Supplemental Guarantor Information

9 Months Ended

Sep. 30, 2011

Supplemental Guarantor Information

Supplemental Guarantor Information

Note 17.  Supplemental Guarantor Information

The Company’s obligations to pay principal, premium, if any, and interest under its 6.9 percent senior notes due June 2013; 5.4 percent senior notes due January 2015; 8.4 percent senior notes due May 2017; and 6.6 percent senior notes due May 2020 are guaranteed on a joint and several basis by substantially all of its 100 percent-owned homebuilding subsidiaries (the “Guarantor Subsidiaries”).  Such guarantees are full and unconditional.

In lieu of providing separate financial statements for the Guarantor Subsidiaries, the accompanying condensed consolidating financial statements have been included. Management does not believe that separate financial statements for the Guarantor Subsidiaries are material to investors and are, therefore, not presented.

The following information presents the consolidating statements of earnings, financial position and cash flows for (a) the parent company and issuer, The Ryland Group, Inc. (“TRG, Inc.”); (b) the Guarantor Subsidiaries; (c) the non-Guarantor Subsidiaries; and (d) the consolidation eliminations used to arrive at the consolidated information for The Ryland Group, Inc. and subsidiaries.

CONSOLIDATING STATEMENTS OF EARNINGS

	THREE MONTHS ENDED SEPTEMBER 30, 2011
							NON-
				GUARANTOR			GUARANTOR		CONSOLIDATING		CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES		ELIMINATIONS		TOTAL
REVENUES	$	127,377		$	113,962		$	7,628	$	-	$	248,967
EXPENSES	130,813			116,666			5,599		-		253,078
OTHER INCOME	203			-			-		-		203
(Loss) earnings from continuing operations before taxes	(3,233		)	(2,704		)	2,029		-		(3,908		)
Tax (benefit) expense	(115		)	(45		)	142		-		(18		)
Equity in net loss of subsidiaries	(4,032		)	-			-		4,032		-
Net (loss) earnings from continuing operations	(7,150		)	(2,659		)	1,887		4,032		(3,890		)
Loss from discontinued operations, net of taxes	(14,163		)	(3,260		)	-		-		(17,423		)
NET (LOSS) EARNINGS	$	(21,313	)	$	(5,919	)	$	1,887	$	4,032	$	(21,313	)

	NINE MONTHS ENDED SEPTEMBER 30, 2011
REVENUES	$	322,686		$	285,006		$	21,289	$	-	$	628,981
EXPENSES	355,004			293,492			15,987		-		664,483
OTHER INCOME	1,956			-			-		-		1,956
(Loss) earnings from continuing operations
before taxes	(30,362		)	(8,486		)	5,302		-		(33,546		)
Tax (benefit) expense	(2,187		)	(611		)	382		-		(2,416		)
Equity in net loss of subsidiaries	(8,141		)	-			-		8,141		-
Net (loss) earnings from continuing operations	(36,316		)	(7,875		)	4,920		8,141		(31,130		)
Loss from discontinued operations, net of taxes	(15,246		)	(5,186		)	-		-		(20,432		)
NET (LOSS) EARNINGS	$	(51,562	)	$	(13,061	)	$	4,920	$	8,141	$	(51,562	)

	THREE MONTHS ENDED SEPTEMBER 30, 2010
							NON-
				GUARANTOR			GUARANTOR			CONSOLIDATING		CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES			ELIMINATIONS		TOTAL
REVENUES	$	104,451		$	91,743		$	6,283		$	-	$	202,477
EXPENSES	121,493			104,045			6,944			-		232,482
OTHER INCOME	1,428			-			-			-		1,428
Loss from continuing operations before taxes	(15,614		)	(12,302		)	(661		)	-		(28,577		)
Tax expense	309			106			5			-		420
Equity in net loss of subsidiaries	(13,734		)	-			-			13,734		-
Net loss from continuing operations	(29,657		)	(12,408		)	(666		)	13,734		(28,997		)
Loss from discontinued operations, net of taxes	(283		)	(660		)	-			-		(943		)
NET LOSS	$	(29,940	)	$	(13,068	)	$	(666	)	$	13,734	$	(29,940	)

	NINE MONTHS ENDED SEPTEMBER 30, 2010
REVENUES	$	419,345		$	341,430		$	26,107		$	-	$	786,882
EXPENSES	451,008			357,416			26,930			-		835,354
OTHER LOSS	(15,010		)	-			-			-		(15,010		)
Loss from continuing operations before taxes	(46,673		)	(15,986		)	(823		)	-		(63,482		)
Tax expense	309			106			5			-		420
Equity in net loss of subsidiaries	(17,482		)	-			-			17,482		-
Net loss from continuing operations	(64,464		)	(16,092		)	(828		)	17,482		(63,902		)
Loss from discontinued operations, net of taxes	(1,536		)	(562		)	-			-		(2,098		)
NET LOSS	$	(66,000	)	$	(16,654	)	$	(828	)	$	17,482	$	(66,000	)

CONSOLIDATING BALANCE SHEETS

	SEPTEMBER 30, 2011
					NON-
			GUARANTOR		GUARANTOR		CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.		SUBSIDIARIES		SUBSIDIARIES		ELIMINATIONS			TOTAL
ASSETS
Cash and cash equivalents	$	-	$	140,102	$	14,352	$	-		$	154,454
Marketable securities and restricted cash	372,216		-		35,025		-			407,241
Consolidated inventory owned	474,210		280,092		-		-			754,302
Consolidated inventory not owned	16,541		-		34,969		-			51,510
Total housing inventories	490,751		280,092		34,969		-			805,812
Investment in subsidiaries/intercompany receivables	489,621		-		-		(489,621		)	-
Other assets	55,497		36,036		44,371		-			135,904
Assets from discontinued operations	13,711		29,815		-		-			43,526
TOTAL ASSETS	1,421,796		486,045		128,717		(489,621		)	1,546,937
LIABILITIES
Accounts payable and other accrued liabilities	140,549		47,446		35,249		-			223,244
Debt	829,295		2,531		-		-			831,826
Intercompany payables	-		230,716		26,919		(257,635		)	-
Liabilities from discontinued operations	2,164		4,946		-		-			7,110
TOTAL LIABILITIES	972,008		285,639		62,168		(257,635		)	1,062,180
EQUITY
STOCKHOLDERS’ EQUITY	449,788		200,406		31,580		(231,986		)	449,788
NONCONTROLLING INTEREST	-		-		34,969		-			34,969
TOTAL LIABILITIES AND EQUITY	$	1,421,796	$	486,045	$	128,717	$	(489,621	)	$	1,546,937
	DECEMBER 31, 2010
ASSETS
Cash and cash equivalents	$	26,711	$	177,152	$	22,745	$	-		$	226,608
Marketable securities and restricted cash	478,888		-		33,695		-			512,583
Consolidated inventory owned	423,876		240,049		-		-			663,925
Consolidated inventory not owned	26,483		-		61,806		-			88,289
Total housing inventories	450,359		240,049		61,806		-			752,214
Investment in subsidiaries/intercompany receivables	464,209		-		-		(464,209		)	-
Other assets	59,547		33,879		17,208		-			110,634
Assets from discontinued operations	27,722		22,942		-		-			50,664
TOTAL ASSETS	1,507,436		474,022		135,454		(464,209		)	1,652,703
LIABILITIES
Accounts payable and other accrued liabilities	129,944		41,805		35,152		-			206,901
Debt	875,817		3,972		-		-			879,789
Intercompany payables	-		212,246		7,649		(219,895		)	-
Liabilities from discontinued operations	1,819		2,532		-		-			4,351
TOTAL LIABILITIES	1,007,580		260,555		42,801		(219,895		)	1,091,041
EQUITY
STOCKHOLDERS’ EQUITY	499,856		213,467		30,847		(244,314		)	499,856
NONCONTROLLING INTEREST	-		-		61,806		-			61,806
TOTAL LIABILITIES AND EQUITY	$	1,507,436	$	474,022	$	135,454	$	(464,209	)	$	1,652,703

CONSOLIDATING STATEMENTS OF CASH FLOWS

	NINE MONTHS ENDED SEPTEMBER 30, 2011
				GUARANTOR			NON-GUARANTOR			CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES			ELIMINATIONS			TOTAL
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income from continuing operations	$	(36,316	)	$	(7,875	)	$	4,920		$	8,141		$	(31,130	)
Adjustments to reconcile net (loss) income from continuing operations to net cash used for operating activities	43,885			5,474			432			-			49,791
Changes in assets and liabilities	(35,035		)	(64,350		)	(31,534		)	(8,141		)	(139,060		)
Other operating activities, net	1,266			-			-			-			1,266
Net cash used for operating activities from continuing operations	(26,200		)	(66,751		)	(26,182		)	-			(119,133		)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(5,771		)	(3,218		)	(173		)	-			(9,162		)
Purchases of marketable securities, available-for-sale	(1,112,841		)	-			(4,130		)	-			(1,116,971		)
Proceeds from sales and maturities of marketable securities, available-for-sale	1,213,113			-			3,810			-			1,216,923
Other investing activities, net	-			-			29			-			29
Net cash provided by (used for) investing activities from continuing operations	94,501			(3,218		)	(464		)	-			90,819
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in senior debt and short-term borrowings	(48,174		)	(1,441		)	-			-			(49,615		)
Common stock dividends, repurchases and stock-based compensation	(524		)	-			-			-			(524		)
Decrease (increase) in restricted cash	7,316			-			(1,017		)	-			6,299
Intercompany balances	(53,630		)	34,360			19,270			-			-
Net cash (used for) provided by financing activities	(95,012		)	32,919			18,253			-			(43,840		)
Net decrease in cash and cash equivalents from continuing operations	(26,711		)	(37,050		)	(8,393		)	-			(72,154		)
Cash flows from operating activities–discontinued operations	256			510			-			-			766
Cash flows from investing activities–discontinued operations	(229		)	(290		)	-			-			(519		)
Cash flows from financing activities–discontinued operations	-			-			-			-			-
Cash and cash equivalents at beginning of year	26,711			177,191			22,745			-			226,647
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27		$	140,361		$	14,352		$	-		$	154,740

	NINE MONTHS ENDED SEPTEMBER 30, 2010
				GUARANTOR			NON-GUARANTOR			CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES			ELIMINATIONS			TOTAL
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$	(64,464	)	$	(16,092	)	$	(828	)	$	17,482		$	(63,902	)
Adjustments to reconcile net loss from continuing operations to net cash provided by (used for) operating activities	77,740			14,033			709			-			92,482
Changes in assets and liabilities	15,904			(20,842		)	(5,133		)	(17,482		)	(27,553		)
Other operating activities, net	(5,147		)	-			-			-			(5,147		)
Net cash provided by (used for) operating activities from continuing operations	24,033			(22,901		)	(5,252		)	-			(4,120		)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(4,557		)	(4,913		)	(34		)	-			(9,504		)
Purchases of marketable securities, available-for-sale	(964,035		)	(400,649		)	(4,172		)	-			(1,368,856		)
Proceeds from sales and maturities of marketable securities, available-for-sale	965,067			375,906			6,548			-			1,347,521
Other investing activities, net	-			-			25			-			25
Net cash (used for) provided by investing activities from continuing operations	(3,525		)	(29,656		)	2,367			-			(30,814		)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in senior debt and short-term borrowings	2,330			-			-			-			2,330
Common stock dividends, repurchases and stock-based compensation	657			-			-			-			657
(Increase) decrease in restricted cash	(8,774		)	10,468			(214		)	-			1,480
Intercompany balances	9,725			(11,746		)	2,021			-			-
Net cash provided by (used for) financing activities from continuing operations	3,938			(1,278		)	1,807			-			4,467
Net increase (decrease) in cash and cash equivalents from continuing operations	24,446			(53,835		)	(1,078		)	-			(30,467		)
Cash flows from operating activities–discontinued operations	768			261			-			-			1,029
Cash flows from investing activities–discontinued operations	(267		)	(227		)	-			-			(494		)
Cash flows from financing activities–discontinued operations	(501		)	-			-			-			(501		)
Cash and cash equivalents at beginning of year	1,932			259,040			24,227			-			285,199
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	26,378		$	205,239		$	23,149		$	-		$	254,766