-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NFdxE8gR6p3NbWb1zmhk5YpQVsrr5/s0jQTAklcdxUIPBp6VyuiNeW1xVpVcz07Y Yw1d9Hy2mJIluy6RNsZ0mA== 0000085974-97-000006.txt : 19970701 0000085974-97-000006.hdr.sgml : 19970701 ACCESSION NUMBER: 0000085974-97-000006 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970630 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RYLAND GROUP INC CENTRAL INDEX KEY: 0000085974 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 520849948 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08029 FILM NUMBER: 97632937 BUSINESS ADDRESS: STREET 1: 11000 BROKEN LAND PARKWAY CITY: COLUMBIA STATE: MD ZIP: 21044 BUSINESS PHONE: 4107157000 FORMER COMPANY: FORMER CONFORMED NAME: RYAN JAMES P CO DATE OF NAME CHANGE: 19720414 11-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K (Mark One): [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1996. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from_________to___________ Commission file number 1-8029 A. The Ryland Group, Inc. Retirement and Stock Ownership Plan B. The Ryland Group, Inc. 11000 Broken Land Parkway Columbia, Maryland, 2104 THE RYLAND GROUP, INC. Information Required by Form 11-K INDEX Page Number Report of Independent Auditors 1 Item 4. Audited Financial Statements and Schedules prepared in accordance with ERISA 2-16 SIGNATURES 17 INDEX OF EXHIBITS 18 REPORT OF INDEPENDENT AUDITORS Employee Benefits Committee The Ryland Group, Inc. We have audited the accompanying statements of net assets available for plan benefits of The Ryland Group, Inc. Retirement and Stock Ownership Plan as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Baltimore, Maryland June 23, 1997 Item 4: Audited Financial Statements and Schedules prepared in accordance with ERISA STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS The Ryland Group, Inc. Retirement and Stock Ownership Plan December 31, December 31, 1996 1995 ------------ ------------ ASSETS Receivables: Accrued employer contributions $ 2,732,371 $ 1,879,172 Accrued interest and dividends 499,910 546,576 --------------- ------------ Total receivables 3,232,281 2,425,748 Investments at fair value: Short-term investments 144,646 138,791 CIGNA Income Fund 5,599,646 6,196,142 Preferred stock of The Ryland Group, Inc. Unallocated 7,901,966 11,895,164 Allocated 14,072,430 12,153,810 Common stock of The Ryland Group, Inc. 152,436 182,154 Mutual funds 31,037,164 28,897,369 Loans to participants 1,765,450 1,513,314 ------------- ----------- Total investments 60,673,738 60,976,744 ------------- ----------- Total Assets 63,906,019 63,402,492 ------------- ----------- LIABILITIES Accrued liabilities 409,360 534,302 Loan payable to The Ryland Group, Inc. 16,390,810 21,393,457 ------------- ----------- Total Liabilities 16,800,170 21,927,759 ------------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 47,105,849 $ 41,474,733 ============= ============ See notes to financial statements STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS The Ryland Group, Inc. Retirement and Stock Ownership Plan Year Ended Year Ended December 31, December 31, 1996 1995 ------------- ------------- ADDITIONS Contributions: Employer $ 7,263,783 $ 6,899,539 Participants 4,333,945 4,860,384 Rollovers 338,277 1,058,624 ----------- ----------- Total contributions 11,936,005 12,818,547 Interest: Short-term investments 1,471 15,521 CIGNA Income Fund 333,539 396,762 Participant loans 137,129 117,743 ----------- ------------ Total interest 472,139 530,026 Dividends: The Ryland Group, Inc. Preferred stock 1,974,464 2,192,552 Common stock 7,481 11,370 Mutual funds 2,007,320 2,116,968 ------------ ------------ Total dividends 3,989,265 4,320,890 ------------ ------------ Total Additions 16,397,409 17,669,463 DEDUCTIONS Benefit payments to participants 9,719,542 14,281,532 Interest expense 1,794,450 2,229,042 Administrative expenses 165,424 158,522 ----------- ------------ Total Deductions 11,679,416 16,669,096 Net realized and unrealized appreciation (depreciation) in fair value of investments 913,123 4,075,913 ------------ ------------ Increase in net assets available for plan benefits 5,631,116 5,076,280 Net assets available for plan benefits at beginning of year 41,474,733 36,398,453 ------------- ------------ NET ASSET AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 47,105,849 $ 41,474,733 ============= ============ See notes to financial statements NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE A: SIGNIFICANT ACCOUNTING POLICIES The financial statements of The Ryland Group, Inc. Retirement and Stock Ownership Plan ("the Plan" or "the RSOP") are prepared on the accrual basis of accounting. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Investments are stated at aggregate current market value. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Mutual funds are valued at quoted market prices which represent the net asset values of shares held by the plan. The Preferred Stock of The Ryland Group, Inc. (the "Company"), is valued monthly by an independent appraiser, with a minimum guaranteed value of $25.25 by the Company. Deposits invested by the Trustee (Wachovia Bank) in funds maintained by CIGNA are stated at current redemption value. The Trustee invests any excess funds on a short-term basis in common trust funds. The change in the difference between current fair value and the cost of investments is reflected in the statement of changes in net assets available for plan benefits as net unrealized appreciation or depreciation in fair value of investments. The net realized gain or loss on sale of investments reflects the difference between the proceeds received and the cost of the specific investment shares sold (see also Note D). Expenses relating to the purchase or sale of investments are added to their cost or deducted from their proceeds. Approximately half of all administrative expenses incurred are paid by the Plan, with the Company paying the remainder. The Plan accounts for benefits due but unpaid as a component of net assets available for plan benefits. Benefits due but unpaid were approximately $96,907 and $40,323 at December 31, 1996 and 1995, respectively. NOTE B: DESCRIPTION OF THE PLAN General - ------- The RSOP was established on August 16, 1989. Designed to be an employee stock ownership plan with a deferred compensation and profit sharing arrangement, the Plan permits deferral of a portion of participants' pretax income pursuant to Section 401(k) of the Internal Revenue Code. These participant contributions into the Plan are combined with Company contributions, which are allocated to participants as a match of their pretax deferrals and as discretionary contributions resulting from the Company's desire to share profits with participants. Employee Eligibility - -------------------- In 1995, employees were eligible to participate in the Plan at the beginning of the first pay period of the month following the employee's hire date, provided the employee ultimately completes the period of service requirement as defined below. As of January 1, 1996, the Plan was amended to make employees eligible to participate in the Plan at the beginning of the first pay period of the month that followed completion of a one-year period of service. An employee was credited with a one-year period of service upon completion of at least 1,000 hours of service in the 12-month period beginning on the date of his/her employment or in any plan year beginning thereafter. This amendment did not have a material impact on the net assets of the Plan. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE B: DESCRIPTION OF THE PLAN--CONTINUED Employee Contributions and Investment Options - --------------------------------------------- Each eligible participant may elect to contribute on a pretax basis, through a system of payroll deductions, any whole number percentage, from one percent (1%) to twelve percent (12%), of the eligible participant's compensation. In accordance with IRS regulations, no employee may contribute more than $9,500 to the Plan for the 1996 calendar year. The RSOP offers the participants several investment options for their contributions. The following are descriptions of the participant investment options for 1996: Putnam Voyager Fund - The Putnam Voyager Fund is an aggressive equity mutual fund seeking capital appreciation primarily by investing in emerging growth stocks of small to medium sized companies with the potential for above average sales and earnings growth, as well as opportunity stocks of larger, well- established companies which show near-term growth potential resulting from some change in the companies business plans or competitive environments. The investment manager of this fund is The Putnam Management Company, Inc. At December 31, 1996 and 1995, 1,298 and 1,411 employees, respectively, were participating in this option. Fidelity Growth Company Fund - The Fidelity Growth Company Fund is an aggressive equity mutual fund seeking capital appreciation primarily by investing in common stocks and convertible securities of companies with above-average growth characteristics found in smaller, lesser-known companies in emerging areas of the economy as well as revitalized or well-positioned larger companies in mature industries. The investment manager of this fund is Fidelity Management and Research. At December 31, 1996, 1,106 employees were participating in this option. CIGNA Income Fund -The CIGNA Income Fund is a fund which consists of investments in intermediate-term obligations of a "fixed income" nature. These are predominantly public and direct placement bonds and mortgages. Interest rates on funds are declared annually and in advance. Withdrawals or transfers from the CIGNA Income Fund may be restricted. At December 31, 1996 and 1995, 630 and 806 employees, respectively, were participating in this option. American Balanced Fund -The American Balanced Fund is a conservative mutual fund seeking preservation of capital and income as well as long-term growth of capital and income by broadly investing in a diversified portfolio of blue chip common stocks, preferred stocks, corporate bonds, and U.S. Government securities. The investment advisor of this fund is Capital Research and Management Company (CRMC). At December 31, 1996 and 1995, 976 and 1,183 employees, respectively, were participating in this option. Wells Fargo Equity Index Fund -The Wells Fargo Equity Index Fund is a fund that has the objective of reproducing the performance of the S&P 500 Index which is a widely accepted benchmark composed of industrial, utility, financial and transportation stocks. The Index is designed to reflect the industrial composition of the entire U.S. economy. The companies represented in the Index account for approximately 70% of the value of all publicly traded U.S. common stocks. The investment manager of this fund is Wells Fargo Nikko Investment Advisors. At December 31, 1996, 163 employees were participating in this option. Standish Fixed Income Fund -The Standish Fixed Income Fund is a mutual fund seeking to achieve a high level of current income while preserving principal and liquidity by primarily investing in a diversified portfolio of investment- grade fixed income securities such as bonds, notes, mortgage pass-through securities, convertible debt securities and debt securities with an average maturity of five to thirteen years. The investment advisor of this fund is Standish, Ayer & Wood, Inc. At December 31, 1996 and 1995, 591 and 703 employees, respectively, were participating in this option. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE B: DESCRIPTION OF THE PLAN--CONTINUED Employee Contributions and Investment Options - cont. - ----------------------------------------------------- In 1995, the Employee Benefits Committee agreed to eliminate the Kemper Growth Fund as an RSOP investment option for participants effective January 1, 1996. The Fidelity Growth Company Fund and Wells Fargo Equity Index Fund were chosen to replace this fund. Participant balances in the Kemper Growth Fund were transferred at the participant's discretion among the available funds. The replaced investment option for 1995 was: Kemper Growth Fund - The Kemper Growth Fund is an equity mutual fund which seeks growth of capital by primarily investing in common stocks of companies that are typically characterized by above average profitability, leadership position in the industry, good management, increasing demand for the companies' products and services, and new product development. The investment manager of this fund is Kemper Financial Services, Inc. At December 31, 1995, 1,177 employees were participating in this option. In May 1992, the Employee Benefits Committee agreed to eliminate The Ryland Group, Inc. Common Stock Fund as an RSOP investment option for participants effective January 1, 1993. Participant balances in the Common Stock fund remain as frozen options which can be liquidated into the other investment funds at the participant's option. At December 31, 1996 and 1995, 90 and 112 employees were maintaining balances in The Ryland Group, Inc. Common Stock Fund. Company Contributions - --------------------- As of January 1, 1994, the RSOP was amended to allow the Company to make both matching and discretionary contributions in the form of Preferred Shares, cash or a combination of both. In instances where cash is all or part of the Company's contribution, it is divided among the current investment funds based on each participant's current investment option selection. In instances where both Preferred Shares and cash are contributed to participant accounts, all participants receive an equal proportion of each. The Company made no discretionary contributions for the years ended December 31, 1996 and 1995. Vesting - ------- Participants' contributions are fully vested at all times. The Plan provides for graduated vesting of Company contributions of 25% after two years' service and 25% additional vesting for each year thereafter until the fifth year, at which time participants are 100% vested. Participants are automatically vested upon death, disability or retirement at age 65. RSOP Loan - --------- The "RSOP Loan" is a loan between the Company and the Plan; the proceeds were used by the Plan to acquire the Preferred Stock (see Note C below). To the extent employer contributions, including matching contributions and discretionary contributions, are used to make an RSOP Loan amortization payment, such contributions are made in cash. After each RSOP Loan amortization payment is made, a number of shares of Preferred Stock is released from the RSOP Loan suspense account based on a predetermined formula. Following the release of the Preferred Stock and allocation of a portion of the shares attributable to dividends, the remaining shares of Preferred Stock are allocated among the participants' accounts based on the amount of the required matching contributions. Any remaining shares are allocated among the participants' accounts based on compensation. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE B: DESCRIPTION OF THE PLAN--CONTINUED Other - ----- The Company expects and intends to continue the Plan but reserves the right to amend, suspend or terminate the Plan at any time. If the Company terminates the Plan, each participant will become fully vested in all of his or her accounts under the Plan and will be entitled to a distribution of such accounts in accordance with the terms of the Plan. Earnings on investments, net gains or losses on sales of investments and unrealized appreciation or depreciation in market value of investments are allocated to individual participant accounts based on a ratio of the individual's account balance to the total fund balance. Additional information about the Plan agreement is contained in the pamphlet The Ryland Retirement and Stock Ownership Plan. Copies of this pamphlet are - ---------------------------------------------- available from the Company's Employee Benefits Department. NOTE C: PREFERRED STOCK AND THE LOAN PAYABLE TO RYLAND On August 31, 1989, the Company sold 1,267,327 shares of non-transferable Series A ESOP Convertible Preferred Stock, par value $1.00, to the Plan for $31.5625 per share, or an aggregate purchase price of approximately $40,000,000. Each share of Preferred Stock will pay an annual cumulative dividend of $2.2094, or 7.0 percent of the purchase price per share, and is convertible initially into one share of the Company's Common Stock. During 1996 and 1995, the Company paid approximately $1,974,000 and $2,193,000, respectively, in dividends on the Preferred Stock. Each share of Preferred Stock is entitled to a number of votes equal to the shares into which it is convertible, and the holders of the Preferred Stock generally vote together with the Common Stock on all matters. The conversion and voting rights of the Preferred Stock are subject to anti-dilution adjustments. The Plan's purchase of the Preferred Stock was financed by a loan to the Plan from the Company in the amount of $40,000,000. The loan bears interest at the annual rate of 9.99 percent and is expected to be repaid over 10 years by the Plan through dividends received on the Preferred Stock and Company contributions. The Plan incurred approximately $1,794,000 and $2,229,000 of interest on this loan in 1996 and 1995. Participants receive allocations of the Preferred Stock as debt payments are made. During 1996 and 1995, there were 156,595 and 120,170 shares released, respectively, and allocated to participants. The unallocated preferred shares are collateral to the loan payable to Ryland. As of December 31, 1996, there were 309,881 unallocated preferred shares with an approximate value of $7,902,000. At December 31, 1995, there were 466,477 unallocated preferred shares with an approximate value of $11,895,000. Maturities of the loan payable to Ryland for each of the remaining three years of the loan are as follows: 1997 $ 9,217,801 1998 $ 6,914,306 1999 $ 258,703 NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE D: DISTRIBUTIONS A participant who terminates employment with the Company by reason of a separation from service, death, disability or retirement will be paid the current value of his/her contributions to the Plan, plus the vested portion of his/her account, if any, attributable to Company contributions. Distributions from a participant's vested portion of his/her Convertible Preferred Stock account will be made at the participant's election either in cash or whole shares of Common Stock of the Company. If the participant elects to receive Common Stock, the Trustee will convert each share of Preferred Stock held in the participant's Convertible Preferred Stock account into one share of Common Stock and will receive from the Company an additional cash contribution to cover any differential between the current Common Stock price and the appraised value of the Preferred Stock. The Trustee will use the cash to acquire (on the open market) additional shares of Common Stock and then distribute to the participant the total number of shares of Common Stock that were acquired. If the participant elects to receive cash, the Trustee will convert each share of Preferred Stock into the number of shares of Common Stock into which such Preferred Stock is convertible, and will receive in cash from the Company any differential between the current Common Stock price and the appraised value of the Preferred Stock. The Trustee will then sell the shares of Common Stock on the open market and distribute to the participant the cash proceeds plus the differential contribution made by the Company. The non-vested portion of the Company's contributions credited to the terminating participant is forfeited immediately. All forfeitures are used to reduce future matching contributions required from the Company. For purposes of these financial statements, the cash received by the Trustee from the Company to fund any differential between the current market price of the Company's Common Stock and the appraised value of the Preferred Shares is recorded as an employer contribution. This cash is not included in the computation of the realized gain or loss of the converted Preferred Shares. NOTE E: INVESTMENTS During 1996 and 1995, the Plan's investments (including investments bought and sold, as well as held during the year) appreciated in fair value by $913,123 and $4,075,913, respectively. Net (Depreciation) Appreciation For the Year Ended in Fair Value Fair Value at December 31, 1996 During Year End of Year - ---------------------------- ------------------ ------------- Common Stock- The Ryland Group, Inc. $ (2,830) $ 152,436 Putnam Voyager Fund 582,660 11,188,498 American Balanced Fund 218,717 7,403,388 Fidelity Growth Fund 901,866 8,839,414 Wells Fargo S&P 500 71,847 571,048 CIGNA Income Fund 0 5,599,646 Wachovia Short-Term Investment Fund 0 144,646 Loans to Participants 0 1,765,450 Preferred Stock - The Ryland Group, Inc. (901,448) 21,974,396 Standish Fixed Income Fund 42,311 3,034,816 ------- --------- Total $ 913,123 $ 60,673,738 ========= ============ NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE E: INVESTMENTS--CONTINUED Net (Deprecation) Appreciation in For the Year Ended Fair Value Fair Value at December 31, 1995 During Year End of Year - ------------------------------ ------------------ --------------- Common Stock- The Ryland Group, Inc. $ (17,374) $ 182,154 Putnam Voyager Fund 2,408,791 10,043,695 Kemper Growth Fund 1,221,997 0 American Balanced Fund 1,214,243 7,883,646 Fidelity Growth Fund 0 7,767,441 CIGNA Income Fund 0 6,196,142 Wachovia Short-Term Investment Fund 0 138,791 Loans to Participants 0 1,513,314 Preferred Stock- The Ryland Group, Inc. (1,086,329) 24,048,974 Standish Fixed Income Fund 334,585 3,202,587 ------- --------- Total $ 4,075,913 $ 60,976,744 ========= ========== The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: December 31, December 31, 1996 1995 ---------------- -------------- Putnam Voyager Fund $ 11,188,498 $ 10,043,695 American Balance Fund $ 7,403,388 $ 7,883,646 Fidelity Growth Fund $ 8,839,414 $ 7,767,441 CIGNA Income Fund $ 5,599,646 $ 6,196,142 Standish Fixed Income Fund $ 3,034,816 $ 3,202,587 Preferred Stock- The Ryland Group, Inc. $ 21,974,396 $ 24,048,974 The maximum accounting loss the Plan would incur if parties to the financial instruments failed to perform would be the current value of the investments as stated on the Statement of Net Assets Available for Plan Benefits. None of the investments are secured by collateral. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE F: INCOME TAX STATUS The Internal Revenue Service has ruled (November 15, 1994) that the Plan qualifies under Section 401(a) of the Internal Revenue Code (IRC) and is, therefore, not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Employee Benefits Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE G: NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND AS OF DECEMBER 31, 1996 Ryland Putnam American Common Voyager Balanced ------ ------ -------- ASSETS Receivables: Accrued employer contributions Accrued interest and dividends $ 14 $ 0 $ 0 --- --- --- Total receivables 14 0 0 Investments at fair value: Short-term investments 3,195 CIGNA Income Fund Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. 152,259 Mutual funds 11,188,498 7,403,388 Loans to participants ------- ---------- --------- Total investments 155,454 11,188,498 7,403,388 ------- ---------- --------- Total Assets 155,468 11,188,498 7,403,388 ======= ========== ========= LIABILITIES Accrued liabilities 0 0 0 Loan payable to The Ryland Group, Inc. ------- ------ ------ Total Liabilities 0 0 0 -------- -------- ------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 155,468 $ 11,188,498 $ 7,403,388 ========== ========== ========= Standish Fidelity Fixed Income Growth CIGNA ------------ --------- -------- ASSETS Receivables: Accrued employer contributions Accrued interest and dividends $ 0 $ 0 $ 23,913 ------ ----- ------- Total receivables 0 0 23,913 Investments at fair value: Short-term investments 36,639 CIGNA Income Fund 5,599,646 Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. Mutual funds 3,034,816 8,839,414 Loans to participants -------- ---------- --------- Total investments 3,034,816 8,839,414 5,636,285 --------- --------- --------- Total Assets 3,034,816 8,839,414 5,660,198 ========= ========= ========= LIABILITIES Accrued liabilities 0 0 0 Loan payable to The Ryland Group, Inc. ------------ ----------- ----------- Total Liabilities 0 0 0 ------------ ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 3,034,816 $ 8,839,414 $ 5,660,198 ============ =========== =========== Wells Fargo Ryland S&P 500 Preferred --------- --------- ASSETS Receivables: Accrued employer contributions $ 2,732,371 Accrued interest and dividends $ 0 475,983 ----------- ---------- Total receivables 0 3,208,354 Investments at fair value: Short-term investments 104,812 CIGNA Income Fund Preferred stock of The Ryland Group, Inc. 21,974,396 Common stock of The Ryland Group, Inc. 177 Mutual funds 571,048 Loans to participants -------- ---------- Total investments 571,048 22,079,385 -------- ---------- Total Assets 571,048 25,287,739 ======== ========== LIABILITIES Accrued liabilities 0 409,360 Loan payable to The Ryland Group, Inc. 16,390,810 -------- ---------- Total Liabilities 0 16,800,170 -------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 571,048 $ 8,487,569 =========== ============ Loan Fund Total ------ -------- ASSETS Receivables: Accrued employer contributions $ 2,732,371 Accrued interest and dividends $ 0 499,910 --------- ---------- Total receivables 0 3,232,281 Investments at fair value: Short-term investments 144,646 CIGNA Income Fund 5,599,646 Preferred stock of The Ryland Group, Inc. 21,974,396 Common stock of The Ryland Group, Inc. 152,436 Mutual funds 31,037,164 Loans to participants 1,765,450 1,765,450 ---------- ---------- Total investments 1,765,450 60,673,738 ---------- ---------- Total Assets 1,765,450 63,906,019 ========== ========== LIABILITIES Accrued liabilities 0 409,360 Loan payable to The Ryland Group, Inc. 16,390,810 ---------- ---------- Total Liabilities 0 16,800,170 ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 1,765,450 $ 47,105,849 ============ ============ NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE G: NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND AS OF DECEMBER 31, 1995 Ryland Putnam American Common Voyager Balanced ------ ------ -------- ASSETS Receivables: Accrued employer contributions Accrued interest and dividends $ 15 $ 0 $ 0 --- --- --- Total receivables 15 0 0 Investments at fair value: Short-term investments 3,182 CIGNA Income Fund Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. 182,000 Mutual funds 10,043,695 7,883,646 Loans to participants ------- ---------- --------- Total investments 185,182 10,043,695 7,883,646 ------- ---------- --------- Total Assets 185,197 10,043,695 7,883,646 ======= ========== ========= LIABILITIES Accrued liabilities 0 0 0 Loan payable to The Ryland Group, Inc. ------- ------ ------ Total Liabilities 0 0 0 -------- -------- ------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 185,197 $ 10,043,695 $ 7,883,646 ========== ========== ========= Standish Fidelity Fixed Income Growth CIGNA ------------ --------- -------- ASSETS Receivables: Accrued employer contributions Accrued interest and dividends $ 0 $ 0 $ 25,641 ------ ----- ------- Total receivables 0 0 25,641 Investments at fair value: Short-term investments 129,621 CIGNA Income Fund 6,196,142 Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. Mutual funds 3,202,587 7,767,441 Loans to participants -------- ---------- --------- Total investments 3,202,587 7,767,441 6,325,763 --------- --------- --------- Total Assets 3,202,587 7,767,441 6,351,404 ========= ========= ========= LIABILITIES Accrued liabilities 0 0 0 Loan payable to The Ryland Group, Inc. ------------ ----------- ----------- Total Liabilities 0 0 0 ------------ ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 3,202,587 $ 7,767,441 $ 6,351,404 ============ =========== =========== Ryland Loan Preferred Fund Total --------- ------ -------- ASSETS Receivables: Accrued employer contributions $ 1,879,172 $ 1,879,172 Accrued interest and dividends 520,920 $ 0 546,576 ----------- --------- ---------- Total receivables 2,400,092 0 2,425,748 Investments at fair value: Short-term investments 5,988 138,791 CIGNA Income Fund 6,196,142 Preferred stock of The Ryland Group, Inc. 24,048,974 24,048,974 Common stock of The Ryland Group, Inc. 154 182,154 Mutual funds 28,897,369 Loans to participants 1,513,314 1,513,314 ---------- --------- ---------- Total investments 24,055,116 1,513,314 60,976,744 ---------- --------- ---------- Total Assets 26,455,208 1,513,314 63,402,492 ========== ========= ========== LIABILITIES Accrued liabilities 534,302 0 534,302 Loan payable to The Ryland Group, Inc. 21,393,457 21,393,457 ---------- ---------- ---------- Total Liabilities 21,927,759 0 21,927,759 ---------- ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 4,527,449 $ 1,513,314 $ 41,474,733 ============ =========== ============ NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE H: ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1996 Ryland Putnam American Common Voyager Balanced -------- --------- ------- ADDITIONS Contributions: Employer $ 207,612 $ 111,736 Participants 1,634,652 807,299 Rollovers 100,048 37,491 -------- --------- -------- Total contributions 0 1,942,312 956,526 Earnings on investments Interest $ 205 0 0 Dividends 7,481 702,173 699,167 -------- --------- -------- Total Additions 7,686 2,644,485 1,655,693 -------- --------- -------- DEDUCTIONS Benefit payments to participants 22,095 2,320,296 1,443,227 Interest expense 0 0 0 Administrative expenses 6 49,961 34,157 -------- --------- -------- Total Deductions 22,101 2,370,257 1,477,384 -------- --------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments (2,830) 582,660 218,717 Interfund transfers (12,484) 287,915 (877,284) -------- --------- -------- Net (Decrease) Increase in net assets available for plan benefits (29,729) 1,144,803 (480,258) Net assets available for plan benefits at beginning of year 185,197 10,043,695 7,883,646 -------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $155,468 $11,188,498 $7,403,388 ======== =========== ========= Standish Fidelity Fixed Income Growth CIGNA -------- --------- ------- ADDITIONS Contributions: Employer $ 46,037 $ 131,019 $ 61,458 Participants 330,644 1,028,611 447,719 Rollovers 35,198 75,833 74,862 -------- --------- -------- Total contributions 411,879 1,235,463 584,039 Earnings on investments Interest 0 1,266 333,539 Dividends 209,031 396,949 0 -------- --------- -------- Total Additions 620,910 1,633,678 917,578 -------- --------- -------- DEDUCTIONS Benefit payments to participants 506,323 1,828,102 1,260,516 Interest expense 0 0 0 Administrative expenses 13,551 38,519 29,230 -------- --------- -------- Total Deductions 519,874 1,866,621 1,289,746 -------- --------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments 42,311 901,866 0 Interfund transfers (311,118) 403,050 (319,038) -------- --------- -------- Net (Decrease) Increase in net assets available for plan benefits (167,771) 1,071,973 (691,206) Net assets available for plan benefits at beginning of year 3,202,587 7,767,441 6,351,404 -------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $3,034,816 $8,839,414 $5,660,198 ========== ========== =========== Wells Fargo Ryland S&P 500 Preferred -------- -- ------- ADDITIONS Contributions: Employer $ 6,442 $ 6,699,479 Participants 85,020 0 Rollovers 14,845 0 -------- --------- Total contributions 106,307 6,699,479 Earnings on investments Interest 0 0 Dividends 0 1,974,464 -------- -------- Total Additions 106,307 8,673,943 -------- -------- DEDUCTIONS Benefit payments to participants 21,044 2,017,925 Interest expense 0 1,794,450 Administrative expenses 0 0 -------- -------- Total Deductions 21,044 3,812,375 ---------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments 71,847 (901,448) Interfund transfers 413,938 0 -------- -------- Net (Decrease) Increase in net assets available for plan benefits 571,048 3,960,120 Net assets available for plan benefits at beginning of year 0 4,527,449 -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 571,048 $8,487,569 ========== ========== Loan Fund Total -------- -- ------- ADDITIONS Contributions: Employer 0 $ 7,263,783 Participants 0 4,333,945 Rollovers 0 338,277 -------- --------- Total contributions 0 11,936,005 Earnings on investments Interest $ 137,129 472,139 Dividends 0 3,989,265 -------- --------- Total Additions 137,129 16,397,409 -------- ---------- DEDUCTIONS Benefit payments to participants 300,014 9,719,542 Interest expense 0 1,794,450 Administrative expenses 0 165,424 -------- ---------- Total Deductions 300,014 11,679,416 -------- ---------- Net realized and unrealized appreciation (depreciation) in fair value of investments 0 913,123 Interfund transfers 415,021 0 -------- -------- Net (Decrease) Increase in net assets available for plan benefits 252,136 5,631,116 Net assets available for plan benefits at beginning of year 1,513,314 41,474,733 -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $1,765,450 $ 47,105,849 ========== ============ NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN NOTE H: ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1995 Ryland Putnam Kemper Common Voyager Growth -------- --------- ------- ADDITIONS Contributions: Employer $ 587,342 $ 403,360 Participants 1,629,792 1,078,292 Rollovers 383,837 231,077 -------- --------- -------- Total contributions 0 2,600,971 1,712,729 Earnings on investments Interest $ 516 4,945 4,115 Dividends 11,370 529,141 800,884 -------- --------- -------- Total Additions 11,886 3,135,057 2,517,728 -------- --------- -------- DEDUCTIONS Benefit payments to participants 180,317 2,739,035 2,203,531 Interest expense 0 0 0 Administrative expenses 8 40,270 34,569 -------- --------- -------- Total Deductions 180,325 2,779,305 2,238,100 -------- --------- --------- Net realized and unrealized appreciation (depreciation) in fair value of investments (17,374) 2,408,791 1,221,997 Interfund transfers (26,908) 454,957 (7,881,955) -------- --------- ----------- Net (Decrease) Increase in net assets available for plan benefits (212,721) 3,219,500 (6,380,330) Net assets available for plan benefits at beginning of year 397,918 6,824,195 6,380,330 -------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $185,197 $10,043,695 $ 0 ======== =========== ========= American Standish Fidelity Balanced Fixed Income Growth -------- --------- ------- ADDITIONS Contributions: Employer $396,146 $ 161,772 $ 0 Participants 1,048,834 421,378 0 Rollovers 211,103 123,908 0 -------- --------- -------- Total contributions 1,656,083 707,058 0 Earnings on investments Interest 4,152 1,793 0 Dividends 562,132 224,811 0 -------- --------- -------- Total Additions 2,222,367 933,662 0 -------- --------- -------- DEDUCTIONS Benefit payments to participants 2,120,001 784,119 0 Interest expense 0 0 0 Administrative expenses 35,121 15,455 0 -------- --------- -------- Total Deductions 2,155,122 799,574 0 -------- --------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments 1,214,243 334,585 0 Interfund transfers (171,459) (380,410) 7,767,441 -------- --------- -------- Net (Decrease) Increase in net assets available for plan benefits 1,110,029 88,263 7,767,441 Net assets available for plan benefits at beginning of year 6,773,617 3,114,324 0 -------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $7,883,646 $3,202,587 $ 7,767,441 ========== ========== =========== Ryland CIGNA Preferred -------- -- ------- ADDITIONS Contributions: Employer $ 261,267 $ 5,089,652 Participants 682,088 0 Rollovers 108,699 0 -------- -------- Total contributions 1,052,054 5,089,652 Earnings on investments Interest 396,762 0 Dividends 0 2,192,552 -------- -------- Total Additions 1,448,816 7,282,204 -------- -------- DEDUCTIONS Benefit payments to participants 2,265,351 3,342,203 Interest expense 0 2,229,042 Administrative expenses 33,099 0 -------- -------- Total Deductions 2,298,450 5,571,245 -------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments 0 (1,086,329) Interfund transfers 80,119 0 -------- -------- Net (Decrease) Increase in net assets available for plan benefits (769,515) 624,630 Net assets available for plan benefits at beginning of year 7,120,919 3,902,819 -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $6,351,404 $4,527,449 ========== ========== Loan Fund Total -------- -- ------- ADDITIONS Contributions: Employer 0 $ 6,899,539 Participants 0 4,860,384 Rollovers 0 1,058,624 -------- -------- Total contributions 0 12,818,547 Earnings on investments Interest $ 117,743 530,026 Dividends 0 4,320,890 -------- -------- Total Additions 117,743 17,669,463 -------- -------- DEDUCTIONS Benefit payments to participants 646,975 14,281,532 Interest expense 0 2,229,042 Administrative expenses 0 158,522 -------- -------- Total Deductions 646,975 16,669,096 -------- -------- Net realized and unrealized appreciation (depreciation) in fair value of investments 0 4,075,913 Interfund transfers 158,215 0 -------- -------- Net (Decrease) Increase in net assets available for plan benefits (371,017) 5,076,280 Net assets available for plan benefits at beginning of year 1,884,331 36,398,453 -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $1,513,314 $ 41,474,733 ========== ============ The Ryland Group, Inc. Retirement and Stock Ownership Plan Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1996 DESCRIPTION OF INVESTMENT, INCLUDING IDENTITY OF ISSUE, MATURITY DATE, RATE OF BORROWER, LESSOR INTEREST, PAR OR CURRENT OR SIMILAR PARTY MATURITY VALUE COST VALUE (1) The Ryland Group, Inc. Common Stock $ 212,638 $ 152,436 (1) The Ryland Group, Inc. Preferred Stock $27,198,700 $21,974,396 CIGNA Income Fund Guaranteed Account $ 5,599,646 $ 5,599,646 Putnam Voyager Mutual Fund $ 9,230,716 $11,188,498 Fidelity Growth Mutual Fund $ 8,082,342 $ 8,839,414 Wells Fargo S&P 500 Mutual Fund $ 501,335 $ 571,048 American Balanced Mutual Fund $ 6,618,048 $ 7,403,388 Standish Income Mutual Fund $ 2,936,424 $ 3,034,816 Wachovia DTF Money Market Short-term Investment Mutual Funds $ 144,646 $ 144,646 Participant Loans High - 9.5% $ 1,765,450 $ 1,765,450 Low - 9.25% (1) Denotes party in-interest The Ryland Group, Inc. Retirement and Stock Ownership Plan Item 27d - Schedule of Reportable Transactions FOR THE YEAR ENDED DECEMBER 31, 1996 (a) (b) (c) Description of Assets (including interest rate and maturity in Purchase Identity of Party Involved case of a loan) Price - -------------------------- ------------ -------- Category (i) - single transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund Money Market Fund $ 2,300,906 Wachovia DTF Short Term Investment Fund Money Market Fund $ 7,767,441 Wachovia DTF Short Term Investment Fund Money Market Fund n/a Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund Money Market Fund $ 23,849,971 Wachovia DTF Short Term Investment Fund Money Market Fund n/a American Balanced Fund Mutual Fund $ 1,708,919 American Balanced Fund Mutual Fund n/a CIGNA Income Fund Guaranteed Account $ 1,228,124 CIGNA Income Fund Guaranteed Account n/a Fidelity Growth Fund Mutual Fund $ 2,366,334 Fidelity Growth Fund Mutual Fund n/a Putnam Voyager Fund Mutual Fund $ 3,549,494 Putnam Voyager Fund Mutual Fund n/a Ryland Preferred Stock (1) Preferred Stock n/a Ryland Common Stock (1) Common Stock $ 1,176,834 Ryland Common Stock (1) Common Stock n/a (1)Denotes party in-interest (d) (e) Identity of Party Involved Selling Price Lease Rental - -------------------------- ------------ -------- Category (i) - single transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund n/a n/a Wachovia DTF Short Term Investment Fund n/a n/a Wachovia DTF Short Term Investment Fund $ 7,767,441 n/a Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund n/a n/a Wachovia DTF Short Term Investment Fund $ 23,936,696 n/a American Balanced Fund n/a n/a American Balanced Fund $ 2,407,893 n/a CIGNA Income Fund n/a n/a CIGNA Income Fund $ 2,152,644 n/a Fidelity Growth Fund n/a n/a Fidelity Growth Fund $ 2,196,227 n/a Putnam Voyager Fund n/a n/a Putnam Voyager Fund $ 2,987,351 n/a Ryland Preferred Stock (1) $ 2,111,477 n/a Ryland Common Stock (1) n/a n/a Ryland Common Stock (1) $ 1,208,019 n/a (1)Denotes party in-interest (f) (2) Expenses Incurred with Identity of Party Involved Transaction - -------------------------- ------------ Category (i) - single transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund $0 Wachovia DTF Short Term Investment Fund $0 Wachovia DTF Short Term Investment Fund $0 Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund $0 Wachovia DTF Short Term Investment Fund $0 American Balanced Fund $0 American Balanced Fund $0 CIGNA Income Fund $0 CIGNA Income Fund $0 Fidelity Growth Fund $0 Fidelity Growth Fund $0 Putnam Voyager Fund $0 Putnam Voyager Fund $0 Ryland Preferred Stock (1) $0 Ryland Common Stock (1) $51 Ryland Common Stock (1) $6,273 (1)Denotes party in-interest (2) Commissions and fees related to purchases and sales of investments are included in the cost of the investment or the proceeds from the sale and are not separately identified by the trustee. (g) (h) Current Value of Asset Cost of on Transaction Identity of Party Involved Asset Date - -------------------------- ------------ -------- Category (i) - single transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund $ 2,300,906 $ 2,300,906 Wachovia DTF Short Term Investment Fund $ 7,767,441 $ 7,767,441 Wachovia DTF Short Term Investment Fund $ 7,767,441 $ 7,767,441 Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund $ 23,849,971 $ 23,849,971 Wachovia DTF Short Term Investment Fund $ 23,936,696 $ 23,936,696 American Balanced Fund $ 1,708,919 $ 1,708,919 American Balanced Fund $ 2,126,294 $ 2,407,893 CIGNA Income Fund $ 1,228,124 $ 1,228,124 CIGNA Income Fund $ 2,152,644 $ 2,152,644 Fidelity Growth Fund $ 2,366,334 $ 2,366,334 Fidelity Growth Fund $ 2,051,432 $ 2,196,227 Putnam Voyager Fund $ 3,549,494 $ 3,549,494 Putnam Voyager Fund $ 2,272,062 $ 2,987,351 Ryland Preferred Stock (1) $ 2,274,223 $ 2,111,477 Ryland Common Stock (1) $ 1,176,886 $ 1,176,834 Ryland Common Stock (1) $ 1,214,585 $ 1,208,019 (1)Denotes party in-interest (i) Identity of Party Involved Net Gain or (Loss) - -------------------------- ------------------ Category (i) - single transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund n/a Wachovia DTF Short Term Investment Fund n/a Wachovia DTF Short Term Investment Fund $ 0 Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund n/a Wachovia DTF Short Term Investment Fund $ 0 American Balanced Fund n/a American Balanced Fund $ 281,599 CIGNA Income Fund n/a CIGNA Income Fund $ 0 Fidelity Growth Fund n/a Fidelity Growth Fund $ 144,795 Putnam Voyager Fund n/a Putnam Voyager Fund $ 715,289 Ryland Preferred Stock (1) $ (162,746) Ryland Common Stock (1) n/a Ryland Common Stock (1) $ (12,839) (1)Denotes party in-interest There were no category (ii) or (iv) reportable transactions during 1996. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this Annual Report to be signed by the undersigned thereunto duly authorized. THE RYLAND GROUP, INC. RETIREMENT AND STOCK OWNERSHIP PLAN Date: June 27, 1997 By: /s/ Michael D. Mangan . -------------------------------- Michael D. Mangan Executive Vice President and Chief Financial Officer of The Ryland Group, Inc. Page Of Sequentially Numbered Pages -------------- INDEX OF EXHIBITS ----------------- 23 Consent of Ernst & Young, Independent Auditors 19 EX-23 2 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-32431) pertaining to the Retirement and Stock Ownership Plan of The Ryland Group, Inc. of our report dated June 23, 1997, with respect to the financial statements and schedules of The Ryland Group, Inc. Retirement and Stock Ownership Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1996. /s/ Ernst & Young LLP Baltimore, Maryland June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----