(98,980)	(146,678)
Other assets	(3,536)	2,806
Accounts payable	9,834	1,040
Accrued expenses	(1,724)	11,649
Net cash used in operating activities	(22,990)	(82,978)
Investing activities
Collection of related party note receivable	0	6,188
Purchases of property and equipment	(2,416)	(773)
Net cash (used in) provided by investing activities	(2,416)	5,415
Financing activities
Proceeds from borrowings on notes payable	105,109	111,992
Principal payments on notes payable	(101,400)	(91,250)
Redemption premium of 8.5% Senior Notes	(19,645)	0
Principal payments of 8.5% Senior Notes	(425,000)	0
Proceeds from issuance of 7% senior notes	446,468	0
Proceeds from borrowings on Revolver	275,000	198,000
Payments on Revolver	(254,000)	(167,000)
Principal payments on subordinated amortizing notes	(5,606)	(5,096)
Payment of deferred loan costs	(9,794)	(792)
Shares remitted to, or withheld by the Company for employee tax withholding	(1,450)	(918)
Payments for Repurchase of Common Stock	(2,284)	0
Excess income tax benefit from stock based awards	0	(238)
Noncontrolling interest contributions	58,829	36,140
Noncontrolling interest distributions	(39,829)	(12,768)
Net cash provided by financing activities	26,398	68,070
Net decrease in cash and cash equivalents	992	(9,493)
Cash and cash equivalents — beginning of period	42,612	50,203
Cash and cash equivalents — end of period	43,604	40,710
Supplemental disclosures:
Cash paid during the period for income taxes	17,079	6,914
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	5,213	1,353
Issuance of note payable related to land acquisition	0	32,419
Accrued Deferred Loan Costs	$ 0	$ 43

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Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand) and Oregon (under the Polygon Northwest brand).

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of September 30, 2017 and December 31, 2016 and revenues and expenses for the three and nine month periods ended September 30, 2017 and 2016. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 2). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2016, which are included in our 2016 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report. Also, refer to the discussion under Change in Accounting Principle below regarding the adoption of the new standard for leases.

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three and nine months ended September 30, 2017, the Company had one and two land parcel sales, respectively, that resulted in a negligible loss for both periods then ended. During the three and nine months ended September 30, 2016, the Company had two and five land parcel sales, respectively, that resulted in a $2.7 million gain for both periods then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability for the nine months ended September 30, 2017 and 2016, are as follows (in thousands):

	Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Warranty liability, beginning of period	$	14,174		$	18,117
Warranty provision during period	7,695			7,086
Warranty payments during period	(9,419		)	(10,579		)
Warranty charges related to construction services projects	120			128
Warranty liability, end of period	$	12,570		$	14,752

Interest incurred under the Company’s debt obligations, as more fully discussed in Note 6, is capitalized to qualifying real estate projects under development. Interest activity for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands):

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Interest incurred	$	18,112	$	21,293	$	56,359	$	62,112
Less: Interest capitalized	18,112		21,293		56,359		62,112
Interest expense, net of amounts capitalized	$	—	$	—	$	—	$	—
Cash paid for interest	$	28,374	$	14,898	$	55,532	$	54,576

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with FASB ASC Topic 605 Revenue Recognition (“ASC 605”). Under ASC 605, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

The Company entered into construction management agreements to build, sell and market homes in certain communities. For such services, the Company will receive fees (generally 3 to 5 percent of the sales price, as defined) and may, under certain circumstances, receive additional compensation if certain financial thresholds are achieved.

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments with off-balance sheet risk in the normal course of business which exposes it to credit risks. These financial instruments include letters of credit and obligations in connection with assessment district bonds. These off-balance sheet financial instruments are described in more detail in Note 12.

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of September 30, 2017 and December 31, 2016. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have six reporting segments, as discussed in Note 4, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

Impact of Recent Accounting Pronouncements

Effective January 1, 2017, the Company adopted Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplified several aspects for the accounting for share-based payment transactions, including the income tax consequences and classification on the statement of cash flows. The Company did not have any previously unrecognized excess tax benefits. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09”), which clarifies existing accounting literature relating to how and when revenue is recognized by an entity. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In doing so, an entity will need to exercise a greater degree of judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017, and is to be applied either retrospectively or using the cumulative effect transition method, with early adoption not permitted.

The Company is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements, but does not anticipate that the adoption will have a material impact on the amount or timing of its revenues. ASU 2014-09 may impact the classification and timing of recognition of certain marketing costs and costs associated with obtaining a customer sales contract that the Company incurs in the course of its business. The Company has not concluded its analysis of these costs, but does not anticipate that adoption of the ASU will result in a material change to the Company's financial statements or related disclosures. The Company has not finalized its implementation plan for ASU 2014-09, but expects to employ the cumulative effect transition method.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the potential impact the adoption of ASU 2016-15 will have on its consolidated financial statements.

Change in Accounting Principle

During the second quarter ended June 30, 2017, the Company adopted the provisions of Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"), which amends the existing standards for lease accounting, requiring lessees to recognize most leases on their balance sheets and disclose key information about leasing arrangements. The new standard establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The Company adopted the new standard with a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The adoption is accounted for as a change in accounting principle in conformity with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 250, “Accounting Changes and Error Corrections”.

As a result of the adoption, the most significant changes related to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for office, real estate and equipment operating leases; and (2) the derecognition of previous assets and liabilities for a sale-leaseback transaction that did not qualify for sale accounting under the previous standards.

The Company elected all of the standard's available practical expedients on adoption, including the package of practical expedients and use of hindsight expedient. Consequently, the Company:

–Recognized lease related liabilities within Accrued expenses of $15.6 million as of June 30, 2017, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

The balance sheet as of December 31, 2016 was adjusted using the modified retrospective transition approach which resulted in the following adjusted balances (in thousands):

	December 31, 2016	Lease adoption adjustments		December 31, 2016
				(as adjusted)
Lease right-of-use assets	—	$	13,129	$	13,129
Total assets	1,998,151	13,129		2,011,280
Accrued expenses	79,790	13,129		92,919
Total liabilities and equity	1,998,151	13,129		2,011,280

The Company's existing material leases were all considered operating leases under the new leasing standard and as a result, no adjustment to previously reported lease expense was incurred for prior periods presented.

–Derecognized obligations of $19.8 million relating to cash received from a sale-leaseback transaction that was previously classified within Accrued expenses.

Refer to Note 12 for more details regarding leases as of September 30, 2017 and its comparative period.

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Variable Interest Entities and Noncontrolling Interests

9 Months Ended

Sep. 30, 2017

Noncontrolling Interest [Abstract]

Variable Interest Entities and Noncontrolling Interests

Variable Interest Entities and Noncontrolling Interests

As of September 30, 2017 and December 31, 2016, the Company was party to twelve and eleven joint ventures for the purpose of land development and homebuilding activities which we have determined to be VIEs. The Company, as the managing member, has the power to direct the activities of the VIEs since it manages the daily operations and has exposure to the risks and rewards of the VIEs, based upon the allocation of income and loss per the respective joint venture agreements. Therefore, the Company is the primary beneficiary of the joint ventures, and the VIEs were consolidated as of September 30, 2017 and December 31, 2016.

As of September 30, 2017, the assets of the consolidated VIEs totaled $243.7 million, of which $8.8 million was cash and cash equivalents and $250.6 million was real estate inventories. The liabilities of the consolidated VIEs totaled $115.8 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

As of December 31, 2016, the assets of the consolidated VIEs totaled $204.8 million, of which $5.8 million was cash and cash equivalents and $200.7 million was real estate inventories. The liabilities of the consolidated VIEs totaled $107.3 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

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Investments in Unconsolidated Joint Ventures

9 Months Ended

Sep. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues	$	5,368		$	5,397		$	13,830		$	14,675
Cost of sales	(2,781		)	(2,521		)	(7,936		)	(7,043		)
Income of unconsolidated joint ventures	$	2,587		$	2,876		$	5,894		$	7,632

Income from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income of our unconsolidated mortgage joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements less any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  For the three and nine months ended September 30, 2017, and 2016, the Company recorded income of $1.2 million and $2.6 million, and $1.4 million and $3.8 million, respectively, from its unconsolidated joint ventures. This income was primarily attributable to our share of income related to mortgages that were generated and issued to qualifying home buyers during the periods.

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

			September 30, 2017		December 31, 2016
Assets
	Cash		$	12,051	$	10,208
	Loans held for sale		26,929		18,791
	Accounts receivable		585		764
	Other assets		156		56
		Total Assets	$	39,721	$	29,819
Liabilities and Equity
	Accounts payable		$	362	$	694
	Accrued expenses		1,314		1,026
	Credit lines payable		25,706		17,748
	Other liabilities		24		17
	Members equity		12,315		10,334
		Total Liabilities and Equity	$	39,721	$	29,819

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Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates one principal homebuilding business. In accordance with FASB ASC Topic 280, Segment Reporting ("ASC 280"), the Company has determined that each of its operating divisions is an operating segment. The Company’s President and Chief Executive Officer has been identified as the chief operating decision maker. The Company’s chief operating decision maker directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company’s homebuilding operations design, construct and sell a wide range of homes designed to meet the specific needs in each of its markets. As such, in accordance with the aggregation criteria defined by FASB ASC Topic 280, Segment Reporting (“ASC 280”), the Company’s homebuilding operating segments have been grouped into six reportable segments:

California, consisting of operating divisions in i) Southern California, consisting of operations in Orange, Los Angeles, Riverside and San Bernardino counties; and ii) Northern California, consisting of operations in Alameda, Contra Costa, San Joaquin, and Santa Clara counties.

Arizona, consisting of operations in the Phoenix, Arizona metropolitan area.

Nevada, consisting of operations in the Las Vegas, Nevada metropolitan area.

Colorado, consisting of operations in the Denver, Colorado metropolitan area.

Washington, consisting of operations in the Seattle, Washington metropolitan area.

Oregon, consisting of operations in the Portland, Oregon metropolitan area.

Corporate develops and implements strategic initiatives and supports the Company’s operating segments by centralizing key administrative functions such as finance and treasury, information technology, risk management and litigation and human resources.

Segment financial information relating to the Company’s operations was as follows (in thousands):

	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Operating revenue:
California (1)	$	230,960		$	111,520		$	462,277		$	309,199
Arizona	39,607			28,758			118,695			85,399
Nevada	42,966			49,600			103,448			128,996
Colorado	24,811			35,316			77,149			85,885
Washington	71,788			42,247			185,523			112,512
Oregon	80,207			75,273			224,793			210,801
Total operating revenue	$	490,339		$	342,714		$	1,171,885		$	932,792
(1) Operating revenue in the California segment includes construction services revenue.
	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Income before provision for income taxes:
California	$	31,150		$	10,364		$	53,907		$	28,252
Arizona	3,388			2,542			11,102			7,537
Nevada	4,372			5,291			7,811			12,587
Colorado	969			2,342			2,519			3,643
Washington	6,164			2,899			10,249			6,767
Oregon	10,708			9,466			25,847			27,452
Corporate	(12,786		)	(8,095		)	(31,112		)	(23,838		)
Income before extinguishment of debt	$	43,965		$	24,809		$	80,323		$	62,400
Corporate - Loss on extinguishment of debt	$	—		$	—		$	(21,828	)	$	—
Income before provision for income taxes	$	43,965		$	24,809		$	58,495		$	62,400

	September 30, 2017		December 31, 2016
Homebuilding assets:			(as adjusted, refer to Note 1)
California	$	704,313	$	716,955
Arizona	182,588		191,581
Nevada	218,060		189,248
Colorado	154,422		124,580
Washington	324,358		343,973
Oregon	302,332		238,766
Corporate (1)	214,786		206,177
Total homebuilding assets	$	2,100,859	$	2,011,280

(1) Comprised primarily of cash and cash equivalents, deferred income taxes, receivables, lease right-of-use assets, and other assets.

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Real Estate Inventories

9 Months Ended

Sep. 30, 2017

Real Estate [Abstract]

Real Estate Inventories

Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Real estate inventories:
Land deposits	$	61,123	$	50,429
Land and land under development	888,091		1,069,001
Homes completed and under construction	804,338		545,310
Model homes	102,106		107,258
Total	$	1,855,658	$	1,771,998

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Senior Notes, Secured, and Unsecured Indebtedness

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Senior Notes, Secured, and Unsecured Indebtedness

Senior Notes, Secured, and Unsecured Indebtedness

Senior notes, secured, and unsecured indebtedness consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Notes payable:
Revolving credit facility	$	50,000	$	29,000
Seller financing	5,226		24,692
Joint venture notes payable	105,785		102,076
Total notes payable	161,011		155,768
Subordinated amortizing notes	1,619		7,225
Senior notes:
5 3/4% Senior Notes due April 15, 2019	149,226		148,826
8 1/2% Senior Notes due November 15, 2020	—		422,817
7% Senior Notes due August 15, 2022	346,556		346,014
5 7/8% Senior Notes due January 31, 2025	439,221		—
Total senior notes	935,003		917,657
Total notes payable and senior notes	$	1,097,633	$	1,080,650

As of September 30, 2017, the maturities of the Notes payable, Subordinated amortizing notes, 5 ³/₄% Senior Notes, 7% Senior Notes, and 5 ⁷/₈% Senior Notes are as follows (in thousands):

Year Ending December 31,
2017	5,335
2018	47,238
2019	231,806
2020	28,251
2021	—
Thereafter	800,000
	$	1,112,630

Maturities above exclude premium on the 7% Senior Notes of $0.8 million, discount on the 5 ⁷/₈% Senior Notes of $3.3 million, and deferred loan costs on the 5 ³/₄%, 7%, and 5 ⁷/₈% Senior Notes of $12.5 million as of September 30, 2017.

Notes Payable

Revolving Credit Facility

On July 1, 2016, California Lyon and Parent entered into an amendment and restatement agreement pursuant to which its existing credit agreement providing for a revolving credit facility, as previously amended and restated on March 27, 2015 as described below, was further amended and restated in its entirety (as amended from time to time, the "Second Amended Facility"). The Second Amended Facility amends and restates the Company’s previous $130.0 million revolving credit facility and provides for total lending commitments of $145.0 million. In addition, the Second Amended Facility has an uncommitted accordion feature under which the Company may increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. The Second Amended Facility, among other things, also amended the maturity date of the previous facility to July 1, 2019, provided that the Second Amended Facility will terminate on January 14, 2019 (the “Springing Termination Date”) if, on the Springing Termination Date, the aggregate outstanding principal amount of California Lyon’s 5.75% senior notes due 2019 is equal to or greater than the sum of (a) 50% of the Consolidated EBITDA (as defined in the Second Amended Facility) of California Lyon, Parent, certain of the Parent’s direct and indirect wholly owned subsidiaries (together with California Lyon and Parent, the “Loan Parties”) and their Restricted Subsidiaries (as defined in the Second Amended Facility) for the four-quarter period ending September 30, 2018, plus (b) the Liquidity (as defined in the Second Amended Facility) of the Loan Parties and their consolidated subsidiaries on the Springing Termination Date. Further, the Second Amended Facility amended the maximum leverage ratio covenant to extend the timing of the gradual step-downs. Specifically, pursuant to the Second Amended Facility, the maximum leverage ratio remained at 65% from June 30, 2016 through and including December 30, 2016, decreased to 62.5% on the last day of the 2016 fiscal year, remained at 62.5% from December 31, 2016 through and including June 29, 2017, and was scheduled to further decrease to 60% on the last day of the second quarter of 2017 and to remain at 60% thereafter. The Second Amended Facility did not revise any of our other financial covenants thereunder.

On June 16, 2017, California Lyon, Parent and the lenders party thereto entered into an amendment to the Second Amended Facility, which amended the maximum leverage ratio to further extend the timing of the gradual step-downs, such that the leverage ratio will remain at 62.5% through and including December 30, 2017, and decrease to 60% on the last day of the 2017 fiscal year and remain at 60% thereafter. The amendment did not revise any of our other financial covenants thereunder.

Prior to the entry into the Second Amended Facility as described above, on March 27, 2015, California Lyon and Parent entered into an amendment and restatement agreement which amended and restated the Company's previous $100 million revolving credit facility and provided for total lending commitments of $130.0 million, an uncommitted accordion feature under which the Company could increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances (up from a maximum aggregate of $125.0 million under the previous facility), as well as a sublimit of $50.0 million for letters of credit, and extended the maturity date of the previous facility by one year to August 7, 2017.

The Second Amended Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $451.0 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65%, which maximum leverage ratio decreased to 62.5% effective as of December 31, 2016 and is scheduled to decrease to 60% effective as of December 31, 2017, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the Second Amended Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The Second Amended Facility contains customary events of default, subject to cure periods in certain circumstances, including: nonpayment of principal, interest and fees or other amounts; violation of covenants; inaccuracy of representations and warranties; cross default to certain other indebtedness; unpaid judgments; and certain bankruptcy and other insolvency events. The occurrence of any event of default could result in the termination of the commitments under the Second Amended Facility and permit the lenders to accelerate payment on outstanding borrowings under the Second Amended Facility and require cash collateralization of outstanding letters of credit. If a change in control (as defined in the Second Amended Facility) occurs, the lenders may terminate the commitments under the Second Amended Facility and require that the Company repay outstanding borrowings under the Second Amended Facility and cash collateralize outstanding letters of credit. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread.

In January 2017, the Company entered into an amendment which modifies the definition of Tangible Net Worth for purposes of calculating the Leverage Ratio covenant under the Second Amended Facility, so as to exclude any reduction in Tangible Net Worth (as defined therein) that occurs as a result of the costs related to payment of any call premium or any other costs associated with the refinancing transaction and the redemption of outstanding 8.5% Notes. The Company was in compliance with all covenants under the Second Amended Facility as of September 30, 2017.

Borrowings under the Second Amended Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent's wholly-owned subsidiaries, are secured by a pledge of all equity interests held by such guarantors, and may be used for general corporate purposes. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread. As of September 30, 2017, the commitment fee on the unused portion of the Second Facility accrues at an annual rate of 0.50%. As of September 30, 2017 and December 31, 2016, the Company had $50.0 million and $29.0 million outstanding against the Second Amended Facility, respectively, at effective rates of 6.25% and 4.75%, respectively as well as letters of credit for $0.8 million and $8.0 million, respectively.

Seller Financing

At September 30, 2017, the Company had $5.2 million of notes payable outstanding related to one land acquisition for which seller financing was provided. The note bears interest at a rate of 7% per annum, is secured by the underlying land, and matures in June 2018. During the nine months ended September 30, 2017, the Company paid in full a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum, was secured by the underlying land, and was paid upon maturity in August 2017. This note was entered into with a related party. Refer to Note 8 for more details regarding the related party transaction.

Joint Venture Notes Payable

The Company and certain of its consolidated joint ventures have entered into notes payable agreements. These loans will be repaid with proceeds from closings and are secured by the underlying projects. The issuance date, facility size, maturity date and interest rate are listed in the table below as of September 30, 2017 (in millions):

Issuance Date	Facility Size		Outstanding			Maturity	Current Rate
March, 2016	$	33.4	$	16.7		September, 2018	4.24	%	(1)
January, 2016	35.0		31.8			February, 2019	4.48	%	(2)
November, 2015	42.5		19.3			May, 2018	5.25	%	(1)
July, 2015	15.0		3.6			July, 2018	4.75	%	(3)
November, 2014	7.0		3.7		(4)	November, 2017	4.75	%	(3)
November, 2014	15.0		—			November, 2017	4.75	%	(3)
March, 2014	26.0		2.4			April, 2018	4.24	%	(1)
July, 2017	46.2		28.3			August, 2020	4.46	%	(5)
	$	220.1	$	105.8

(1) Loan bears interest at the Company's option of either LIBOR +3.0% or the prime rate +1.0%.

(2) Loan bears interest at LIBOR +3.25%.

(3) Loan bears interest at the prime rate +0.5%.

(4) The Company anticipates paying the borrowings in full upon the maturity date from proceeds from homes closed in the respective project.

(5) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

The joint venture notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of September 30, 2017.

Subordinated Amortizing Notes

On November 21, 2014, in order to pay down amounts borrowed under the senior unsecured bridge loan facility entered into in conjunction with the Polygon Acquisition, the Company completed its public offering and sale of 1,000,0006.50% tangible equity units (“TEUs”, or "Units"), sold for a stated amount of $100 per Unit, featuring a 17.5% conversion premium.  On December 3, 2014, the Company sold an additional 150,000 TEUs pursuant to an over-allotment option granted to the underwriters. Each TEU is a unit composed of two parts: 

• a prepaid stock purchase contract (a “purchase contract”); and

• a senior subordinated amortizing note (an “amortizing note”).

Unless settled earlier at the holder’s option, each purchase contract will automatically settle on December 1, 2017 (the "mandatory settlement date"), and the Company will deliver not more than 5.2247 shares of Class A Common Stock and not less than 4.4465 shares of Class A Common Stock on the mandatory settlement date, subject to adjustment, based upon the applicable settlement rate and applicable market value of Class A Common Stock.

Each amortizing note had an initial principal amount of $18.01, bears interest at the annual rate of 5.50% and has a final installment payment date of December 1, 2017. On each March 1, June 1, September 1 and December 1, commencing on March 1, 2015, William Lyon Homes will pay equal quarterly installments of $1.6250 on each amortizing note (except for the March 1, 2015 installment payment, which was $1.8056 per amortizing note). Each installment will constitute a payment of interest and a partial repayment of principal. The amortizing notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, other than borrowings under the Amended Facility and the Company's secured project level financing, which will be senior in right of payment to the obligations under the amortizing notes, in each case to the extent of the value of the assets securing such indebtedness.

Each TEU may be separated into its constituent purchase contract and amortizing note on any business day during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the Units to, but excluding, the third scheduled trading day immediately preceding the mandatory settlement date. Prior to separation, the purchase contracts and amortizing notes may only be purchased and transferred together as Units. The net proceeds received from the TEU issuance were allocated between the amortizing note and the purchase contract under the relative fair value method, with amounts allocated to the purchase contract classified as additional paid-in capital. As of September 30, 2017 and December 31, 2016, the amortizing notes had an unamortized carrying value of $1.6 million and $7.2 million, respectively.

Senior Notes

5 ³/₄% Senior Notes Due 2019

On March 31, 2014, California Lyon completed its private placement with registration rights of 5.75% Senior Notes due 2019 (the "5.75% Notes"), in an aggregate principal amount of $150 million. The 5.75% Notes were issued at 100% of their aggregate principal amount. In August 2014, we exchanged 100% of the initial 5.75% Notes for notes that are freely transferable and registered under the Securities Act of 1933, as amended (the “Securities Act”).

As of September 30, 2017, the outstanding principal amount of the 5.75% Notes was $150 million, excluding deferred loan costs of $0.8 million. The 5.75% Notes bear interest at a rate of 5.75% per annum, payable semiannually in arrears on April 15 and October 15, and mature on April 15, 2019. The 5.75% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.75% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $450 million in aggregate principal amount of 5.875% Senior Notes due 2020 and $350 million in aggregate principal amount of 7.00% Notes due 2019, each as described below. The 5.75% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.75% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

8 ¹/₂% Senior Notes Due 2020

On November 8, 2012, California Lyon completed its private placement with registration rights of 8.5% Senior Notes due 2020, (the "initial 8.5% notes"), in an aggregate principal amount of $325 million. The initial 8.5% Notes were issued at 100% of their aggregate principal amount. In July 2013, we exchanged 100% of the initial 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

On October 24, 2013, California Lyon completed its private placement with registration rights of an additional $100.0 million in aggregate principal amount of its 8.5% Senior Notes due 2020 (the “additional 8.5% Notes”, and together with the initial 8.5% notes, the "8.5% Notes" ) at an issue price of 106.5% of their aggregate principal amount, plus accrued interest from and including May 15, 2013, resulting in net proceeds of approximately $104.7 million. In February 2014, we exchanged 100% of the additional 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

During the nine months ended September 30, 2017, Parent, through California Lyon, used the net proceeds from its private placement with registration rights of 5.875% Senior Notes due 2025, as further described below, to purchase $395.6 million of the outstanding aggregate principal amount of the 8.5% Notes, pursuant to a cash tender offer and consent solicitation. Subsequently, the Company used the remaining proceeds, together with cash on hand, for the retirement of the remaining outstanding 8.5% Notes, such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. The Company incurred certain costs related to the early extinguishment of debt of the 8.5% Notes during the nine months ended September 30, 2017 in an amount of $21.8 million, which is included in the Consolidated Statement of Operations as Loss on extinguishment of debt.

7% Senior Notes Due 2022

On August 11, 2014, WLH PNW Finance Corp. (“Escrow Issuer”), completed its private placement with registration rights of 7.00% Senior Notes due 2022 (the “initial 7.00% Notes”), in an aggregate principal amount of $300 million. The initial 7.00% Notes were issued at 100% of their aggregate principal amount. On August 12, 2014, in connection with the consummation of the Polygon Acquisition, Escrow Issuer merged with and into California Lyon, and California Lyon assumed the obligations of the Escrow Issuer under the initial 7.00% Notes and the related indenture by operation of law (the “Escrow Merger”). Following the Escrow Merger, California Lyon is the obligor under the initial 7.00% Notes. In January 2015, we exchanged 100% of the initial 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

On September 15, 2015, California Lyon completed its private placement with registration rights of an additional $50.0 million in aggregate principal amount of its 7.00% Senior Notes due 2022 (the “additional 7.00% Notes”, and together with the initial 7.00% Notes, the "7.00% Notes") at an issue price of 102.0% of their principal amount, plus accrued interest from August 15, 2015, resulting in net proceeds of approximately $50.5 million. In January 2016, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017 the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.8 million and deferred loan costs of $4.2 million. The 7.00% Notes bear interest at a rate of 7.00% per annum, payable semiannually in arrears on February 15 and August 15, and mature on August 15, 2022. The 7.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 7.00% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019, as described above, and $450 million in aggregate principal amount of 5.875% Senior Notes due 2020, as described below. The 7.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 7.00% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the 8.5% Notes such that the entire aggregate $425 million of previously outstanding 8.5% Notes are retired and extinguished as of September 30, 2017. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of September 30, 2017, the outstanding principal amount of the 5.875% Notes was $450 million, excluding unamortized discount of $3.3 million and deferred loan costs of $7.5 million. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019 and $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

On or after January 31, 2020, California Lyon may redeem all or a portion of the 5.875% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount), set forth below plus accrued and unpaid interest to the redemption date, if redeemed during the 12-month period commencing on each of the dates indicated below:

Year	Percentage
January 31, 2020	102.938	%
January 31, 2021	101.469	%
January 31, 2022	100.734	%
January 31, 2023 and thereafter	100.000	%

Prior to January 31, 2020, the 5.875% Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a "make-whole" premium, and accrued and unpaid interest to, the redemption date.

In addition, any time prior to January 31, 2020, California Lyon may, at its option on one or more occasions, redeem the 5.875% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 5.875% Notes issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 105.875%, plus accrued and unpaid interest to the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

Senior Notes Covenant Compliance

The indentures governing the 5.75% Notes, the 7.00% Notes, and the 5.875% Notes contain covenants that limit the ability of Parent, California Lyon, and their restricted subsidiaries to, among other things: (i) incur or guarantee certain additional indebtedness; (ii) pay dividends, distributions, or repurchase equity or make payments in respect of subordinated indebtedness; (iii) make certain investments; (iv) sell assets; (v) incur liens; (vi) enter into agreements restricting the ability of the Company’s restricted subsidiaries to pay dividends or transfer assets; (vii) enter into transactions with affiliates; (viii) create unrestricted subsidiaries; and (viii) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to a number of important exceptions and qualifications as described in the indentures. The Company was in compliance with all such covenants as of September 30, 2017.

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of September 30, 2017 and December 31, 2016; consolidating statements of operations for the three and nine months ended September 30, 2017 and 2016; and consolidating statements of cash flows for the nine month periods ended September 30, 2017 and 2016, of (a) William Lyon Homes, as the parent, or “Delaware Lyon”, (b) William Lyon Homes, Inc., as the subsidiary issuer, or “California Lyon”, (c) the guarantor subsidiaries, (d) the non-guarantor subsidiaries and (e) William Lyon Homes, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate Delaware Lyon, with California Lyon and its guarantor and non-guarantor subsidiaries.

Delaware Lyon owns 100% of all of its guarantor subsidiaries and all guarantees are full and unconditional, joint and several. As a result, in accordance with Rule 3-10 (d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries as of September 30, 2017 and December 31, 2016, and for the nine month periods ended September 30, 2017 and 2016.

The consolidating balance sheet as of December 31, 2016 was adjusted to reflect the adoption of ASU 2016-02 (see Note 1).

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	34,727		$	(328	)	$	9,205		$	—		$	43,604
Receivables	—		4,048			1,760			3,911			—			9,719
Escrow proceeds receivable	—		228			—			—			—			228
Real estate inventories	—		900,390			697,824			257,444			—			1,855,658
Investment in unconsolidated joint ventures	—		8,075			150			—			—			8,225
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		73,597			—			—			—			73,597
Lease right-of-use assets	—		15,074			—			—			—			15,074
Other assets, net	—		18,762			1,896			494			—			21,152
Investments in subsidiaries	735,984		(18,249		)	(575,925		)	—			(141,810		)	—
Intercompany receivables	—		—			241,160			—			(241,160		)	—
Total assets	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859
LIABILITIES AND EQUITY
Accounts payable	$	—	$	48,450		$	25,061		$	10,605		$	—		$	84,116
Accrued expenses	—		88,318			4,719			103			—			93,140
Notes payable	—		55,226			—			105,785			—			161,011
Subordinated amortizing notes	—		1,619			—			—			—			1,619
5  3/4% Senior Notes	—		149,226			—			—			—			149,226
7% Senior Notes	—		346,556			—			—			—			346,556
5 7/8% Senior Notes	—		439,221			—			—			—			439,221
Intercompany payables	—		158,338			—			82,822			(241,160		)	—
Total liabilities	—		1,286,954			29,780			199,315			(241,160		)	1,274,889
Equity
William Lyon Homes stockholders’ equity (deficit)	735,984		(236,091		)	396,150			(18,249		)	(141,810		)	735,984
Noncontrolling interests	—		(2		)	—			89,988			—			89,986
Total liabilities and equity	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2016

(as adjusted)

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	36,204		$	272		$	6,136		$	—		$	42,612
Receivables	—		2,989			3,303			3,246			—			9,538
Escrow proceeds receivable	—		85			—			—			—			85
Real estate inventories	—		910,594			645,341			216,063			—			1,771,998
Investment in unconsolidated joint ventures	—		7,132			150			—			—			7,282
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		75,751			—			—			—			75,751
Lease right-of-use assets	—		13,129			—			—			—			13,129
Other assets, net	—		15,779			1,089			415			—			17,283
Investments in subsidiaries	697,086		(23,736		)	(573,650		)	—			(99,700		)	—
Intercompany receivables	—		—			252,860			—			(252,860		)	—
Total assets	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280
LIABILITIES AND EQUITY
Accounts payable	$	—	$	52,380		$	16,416		$	5,486		$	—		$	74,282
Accrued expenses	—		88,185			4,636			98			—			92,919
Notes payable	—		50,713			2,979			102,076			—			155,768
Subordinated amortizing notes	—		7,225			—			—			—			7,225
5 3/4% Senior Notes	—		148,826			—			—			—			148,826
8 1/2% Senior Notes	—		422,817			—			—			—			422,817
7% Senior Notes	—		346,014			—			—			—			346,014
Intercompany payables	—		177,267			—			75,593			(252,860		)	—
Total liabilities	—		1,293,427			24,031			183,253			(252,860		)	1,247,851
Equity
William Lyon Homes stockholders’ equity (deficit)	697,086		(241,291		)	364,727			(23,736		)	(99,700		)	697,086
Noncontrolling interests	—		—			—			66,343			—			66,343
Total liabilities and equity	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	211,317		$	218,033		$	60,954		$	—		$	490,304
Construction services	—		35			—			—			—			35
Management fees	—		(1,899		)	—			—			1,899			—
	—		209,453			218,033			60,954			1,899			490,339
Operating costs
Cost of sales	—		(165,392		)	(181,184		)	(53,225		)	(1,899		)	(401,700		)
Construction services	—		(35		)	—			—			—			(35		)
Sales and marketing	—		(7,904		)	(11,521		)	(2,510		)	—			(21,935		)
General and administrative	—		(19,171		)	(3,780		)	—			—			(22,951		)
Other	—		(635		)	86			1			—			(548		)
	—		(193,137		)	(196,399		)	(55,734		)	(1,899		)	(447,169		)
Income from subsidiaries	27,418		6,162			—			—			(33,580		)	—
Operating income	27,418		22,478			21,634			5,220			(33,580		)	43,170
Equity in income from unconsolidated joint ventures	—		819			341			—			—			1,160
Other income (expense), net	—		47			(4		)	(408		)	—			(365		)
Income before provision for income taxes	27,418		23,344			21,971			4,812			(33,580		)	43,965
Provision for income taxes	—		(13,905		)	—			—			—			(13,905		)
Net income	27,418		9,439			21,971			4,812			(33,580		)	30,060
Less: Net income attributable to noncontrolling interests	—		—			—			(2,642		)	—			(2,642		)
Net income available to common stockholders	$	27,418	$	9,439		$	21,971		$	2,170		$	(33,580	)	$	27,418

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	105,962		$	181,594		$	55,072		$	—		$	342,628
Construction services	—		86			—			—			—			86
Management fees	—		(1,541		)	—			—			1,541			—
	—		104,507			181,594			55,072			1,541			342,714
Operating costs
Cost of sales	—		(84,652		)	(151,306		)	(48,397		)	(1,541		)	(285,896		)
Construction services	—		(86		)	—			—			—			(86		)
Sales and marketing	—		(6,205		)	(9,774		)	(2,267		)	—			(18,246		)
General and administrative	—		(14,268		)	(3,091		)	(1		)	—			(17,360		)
Other	—		140			69			(11		)	—			198
	—		(105,071		)	(164,102		)	(50,676		)	(1,541		)	(321,390		)
Income from subsidiaries	13,069		3,548			—			—			(16,617		)	—
Operating income (loss)	13,069		2,984			17,492			4,396			(16,617		)	21,324
Equity in income from unconsolidated joint ventures	—		1,140			295			—			—			1,435
Other income (expense), net	—		2,550			(19		)	(481		)	—			2,050
Income (loss) before provision for income taxes	13,069		6,674			17,768			3,915			(16,617		)	24,809
Provision for income taxes	—		(8,295		)	—			—			—			(8,295		)
Net income (loss)	13,069		(1,621		)	17,768			3,915			(16,617		)	16,514
Less: Net income attributable to noncontrolling interests	—		—			—			(3,445		)	—			(3,445		)
Net income (loss) available to common stockholders	$	13,069	$	(1,621	)	$	17,768		$	470		$	(16,617	)	$	13,069

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	505,006		$	535,828		$	130,957		$	—		$	1,171,791
Construction services	—		94			—			—			—			94
Management fees	—		(3,501		)	—			—			3,501			—
	—		501,599			535,828			130,957			3,501			1,171,885
Operating costs
Cost of sales	—		(408,420		)	(445,737		)	(115,554		)	(3,501		)	(973,212		)
Construction services	—		(41		)	—			—			—			(41		)
Sales and marketing	—		(21,479		)	(29,241		)	(7,204		)	—			(57,924		)
General and administrative	—		(49,285		)	(12,161		)	(1		)	—			(61,447		)
Other	—		(1,786		)	232			6			—			(1,548		)
	—		(481,011		)	(486,907		)	(122,753		)	(3,501		)	(1,094,172		)
Income from subsidiaries	36,372		13,328			—			—			(49,700		)	—
Operating income	36,372		33,916			48,921			8,204			(49,700		)	77,713
Equity in income from unconsolidated joint ventures	—		1,743			879			—			—			2,622
Other income (expense), net	—		1,072			(10		)	(1,074		)	—			(12		)
Income before extinguishment of debt	36,372		36,731			49,790			7,130			(49,700		)	80,323
Loss on extinguishment of debt	—		(21,828		)	—			—			—			(21,828		)
Income (loss) before provision for income taxes	36,372		14,903			49,790			7,130			(49,700		)	58,495
Provision for income taxes	—		(17,480		)	—			—			—			(17,480		)
Net income (loss)	36,372		(2,577		)	49,790			7,130			(49,700		)	41,015
Less: Net income attributable to noncontrolling interests	—		—			—			(4,643		)	—			(4,643		)
Net income (loss) available to common stockholders	$	36,372	$	(2,577	)	$	49,790		$	2,487		$	(49,700	)	$	36,372

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	344,459		$	494,597		$	89,926		$	—		$	928,982
Construction services	—		3,810			—			—			—			3,810
Management fees	—		(2,587		)	—			—			2,587			—
	—		345,682			494,597			89,926			2,587			932,792
Operating costs
Cost of sales	—		(276,481		)	(411,339		)	(79,298		)	(2,587		)	(769,705		)
Construction services	—		(3,458		)	—			—			—			(3,458		)
Sales and marketing	—		(18,080		)	(26,731		)	(6,540		)	—			(51,351		)
General and administrative	—		(41,749		)	(10,129		)	(1		)	—			(51,879		)
Other	—		(587		)	(14		)	(11		)	—			(612		)
	—		(340,355		)	(448,213		)	(85,850		)	(2,587		)	(877,005		)
Income from subsidiaries	36,644		7,472			—			—			(44,116		)	—
Operating income	36,644		12,799			46,384			4,076			(44,116		)	55,787
Equity in income from unconsolidated joint ventures	—		3,001			809			—			—			3,810
Other income (expense), net	—		3,873			(34		)	(1,036		)	—			2,803
Income (loss) before provision for income taxes	36,644		19,673			47,159			3,040			(44,116		)	62,400
Provision for income taxes	—		(20,859		)	—			—			—			(20,859		)
Net income (loss)	36,644		(1,186		)	47,159			3,040			(44,116		)	41,541
Less: Net income attributable to noncontrolling interests	—		—			—			(4,897		)	—			(4,897		)
Net income (loss) available to common stockholders	$	36,644	$	(1,186	)	$	47,159		$	(1,857	)	$	(44,116	)	$	36,644

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,526	)	$	2,452		$	4,366		$	(29,808	)	$	2,526		$	(22,990	)
Investing activities
Purchases of property and equipment	—			(1,781		)	(572		)	(63		)	—			(2,416		)
Investments in subsidiaries	—			7,841			2,275			—			(10,116		)	—
Net cash provided by (used in) investing activities	—			6,060			1,703			(63		)	(10,116		)	(2,416		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			105,109			—			105,109
Principal payments on notes payable	—			—			—			(101,400		)	—			(101,400		)
Redemption premium of 8.5% Senior Notes	—			(19,645		)	—			—			—			(19,645		)
Principal payments of 8.5% Senior Notes	—			(425,000		)	—			—			—			(425,000		)
Proceeds from issuance of 5.875% Senior Notes	—			446,468			—			—			—			446,468
Proceeds from borrowings on Revolver	—			275,000			—			—			—			275,000
Payments on Revolver	—			(254,000		)	—			—			—			(254,000		)
Principal payments on subordinated amortizing notes	—			(5,606		)	—			—			—			(5,606		)
Payment of deferred loan costs	—			(9,794		)	—			—			—			(9,794		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(1,450		)	—			—			—			(1,450		)
Payments to repurchase common stock	—			(2,284		)	—			—			—			(2,284		)
Noncontrolling interest contributions	—			—			—			58,829			—			58,829
Noncontrolling interest distributions	—			—			—			(39,829		)	—			(39,829		)
Advances to affiliates	—			—			(18,367		)	3,000			15,367			—
Intercompany receivables/payables	2,526			(13,678		)	11,698			7,231			(7,777		)	—
Net cash provided by (used in) financing activities	2,526			(9,989		)	(6,669		)	32,940			7,590			26,398
Net (decrease) increase in cash and cash equivalents	—			(1,477		)	(600		)	3,069			—			992
Cash and cash equivalents - beginning of period	—			36,204			272			6,136			—			42,612
Cash and cash equivalents - end of period	$	—		$	34,727		$	(328	)	$	9,205		$	—		$	43,604

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,931	)	$	18,174		$	(35,182	)	$	(65,970	)	$	2,931		$	(82,978	)
Investing activities
Collection of related party note receivable	—			6,188			—			—			—			6,188
Purchases of property and equipment	—			(809		)	56			(20		)	—			(773		)
Investments in subsidiaries	—			(1,727		)	46,801			—			(45,074		)	—
Net cash provided by (used in) investing activities	—			3,652			46,857			(20		)	(45,074		)	5,415
Financing activities
Proceeds from borrowings on notes payable	—			2,211			—			109,781			—			111,992
Principal payments on notes payable	—			(10,440		)	—			(80,810		)	—			(91,250		)
Proceeds from borrowings on Revolver	—			198,000			—			—			—			198,000
Payments on revolver	—			(167,000		)	—			—			—			(167,000		)
Principal payments on subordinated amortizing notes	—			(5,096		)	—			—			—			(5,096		)
Payment of deferred loan costs	—			(792		)	—			—			—			(792		)
Shares remitted to or withheld by Company for employee tax withholding	—			(918		)	—			—			—			(918		)
Excess income tax benefit from stock based awards	—			(238		)	—			—			—			(238		)
Noncontrolling interest contributions	—			—			—			36,140			—			36,140
Noncontrolling interest distributions	—			—			—			(12,768		)	—			(12,768		)
Advances to affiliates	—			—			(4,479		)	11,056			(6,577		)	—
Intercompany receivables/payables	2,931			(46,182		)	(9,391		)	3,922			48,720			—
Net cash provided by (used in) financing activities	2,931			(30,455		)	(13,870		)	67,321			42,143			68,070
Net (decrease) increase in cash and cash equivalents	—			(8,629		)	(2,195		)	1,331			—			(9,493		)
Cash and cash equivalents - beginning of period	—			44,332			2,723			3,148			—			50,203
Cash and cash equivalents - end of period	$	—		$	35,703		$	528		$	4,479		$	—		$	40,710

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), the Company is required to disclose the estimated fair value of financial instruments. As of September 30, 2017 and December 31, 2016, the Company used the following assumptions to estimate the fair value of each type of financial instrument for which it is practicable to estimate:

• Notes payable—The carrying amount is a reasonable estimate of fair value of the notes payable because market rates are unchanged since inception and/or the outstanding balance at quarter end is expected to be repaid within one year.

• Subordinated amortizing notes—The Subordinated amortizing notes are traded over the counter and their fair values were based upon quotes from industry sources.

•     5 ³/₄% Senior Notes due April 15, 2019 —The 5 ³/4% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 8 ¹/2% Senior Notes due November 15, 2020 —The 8 ¹/2% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 7% Senior Notes due August 15, 2022 —The 7% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 5 ⁷/₈ Senior Notes due January 31, 2025 —The 5 ⁷/8% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

The following table excludes cash and cash equivalents, restricted cash, receivables and accounts payable, which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. The estimated fair values of financial instruments are as follows (in thousands):

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	161,011	$	161,011	$	155,768	$	155,768
Subordinated amortizing notes	1,619		1,700		7,225		7,478
5 3/4% Senior Notes due 2019	149,226		151,875		148,826		151,125
8 1/2% Senior Notes due 2020	—		—		422,817		444,125
7% Senior Notes due 2022	346,556		362,250		346,014		363,125
5 7/8% Senior Notes due 2025	439,221		462,375		—		—

ASC 820 establishes a framework for measuring fair value, expands disclosures regarding fair value measurements and defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The Company used Level 3 to measure the fair value of its Notes payable, and Level 2 to measure the fair value of its Senior notes and Subordinated amortizing notes. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The three levels of the hierarchy are as follows:

• Level 1—quoted prices for identical assets or liabilities in active markets;

• Level 2—quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3—valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

In August 2016 the Company acquired certain lots within a master planned community located in Aurora, Colorado, for an overall purchase price of approximately $9.3 million, from an entity managed by an affiliate of Paulson & Co., Inc. (“Paulson”). WLH Recovery Acquisition LLC, which is affiliated with, and managed by affiliates of Paulson, held over 5% of Parent’s outstanding Class A common stock during the nine months ended September 30, 2017. A portion of the acquisition price for the lots was paid in the form of a seller note with a principal amount of approximately $3.0 million, which was paid upon maturity in August 2017. The Company believes that the transaction, including the terms of the seller note, was on terms no less favorable than it would have agreed to with unrelated parties.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Since inception, the Company has operated solely within the United States. The Company’s effective income tax rate was 31.6% and 29.9%, and 33.4% and 33.4% for the three and nine months ended September 30, 2017 and 2016, respectively. The significant drivers of the effective tax rate are the loss on extinguishment of debt resulting from the retirement of the 8.5% Notes (see Note 6), allocation of income to noncontrolling interests and the domestic production activities deduction.

Management assesses its deferred tax assets to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. At September 30, 2017, the Company had no valuation allowance recorded.

At September 30, 2017, the Company had no remaining federal net operating loss carryforwards and $56.5 million of remaining state net operating loss carryforwards. State net operating loss carryforwards begin to expire in 2031. In addition, as of September 30, 2017, the Company had unused federal and state built-in losses of $52.1 million and $7.3 million, respectively. The five year testing period for built-in losses expires in 2017 and the unused built-in loss carryforwards begin to expire in 2032. The Company had AMT credit carryovers of $1.4 million at September 30, 2017, which have an indefinite life.

FASB ASC Topic 740,Income Taxes (“ASC 740”), prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities. The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes. The Company has no unrecognized tax benefits.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal income tax examination for calendar tax years ended 2013 through 2016 and forward. The Company is subject to various state income tax examinations for calendar tax years ended 2009 through 2016 and forward.

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Income Per Common Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Income Per Common Share

Income Per Common Share

Basic and diluted income per common share for the three and nine months ended September 30, 2017 and 2016 were calculated as follows (in thousands, except number of shares and per share amounts):

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Basic weighted average number of common shares outstanding	37,059,483		36,801,464		37,007,144		36,746,727
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,523,858		636,633		1,374,148		672,364
Tangible equity units	—		894,930		—		894,930
Diluted average shares outstanding	38,583,341		38,333,027		38,381,292		38,314,021
Net income available to common stockholders	$	27,418	$	13,069	$	36,372	$	36,644
Basic income per common share	$	0.74	$	0.36	$	0.98	$	1.00
Dilutive income per common share	$	0.71	$	0.34	$	0.95	$	0.96
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	240,000		240,000		240,000		240,000
Warrants	—		1,907,551		—		1,907,551

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Stock Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Stock Based Compensation

We account for share-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at the fair value on the date of grant. Compensation expense for awards with performance based conditions is recognized over the vesting period once achievement of the performance condition is deemed probable.

During the three months ended September 30, 2017, the Company granted 6,434 shares of time-based restricted stock and during the nine months ended September 30, 2017, the Company granted 259,677 shares of time-based restricted stock and 553,909 shares of performance based restricted stock. On the Consolidated Balance Sheets and Statement of Equity, the Company considers unvested shares of restricted stock to be issued, but not outstanding.

The Company recorded total stock based compensation expense during the three and nine months ended September 30, 2017 and 2016 of $3.1 million and $6.3 million, and $1.5 million and $4.1 million, respectively.

Performance-Based Restricted Stock Awards

With respect to the performance based restricted stock awards granted to certain employees during the nine months ended September 30, 2017, the actual number of such shares of restricted stock that will be earned (the “Earned Shares”) is subject to the Company’s achievement of pre-established performance targets as of the end of the 2017 fiscal year. For each of the aforementioned awards, one-third of the Earned Shares will vest on March 1st of each of 2018, 2019 and 2020, subject to each grantee’s continued service through each vesting date. Based on the probability assessment as of September 30, 2017, management determined that the currently available data was sufficient to support that the achievement of the minimum threshold for one of the performance targets is probable, and as such, compensation expense of $1.5 million has been recognized for these awards to date.

Time-Based Restricted Stock Awards

With respect to the restricted stock awards granted to certain employees during the three months ended September 30, 2017, representing 6,434 shares of restricted stock, all shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on July 27th of each of 2018 and 2019, in each case subject to each grantee’s continued service through each vesting date. With respect to the restricted stock awards granted to certain employees and non-employee directors during the nine months ended September 30, 2017, representing 259,677 shares of restricted stock, 172,857 of such shares are subject to a vesting schedule pursuant to which one-third of the shares will vest on March 1st of each of 2018, 2019 and 2020, 45,111 of such shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on March 1st of each of 2018 and 2019, and 6,434 of such shares are subject to a vesting schedule pursuant to which one-half of the shares will vest on July 27th of each of 2018 and 2019, in each case subject to each grantee’s continued service through each vesting date, and 35,275 of such shares vest in equal quarterly installments on each of June 1, 2017, September 1, 2017, December 1, 2017 and March 1, 2018, subject to each grantee’s continued service on the board through each vesting date.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company’s commitments and contingent liabilities include the usual obligations incurred by real estate developers in the normal course of business. In the opinion of management, these matters will not have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

The Company is a defendant in various lawsuits related to its normal business activities. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of September 30, 2017, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized on our condensed consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings, and as appropriate, adjust them to reflect (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

The Company had outstanding performance and surety bonds of $209.6 million at September 30, 2017, related principally to its obligations for site improvements at various projects. The Company does not believe that draws upon these bonds, if any, will have a material effect on the Company’s financial position, results of operations or cash flows. As of September 30, 2017, the Company had $181.0 million of project commitments relating to the construction of projects.

See Note 6 for additional information relating to the Company’s guarantee arrangements.

The Company has entered into various purchase option agreements with third parties to acquire land. As of September 30, 2017, the Company has made non-refundable deposits of $61.1 million. The Company is under no obligation to purchase the land, but would forfeit remaining deposits if the land were not purchased. The total remaining purchase price under the option agreements is $455.4 million as of September 30, 2017.

Lease Obligations

As described more fully in Note 1, as of April 1, 2017, the Company adopted the provisions of ASU 2016-02 and recognized lease obligations and associated ROU assets for its existing non-cancelable leases. Lease obligations, as included in Accrued expenses on the consolidated balance sheets, were $15.9 million as of September 30, 2017 and $13.1 million as of December 31, 2016. The Company has non-cancelable operating leases primarily associated with office facilities, real estate and office equipment, in addition to one related sublease for an office facility. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Lease cost
Operating lease cost	$	1,646		$	1,006		$	4,405		$	2,874
Sublease income	(29		)	(29		)	(87		)	(87		)
Total lease cost	$	1,617		$	977		$	4,318		$	2,787
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,621		$	811		$	3,879		$	2,410
Right-of-use assets obtained in exchange for new operating lease liabilities	$	155		$	740		$	5,213		$	1,353
Weighted-average discount rate	6.6		%	6.6		%	6.6		%	6.6		%

	September 30, 2017	December 31, 2016
Weighted-average remaining lease term (in years)	3.79	5.16

The table below shows the future minimum payments under non-cancelable operating leases at September 30, 2017 (in thousands).

Year Ending December 31,
2017	$	1,703
2018	6,673
2019	3,740
2020	2,556
2021	2,398
Thereafter	1,782
Total	$	18,852

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Subsequent Events

9 Months Ended

Sep. 30, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

No events have occurred subsequent to September 30, 2017, that would require recognition or disclosure in the Company’s financial statements.

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Operations

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand) and Oregon (under the Polygon Northwest brand).

Basis of Presentation

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of September 30, 2017 and December 31, 2016 and revenues and expenses for the three and nine month periods ended September 30, 2017 and 2016. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 2). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2016, which are included in our 2016 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

Real Estate Inventories

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three and nine months ended September 30, 2017, the Company had one and two land parcel sales, respectively, that resulted in a negligible loss for both periods then ended. During the three and nine months ended September 30, 2016, the Company had two and five land parcel sales, respectively, that resulted in a $2.7 million gain for both periods then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.

Construction Services

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with FASB ASC Topic 605 Revenue Recognition (“ASC 605”). Under ASC 605, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

Financial Instruments

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments with off-balance sheet risk in the normal course of business which exposes it to credit risks. These financial instruments include letters of credit and obligations in connection with assessment district bonds.

Cash and Cash Equivalents

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of September 30, 2017 and December 31, 2016. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

Deferred Loan Costs

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

Goodwill

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have six reporting segments, as discussed in Note 4, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

ncome per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

Impact of Recent Accounting Pronouncements

Impact of Recent Accounting Pronouncements

Effective January 1, 2017, the Company adopted Accounting Standards Update ("ASU") No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplified several aspects for the accounting for share-based payment transactions, including the income tax consequences and classification on the statement of cash flows. The Company did not have any previously unrecognized excess tax benefits. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09”), which clarifies existing accounting literature relating to how and when revenue is recognized by an entity. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. In doing so, an entity will need to exercise a greater degree of judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. ASU 2014-09 is effective for public companies for interim and annual reporting periods beginning after December 15, 2017, and is to be applied either retrospectively or using the cumulative effect transition method, with early adoption not permitted.

The Company is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements, but does not anticipate that the adoption will have a material impact on the amount or timing of its revenues. ASU 2014-09 may impact the classification and timing of recognition of certain marketing costs and costs associated with obtaining a customer sales contract that the Company incurs in the course of its business. The Company has not concluded its analysis of these costs, but does not anticipate that adoption of the ASU will result in a material change to the Company's financial statements or related disclosures. The Company has not finalized its implementation plan for ASU 2014-09, but expects to employ the cumulative effect transition method.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the potential impact the adoption of ASU 2016-15 will have on its consolidated financial statements.

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Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Summary of Changes in Warranty Liability

Changes in the Company’s warranty liability for the nine months ended September 30, 2017 and 2016, are as follows (in thousands):

	Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Warranty liability, beginning of period	$	14,174		$	18,117
Warranty provision during period	7,695			7,086
Warranty payments during period	(9,419		)	(10,579		)
Warranty charges related to construction services projects	120			128
Warranty liability, end of period	$	12,570		$	14,752

Schedule of Interest Activity

Interest activity for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands):

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Interest incurred	$	18,112	$	21,293	$	56,359	$	62,112
Less: Interest capitalized	18,112		21,293		56,359		62,112
Interest expense, net of amounts capitalized	$	—	$	—	$	—	$	—
Cash paid for interest	$	28,374	$	14,898	$	55,532	$	54,576

Summary of Change in Accounting Principle

The balance sheet as of December 31, 2016 was adjusted using the modified retrospective transition approach which resulted in the following adjusted balances (in thousands):

	December 31, 2016	Lease adoption adjustments		December 31, 2016
				(as adjusted)
Lease right-of-use assets	—	$	13,129	$	13,129
Total assets	1,998,151	13,129		2,011,280
Accrued expenses	79,790	13,129		92,919
Total liabilities and equity	1,998,151	13,129		2,011,280

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Investments in Unconsolidated Joint Ventures (Tables)

9 Months Ended

Sep. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Summary of Unaudited Financials for Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues	$	5,368		$	5,397		$	13,830		$	14,675
Cost of sales	(2,781		)	(2,521		)	(7,936		)	(7,043		)
Income of unconsolidated joint ventures	$	2,587		$	2,876		$	5,894		$	7,632

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

			September 30, 2017		December 31, 2016
Assets
	Cash		$	12,051	$	10,208
	Loans held for sale		26,929		18,791
	Accounts receivable		585		764
	Other assets		156		56
		Total Assets	$	39,721	$	29,819
Liabilities and Equity
	Accounts payable		$	362	$	694
	Accrued expenses		1,314		1,026
	Credit lines payable		25,706		17,748
	Other liabilities		24		17
	Members equity		12,315		10,334
		Total Liabilities and Equity	$	39,721	$	29,819

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Segment Financial Information Relating to Operations

Segment financial information relating to the Company’s operations was as follows (in thousands):

	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Operating revenue:
California (1)	$	230,960		$	111,520		$	462,277		$	309,199
Arizona	39,607			28,758			118,695			85,399
Nevada	42,966			49,600			103,448			128,996
Colorado	24,811			35,316			77,149			85,885
Washington	71,788			42,247			185,523			112,512
Oregon	80,207			75,273			224,793			210,801
Total operating revenue	$	490,339		$	342,714		$	1,171,885		$	932,792
(1) Operating revenue in the California segment includes construction services revenue.
	Three   Months   Ended    September 30,   2017			Three   Months   Ended   September 30,   2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Income before provision for income taxes:
California	$	31,150		$	10,364		$	53,907		$	28,252
Arizona	3,388			2,542			11,102			7,537
Nevada	4,372			5,291			7,811			12,587
Colorado	969			2,342			2,519			3,643
Washington	6,164			2,899			10,249			6,767
Oregon	10,708			9,466			25,847			27,452
Corporate	(12,786		)	(8,095		)	(31,112		)	(23,838		)
Income before extinguishment of debt	$	43,965		$	24,809		$	80,323		$	62,400
Corporate - Loss on extinguishment of debt	$	—		$	—		$	(21,828	)	$	—
Income before provision for income taxes	$	43,965		$	24,809		$	58,495		$	62,400

Schedule of Segment Homebuilding Assets

	September 30, 2017		December 31, 2016
Homebuilding assets:			(as adjusted, refer to Note 1)
California	$	704,313	$	716,955
Arizona	182,588		191,581
Nevada	218,060		189,248
Colorado	154,422		124,580
Washington	324,358		343,973
Oregon	302,332		238,766
Corporate (1)	214,786		206,177
Total homebuilding assets	$	2,100,859	$	2,011,280

(1) Comprised primarily of cash and cash equivalents, deferred income taxes, receivables, lease right-of-use assets, and other assets.

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Real Estate Inventories (Tables)

9 Months Ended

Sep. 30, 2017

Real Estate [Abstract]

Summary of Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Real estate inventories:
Land deposits	$	61,123	$	50,429
Land and land under development	888,091		1,069,001
Homes completed and under construction	804,338		545,310
Model homes	102,106		107,258
Total	$	1,855,658	$	1,771,998

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Senior Notes, Secured, and Unsecured Indebtedness (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Debt

Senior notes, secured, and unsecured indebtedness consist of the following (in thousands):

	September 30, 2017		December 31, 2016
Notes payable:
Revolving credit facility	$	50,000	$	29,000
Seller financing	5,226		24,692
Joint venture notes payable	105,785		102,076
Total notes payable	161,011		155,768
Subordinated amortizing notes	1,619		7,225
Senior notes:
5 3/4% Senior Notes due April 15, 2019	149,226		148,826
8 1/2% Senior Notes due November 15, 2020	—		422,817
7% Senior Notes due August 15, 2022	346,556		346,014
5 7/8% Senior Notes due January 31, 2025	439,221		—
Total senior notes	935,003		917,657
Total notes payable and senior notes	$	1,097,633	$	1,080,650

Schedule of Maturities of Notes Payable and Senior Notes

The issuance date, facility size, maturity date and interest rate are listed in the table below as of September 30, 2017 (in millions):

Issuance Date	Facility Size		Outstanding			Maturity	Current Rate
March, 2016	$	33.4	$	16.7		September, 2018	4.24	%	(1)
January, 2016	35.0		31.8			February, 2019	4.48	%	(2)
November, 2015	42.5		19.3			May, 2018	5.25	%	(1)
July, 2015	15.0		3.6			July, 2018	4.75	%	(3)
November, 2014	7.0		3.7		(4)	November, 2017	4.75	%	(3)
November, 2014	15.0		—			November, 2017	4.75	%	(3)
March, 2014	26.0		2.4			April, 2018	4.24	%	(1)
July, 2017	46.2		28.3			August, 2020	4.46	%	(5)
	$	220.1	$	105.8

(1) Loan bears interest at the Company's option of either LIBOR +3.0% or the prime rate +1.0%.

(2) Loan bears interest at LIBOR +3.25%.

(3) Loan bears interest at the prime rate +0.5%.

(4) The Company anticipates paying the borrowings in full upon the maturity date from proceeds from homes closed in the respective project.

(5) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

As of September 30, 2017, the maturities of the Notes payable, Subordinated amortizing notes, 5 ³/₄% Senior Notes, 7% Senior Notes, and 5 ⁷/₈% Senior Notes are as follows (in thousands):

Year Ending December 31,
2017	5,335
2018	47,238
2019	231,806
2020	28,251
2021	—
Thereafter	800,000
	$	1,112,630

Debt Instrument Redemption

On or after January 31, 2020, California Lyon may redeem all or a portion of the 5.875% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount), set forth below plus accrued and unpaid interest to the redemption date, if redeemed during the 12-month period commencing on each of the dates indicated below:

Year	Percentage
January 31, 2020	102.938	%
January 31, 2021	101.469	%
January 31, 2022	100.734	%
January 31, 2023 and thereafter	100.000	%

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	34,727		$	(328	)	$	9,205		$	—		$	43,604
Receivables	—		4,048			1,760			3,911			—			9,719
Escrow proceeds receivable	—		228			—			—			—			228
Real estate inventories	—		900,390			697,824			257,444			—			1,855,658
Investment in unconsolidated joint ventures	—		8,075			150			—			—			8,225
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		73,597			—			—			—			73,597
Lease right-of-use assets	—		15,074			—			—			—			15,074
Other assets, net	—		18,762			1,896			494			—			21,152
Investments in subsidiaries	735,984		(18,249		)	(575,925		)	—			(141,810		)	—
Intercompany receivables	—		—			241,160			—			(241,160		)	—
Total assets	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859
LIABILITIES AND EQUITY
Accounts payable	$	—	$	48,450		$	25,061		$	10,605		$	—		$	84,116
Accrued expenses	—		88,318			4,719			103			—			93,140
Notes payable	—		55,226			—			105,785			—			161,011
Subordinated amortizing notes	—		1,619			—			—			—			1,619
5  3/4% Senior Notes	—		149,226			—			—			—			149,226
7% Senior Notes	—		346,556			—			—			—			346,556
5 7/8% Senior Notes	—		439,221			—			—			—			439,221
Intercompany payables	—		158,338			—			82,822			(241,160		)	—
Total liabilities	—		1,286,954			29,780			199,315			(241,160		)	1,274,889
Equity
William Lyon Homes stockholders’ equity (deficit)	735,984		(236,091		)	396,150			(18,249		)	(141,810		)	735,984
Noncontrolling interests	—		(2		)	—			89,988			—			89,986
Total liabilities and equity	$	735,984	$	1,050,861		$	425,930		$	271,054		$	(382,970	)	$	2,100,859

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2016

(as adjusted)

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	36,204		$	272		$	6,136		$	—		$	42,612
Receivables	—		2,989			3,303			3,246			—			9,538
Escrow proceeds receivable	—		85			—			—			—			85
Real estate inventories	—		910,594			645,341			216,063			—			1,771,998
Investment in unconsolidated joint ventures	—		7,132			150			—			—			7,282
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		75,751			—			—			—			75,751
Lease right-of-use assets	—		13,129			—			—			—			13,129
Other assets, net	—		15,779			1,089			415			—			17,283
Investments in subsidiaries	697,086		(23,736		)	(573,650		)	—			(99,700		)	—
Intercompany receivables	—		—			252,860			—			(252,860		)	—
Total assets	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280
LIABILITIES AND EQUITY
Accounts payable	$	—	$	52,380		$	16,416		$	5,486		$	—		$	74,282
Accrued expenses	—		88,185			4,636			98			—			92,919
Notes payable	—		50,713			2,979			102,076			—			155,768
Subordinated amortizing notes	—		7,225			—			—			—			7,225
5 3/4% Senior Notes	—		148,826			—			—			—			148,826
8 1/2% Senior Notes	—		422,817			—			—			—			422,817
7% Senior Notes	—		346,014			—			—			—			346,014
Intercompany payables	—		177,267			—			75,593			(252,860		)	—
Total liabilities	—		1,293,427			24,031			183,253			(252,860		)	1,247,851
Equity
William Lyon Homes stockholders’ equity (deficit)	697,086		(241,291		)	364,727			(23,736		)	(99,700		)	697,086
Noncontrolling interests	—		—			—			66,343			—			66,343
Total liabilities and equity	$	697,086	$	1,052,136		$	388,758		$	225,860		$	(352,560	)	$	2,011,280

Condensed Consolidating Statement of Operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	211,317		$	218,033		$	60,954		$	—		$	490,304
Construction services	—		35			—			—			—			35
Management fees	—		(1,899		)	—			—			1,899			—
	—		209,453			218,033			60,954			1,899			490,339
Operating costs
Cost of sales	—		(165,392		)	(181,184		)	(53,225		)	(1,899		)	(401,700		)
Construction services	—		(35		)	—			—			—			(35		)
Sales and marketing	—		(7,904		)	(11,521		)	(2,510		)	—			(21,935		)
General and administrative	—		(19,171		)	(3,780		)	—			—			(22,951		)
Other	—		(635		)	86			1			—			(548		)
	—		(193,137		)	(196,399		)	(55,734		)	(1,899		)	(447,169		)
Income from subsidiaries	27,418		6,162			—			—			(33,580		)	—
Operating income	27,418		22,478			21,634			5,220			(33,580		)	43,170
Equity in income from unconsolidated joint ventures	—		819			341			—			—			1,160
Other income (expense), net	—		47			(4		)	(408		)	—			(365		)
Income before provision for income taxes	27,418		23,344			21,971			4,812			(33,580		)	43,965
Provision for income taxes	—		(13,905		)	—			—			—			(13,905		)
Net income	27,418		9,439			21,971			4,812			(33,580		)	30,060
Less: Net income attributable to noncontrolling interests	—		—			—			(2,642		)	—			(2,642		)
Net income available to common stockholders	$	27,418	$	9,439		$	21,971		$	2,170		$	(33,580	)	$	27,418

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	105,962		$	181,594		$	55,072		$	—		$	342,628
Construction services	—		86			—			—			—			86
Management fees	—		(1,541		)	—			—			1,541			—
	—		104,507			181,594			55,072			1,541			342,714
Operating costs
Cost of sales	—		(84,652		)	(151,306		)	(48,397		)	(1,541		)	(285,896		)
Construction services	—		(86		)	—			—			—			(86		)
Sales and marketing	—		(6,205		)	(9,774		)	(2,267		)	—			(18,246		)
General and administrative	—		(14,268		)	(3,091		)	(1		)	—			(17,360		)
Other	—		140			69			(11		)	—			198
	—		(105,071		)	(164,102		)	(50,676		)	(1,541		)	(321,390		)
Income from subsidiaries	13,069		3,548			—			—			(16,617		)	—
Operating income (loss)	13,069		2,984			17,492			4,396			(16,617		)	21,324
Equity in income from unconsolidated joint ventures	—		1,140			295			—			—			1,435
Other income (expense), net	—		2,550			(19		)	(481		)	—			2,050
Income (loss) before provision for income taxes	13,069		6,674			17,768			3,915			(16,617		)	24,809
Provision for income taxes	—		(8,295		)	—			—			—			(8,295		)
Net income (loss)	13,069		(1,621		)	17,768			3,915			(16,617		)	16,514
Less: Net income attributable to noncontrolling interests	—		—			—			(3,445		)	—			(3,445		)
Net income (loss) available to common stockholders	$	13,069	$	(1,621	)	$	17,768		$	470		$	(16,617	)	$	13,069

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	505,006		$	535,828		$	130,957		$	—		$	1,171,791
Construction services	—		94			—			—			—			94
Management fees	—		(3,501		)	—			—			3,501			—
	—		501,599			535,828			130,957			3,501			1,171,885
Operating costs
Cost of sales	—		(408,420		)	(445,737		)	(115,554		)	(3,501		)	(973,212		)
Construction services	—		(41		)	—			—			—			(41		)
Sales and marketing	—		(21,479		)	(29,241		)	(7,204		)	—			(57,924		)
General and administrative	—		(49,285		)	(12,161		)	(1		)	—			(61,447		)
Other	—		(1,786		)	232			6			—			(1,548		)
	—		(481,011		)	(486,907		)	(122,753		)	(3,501		)	(1,094,172		)
Income from subsidiaries	36,372		13,328			—			—			(49,700		)	—
Operating income	36,372		33,916			48,921			8,204			(49,700		)	77,713
Equity in income from unconsolidated joint ventures	—		1,743			879			—			—			2,622
Other income (expense), net	—		1,072			(10		)	(1,074		)	—			(12		)
Income before extinguishment of debt	36,372		36,731			49,790			7,130			(49,700		)	80,323
Loss on extinguishment of debt	—		(21,828		)	—			—			—			(21,828		)
Income (loss) before provision for income taxes	36,372		14,903			49,790			7,130			(49,700		)	58,495
Provision for income taxes	—		(17,480		)	—			—			—			(17,480		)
Net income (loss)	36,372		(2,577		)	49,790			7,130			(49,700		)	41,015
Less: Net income attributable to noncontrolling interests	—		—			—			(4,643		)	—			(4,643		)
Net income (loss) available to common stockholders	$	36,372	$	(2,577	)	$	49,790		$	2,487		$	(49,700	)	$	36,372

Condensed Consolidating Statement of Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2017

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,526	)	$	2,452		$	4,366		$	(29,808	)	$	2,526		$	(22,990	)
Investing activities
Purchases of property and equipment	—			(1,781		)	(572		)	(63		)	—			(2,416		)
Investments in subsidiaries	—			7,841			2,275			—			(10,116		)	—
Net cash provided by (used in) investing activities	—			6,060			1,703			(63		)	(10,116		)	(2,416		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			105,109			—			105,109
Principal payments on notes payable	—			—			—			(101,400		)	—			(101,400		)
Redemption premium of 8.5% Senior Notes	—			(19,645		)	—			—			—			(19,645		)
Principal payments of 8.5% Senior Notes	—			(425,000		)	—			—			—			(425,000		)
Proceeds from issuance of 5.875% Senior Notes	—			446,468			—			—			—			446,468
Proceeds from borrowings on Revolver	—			275,000			—			—			—			275,000
Payments on Revolver	—			(254,000		)	—			—			—			(254,000		)
Principal payments on subordinated amortizing notes	—			(5,606		)	—			—			—			(5,606		)
Payment of deferred loan costs	—			(9,794		)	—			—			—			(9,794		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(1,450		)	—			—			—			(1,450		)
Payments to repurchase common stock	—			(2,284		)	—			—			—			(2,284		)
Noncontrolling interest contributions	—			—			—			58,829			—			58,829
Noncontrolling interest distributions	—			—			—			(39,829		)	—			(39,829		)
Advances to affiliates	—			—			(18,367		)	3,000			15,367			—
Intercompany receivables/payables	2,526			(13,678		)	11,698			7,231			(7,777		)	—
Net cash provided by (used in) financing activities	2,526			(9,989		)	(6,669		)	32,940			7,590			26,398
Net (decrease) increase in cash and cash equivalents	—			(1,477		)	(600		)	3,069			—			992
Cash and cash equivalents - beginning of period	—			36,204			272			6,136			—			42,612
Cash and cash equivalents - end of period	$	—		$	34,727		$	(328	)	$	9,205		$	—		$	43,604

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(2,931	)	$	18,174		$	(35,182	)	$	(65,970	)	$	2,931		$	(82,978	)
Investing activities
Collection of related party note receivable	—			6,188			—			—			—			6,188
Purchases of property and equipment	—			(809		)	56			(20		)	—			(773		)
Investments in subsidiaries	—			(1,727		)	46,801			—			(45,074		)	—
Net cash provided by (used in) investing activities	—			3,652			46,857			(20		)	(45,074		)	5,415
Financing activities
Proceeds from borrowings on notes payable	—			2,211			—			109,781			—			111,992
Principal payments on notes payable	—			(10,440		)	—			(80,810		)	—			(91,250		)
Proceeds from borrowings on Revolver	—			198,000			—			—			—			198,000
Payments on revolver	—			(167,000		)	—			—			—			(167,000		)
Principal payments on subordinated amortizing notes	—			(5,096		)	—			—			—			(5,096		)
Payment of deferred loan costs	—			(792		)	—			—			—			(792		)
Shares remitted to or withheld by Company for employee tax withholding	—			(918		)	—			—			—			(918		)
Excess income tax benefit from stock based awards	—			(238		)	—			—			—			(238		)
Noncontrolling interest contributions	—			—			—			36,140			—			36,140
Noncontrolling interest distributions	—			—			—			(12,768		)	—			(12,768		)
Advances to affiliates	—			—			(4,479		)	11,056			(6,577		)	—
Intercompany receivables/payables	2,931			(46,182		)	(9,391		)	3,922			48,720			—
Net cash provided by (used in) financing activities	2,931			(30,455		)	(13,870		)	67,321			42,143			68,070
Net (decrease) increase in cash and cash equivalents	—			(8,629		)	(2,195		)	1,331			—			(9,493		)
Cash and cash equivalents - beginning of period	—			44,332			2,723			3,148			—			50,203
Cash and cash equivalents - end of period	$	—		$	35,703		$	528		$	4,479		$	—		$	40,710

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments are as follows (in thousands):

	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	161,011	$	161,011	$	155,768	$	155,768
Subordinated amortizing notes	1,619		1,700		7,225		7,478
5 3/4% Senior Notes due 2019	149,226		151,875		148,826		151,125
8 1/2% Senior Notes due 2020	—		—		422,817		444,125
7% Senior Notes due 2022	346,556		362,250		346,014		363,125
5 7/8% Senior Notes due 2025	439,221		462,375		—		—

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Income Per Common Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Income Per Common Share Calculation

Basic and diluted income per common share for the three and nine months ended September 30, 2017 and 2016 were calculated as follows (in thousands, except number of shares and per share amounts):

	Three   Months   Ended    September 30,   2017		Three   Months   Ended   September 30,   2016		Nine   Months   Ended   September 30,   2017		Nine   Months   Ended   September 30,   2016
Basic weighted average number of common shares outstanding	37,059,483		36,801,464		37,007,144		36,746,727
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,523,858		636,633		1,374,148		672,364
Tangible equity units	—		894,930		—		894,930
Diluted average shares outstanding	38,583,341		38,333,027		38,381,292		38,314,021
Net income available to common stockholders	$	27,418	$	13,069	$	36,372	$	36,644
Basic income per common share	$	0.74	$	0.36	$	0.98	$	1.00
Dilutive income per common share	$	0.71	$	0.34	$	0.95	$	0.96
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	240,000		240,000		240,000		240,000
Warrants	—		1,907,551		—		1,907,551

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Lease Costs

Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine   Months   Ended   September 30,   2017			Nine   Months   Ended   September 30,   2016
Lease cost
Operating lease cost	$	1,646		$	1,006		$	4,405		$	2,874
Sublease income	(29		)	(29		)	(87		)	(87		)
Total lease cost	$	1,617		$	977		$	4,318		$	2,787
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,621		$	811		$	3,879		$	2,410
Right-of-use assets obtained in exchange for new operating lease liabilities	$	155		$	740		$	5,213		$	1,353
Weighted-average discount rate	6.6		%	6.6		%	6.6		%	6.6		%

	September 30, 2017	December 31, 2016
Weighted-average remaining lease term (in years)	3.79	5.16

Schedule of Future Minimum Rental Payments for Operating Leases

The table below shows the future minimum payments under non-cancelable operating leases at September 30, 2017 (in thousands).

Year Ending December 31,
2017	$	1,703
2018	6,673
2019	3,740
2020	2,556
2021	2,398
Thereafter	1,782
Total	$	18,852

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Basis of Presentation and Significant Accounting Policies - Narrative (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) segment	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Significant Accounting Policies [Line Items]
Gain (Loss) on Disposition of Property Plant Equipment	$ 2,700,000	$ 2,700,000
Number of reportable segments | segment		6
Minimum
Significant Accounting Policies [Line Items]
Percentage of sales price fee from construction management agreements		3.00%
Maximum
Significant Accounting Policies [Line Items]
Percentage of sales price fee from construction management agreements		5.00%
Accrued Expenses
Significant Accounting Policies [Line Items]
Lease liability		$ 15,900,000	$ 15,600,000		$ 13,100,000
Accrued Expenses | Restatement Adjustment
Significant Accounting Policies [Line Items]
Sale Leaseback Transaction, Amount Due under Financing Arrangement				$ 19,800,000

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Basis of Presentation and Significant Accounting Policies - Summary of Changes in Warranty Liability (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]
Warranty liability, beginning of period	$ 14,174,000	$ 18,117,000
Warranty provision during period	7,695,000	7,086,000
Warranty payments during period	(9,419,000)	(10,579,000)
Warranty charges related to construction services projects	120,000	128,000
Warranty liability, end of period	$ 12,570,000	$ 14,752,000

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Basis of Presentation and Significant Accounting Policies - Schedule of Interest Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accounting Policies [Abstract]
Interest incurred	$ 18,112	$ 21,293	$ 56,359	$ 62,112
Less: Interest capitalized	18,112	21,293	56,359	62,112
Interest expense, net of amounts capitalized	0	0	0	0
Cash paid for interest	$ 28,374	$ 14,898	$ 55,532	$ 54,576

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Basis of Presentation and Significant Accounting Policies - Change in Accounting Principle (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease right-of-use assets	$ 15,074	$ 13,129
Total assets	2,100,859	2,011,280
Accrued expenses	93,140	92,919
Total liabilities and equity	$ 2,100,859	2,011,280
Previously Reported
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease right-of-use assets		0
Total assets		1,998,151
Accrued expenses		79,790
Total liabilities and equity		1,998,151
Restatement Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease right-of-use assets		13,129
Total assets		13,129
Accrued expenses		13,129
Total liabilities and equity		$ 13,129

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Variable Interest Entities and Noncontrolling Interests - Narrative (Details) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) joint_venture	Dec. 31, 2016 USD ($) joint_venture
Noncontrolling Interest [Line Items]
Number of joint ventures | joint_venture	12	11
Consolidated variable interest entities, assets	$ 243.7	$ 204.8
Consolidated variable interest entities, liabilities	115.8	107.3
Cash
Noncontrolling Interest [Line Items]
Consolidated variable interest entities, assets	8.8	5.8
Real estate
Noncontrolling Interest [Line Items]
Consolidated variable interest entities, assets	$ 250.6	$ 200.7

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Investments in Unconsolidated Joint Ventures - Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Equity Method Investments [Line Items]
Revenues	$ 490,339	$ 342,714	$ 1,171,885	$ 932,792
Cost of sales	(447,169)	(321,390)	(1,094,172)	(877,005)
Operating income (loss)	43,170	21,324	77,713	55,787
Unconsolidated joint venture income	1,160	1,435	2,622	3,810
Joint Ventures
Schedule of Equity Method Investments [Line Items]
Revenues	5,368	5,397	13,830	14,675
Cost of sales	(2,781)	(2,521)	(7,936)	(7,043)
Operating income (loss)	$ 2,587	$ 2,876	$ 5,894	$ 7,632

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Investments in Unconsolidated Joint Ventures - Financial Position (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Other assets	$ 21,152	$ 17,283
Total assets	2,100,859	2,011,280
LIABILITIES AND EQUITY
Accounts payable	84,116	74,282
Accrued expenses	93,140	92,919
Total liabilities and equity	2,100,859	2,011,280
Joint Ventures
ASSETS
Cash	12,051	10,208
Loans held for sale	26,929	18,791
Accounts receivable	585	764
Other assets	156	56
Total assets	39,721	29,819
LIABILITIES AND EQUITY
Accounts payable	362	694
Accrued expenses	1,314	1,026
Credit lines payable	25,706	17,748
Other liabilities	24	17
Members equity	12,315	10,334
Total liabilities and equity	$ 39,721	$ 29,819

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Segment Information - Narrative (Details)	9 Months Ended
	Sep. 30, 2017 segment
Segment Reporting [Abstract]
Number of operating segments	1
Number of reportable segments	6

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Segment Information - Schedule of Segment Financial Information Relating to Operations (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating revenue
Total operating revenue		$ 490,339	$ 342,714	$ 1,171,885	$ 932,792
Income before provision for income taxes:
Income before provision for income taxes		43,965	24,809	58,495	62,400
Income before extinguishment of debt		43,965	24,809	80,323	62,400
Loss on extinguishment of debt		0	0	(21,828)	0
Corporate
Income before provision for income taxes:
Income before provision for income taxes		(12,786)	(8,095)	(31,112)	(23,838)
California
Operating revenue
Total operating revenue	[1]	230,960	111,520	462,277	309,199
California | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		31,150	10,364	53,907	28,252
Arizona
Operating revenue
Total operating revenue		39,607	28,758	118,695	85,399
Arizona | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		3,388	2,542	11,102	7,537
Nevada
Operating revenue
Total operating revenue		42,966	49,600	103,448	128,996
Nevada | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		4,372	5,291	7,811	12,587
Colorado
Operating revenue
Total operating revenue		24,811	35,316	77,149	85,885
Colorado | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		969	2,342	2,519	3,643
Washington
Operating revenue
Total operating revenue		71,788	42,247	185,523	112,512
Washington | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		6,164	2,899	10,249	6,767
Oregon
Operating revenue
Total operating revenue		80,207	75,273	224,793	210,801
Oregon | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		$ 10,708	$ 9,466	$ 25,847	$ 27,452

[1] Operating revenue in the California segment includes construction services revenue.

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Segment Information - Schedule of Segment Homebuilding Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Homebuilding assets:
Total homebuilding assets	$ 2,100,859	$ 2,011,280
Corporate
Homebuilding assets:
Total homebuilding assets	214,786	206,177
California | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	704,313	716,955
Arizona | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	182,588	191,581
Nevada | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	218,060	189,248
Colorado | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	154,422	124,580
Washington | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	324,358	343,973
Oregon | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	$ 302,332	$ 238,766

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Real Estate Inventories - Summary of Real Estate Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Real estate inventories:
Land deposits	$ 61,123	$ 50,429
Land and land under development	888,091	1,069,001
Homes completed and under construction	804,338	545,310
Model homes	102,106	107,258
Total	$ 1,855,658	$ 1,771,998

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Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jan. 31, 2017	Dec. 31, 2016	Nov. 21, 2014	Aug. 11, 2014	Mar. 31, 2014	Nov. 08, 2012
Debt Instrument [Line Items]
Total notes payable	$ 161,011		$ 155,768
Total debt	1,097,633		1,080,650
Subordinated amortizing notes
Debt Instrument [Line Items]
Total debt	1,619		7,225
Stated interest rate				5.50%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Total debt	$ 149,226		$ 148,826
Stated interest rate	5.75%		5.75%
8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Total debt	$ 0		$ 422,817
Stated interest rate	8.50%		8.50%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Total debt	$ 346,556		$ 346,014
Stated interest rate	7.00%		7.00%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Total debt	$ 439,221		$ 0
Stated interest rate	5.875%
Seller financing
Debt Instrument [Line Items]
Total notes payable	$ 5,226		24,692
Seller financing | Note Payable Maturing in June 2018
Debt Instrument [Line Items]
Stated interest rate	7.00%
Joint venture notes payable
Debt Instrument [Line Items]
Total notes payable	$ 105,785		102,076
Senior notes
Debt Instrument [Line Items]
Total debt	935,003		917,657
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Total debt	$ 149,226		$ 148,826
Stated interest rate	5.75%		5.75%			5.75%
Senior notes | 8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Total debt	$ 0		$ 422,817
Stated interest rate	8.50%		8.50%				8.50%
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Total debt	$ 346,556		$ 346,014
Stated interest rate	7.00%		7.00%		7.00%
Senior notes | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Total debt	$ 439,221		$ 0
Stated interest rate	5.875%	5.875%

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Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Notes Payable, Senior Unsecured Facility, 5 3/4% and 8 1/2% Senior Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Total debt	$ 1,097,633	$ 1,080,650
Senior Notes and Subordinated Amortizing Notes
Debt Instrument [Line Items]
2017	5,335
2018	47,238
2019	231,806
2020	28,251
2021	0
Thereafter	800,000
Total debt	$ 1,112,630

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Senior Notes, Secured, and Unsecured Indebtedness - Revolving Line of Credit - Narrative (Details) - USD ($)		9 Months Ended
	Jul. 01, 2016	Sep. 30, 2016	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016	Mar. 27, 2015	Mar. 31, 2014
Debt Instrument [Line Items]
Notes payable				$ 161,011,000	$ 155,768,000
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate				5.75%	5.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Effective rate				6.25%	4.75%
Revolving Credit Facility | Amended Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 130,000,000.0				$ 130,000,000.0
Additional capacity under accordion feature						200,000,000.0
Commitment fee percentage		50.00%
Revolving Credit Facility | Second Amended Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 145,000,000.0
Additional capacity under accordion feature	$ 200,000,000.0
Debt Instrument, Covenant, Tangible Net Worth, Minimum				$ 451,000,000.0
Debt instrument, subjective acceleration clause, percentage of EBITDA, minimum	50.00%
Debt Instrument, Covenant, Leverage Ratio, Maximum				65.00%	62.50%
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum				1.50
Debt Instrument, Covenant, Interest Coverage Ratio, Maximum Liquidity Used in Calculation				$ 50,000,000.0
Revolving Credit Facility | Original Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						100,000,000
Additional capacity under accordion feature						125,000,000.0
Letter of Credit
Debt Instrument [Line Items]
Outstanding letter of credit				800,000	$ 8,000,000
Letter of Credit | Amended Facility
Debt Instrument [Line Items]
Minimum borrowing capacity						$ 50,000,000.0
Outstanding letter of credit				$ 800,000	$ 8,000,000
Letter of Credit | Second Amended Facility
Debt Instrument [Line Items]
Minimum borrowing capacity	$ 50,000,000.0
Senior Notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate				5.75%	5.75%		5.75%
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Notes payable				$ 50,000,000	$ 29,000,000
Scenario, Forecast | Revolving Credit Facility | Second Amended Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum			60.00%

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Senior Notes, Secured, and Unsecured Indebtedness - Narrative (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 30, 2016 land_acquisition	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Jan. 31, 2017	Dec. 31, 2016 USD ($)	Aug. 11, 2014	Mar. 31, 2014	Nov. 08, 2012
Debt Instrument [Line Items]
Loss on extinguishment of debt		$ 0	$ 0	$ (21,828)	$ 0
Deferred loan costs		12,500		12,500
Notes payable		$ 161,011		$ 161,011			$ 155,768
Number of land acquisitions using seller financing | land_acquisition	1
8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate		8.50%		8.50%			8.50%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate		7.00%		7.00%			7.00%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate		5.75%		5.75%			5.75%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Stated interest rate		5.875%		5.875%
Senior notes | 8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate		8.50%		8.50%			8.50%			8.50%
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate		7.00%		7.00%			7.00%	7.00%
Unamortized premium		$ 800		$ 800
Deferred loan costs		$ 4,200		$ 4,200
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate		5.75%		5.75%			5.75%		5.75%
Deferred loan costs		$ 800		$ 800
Senior notes | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Stated interest rate		5.875%		5.875%		5.875%
Deferred loan costs		$ 7,500		$ 7,500
Seller financing
Debt Instrument [Line Items]
Notes payable		$ 5,226		$ 5,226			$ 24,692
Seller financing | Note Payable Maturing in August 2017
Debt Instrument [Line Items]
Stated interest rate		7.00%		7.00%
Seller financing | Note Payable Maturing in June 2018
Debt Instrument [Line Items]
Stated interest rate		7.00%		7.00%

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Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Construction Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Total notes payable	$ 161,011	$ 155,768
Construction Loans
Debt Instrument [Line Items]
Total notes payable	220,100
Outstanding	105,800
Construction Loans | March 2016 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	33,400
Outstanding	$ 16,700
Current Rate	4.24%
Construction Loans | January 2016 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 35,000
Outstanding	$ 31,800
Current Rate	4.48%
Construction Loans | November 2015 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 42,500
Outstanding	$ 19,300
Current Rate	5.25%
Construction Loans | July 2015 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 15,000
Outstanding	$ 3,600
Current Rate	4.75%
Construction Loans | November 2014 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 7,000
Outstanding	$ 3,700
Current Rate	4.75%
Construction Loans | November 2014 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 15,000
Outstanding	$ 0
Current Rate	4.75%
Construction Loans | March 2014 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 26,000
Outstanding	$ 2,400
Current Rate	4.24%
Construction Loans | July 2017 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 46,200
Outstanding	$ 28,300
Current Rate	4.46%

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Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Construction Notes Payable (Footnote) (Details)	9 Months Ended
	Sep. 30, 2017
Construction Notes Payable, March 2014, August 2015, November 2015, March 2016 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.00%
Construction Notes Payable, March 2014, August 2015, November 2015, March 2016 | Prime rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Construction Notes Payable, January 2016 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
Construction Notes Payable, November 2014, April 2015, July 2015 | Prime rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
Construction Notes Payable Five [Member] | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Construction Notes Payable Five [Member] | Federal Funds Effective Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%

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Senior Notes, Secured, and Unsecured Indebtedness - Subordinated Amortizing Notes - Narrative (Details) $ / shares in Units, $ in Thousands	Nov. 21, 2014 $ / shares $ / note shares	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 03, 2014 shares
Debt Instrument [Line Items]
Total debt | $		$ 1,097,633	$ 1,080,650
Subordinated amortizing notes
Debt Instrument [Line Items]
Initial principal amount | $ / note	18.01
Stated interest rate	5.50%
Quarterly installments amount per amortizing note (in USD per note) | $ / note	1.6250
Installment payment amount per amortizing note (in USD per note) | $ / note	1.8056
Total debt | $		1,619	7,225
Senior unsecured loan facility
Debt Instrument [Line Items]
Total debt | $		$ 1,619	$ 7,225
Minimum | Common stock, Class A
Debt Instrument [Line Items]
Shares delivered on mandatory settlement date (in shares) | shares	4.4465
Maximum | Common stock, Class A
Debt Instrument [Line Items]
Shares delivered on mandatory settlement date (in shares) | shares	5.2247
Tangible Equity Units
Debt Instrument [Line Items]
Number of TEUs sold (in shares) | shares	1,000,000			150,000
Stated rate	6.50%
Share price (in USD per share) | $ / shares	$ 100
Percent conversion premium	17.50%

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Senior Notes, Secured, and Unsecured Indebtedness - Senior Notes - Narrative (Details) - USD ($)							1 Months Ended					3 Months Ended		9 Months Ended		12 Months Ended			36 Months Ended
	Jan. 31, 2017	Sep. 15, 2015	Aug. 11, 2014	Mar. 31, 2014	Oct. 24, 2013	Nov. 08, 2012	Jan. 31, 2016	Jan. 31, 2015	Aug. 31, 2014	Feb. 28, 2014	Jul. 31, 2013	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jan. 31, 2022	Jan. 31, 2021	Jan. 31, 2020	Jan. 31, 2025	Dec. 31, 2016
Debt Instrument [Line Items]
Gain (Loss) on Extinguishment of Debt												$ 0	$ 0	$ (21,828,000)	$ 0
Deferred loan costs												$ 12,500,000		$ 12,500,000
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate												7.00%		7.00%						7.00%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate												5.75%		5.75%						5.75%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Stated interest rate												5.875%		5.875%
8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate												8.50%		8.50%						8.50%
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate			7.00%									7.00%		7.00%						7.00%
Principal amount		$ 50,000,000.0	$ 300,000,000									$ 350,000,000		$ 350,000,000
Percentage of principal amount		102.00%	100.00%
Percent exchanged								100.00%
Deferred loan costs												4,200,000		4,200,000
Net proceeds from issuance of debt		$ 50,500,000
Expected percent exchanged							100.00%
Outstanding amount												350,000,000		350,000,000
Unamortized premium												$ 800,000		$ 800,000
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate				5.75%								5.75%		5.75%						5.75%
Principal amount				$ 150,000,000								$ 150,000,000		$ 150,000,000
Percentage of principal amount				100.00%
Percent exchanged									100.00%
Deferred loan costs												$ 800,000		$ 800,000
Maturity date														Apr. 15, 2019
Senior notes | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Stated interest rate	5.875%											5.875%		5.875%
Principal amount	$ 450,000,000											$ 450,000,000		$ 450,000,000
Percentage of principal amount	99.215%
Deferred loan costs												7,500,000		7,500,000
Debt Instrument, Unamortized Discount												$ 3,300,000		$ 3,300,000
Senior notes | 8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate						8.50%						8.50%		8.50%						8.50%
Debt Instrument, Repurchase Amount	$ 395,600,000
Principal amount					$ 100,000,000.0	$ 325,000,000
Percentage of principal amount					106.50%	100.00%
Percent exchanged										100.00%	100.00%
Net proceeds from issuance of debt					$ 104,700,000
Outstanding amount												$ 425,000,000		$ 425,000,000
California Lyon | Senior notes | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Debt Instrument [Line Items]
Senior Notes Redemption Price Percentage												100.00%
Debt Instrument, Redemption Price, Percentage												105.875%
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed												35.00%
Scenario, Forecast | November 2025 | Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Senior Notes Redemption Price Percentage																100.734%	101.469%	102.938%	100.00%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Guarantor and Non-Guarantor Financial Statements - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Debt Instrument [Line Items]
Proceeds from issuance of 7% senior notes	$ 446,468	$ 0
Parent
Debt Instrument [Line Items]
Ownership percentage	100.00%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Proceeds from issuance of 7% senior notes	$ 446,468
Reporting Entities | 7% Senior Notes due August 15, 2022 | California Lyon
Debt Instrument [Line Items]
Proceeds from issuance of 7% senior notes	$ 446,468

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jan. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015	Nov. 21, 2014	Aug. 11, 2014	Mar. 31, 2014	Nov. 08, 2012
ASSETS
Cash and cash equivalents	$ 43,604		$ 42,612	$ 40,710	$ 50,203
Receivables	9,719		9,538
Escrow proceeds receivable	228		85
Real estate inventories	1,855,658		1,771,998
Investment in unconsolidated joint ventures	8,225		7,282
Goodwill	66,902		66,902
Intangibles, net	6,700		6,700
Deferred income taxes, net	73,597		75,751
Lease right-of-use assets	15,074		13,129
Other assets, net	21,152		17,283
Investments in subsidiaries	0		0
Intercompany receivables	0		0
Total assets	2,100,859		2,011,280
LIABILITIES AND EQUITY
Accounts payable	84,116		74,282
Accrued expenses	93,140		92,919
Notes payable	161,011		155,768
Total debt	1,097,633		1,080,650
Intercompany payables	0		0
Total liabilities	1,274,889		1,247,851
Equity
William Lyon Homes stockholders’ equity (deficit)	735,984		697,086
Noncontrolling interests	89,986		66,343
Total liabilities and equity	2,100,859		2,011,280
Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	1,619		7,225
Equity
Stated interest rate						5.50%
5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	$ 149,226		$ 148,826
Equity
Stated interest rate	5.75%		5.75%
8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt	$ 0		$ 422,817
Equity
Stated interest rate	8.50%		8.50%
7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	$ 346,556		$ 346,014
Equity
Stated interest rate	7.00%		7.00%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	$ 439,221		$ 0
Equity
Stated interest rate	5.875%
Reporting Entities | Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	$ (328)		272	528	2,723
Receivables	1,760		3,303
Escrow proceeds receivable	0		0
Real estate inventories	697,824		645,341
Investment in unconsolidated joint ventures	150		150
Goodwill	52,693		52,693
Intangibles, net	6,700		6,700
Deferred income taxes, net	0		0
Lease right-of-use assets	0		0
Other assets, net	1,896		1,089
Investments in subsidiaries	(575,925)		(573,650)
Intercompany receivables	241,160		252,860
Total assets	425,930		388,758
LIABILITIES AND EQUITY
Accounts payable	25,061		16,416
Accrued expenses	4,719		4,636
Notes payable	0		2,979
Intercompany payables	0		0
Total liabilities	29,780		24,031
Equity
William Lyon Homes stockholders’ equity (deficit)	396,150		364,727
Noncontrolling interests	0		0
Total liabilities and equity	425,930		388,758
Reporting Entities | Guarantor Subsidiaries | Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Guarantor Subsidiaries | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt			0
Reporting Entities | Guarantor Subsidiaries | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Guarantor Subsidiaries | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | Non-Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	9,205		6,136	4,479	3,148
Receivables	3,911		3,246
Escrow proceeds receivable	0		0
Real estate inventories	257,444		216,063
Investment in unconsolidated joint ventures	0		0
Goodwill	0		0
Intangibles, net	0		0
Deferred income taxes, net	0		0
Lease right-of-use assets	0		0
Other assets, net	494		415
Investments in subsidiaries	0		0
Intercompany receivables	0		0
Total assets	271,054		225,860
LIABILITIES AND EQUITY
Accounts payable	10,605		5,486
Accrued expenses	103		98
Notes payable	105,785		102,076
Intercompany payables	82,822		75,593
Total liabilities	199,315		183,253
Equity
William Lyon Homes stockholders’ equity (deficit)	(18,249)		(23,736)
Noncontrolling interests	89,988		66,343
Total liabilities and equity	271,054		225,860
Reporting Entities | Non-Guarantor Subsidiaries | Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Non-Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Non-Guarantor Subsidiaries | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt			0
Reporting Entities | Non-Guarantor Subsidiaries | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Non-Guarantor Subsidiaries | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | Delaware Lyon
ASSETS
Cash and cash equivalents	0		0	0	0
Receivables	0		0
Escrow proceeds receivable	0		0
Real estate inventories	0		0
Investment in unconsolidated joint ventures	0		0
Goodwill	0		0
Intangibles, net	0		0
Deferred income taxes, net	0		0
Lease right-of-use assets	0		0
Other assets, net	0		0
Investments in subsidiaries	735,984		697,086
Intercompany receivables	0		0
Total assets	735,984		697,086
LIABILITIES AND EQUITY
Accounts payable	0		0
Accrued expenses	0		0
Notes payable	0		0
Intercompany payables	0		0
Total liabilities	0		0
Equity
William Lyon Homes stockholders’ equity (deficit)	735,984		697,086
Noncontrolling interests	0		0
Total liabilities and equity	735,984		697,086
Reporting Entities | Delaware Lyon | Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Delaware Lyon | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Delaware Lyon | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt			0
Reporting Entities | Delaware Lyon | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0		0
Reporting Entities | Delaware Lyon | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | California Lyon
ASSETS
Cash and cash equivalents	34,727		36,204	35,703	44,332
Receivables	4,048		2,989
Escrow proceeds receivable	228		85
Real estate inventories	900,390		910,594
Investment in unconsolidated joint ventures	8,075		7,132
Goodwill	14,209		14,209
Intangibles, net	0		0
Deferred income taxes, net	73,597		75,751
Lease right-of-use assets	15,074		13,129
Other assets, net	18,762		15,779
Investments in subsidiaries	(18,249)		(23,736)
Intercompany receivables	0		0
Total assets	1,050,861		1,052,136
LIABILITIES AND EQUITY
Accounts payable	48,450		52,380
Accrued expenses	88,318		88,185
Notes payable	55,226		50,713
Intercompany payables	158,338		177,267
Total liabilities	1,286,954		1,293,427
Equity
William Lyon Homes stockholders’ equity (deficit)	(236,091)		(241,291)
Noncontrolling interests	(2)		0
Total liabilities and equity	1,050,861		1,052,136
Reporting Entities | California Lyon | Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	1,619		7,225
Reporting Entities | California Lyon | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	149,226		148,826
Reporting Entities | California Lyon | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt			422,817
Reporting Entities | California Lyon | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	346,556		346,014
Reporting Entities | California Lyon | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	439,221
Consolidation, Eliminations
ASSETS
Cash and cash equivalents	0		0	$ 0	$ 0
Receivables	0		0
Escrow proceeds receivable	0		0
Real estate inventories	0		0
Investment in unconsolidated joint ventures	0		0
Goodwill	0		0
Intangibles, net	0		0
Deferred income taxes, net	0		0
Lease right-of-use assets	0		0
Other assets, net	0		0
Investments in subsidiaries	(141,810)		(99,700)
Intercompany receivables	(241,160)		(252,860)
Total assets	(382,970)		(352,560)
LIABILITIES AND EQUITY
Accounts payable	0		0
Accrued expenses	0		0
Notes payable	0		0
Intercompany payables	(241,160)		(252,860)
Total liabilities	(241,160)		(252,860)
Equity
William Lyon Homes stockholders’ equity (deficit)	(141,810)		(99,700)
Noncontrolling interests	0		0
Total liabilities and equity	(382,970)		(352,560)
Consolidation, Eliminations | Subordinated amortizing notes
LIABILITIES AND EQUITY
Total debt	0		0
Consolidation, Eliminations | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	0		0
Consolidation, Eliminations | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt			0
Consolidation, Eliminations | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0		0
Consolidation, Eliminations | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	0
Senior Notes
LIABILITIES AND EQUITY
Total debt	935,003		917,657
Senior Notes | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt	$ 149,226		$ 148,826
Equity
Stated interest rate	5.75%		5.75%					5.75%
Senior Notes | 8 1/2% Senior Notes due November 15, 2020
LIABILITIES AND EQUITY
Total debt	$ 0		$ 422,817
Equity
Stated interest rate	8.50%		8.50%						8.50%
Senior Notes | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	$ 346,556		$ 346,014
Equity
Stated interest rate	7.00%		7.00%				7.00%
Senior Notes | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
LIABILITIES AND EQUITY
Total debt	$ 439,221		$ 0
Equity
Stated interest rate	5.875%	5.875%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Operating revenue
Sales	$ 490,304	$ 342,628	$ 1,171,791	$ 928,982
Construction services	35	86	94	3,810
Management fees	0	0	0	0
Operating revenue	490,339	342,714	1,171,885	932,792
Operating costs
Cost of sales — homes	(401,700)	(285,896)	(973,212)	(769,705)
Construction services	(35)	(86)	(41)	(3,458)
Sales and marketing	(21,935)	(18,246)	(57,924)	(51,351)
General and administrative	(22,951)	(17,360)	(61,447)	(51,879)
Other	(548)	198	(1,548)	(612)
Total operating costs	(447,169)	(321,390)	(1,094,172)	(877,005)
Income from subsidiaries	0	0	0	0
Operating income (loss)	43,170	21,324	77,713	55,787
Equity in income of unconsolidated joint ventures	1,160	1,435	2,622	3,810
Other income (expense), net	(365)	2,050	(12)	2,803
Income before extinguishment of debt	43,965	24,809	80,323	62,400
Loss on extinguishment of debt	0	0	(21,828)	0
Income (loss) before provision for income taxes	43,965	24,809	58,495	62,400
Provision for income taxes	(13,905)	(8,295)	(17,480)	(20,859)
Net income (loss)	30,060	16,514	41,015	41,541
Less: Net income attributable to noncontrolling interests	(2,642)	(3,445)	(4,643)	(4,897)
Net income available to common stockholders	27,418	13,069	36,372	36,644
Reporting Entities | Guarantor Subsidiaries
Operating revenue
Sales	218,033	181,594	535,828	494,597
Construction services	0	0	0	0
Management fees	0	0	0	0
Operating revenue	218,033	181,594	535,828	494,597
Operating costs
Cost of sales — homes	(181,184)	(151,306)	(445,737)	(411,339)
Construction services	0	0	0	0
Sales and marketing	(11,521)	(9,774)	(29,241)	(26,731)
General and administrative	(3,780)	(3,091)	(12,161)	(10,129)
Other	86	69	232	(14)
Total operating costs	(196,399)	(164,102)	(486,907)	(448,213)
Income from subsidiaries	0	0	0	0
Operating income (loss)	21,634	17,492	48,921	46,384
Equity in income of unconsolidated joint ventures	341	295	879	809
Other income (expense), net	(4)	(19)	(10)	(34)
Income before extinguishment of debt			49,790
Loss on extinguishment of debt			0
Income (loss) before provision for income taxes	21,971	17,768	49,790	47,159
Provision for income taxes	0	0	0	0
Net income (loss)	21,971	17,768	49,790	47,159
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income available to common stockholders	21,971	17,768	49,790	47,159
Reporting Entities | Non-Guarantor Subsidiaries
Operating revenue
Sales	60,954	55,072	130,957	89,926
Construction services	0	0	0	0
Management fees	0	0	0	0
Operating revenue	60,954	55,072	130,957	89,926
Operating costs
Cost of sales — homes	(53,225)	(48,397)	(115,554)	(79,298)
Construction services	0	0	0	0
Sales and marketing	(2,510)	(2,267)	(7,204)	(6,540)
General and administrative	0	(1)	(1)	(1)
Other	1	(11)	6	(11)
Total operating costs	(55,734)	(50,676)	(122,753)	(85,850)
Income from subsidiaries	0	0	0	0
Operating income (loss)	5,220	4,396	8,204	4,076
Equity in income of unconsolidated joint ventures	0	0	0	0
Other income (expense), net	(408)	(481)	(1,074)	(1,036)
Income before extinguishment of debt			7,130
Loss on extinguishment of debt			0
Income (loss) before provision for income taxes	4,812	3,915	7,130	3,040
Provision for income taxes	0	0	0	0
Net income (loss)	4,812	3,915	7,130	3,040
Less: Net income attributable to noncontrolling interests	(2,642)	(3,445)	(4,643)	(4,897)
Net income available to common stockholders	2,170	470	2,487	(1,857)
Reporting Entities | Delaware Lyon
Operating revenue
Sales	0	0	0	0
Construction services	0	0	0	0
Management fees	0	0	0	0
Operating revenue	0	0	0	0
Operating costs
Cost of sales — homes	0	0	0	0
Construction services	0	0	0	0
Sales and marketing	0	0	0	0
General and administrative	0	0	0	0
Other	0	0	0	0
Total operating costs	0	0	0	0
Income from subsidiaries	27,418	13,069	36,372	36,644
Operating income (loss)	27,418	13,069	36,372	36,644
Equity in income of unconsolidated joint ventures	0	0	0	0
Other income (expense), net	0	0	0	0
Income before extinguishment of debt			36,372
Loss on extinguishment of debt			0
Income (loss) before provision for income taxes	27,418	13,069	36,372	36,644
Provision for income taxes	0	0	0	0
Net income (loss)	27,418	13,069	36,372	36,644
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income available to common stockholders	27,418	13,069	36,372	36,644
Reporting Entities | California Lyon
Operating revenue
Sales	211,317	105,962	505,006	344,459
Construction services	35	86	94	3,810
Management fees	(1,899)	(1,541)	(3,501)	(2,587)
Operating revenue	209,453	104,507	501,599	345,682
Operating costs
Cost of sales — homes	(165,392)	(84,652)	(408,420)	(276,481)
Construction services	(35)	(86)	(41)	(3,458)
Sales and marketing	(7,904)	(6,205)	(21,479)	(18,080)
General and administrative	(19,171)	(14,268)	(49,285)	(41,749)
Other	(635)	140	(1,786)	(587)
Total operating costs	(193,137)	(105,071)	(481,011)	(340,355)
Income from subsidiaries	6,162	3,548	13,328	7,472
Operating income (loss)	22,478	2,984	33,916	12,799
Equity in income of unconsolidated joint ventures	819	1,140	1,743	3,001
Other income (expense), net	47	2,550	1,072	3,873
Income before extinguishment of debt			36,731
Loss on extinguishment of debt			(21,828)
Income (loss) before provision for income taxes	23,344	6,674	14,903	19,673
Provision for income taxes	(13,905)	(8,295)	(17,480)	(20,859)
Net income (loss)	9,439	(1,621)	(2,577)	(1,186)
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income available to common stockholders	9,439	(1,621)	(2,577)	(1,186)
Consolidation, Eliminations
Operating revenue
Sales	0	0	0	0
Construction services	0	0	0	0
Management fees	1,899	1,541	3,501	2,587
Operating revenue	1,899	1,541	3,501	2,587
Operating costs
Cost of sales — homes	(1,899)	(1,541)	(3,501)	(2,587)
Construction services	0	0	0	0
Sales and marketing	0	0	0	0
General and administrative	0	0	0	0
Other	0	0	0	0
Total operating costs	(1,899)	(1,541)	(3,501)	(2,587)
Income from subsidiaries	(33,580)	(16,617)	(49,700)	(44,116)
Operating income (loss)	(33,580)	(16,617)	(49,700)	(44,116)
Equity in income of unconsolidated joint ventures	0	0	0	0
Other income (expense), net	0	0	0	0
Income before extinguishment of debt			(49,700)
Loss on extinguishment of debt			0
Income (loss) before provision for income taxes	(33,580)	(16,617)	(49,700)	(44,116)
Provision for income taxes	0	0	0	0
Net income (loss)	(33,580)	(16,617)	(49,700)	(44,116)
Less: Net income attributable to noncontrolling interests	0	0	0	0
Net income available to common stockholders	$ (33,580)	$ (16,617)	$ (49,700)	$ (44,116)

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities
Net cash (used in) provided by operating activities	$ (22,990)	$ (82,978)
Investing activities
Collection of related party note receivable	0	6,188
Purchases of property and equipment	(2,416)	(773)
Investments in subsidiaries	0	0
Net cash (used in) provided by investing activities	(2,416)	5,415
Financing activities
Proceeds from borrowings on notes payable	105,109	111,992
Principal payments on notes payable	(101,400)	(91,250)
Redemption premium of 8.5% Senior Notes	(19,645)	0
Principal payments of 8.5% Senior Notes	(425,000)	0
Proceeds from issuance of 7% senior notes	446,468	0
Proceeds from borrowings on Revolver	275,000	198,000
Payments on Revolver	(254,000)	(167,000)
Principal payments on subordinated amortizing notes	(5,606)	(5,096)
Payment of deferred loan costs	(9,794)	(792)
Shares remitted to, or withheld by the Company for employee tax withholding	(1,450)	(918)
Payments for Repurchase of Common Stock	(2,284)	0
Excess income tax benefit from stock based awards		238
Noncontrolling interest contributions	58,829	36,140
Noncontrolling interest distributions	(39,829)	(12,768)
Advances to affiliates	0	0
Intercompany receivables/payables	0	0
Net cash provided by financing activities	26,398	68,070
Net decrease in cash and cash equivalents	992	(9,493)
Cash and cash equivalents — beginning of period	42,612	50,203
Cash and cash equivalents — end of period	43,604	40,710
Reporting Entities | Guarantor Subsidiaries
Operating activities
Net cash (used in) provided by operating activities	4,366	(35,182)
Investing activities
Collection of related party note receivable		0
Purchases of property and equipment	(572)	56
Investments in subsidiaries	2,275	46,801
Net cash (used in) provided by investing activities	1,703	46,857
Financing activities
Proceeds from borrowings on notes payable	0	0
Principal payments on notes payable	0	0
Proceeds from borrowings on Revolver	0	0
Payments on Revolver	0	0
Principal payments on subordinated amortizing notes	0	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Payments for Repurchase of Common Stock	0
Excess income tax benefit from stock based awards		0
Noncontrolling interest contributions	0	0
Noncontrolling interest distributions	0	0
Advances to affiliates	(18,367)	(4,479)
Intercompany receivables/payables	11,698	(9,391)
Net cash provided by financing activities	(6,669)	(13,870)
Net decrease in cash and cash equivalents	(600)	(2,195)
Cash and cash equivalents — beginning of period	272	2,723
Cash and cash equivalents — end of period	(328)	528
Reporting Entities | Non-Guarantor Subsidiaries
Operating activities
Net cash (used in) provided by operating activities	(29,808)	(65,970)
Investing activities
Collection of related party note receivable		0
Purchases of property and equipment	(63)	(20)
Investments in subsidiaries	0	0
Net cash (used in) provided by investing activities	(63)	(20)
Financing activities
Proceeds from borrowings on notes payable	105,109	109,781
Principal payments on notes payable	(101,400)	(80,810)
Proceeds from borrowings on Revolver	0	0
Payments on Revolver	0	0
Principal payments on subordinated amortizing notes	0	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Payments for Repurchase of Common Stock	0
Excess income tax benefit from stock based awards		0
Noncontrolling interest contributions	58,829	36,140
Noncontrolling interest distributions	(39,829)	(12,768)
Advances to affiliates	3,000	11,056
Intercompany receivables/payables	7,231	3,922
Net cash provided by financing activities	32,940	67,321
Net decrease in cash and cash equivalents	3,069	1,331
Cash and cash equivalents — beginning of period	6,136	3,148
Cash and cash equivalents — end of period	9,205	4,479
Reporting Entities | Delaware Lyon
Operating activities
Net cash (used in) provided by operating activities	(2,526)	(2,931)
Investing activities
Collection of related party note receivable		0
Purchases of property and equipment	0	0
Investments in subsidiaries	0	0
Net cash (used in) provided by investing activities	0	0
Financing activities
Proceeds from borrowings on notes payable	0	0
Principal payments on notes payable	0	0
Proceeds from borrowings on Revolver	0	0
Payments on Revolver	0	0
Principal payments on subordinated amortizing notes	0	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Payments for Repurchase of Common Stock	0
Excess income tax benefit from stock based awards		0
Noncontrolling interest contributions	0	0
Noncontrolling interest distributions	0	0
Advances to affiliates	0	0
Intercompany receivables/payables	2,526	2,931
Net cash provided by financing activities	2,526	2,931
Net decrease in cash and cash equivalents	0	0
Cash and cash equivalents — beginning of period	0	0
Cash and cash equivalents — end of period	0	0
Reporting Entities | California Lyon
Operating activities
Net cash (used in) provided by operating activities	2,452	18,174
Investing activities
Collection of related party note receivable		6,188
Purchases of property and equipment	(1,781)	(809)
Investments in subsidiaries	7,841	(1,727)
Net cash (used in) provided by investing activities	6,060	3,652
Financing activities
Proceeds from borrowings on notes payable	0	2,211
Principal payments on notes payable	0	(10,440)
Proceeds from borrowings on Revolver	275,000	198,000
Payments on Revolver	(254,000)	(167,000)
Principal payments on subordinated amortizing notes	(5,606)	(5,096)
Payment of deferred loan costs	(9,794)	(792)
Shares remitted to, or withheld by the Company for employee tax withholding	(1,450)	(918)
Payments for Repurchase of Common Stock	(2,284)
Excess income tax benefit from stock based awards		238
Noncontrolling interest contributions	0	0
Noncontrolling interest distributions	0	0
Advances to affiliates	0	0
Intercompany receivables/payables	(13,678)	(46,182)
Net cash provided by financing activities	(9,989)	(30,455)
Net decrease in cash and cash equivalents	(1,477)	(8,629)
Cash and cash equivalents — beginning of period	36,204	44,332
Cash and cash equivalents — end of period	34,727	35,703
Consolidation, Eliminations
Operating activities
Net cash (used in) provided by operating activities	2,526	2,931
Investing activities
Collection of related party note receivable		0
Purchases of property and equipment	0	0
Investments in subsidiaries	(10,116)	(45,074)
Net cash (used in) provided by investing activities	(10,116)	(45,074)
Financing activities
Proceeds from borrowings on notes payable	0	0
Principal payments on notes payable	0	0
Proceeds from borrowings on Revolver	0	0
Payments on Revolver	0	0
Principal payments on subordinated amortizing notes	0	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Payments for Repurchase of Common Stock	0
Excess income tax benefit from stock based awards		0
Noncontrolling interest contributions	0	0
Noncontrolling interest distributions	0	0
Advances to affiliates	15,367	(6,577)
Intercompany receivables/payables	(7,777)	48,720
Net cash provided by financing activities	7,590	42,143
Net decrease in cash and cash equivalents	0	0
Cash and cash equivalents — beginning of period	0	0
Cash and cash equivalents — end of period	0	$ 0
7% Senior Notes due August 15, 2022
Financing activities
Proceeds from issuance of 7% senior notes	446,468
7% Senior Notes due August 15, 2022 | Reporting Entities | Guarantor Subsidiaries
Financing activities
Proceeds from issuance of 7% senior notes	0
7% Senior Notes due August 15, 2022 | Reporting Entities | Non-Guarantor Subsidiaries
Financing activities
Proceeds from issuance of 7% senior notes	0
7% Senior Notes due August 15, 2022 | Reporting Entities | Delaware Lyon
Financing activities
Proceeds from issuance of 7% senior notes	0
7% Senior Notes due August 15, 2022 | Reporting Entities | California Lyon
Financing activities
Proceeds from issuance of 7% senior notes	446,468
7% Senior Notes due August 15, 2022 | Consolidation, Eliminations
Financing activities
Proceeds from issuance of 7% senior notes	0
8 1/2% Senior Notes due November 15, 2020
Financing activities
Redemption premium of 8.5% Senior Notes	(19,645)
Principal payments of 8.5% Senior Notes	(425,000)
8 1/2% Senior Notes due November 15, 2020 | Reporting Entities | Guarantor Subsidiaries
Financing activities
Redemption premium of 8.5% Senior Notes	0
Principal payments of 8.5% Senior Notes	0
8 1/2% Senior Notes due November 15, 2020 | Reporting Entities | Non-Guarantor Subsidiaries
Financing activities
Redemption premium of 8.5% Senior Notes	0
Principal payments of 8.5% Senior Notes	0
8 1/2% Senior Notes due November 15, 2020 | Reporting Entities | Delaware Lyon
Financing activities
Redemption premium of 8.5% Senior Notes	0
Principal payments of 8.5% Senior Notes	0
8 1/2% Senior Notes due November 15, 2020 | Reporting Entities | California Lyon
Financing activities
Redemption premium of 8.5% Senior Notes	(19,645)
Principal payments of 8.5% Senior Notes	(425,000)
8 1/2% Senior Notes due November 15, 2020 | Consolidation, Eliminations
Financing activities
Redemption premium of 8.5% Senior Notes	0
Principal payments of 8.5% Senior Notes	$ 0

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Fair Value of Financial Instruments - Schedule of Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial liabilities:
Notes payable, fair value	$ 161,011	$ 155,768
Subordinated amortizing notes
Financial liabilities:
Long-term debt, fair value	1,700	7,478
5 3/4% Senior Notes due April 15, 2019
Financial liabilities:
Long-term debt, fair value	$ 151,875	$ 151,125
Stated interest rate	5.75%	5.75%
8 1/2% Senior Notes due November 15, 2020
Financial liabilities:
Long-term debt, fair value	$ 0	$ 444,125
Stated interest rate	8.50%	8.50%
7% Senior Notes due August 15, 2022
Financial liabilities:
Long-term debt, fair value	$ 362,250	$ 363,125
Stated interest rate	7.00%	7.00%
Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Financial liabilities:
Long-term debt, fair value	$ 462,375	$ 0
Stated interest rate	5.875%
Carrying Amount
Financial liabilities:
Notes payable, fair value	$ 161,011	155,768
Carrying Amount | Subordinated amortizing notes
Financial liabilities:
Long-term debt, fair value	1,619	7,225
Carrying Amount | 5 3/4% Senior Notes due April 15, 2019
Financial liabilities:
Long-term debt, fair value	149,226	148,826
Carrying Amount | 8 1/2% Senior Notes due November 15, 2020
Financial liabilities:
Long-term debt, fair value	0	422,817
Carrying Amount | 7% Senior Notes due August 15, 2022
Financial liabilities:
Long-term debt, fair value	346,556	346,014
Carrying Amount | Five Point Eight Seven Five Percent Senior Notes Due Two Thousand Twenty Five [Member]
Financial liabilities:
Long-term debt, fair value	$ 439,221	$ 0

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Related Party Transactions - Narrative (Details) - Paulson & Co. Inc. - Investor $ in Millions	1 Months Ended
	Aug. 31, 2016 USD ($)
Related Party Transaction [Line Items]
Purchase price of lots	$ 9.3
Related party stock ownership	5.00%
Notes payable, related parties	$ 3.0

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Income Taxes - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Taxes [Line Items]
Effective income tax rate	31.60%	33.40%	29.90%	33.40%
Valuation allowance	$ 0		$ 0
Testing period			5 years
AMT credit carryovers	1,400,000		$ 1,400,000
Unrecognized tax benefits	0		0
Federal
Income Taxes [Line Items]
Operating loss carryforwards	0		0
Unused built-in losses	52,100,000		52,100,000
State
Income Taxes [Line Items]
Operating loss carryforwards	56,500,000		56,500,000
Unused built-in losses	$ 7,300,000		$ 7,300,000

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Income Per Common Share - Schedule of Basic and Diluted Income Per Common Share Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Basic weighted average number of common shares outstanding (in shares)	37,059,483	36,801,464	37,007,144	36,746,727
Effect of dilutive securities:
Diluted average shares outstanding (in shares)	38,583,341	38,333,027	38,381,292	38,314,021
Net income available to common stockholders	$ 27,418	$ 13,069	$ 36,372	$ 36,644
Basic income per common share (in USD per share)	$ 0.74	$ 0.36	$ 0.98	$ 1.00
Dilutive income per common share (in USD per share)	$ 0.71	$ 0.34	$ 0.95	$ 0.96
Stock Options, Unvested Common Shares, and Warrants
Effect of dilutive securities:
Stock options, unvested common shares, and warrants (in shares)	1,523,858	636,633	1,374,148	672,364
Tangible Equity Units
Effect of dilutive securities:
Tangible equity units (in shares)	0	894,930	0	894,930
Unvested Stock Options
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Antidilutive securities (in shares)	240,000	240,000	240,000	240,000
Warrants
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Antidilutive securities (in shares)	0	1,907,551	0	1,907,551

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Stock Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense			$ 6,260
Stock based compensation expense		$ 1,500	6,260	$ 4,087
Allocated Share-based Compensation Expense			$ 1,500
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	6,434		259,677
Restricted stock | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)			259,677
Restricted stock | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)			35,275
Restricted stock | Share-based Compensation Award, Tranche One | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			25.00%
Restricted stock | Share-based Compensation Award, Tranche Two | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			25.00%
Restricted stock | Share-based Compensation Award, Tranche Three | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			25.00%
Restricted stock | Share-based Compensation Award, Tranche Four | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			25.00%
Three Year Vesting Restricted Stock | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)			172,857
Three Year Vesting Restricted Stock | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Three Year Vesting Restricted Stock | Share-based Compensation Award, Tranche Two | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Three Year Vesting Restricted Stock | Share-based Compensation Award, Tranche Three | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Two Year Vesting Restricted Stock, March Schedule | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)			45,111
Two Year Vesting Restricted Stock, March Schedule | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			50.00%
Two Year Vesting Restricted Stock, March Schedule | Share-based Compensation Award, Tranche Two | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			50.00%
Two Year Vesting Restricted Stock, July Schedule [Member] | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			50.00%
Performance Based Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)			553,909
Performance Based Restricted Stock | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Performance Based Restricted Stock | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Performance Based Restricted Stock | Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage			33.33%
Additional Paid-in Capital [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	$ 3,100		$ 6,260

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Outstanding performance and surety bonds	$ 209.6
Non-refundable deposits	61.1
Remaining purchase price of land	455.4
Project construction commitment
Loss Contingencies [Line Items]
Other commitment	181.0
Accrued Expenses
Loss Contingencies [Line Items]
Lease liability	$ 15.9	$ 15.6	$ 13.1

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Commitments and Contingencies - Summary of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Lease cost
Operating lease cost	$ 1,646	$ 1,006	$ 4,405	$ 2,874
Sublease income	(29)	(29)	(87)	(87)
Total lease cost	1,617	977	4,318	2,787
Operating cash flows	1,621	811	3,879	2,410
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 155	$ 740	$ 5,213	$ 1,353
Weighted-average discount rate	6.60%	6.60%	6.60%	6.60%

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Commitments and Contingencies - Weighted Average Remaining Lease Term (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease term (in years)	3 years 9 months 14 days	5 years 1 month 28 days

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Commitments and Contingencies - Schedule of Future Minimum Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Future Minimum Payments Under Non-cancelable Operating Leases
2017	$ 1,703
2018	6,673
2019	3,740
2020	2,556
2021	2,398
Thereafter	1,782
Total	$ 18,852