-----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, EDlyc73ndJiAY9ZDBGCzbIK53m5zmBtnyCzIm7o1+6UvOUD6t7RBie1OJGS+/OEz 7L09uvuf1UHQBG0wLvbJtw== 0000085974-98-000012.txt : 19980701 0000085974-98-000012.hdr.sgml : 19980701 ACCESSION NUMBER: 0000085974-98-000012 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980630 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: SEC FILE NUMBER: 001-08029 FILM NUMBER: 98657911 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, 1997. ------------------------ 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 Savings Opportunity Plan B. The Ryland Group, Inc. 11000 Broken Land Parkway Columbia, Maryland, 21044 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 2-17 SIGNATURES 18 INDEX OF EXHIBITS 19 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 Savings Opportunity Plan (the "Plan") as of December 31, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 16, 1998 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 SAVINGS OPPORTUNITY PLAN December 31, December 31, 1997 1996 ------------ ------------ ASSETS Receivables: Accrued employer contributions $ 0 $ 2,732,371 Accrued interest and dividends 277,740 499,910 --------------- ------------ Total receivables 277,740 3,232,281 Investments at fair value: Cash 35,023,942 0 Short-term investments 4,914,849 144,646 CIGNA Income Fund 0 5,599,646 Preferred stock of The Ryland Group, Inc. Unallocated 47,508 7,901,966 Allocated 19,405,844 14,072,430 Common stock of The Ryland Group, Inc. 94,352 152,436 Mutual funds 0 31,037,164 Loans to participants 1,541,953 1,765,450 ------------- ----------- Total investments 61,028,448 60,673,738 ------------- ----------- Total Assets 61,306,188 63,906,019 ------------- ----------- LIABILITIES Accrued liabilities 1,856 409,360 Loan payable to The Ryland Group, Inc. 0 16,390,810 ------------- ----------- Total Liabilities 1,856 16,800,170 ------------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 61,304,332 $ 47,105,849 ============= ============ See notes to financial statements STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS The Ryland Group, Inc. RETIREMENT SAVINGS OPPORTUNITY PLAN Year Ended Year Ended December 31, December 31, 1997 1996 ------------- ------------- ADDITIONS Contributions: Employer $ 7,149,212 $ 7,263,783 Participants 4,011,867 4,333,945 Rollovers 564,458 338,277 ------------ ----------- Total contributions 11,725,537 11,936,005 Interest: Short-term investments 40,172 1,471 CIGNA Income Fund 284,860 333,539 Participant loans 140,134 137,129 ------------ ------------ Total interest 465,166 472,139 Dividends: The Ryland Group, Inc. Preferred stock 1,629,535 1,974,464 Common stock 3,952 7,481 Mutual funds 2,796,000 2,007,320 ------------ ------------ Total dividends 4,429,487 3,989,265 ------------ ------------ Total Additions 16,620,190 16,397,409 DEDUCTIONS Benefit payments to participants 12,494,407 9,719,542 Interest expense on loan payable to 929,994 1,794,450 The Ryland Group, Inc. Administrative expenses 164,248 165,424 ------------ ------------ Total Deductions 13,588,649 11,679,416 Net realized and unrealized appreciation (depreciation) in fair value of investments 11,166,942 913,123 ------------ ------------ Increase in net assets available for plan benefits 14,198,483 5,631,116 Net assets available for plan benefits at beginning of year 47,105,849 41,474,733 ------------- ------------ NET ASSET AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 61,304,332 $ 47,105,849 ============= ============ See notes to financial statements NOTES TO FINANCIAL STATEMENTS THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN NOTE A: SIGNIFICANT ACCOUNTING POLICIES The financial statements of The Ryland Group, Inc. Retirement Savings Opportunity Plan ("the Plan" or "the RSOP", previously known as "The Ryland Group, Inc. Retirement and Stock Ownership Plan") 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 value of $25.25 guaranteed 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 $40,295 and $96,907 at December 31, 1997 and 1996, 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. Participant contributions into the Plan are combined with Company contributions, which are allocated to participants as a match of their pretax deferrals. Employee Eligibility Prior to January 1, 1998, employees were eligible to participate in the Plan at the beginning of the first pay period of the month that follows completion of a one-year period of service. An employee is 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. Beginning January 1, 1998, all full-time employees are eligible to participate in the Plan the first pay period of the quarter following 30 days of employment. 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 could contribute more than $9,500 to the Plan for the 1997 calendar year. The RSOP offers the participants several investment options for their contributions. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN NOTE B: DESCRIPTION OF THE PLAN--CONTINUED Employee Contributions and Investment Options The following are descriptions of the participant investment options available during 1997: 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, 1997 and 1996, 1,111 and 1,298 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, 1997 and 1996, 1,061 and 1,106 employees, respectively, 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, 1997 and 1996, 529 and 630 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, 1997 and 1996, 900 and 976 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, 1997 and 1996, 400 and 163 employees, respectively, 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, 1997 and 1996, 488 and 591 employees, respectively, 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 remained as frozen options which could be liquidated into the other investment funds at the participant's option. As of December 31, 1997, all balances in this fund had been liquidated. At December 31, 1996, 90 employees were maintaining balances in The Ryland Group, Inc. Common Stock Fund. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN NOTE B: DESCRIPTION OF THE PLAN--CONTINUED Employee Contributions and Investment Options - cont. On January 1, 1998, the Plan established new participant investment fund options available from the Vanguard Funds. In anticipation of transferring the Plan's existing assets to the new investment fund options, all prior investments in the Putnam Voyager Fund, Fidelity Growth Company Fund, CIGNA Income Fund, American Balanced Fund, Wells Fargo Equity Index Fund and Standish Fixed Income Fund were liquidated in December 1997. The proceeds were held in cash and short-term investments at December 31, 1997. Effective January 1, 1998, the Plan changed its trustee from Wachovia Bank to The Vanguard Fiduciary Trust Company. 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 was all or part of the Company's contribution, it was divided among the current investment funds based on each participant's current investment fund option selections. In instances where both Preferred Shares and cash were contributed to participant accounts, all participants received an equal proportion of each. Beginning January 1, 1998, participants will no longer receive Preferred Stock in connection with Company matching contributions to their accounts. The Company made no discretionary contributions for the years ended December 31, 1997 and 1996. 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" was a loan between the Company and the Plan the proceeds of which were used by the Plan to acquire the Preferred Stock (see Note C below). Through September 1997, to the extent employer contributions, including matching contributions and discretionary contributions, were used to make an RSOP Loan payment, such contributions were made in cash. After each RSOP Loan payment was made, a number of shares of Preferred Stock were 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, shares of Preferred Stock were allocated among the participants' accounts based on the amount of the required matching contributions. On October 1, 1997, the Company purchased 248,881 preferred shares that had not been released for allocation to participants accounts (see Note C below). 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 fair 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 Savings Opportunity Plan. Copies of this pamphlet are available from the Company's Employee Benefits Department. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN 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, and is convertible initially into one share of the Company's Common Stock. During 1997 and 1996, the Company paid approximately $1,630,000 and $1,974,000, 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 interest rate on the loan was 9.99% and through September, 1997, the loan was being repaid by the Plan through dividends received on the Preferred Stock and Company contributions. On October 1, 1997, the Company purchased 248,881 shares of Preferred Stock from the Plan at an independently appraised value of $33.1875 per share, representing preferred shares that secured the loan and had not been released for allocation to participant's accounts. The Company retired these preferred shares. The Plan used the proceeds to pay off the related loan balance. Principal payments of $13,260,701 and $5,002,647 were made during 1997 and 1996, respectively. The Plan incurred approximately $930,000 and $1,794,000 of interest on this loan in 1997 and 1996. Participants received allocations of the Preferred Stock as debt payments were made. During 1997 and 1996, there were 61,001 and 127,442 shares released, respectively, and allocated to participants. As of December 31, 1997, there were 1,228 unallocated preferred shares with an approximate value of $48,000. At December 31, 1996, there were 309,881 unallocated preferred shares with an approximate value of $7,902,000. 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 from the converted Preferred Shares. NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN NOTE E: INVESTMENTS During 1997 and 1996, the Plan's investments (including investments bought and sold, as well as held during the year) appreciated in fair value by $11,166,942 and $913,123, respectively. Mutual fund investment balances were converted to cash at the end of 1997 in connection with the transition to the Vanguard Funds in January 1998. Net Appreciation (Depreciation) For the Year Ended in Fair Value Fair Value at December 31, 1997 During Year End of Year - ---------------------------- ------------------ ------------- Common Stock- The Ryland Group, Inc. $ 35,210 $ 94,352 Putnam Voyager Fund 1,990,055 0 American Balanced Fund 609,286 0 Fidelity Growth Fund 687,563 0 Wells Fargo S&P 500 284,444 0 CIGNA Income Fund 24,563 0 Wachovia Short-Term Investment Fund 0 4,914,849 Loans to Participants 0 1,541,953 Preferred Stock - The Ryland Group, Inc. 7,566,891 19,453,352 Standish Fixed Income Fund (31,070) 0 Cash 0 35,023,942 ----------- ---------- Total $ 11,166,942 $ 61,028,448 ========== ========== NOTES TO FINANCIAL STATEMENTS--CONTINUED THE RYLAND GROUP, INC. RETIREMENT SAVINGS OPPORTUNITY PLAN NOTE E: INVESTMENTS--CONTINUED Net (Deprecation) Appreciation in For the Year Ended Fair Value Fair Value at December 31, 1997 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 ========= ========== The fair value of individual investments that represent 5% or more of the Plan's net assets are as follows: December 31, December 31, 1997 1996 ---------------- -------------- Preferred Stock- The Ryland Group, Inc. $ 19,453,352 $ 21,974,396 Wachovia Short-Term Investment Fund $ 4,914,849 Cash $ 35,023,942 Putnam Voyager Fund $ 11,188,498 American Balance Fund $ 7,403,388 Fidelity Growth Fund $ 8,839,414 CIGNA Income Fund $ 5,599,646 Standish Fixed Income Fund $ 3,034,816 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 SAVINGS OPPORTUNITY 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, 1997 Ryland Putnam American Common Voyager Balanced ------ ------ -------- ASSETS Receivables: Accrued interest and dividends $ 0 $ 0 $ 0 ----------- ---------- ---------- Total receivables 0 0 0 Investments at fair value: Cash 11,346,213 8,305,109 Short-term investments Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. Loans to participants ---------- ---------- --------- Total investments 0 11,346,213 8,305,109 ---------- ---------- --------- Total Assets 0 11,346,213 8,305,109 ========== ========== ========= LIABILITIES Accrued liabilities 0 0 0 ---------- ---------- --------- Total Liabilities 0 0 0 ---------- ---------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 0 $ 11,346,213 $ 8,305,109 ========== ========== ========= Standish Fidelity Fixed Income Growth CIGNA ------------ ---------- -------- ASSETS Receivables: Accrued interest and dividends $ 0 $ 0 $ 0 ---------- ---------- ---------- Total receivables 0 0 0 Investments at fair value: Cash 2,652,842 10,148,227 1,258 Short-term investments 4,912,032 Preferred stock of The Ryland Group, Inc. Common stock of The Ryland Group, Inc. Loans to participants ---------- ---------- ---------- Total investments 2,652,842 10,148,227 4,913,290 ---------- ----------- ---------- Total Assets 2,652,842 10,148,227 4,913,290 ========== =========== ========== LIABILITIES Accrued liabilities 0 0 1,856 ---------- ----------- ----------- Total Liabilities 0 0 1,856 ---------- ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 2,652,842 $ 10,148,227 $ 4,911,434 ============ =========== ========== Wells Fargo Ryland S&P 500 Preferred ----------- ---------- ASSETS Receivables: Accrued interest and dividends $ 0 $ 277,740 ----------- ---------- Total receivables 0 277,740 Investments at fair value: Cash 2,610,923 (40,630) Short-term investments 2,817 Preferred stock of The Ryland Group, Inc. 19,453,352 Common stock of The Ryland Group, Inc. 94,352 Loans to participants ---------- ------------ Total investments 2,610,923 19,509,891 ---------- ----------- Total Assets 2,610,923 19,787,631 ========== =========== LIABILITIES Accrued liabilities 0 0 ---------- ---------- Total Liabilities 0 0 ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 2,610,923 $ 19,787,631 =========== ============ Loan Fund Total ----------- ---------- ASSETS Receivables: Accrued interest and dividends $ 0 $ 277,740 ----------- ---------- Total receivables 0 277,740 Investments at fair value: Cash 35,023,942 Short-term investments 4,914,849 Preferred stock of The Ryland Group, Inc. 19,453,352 Common stock of The Ryland Group, Inc. 94,352 Loans to participants 1,541,953 1,541,953 ---------- ------------ Total investments 1,541,953 61,028,448 ---------- ----------- Total Assets 1,541,953 61,306,188 ========== =========== LIABILITIES Accrued liabilities 0 1,856 ----------- ----------- Total Liabilities 0 1,856 ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 1,541,953 61,304,332 ============ ========== 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: Cash 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: Cash 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 H: ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1997 Ryland Putnam American Common Voyager Balanced -------- --------- ------- ADDITIONS Contributions: Employer 0 $ 176,036 $ 90,933 Participants 0 1,438,793 684,208 Rollovers 0 110,284 113,176 -------- --------- ------- Total contributions 0 1,725,113 888,317 Earnings on investments Interest $ 115 13,696 9,646 Dividends 3,952 689,878 920,384 -------- --------- -------- Total Additions 4,067 2,428,687 1,818,347 -------- --------- -------- DEDUCTIONS Benefit payments to participants 76,133 2,678,459 1,350,134 Interest expense on loan payable to 0 0 0 The Ryland Group, Inc. Administrative expenses 4 50,115 34,869 -------- --------- ---------- Total Deductions 76,137 2,728,574 1,385,003 -------- --------- ---------- Net realized and unrealized (depreciation) in fair value of investments 35,210 1,990,055 609,286 Interfund transfers (118,608) (1,532,453) (140,909) -------- --------- ---------- Net (Decrease) Increase in net assets available for plan benefits (155,468) 157,715 901,721 Net assets available for plan benefits at beginning of year 155,468 11,188,498 7,403,388 -------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 0 $11,346,213 $ 8,305,109 ======== =========== ========= Standish Fidelity Fixed Income Growth CIGNA -------- --------- ------- ADDITIONS Contributions: Employer $ 35,535 $ 108,817 $ 47,049 Participants 278,716 969,461 370,565 Rollovers 46,442 138,594 27,419 -------- --------- -------- Total contributions 360,693 1,216,872 445,033 Earnings on investments Interest 3,698 11,265 284,860 Dividends 227,507 956,462 1,762 -------- --------- -------- Total Additions 591,898 2,184,599 731,655 -------- --------- -------- DEDUCTIONS Benefit payments to participants 907,538 2,127,178 1,233,709 Interest expense The Ryland Group, Inc. 0 0 0 Administrative expenses 13,952 41,250 24,058 -------- ---------- --------- Total Deductions 921,490 2,168,428 1,257,767 -------- --------- -------- Net realized and unrealized (depreciation) in fair value of investments (31,070) 687,563 24,563 Interfund transfers (21,312) 605,079 (247,215) -------- --------- -------- Net (Decrease) Increase in net assets available for plan benefits (381,974) 1,308,813 (748,764) Net assets available for plan benefits at beginning of year 3,034,816 8,839,414 5,660,198 --------- --------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $2,652,842 $ 10,148,227 4,911,434 ========== ========== ========== Wells Fargo Ryland S&P 500 Preferred ----------- -- ------- ADDITIONS Contributions: Employer $ 17,472 $ 6,673,370 Participants 270,124 0 Rollovers 128,543 0 ---------- ---------- Total contributions 416,139 6,673,370 Earnings on investments Interest 1,752 0 Dividends 7 1,629,535 -------- ---------- Total Additions 417,898 8,302,905 -------- ---------- DEDUCTIONS Benefit payments to participants 260,838 3,348,835 Interest expense on loan payable to The Ryland Group, Inc. 0 929,994 Administrative expenses 0 0 ---------- ---------- Total Deductions 260,838 4,278,829 ---------- ---------- Net realized and unrealized (depreciation) in fair value of investments 284,444 7,566,891 Interfund transfers 1,598,371 (290,905) --------- --------- Net (Decrease) Increase in net assets available for plan benefits 2,039,875 11,300,062 Net assets available for plan benefits at beginning of year 571,048 8,487,569 ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 2,610,923 $ 19,787,631 ========== ============ Loan Fund Total -------- -- ------- ADDITIONS Contributions: Employer $ 0 $ 7,149,212 Participants 0 4,011,867 Rollovers 0 564,458 -------- --------- Total contributions 0 11,725,537 Earnings on investments Interest $ 140,134 465,166 Dividends 0 4,429,487 -------- --------- Total Additions 140,134 16,620,190 -------- ---------- DEDUCTIONS Benefit payments to participants 511,583 12,494,407 Interest expense on loan payable to The Ryland Group, Inc. 0 929,994 Administrative expenses 0 164,248 -------- ---------- Total Deductions 511,583 13,588,649 -------- ---------- Net realized and unrealized (depreciation) in fair value of investments 0 11,166,942 Interfund transfers 147,952 0 -------- ---------- Net (Decrease) Increase in net assets available for plan benefits (223,497) 14,198,483 Net assets available for plan benefits at beginning of year 1,765,450 47,105,849 --------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS AT END OF YEAR $ 1,541,953 $ 61,304,332 ============ ============== 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 0 $ 207,612 $ 111,736 Participants 0 1,634,652 807,299 Rollovers 0 100,048 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 (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 (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 (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 (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 The Ryland Group, Inc. Retirement Savings Opportunity Plan Line 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997 Description of Investment, Including Maturity Identity of Issue, Date, Rate of Borrower, Lessor Interest, Par or Current or Similar Party Maturity Value Cost Value - ----------------- ------------------ ----------- ----------- * The Ryland Group, Inc. Common Stock $ 98,198 $ 94,352 * The Ryland Group, Inc. Preferred Stock 15,870,667 19,453,352 Wachovia DTF Money Market Short-term Investment Mutual Funds 4,914,849 4,914,849 Participant Loans High - 9.5% 1,541,953 1,541,953 Low - 9.25% Cash 35,023,942 35,023,942 ---------- ---------- Total $57,449,609 $61,028,448 ========== ========== * Denotes party in-interest Line 27d - Schedule of Reportable Transactions FOR THE YEAR ENDED DECEMBER 31, 1997 (a) (b) (c) Description of Assets (including interest rate and Purchase Identity of Party Involved maturity in 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 $ 4,746,109 American Balanced Fund Mutual Fund n/a CIGNA Income Fund Guaranteed Account n/a Fidelity Growth Fund Mutual Fund n/a Wells Fargo S&P 500 Mutual Fund n/a Putnam Voyager Fund Mutual Fund n/a Standish Fixed Income Fund Mutual Fund n/a Ryland Preferred Stock ** Preferred Stock n/a * 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. ** 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 American Balanced Fund $8,308,070 n/a CIGNA Income Fund $4,746,122 n/a Fidelity Growth Fund $10,151,693 n/a Wells Fargo S&P 500 $2,610,917 n/a Putnam Voyager Fund $11,350,444 n/a Standish Fixed Income Fund $2,653,975 n/a Ryland Preferred Stock ** $8,259,738 n/a * 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. **Denotes party in-interest (f) * 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 American Balanced Fund $0 CIGNA Income Fund $0 Fidelity Growth Fund $0 Wells Fargo S&P 500 $0 Putnam Voyager Fund $0 Standish Fixed Income Fund $0 Ryland Preferred Stock $0 * 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 identified by the trustee. ** Denotes party in-interest (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 $ 4,746,109 $ 4,746,109 American Balanced Fund $ 7,263,317 $ 8,308,070 CIGNA Income Fund $ 4,789,731 $ 4,746,122 Fidelity Growth Fund $ 9,123,501 $ 10,151,693 Wells Fargo S&P 500 $ 2,316,366 $ 2,610,917 Putnam Voyager Fund $ 8,522,387 $ 11,350,444 Standish Income Fund $ 2,629,516 $ 2,653,975 Ryland Preferred Stock ** $ 9,925,281 $ 8,259,738 * 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. ** Denotes party in-interest (i) Identity of Party Involved Net Gain (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 American Balanced Fund $1,044,753 CIGNA Income Fund ($43,609) Fidelity Growth Fund $1,028,192 Wells Fargo S&P 500 $294,551 Putnam Voyager Fund $2,828,057 Stanish Fixed Income Fund $24,459 Ryland Preferred Stock ** $(1,665,543) * 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 truestee. **Denotes party in-interest (a) (b) c Description of Assets (including interest rate and Purchase Identity of Party Involved maturity in case of a loan Price - -------------------------- --------------------------- -------- 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 $26,634,800 Wachovia DTF Short Term Investment Fund Money Market Fund n/a American Balanced Fund Mutual Fund $2,413,873 American Balanced Fund Mutual Fund n/a CIGNA Income Fund Guaranteed Account $1,321,296 CIGNA Income Fund Guaranteed Account n/a Fidelity Growth Fund Mutual Fund $3,057,742 Fidelity Growth Fund Mutual Fund n/a Wells Fargo S&P 500 Mutual Fund $2,198,324 Wells Fargo S&P 500 Mutual Fund n/a Putnam Voyager Fund Mutual Fund $2,683,626 Putnam Voyager Fund Mutual Fund n/a Standish Fixed Income Fund Mutual Fund $1,116,595 Standish Fixed Income Fund Mutual Fund n/a Ryland Preferred Stock ** Preferred Stock n/a Ryland Common Stock ** Common Stock $1,822,580 Ryland Common Stock ** Common Stock n/a There were no category (ii)or (iv) reportable transactions during 1997 * 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. ** Denotes party in-interest (d) (e) Selling Lease Identity of Party Involved Price Rental - -------------------------- --------- -------- 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 $21,655,216 n/a American Balanced Fund n/a n/a American Balanced Fund $10,426,546 n/a CIGNA Income Fund n/a n/a CIGNA Income Fund $7,176,639 n/a Fidelity Growth Fund n/a n/a Fidelity Growth Fund $12,584,718 n/a Wells Fargo S&P 500 n/a n/a Wells Fargo S&P 500 $3,053,813 n/a Putnam Voyager Fund n/a n/a Putnam Voyager Fund $15,862,179 n/a Standish Fixed Income Fund n/a n/a Standish Fixed Income Fund $4,120,340 n/a Ryland Preferred Stock ** $11,551,840 n/a Ryland Common Stock ** n/a n/a Ryland Common Stock ** $1,926,933 n/a There were no category (ii) or (iv) reportable transactions during 1997 *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. **Denotes party in-interest (f)* (g) Expenses Incurred with Cost of Identity of Party Involved Transaction Asset - -------------------------- ------------ -------- Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning Wachovia DTF Short Term Investment Fund $0 $26,634,800 Wachovia DTF Short Term Investment $0 $21,655,216 American Balanced Fund $0 $2,413,873 American Balanced Fund $0 $9,031,921 CIGNA Income Fund $0 $1,321,296 CIGNA Income Fund $0 $7,220,247 Fidelity Growth Fund $0 $3,057,742 Fidelity Growth Fund $0 $11,140,084 Wells Fargo S&P 500 $0 $2,198,324 Wells Fargo S&P 500 $0 $2,699,658 Putnam Voyager Fund $0 $2,683,626 Putnam Voyager Fund $0 $11,914,342 Standish Fixed Income Fund $0 $1,116,595 Standish Fixed Income Fund $0 $4,053,018 Ryland Preferred Stock** $0 $12,931,800 Ryland Common Stock** $13 $1,822,593 Ryland Common Stock** $9,319 $1,937,014 There were no category (ii) or (iv) reportable transactions during 1997 * Commissions and fees related to purchase 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. ** Denotes party in-interest (h) (I) Current Value of Asset on Transaction Net Gain Identity of Party Involved Date or (Loss) - -------------------------- ------------ -------- Category (iii) - series of transactions in excess of 5 percent of plan assets at beginning of the year. Wachovia DTF Short Term Investment Fund $26,634,800 n/a Wachovia DTF Short Term Investment Fund $21,655,216 $0 American Balanced Fund $2,413,873 n/a American Balanced Fund 10,426,546 $1,394,625 CIGNA Income Fund $1,321,296 n/a CIGNA Income Fund $7,176,639 ($43,608) Fidelity Growth Fund $3,057,742 n/a Fidelity Growth Fund $12,584,718 $1,444,634 Wells Fargo S&P 500 $2,198,324 n/a Wells Fargo S&P 500 $3,053,813 $354,155 Putnam Voyager Fund $2,683,626 n/a Putnam Voyager Fund $15,862,179 $3,947,837 Standish Fixed Income Fund $1,116,595 n/a Standish Fixed Income Fund $4,120,340 $67,322 Ryland Preferred Stock ** $11,551,840 ($1,379,960) Ryland Common Stock** $1,822,580 n/a Ryland Common Stock** $1,926,933 ($19,400) There were no category (ii) or (iv) reportable transactions during 1997 * 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. ** Denotes party in-interest 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 SAVINGS OPPORTUNITY PLAN Date: June 30, 1998 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 20 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 Savings Opportunity Plan of The Ryland Group, Inc. of our report dated June 16, 1998, with respect to the financial statements and schedules of The Ryland Group, Inc. Retirement Savings Opportunity Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1997. /s/ Ernst & Young LLP Baltimore, Maryland June 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----