Supplemental Guarantor Information

6 Months Ended

Jun. 30, 2012

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; 1.6 percent convertible senior notes due May 2018; 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 JUNE 30, 2012
							NON-
				GUARANTOR			GUARANTOR		CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES		ELIMINATIONS			TOTAL
REVENUES	$	156,304		$	128,289		$	9,176	$	-		$	293,769
EXPENSES	153,859			127,958			6,232		-			288,049
OTHER INCOME	519			-			-		-			519
Income from continuing operations before taxes	2,964			331			2,944		-			6,239
Tax expense (benefit)	88			(110		)	212		-			190
Equity in net earnings of subsidiaries	3,173			-			-		(3,173		)	-
Net income from continuing operations	6,049			441			2,732		(3,173		)	6,049
Income from discontinued operations, net of taxes	223			135			-		(135		)	223
NET INCOME	$	6,272		$	576		$	2,732	$	(3,308	)	$	6,272
(in thousands)	SIX MONTHS ENDED JUNE 30, 2012
REVENUES	$	267,211		$	226,917		$	15,510	$	-		$	509,638
EXPENSES	266,692			228,772			11,921		-			507,385
OTHER INCOME	965			-			-		-			965
Income (loss) from continuing operations before taxes	1,484			(1,855		)	3,589		-			3,218
Tax expense (benefit)	88			(110		)	212		-			190
Equity in net earnings of subsidiaries	1,632			-			-		(1,632		)	-
Net income (loss) from continuing operations	3,028			(1,745		)	3,377		(1,632		)	3,028
Loss from discontinued operations, net of taxes	(1,864		)	(841		)	-		841			(1,864		)
NET INCOME (LOSS)	$	1,164		$	(2,586	)	$	3,377	$	(791	)	$	1,164

CONSOLIDATING STATEMENTS OF EARNINGS

	THREE MONTHS ENDED JUNE 30, 2011
							NON-
				GUARANTOR			GUARANTOR		CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES		ELIMINATIONS			TOTAL
REVENUES	$	104,935		$	99,990		$	6,923	$	-		$	211,848
EXPENSES	117,288			99,947			4,859		-			222,094
OTHER INCOME	445			-			-		-			445
(Loss) income from continuing operations before taxes	(11,908		)	43			2,064		-			(9,801		)
Tax (benefit) expense	(343		)	235			108		-			-
Equity in net earnings of subsidiaries	1,764			-			-		(1,764		)	-
Net (loss) income from continuing operations	(9,801		)	(192		)	1,956		(1,764		)	(9,801		)
Loss from discontinued operations, net of taxes	(912		)	(427		)	-		427			(912		)
NET (LOSS) INCOME	$	(10,713	)	$	(619	)	$	1,956	$	(1,337	)	$	(10,713	)
(in thousands)	SIX MONTHS ENDED JUNE 30, 2011
REVENUES	$	195,309		$	171,044		$	13,167	$	-		$	379,520
EXPENSES	224,191			176,826			9,894		-			410,911
OTHER INCOME	1,753			-			-		-			1,753
(Loss) income from continuing operations before taxes	(27,129		)	(5,782		)	3,273		-			(29,638		)
Tax (benefit) expense	(2,072		)	(566		)	240		-			(2,398		)
Equity in net loss of subsidiaries	(2,183		)	-			-		2,183			-
Net (loss) income from continuing operations	(27,240		)	(5,216		)	3,033		2,183			(27,240		)
Loss from discontinued operations, net of taxes	(3,009		)	(1,926		)	-		1,926			(3,009		)
NET (LOSS) INCOME	$	(30,249	)	$	(7,142	)	$	3,033	$	4,109		$	(30,249	)

CONSOLIDATING BALANCE SHEETS

										JUNE 30, 2012
					NON-
			GUARANTOR		GUARANTOR		CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.		SUBSIDIARIES		SUBSIDIARIES		ELIMINATIONS			TOTAL
ASSETS
Cash and cash equivalents	$	19,900	$	314,806	$	20,506	$	-		$	355,212
Marketable securities and restricted cash	349,007		-		28,691		-			377,698
Consolidated inventory owned	535,381		303,960		-		-			839,341
Consolidated inventory not owned	17,042		-		30,260		-			47,302
Total housing inventories	552,423		303,960		30,260		-			886,643
Investment in subsidiaries/ intercompany receivables	647,199		-		-		(647,199		)	-
Other assets	66,001		32,824		74,919		-			173,744
Assets of discontinued operations	3,942		10,682		-		-			14,624
TOTAL ASSETS	1,638,472		662,272		154,376		(647,199		)	1,807,921
LIABILITIES
Accounts payable and other accrued liabilities	134,589		55,772		31,896		-			222,257
Financial services credit facility	-		-		50,271		-			50,271
Debt	1,047,856		-		-		-			1,047,856
Intercompany payables	-		407,196		13,489		(420,685		)	-
Liabilities of discontinued operations	613		1,250		-		-			1,863
TOTAL LIABILITIES	1,183,058		464,218		95,656		(420,685		)	1,322,247
EQUITY
STOCKHOLDERS’ EQUITY	455,414		198,054		28,460		(226,514		)	455,414
NONCONTROLLING INTEREST	-		-		30,260		-			30,260
TOTAL LIABILITIES AND EQUITY	$	1,638,472	$	662,272	$	154,376	$	(647,199	)	$	1,807,921
(in thousands)							DECEMBER 31, 2011
ASSETS
Cash and cash equivalents	$	25,403	$	117,072	$	16,888	$	-		$	159,363
Marketable securities and restricted cash	370,975		-		32,840		-			403,815
Consolidated inventory owned	470,269		273,791		-		-			744,060
Consolidated inventory not owned	17,177		-		34,223		-			51,400
Total housing inventories	487,446		273,791		34,223		-			795,460
Investment in subsidiaries/ intercompany receivables	456,953		-		-		(456,953		)	-
Other assets	56,758		34,045		94,379		-			185,182
Assets of discontinued operations	8,853		26,471		-		-			35,324
TOTAL ASSETS	1,406,388		451,379		178,330		(456,953		)	1,579,144
LIABILITIES
Accounts payable and other accrued liabilities	131,879		48,750		34,628		-			215,257
Financial services credit facility	-		-		49,933		-			49,933
Debt	822,639		1,188		-		-			823,827
Intercompany payables	-		196,767		29,754		(226,521		)	-
Liabilities of discontinued operations	2,183		4,034		-		-			6,217
TOTAL LIABILITIES	956,701		250,739		114,315		(226,521		)	1,095,234
EQUITY
STOCKHOLDERS’ EQUITY	449,687		200,640		29,792		(230,432		)	449,687
NONCONTROLLING INTEREST	-		-		34,223		-			34,223
TOTAL LIABILITIES AND EQUITY	$	1,406,388	$	451,379	$	178,330	$	(456,953	)	$	1,579,144

CONSOLIDATING STATEMENT OF CASH FLOWS

							SIX MONTHS ENDED JUNE 30, 2012
				GUARANTOR			NON-GUARANTOR			CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES			ELIMINATIONS			TOTAL
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations	$	3,028		$	(1,745	)	$	3,377		$	(1,632	)	$	3,028
Adjustments to reconcile net income (loss) from continuing operations to net cash (used for) provided by operating activities	8,687			4,418			268			-			13,373
Changes in assets and liabilities	(70,561		)	(13,597		)	11,786			1,632			(70,740		)
Other operating activities, net	(784		)	-			-			-			(784		)
Net cash (used for) provided by operating activities from continuing operations	(59,630		)	(10,924		)	15,431			-			(55,123		)
CASH FLOWS FROM INVESTING ACTIVITIES
Return of investment in unconsolidated joint ventures, net	539			1,332			-			-			1,871
Additions to property, plant and equipment	(3,503		)	(1,915		)	(16		)	-			(5,434		)
Purchases of marketable securities, available-for-sale	(468,012		)	-			(1,678		)	-			(469,690		)
Proceeds from sales and maturities of marketable securities, available-for-sale	506,783			-			1,904			-			508,687
Other investing activities, net	-			-			(10		)	-			(10		)
Net cash provided by (used for) investing activities from continuing operations	35,807			(583		)	200			-			35,424
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in debt	224,909			(1,188		)	-			-			223,721
Increase in borrowings against revolving credit facilities, net	-			-			338			-			338
Common stock dividends and stock-based compensation	1,750			-			-			-			1,750
(Increase) decrease in restricted cash	(14,175		)	-			3,914			-			(10,261		)
Intercompany balances	(194,164		)	210,429			(16,265		)	-			-
Net cash provided by (used for) financing activities from continuing operations	18,320			209,241			(12,013		)	-			215,548
Net (decrease) increase in cash and cash equivalents from continuing operations	(5,503		)	197,734			3,618			-			195,849
Cash flows from operating activities—discontinued operations	436			(73		)	-			-			363
Cash flows from investing activities—discontinued operations	6			73			-			-			79
Cash flows from financing activities—discontinued operations	-			-			-			-			-
Cash and cash equivalents at beginning of year	25,430			117,101			16,888			-			159,419
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	20,369		$	314,835		$	20,506		$	-		$	355,710

CONSOLIDATING STATEMENT OF CASH FLOWS

	SIX MONTHS ENDED JUNE 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	$	(27,240	)	$	(5,216	)	$	3,033		$	2,183		$	(27,240	)
Adjustments to reconcile net (loss) income from continuing operations to net cash used for operating activities	31,864			3,882			324			-			36,070
Changes in assets and liabilities	(48,919		)	(46,436		)	(6,278		)	(2,183		)	(103,816		)
Other operating activities, net	(158		)	(213		)	-			-			(371		)
Net cash used for operating activities from continuing operations	(44,453		)	(47,983		)	(2,921		)	-			(95,357		)
CASH FLOWS FROM INVESTING ACTIVITIES
(Contributions to) return of investment in unconsolidated joint ventures, net	(453		)	1,515			-			-			1,062
Additions to property, plant and equipment	(3,483		)	(2,057		)	(55		)	-			(5,595		)
Purchases of marketable securities, available-for-sale	(697,208		)	-			(2,927		)	-			(700,135		)
Proceeds from sales and maturities of marketable securities, available-for-sale	778,063			-			2,531			-			780,594
Other investing activities, net	-			-			30			-			30
Net cash provided by (used for) investing activities from continuing operations	76,919			(542		)	(421		)	-			75,956
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in debt	(28,160		)	(283		)	-			-			(28,443		)
Common stock dividends and stock-based compensation	829			-			-			-			829
Decrease (increase) in restricted cash	3,197			-			(506		)	-			2,691
Intercompany balances	(35,068		)	36,811			(1,743		)	-			-
Net cash (used for) provided by financing activities from continuing operations	(59,202		)	36,528			(2,249		)	-			(24,923		)
Net decrease in cash and cash equivalents from continuing operations	(26,736		)	(11,997		)	(5,591		)	-			(44,324		)
Cash flows from operating activities—discontinued operations	191			150			-			-			341
Cash flows from investing activities—discontinued operations	(166		)	(150		)	-			-			(316		)
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	$	-		$	165,194		$	17,154		$	-		$	182,348
CONSOLIDATING STATEMENTS OF OTHER COMPREHENSIVE INCOME
	THREE MONTHS ENDED JUNE 30, 2012
				GUARANTOR			NON-GUARANTOR			CONSOLIDATING			CONSOLIDATED
(in thousands)	TRG, INC.			SUBSIDIARIES			SUBSIDIARIES			ELIMINATIONS			TOTAL
COMPREHENSIVE INCOME	$	6,145		$	576		$	2,732		$	(3,308	)	$	6,145
	THREE MONTHS ENDED JUNE 30, 2011
COMPREHENSIVE (LOSS) INCOME	$	(10,813	)	$	(619	)	$	1,956		$	(1,337	)	$	(10,813	)
	SIX MONTHS ENDED JUNE 30, 2012
COMPREHENSIVE INCOME (LOSS)	$	1,711		$	(2,586	)	$	3,377		$	(791	)	$	1,711
	SIX MONTHS ENDED JUNE 30, 2011
COMPREHENSIVE (LOSS) INCOME	$	(30,632	)	$	(7,142	)	$	3,033		$	4,109		$	(30,632	)