Supplemental Guarantor Information

The Company’s obligations to pay principal, premium, if any, and interest under its $300.0 million unsecured revolving credit facility; 8.4 percent senior notes due May 2017; 1.6 percent convertible senior notes due May 2018; 0.25 percent convertible senior notes due June 2019; 6.6 percent senior notes due May 2020; and 5.4 percent senior notes due October 2022 are guaranteed on a joint and several basis by substantially all of its direct and indirect wholly owned homebuilding 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.

In the event that a Guarantor Subsidiary is sold or disposed of (whether by merger, consolidation, sale of its capital stock, or sale of all or substantially all of its assets [other than by lease]), and whether or not the Guarantor Subsidiary is the surviving corporation in such transaction to an entity which is not the Company or a Restricted Subsidiary of the Company, such Guarantor Subsidiary will be released from its obligations under its guarantee if (a) the sale or other disposition is in compliance with the indenture and (b) all the obligations of such Guarantor Subsidiary under any agreements relating to any other indebtedness of the Company or its restricted subsidiaries terminate upon consummation of such transaction. In addition, a Guarantor Subsidiary will be released from its obligations under the indenture if such Subsidiary ceases to be a Restricted Subsidiary (in compliance with the applicable provisions of the indenture).

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, 2015
(in thousands)	TRG, INC.			GUARANTOR SUBSIDIARIES		NON-GUARANTOR SUBSIDIARIES			GUARANTOR ELIMINATIONS			CONSOLIDATED TOTAL
REVENUES	$	349,879		$	301,285	$	16,589		$	(14,118	)	$	653,635
EXPENSES	318,181			272,251		7,895			(14,118		)	584,209
OTHER (EXPENSE) INCOME	(3,264		)	299		83			—			(2,882		)
Income from operations before taxes	28,434			29,333		8,777			—			66,544
Tax expense	10,231			10,553		3,158			—			23,942
Equity in net earnings of subsidiaries	24,399			—		—			(24,399		)	—
NET INCOME	$	42,602		$	18,780	$	5,619		$	(24,399	)	$	42,602

	SIX MONTHS ENDED JUNE 30, 2015
REVENUES	$	618,461		$	549,285	$	28,989		$	(25,701	)	$	1,171,034
EXPENSES	568,529			502,947		15,229			(25,701		)	1,061,004
OTHER (EXPENSE) INCOME	(2,838		)	554		139			—			(2,145		)
Income from operations before taxes	47,094			46,892		13,899			—			107,885
Tax expense	16,949			16,875		5,002			—			38,826
Equity in net earnings of subsidiaries	38,914			—		—			(38,914		)	—
NET INCOME	$	69,059		$	30,017	$	8,897		$	(38,914	)	$	69,059

	THREE MONTHS ENDED JUNE 30, 2014
REVENUES	$	297,734		$	280,874	$	11,145		$	(12,364	)	$	577,389
EXPENSES	268,737			256,838		13,079			(12,364		)	526,290
OTHER INCOME	790			289		25			—			1,104
Income (loss) from operations before taxes	29,787			24,325		(1,909		)	—			52,203
Tax expense (benefit)	11,505			9,394		(738		)	—			20,161
Equity in net earnings of subsidiaries	13,760			—		—			(13,760		)	—
NET INCOME (LOSS)	$	32,042		$	14,931	$	(1,171	)	$	(13,760	)	$	32,042

	SIX MONTHS ENDED JUNE 30, 2014
REVENUES	$	548,141		$	521,108	$	19,343		$	(21,520	)	$	1,067,072
EXPENSES	497,607			479,917		22,688			(21,520		)	978,692
OTHER INCOME	1,485			483		25			—			1,993
Income (loss) from operations before taxes	52,019			41,674		(3,320		)	—			90,373
Tax expense (benefit)	20,033			16,050		(1,279		)	—			34,804
Equity in net earnings of subsidiaries	23,583			—		—			(23,583		)	—
NET INCOME (LOSS)	$	55,569		$	25,624	$	(2,041	)	$	(23,583	)	$	55,569

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME



	THREE MONTHS ENDED JUNE 30, 2015
(in thousands)	TRG, INC.			GUARANTOR SUBSIDIARIES		NON-GUARANTOR SUBSIDIARIES			GUARANTOR ELIMINATIONS			CONSOLIDATED TOTAL
Net income	$	42,602		$	18,780	$	5,619		$	(24,399	)	$	42,602
Other comprehensive loss, net:
Amortization of actuarial loss on defined benefit pension plan, net	4			—		—			—			4
Unrealized loss on marketable securities, available-for-sale, net	(150		)	—		—			—			(150		)
Other comprehensive loss, net	(146		)	—		—			—			(146		)
Comprehensive income	$	42,456		$	18,780	$	5,619		$	(24,399	)	$	42,456

	SIX MONTHS ENDED JUNE 30, 2015
Net income	$	69,059		$	30,017	$	8,897		$	(38,914	)	$	69,059
Other comprehensive (loss) income, net:
Amortization of actuarial loss on defined benefit pension plan, net	51			16		5			—			72
Unrealized loss on marketable securities, available-for-sale, net	(169		)	—		—			—			(169		)
Other comprehensive (loss) income, net	(118		)	16		5			—			(97		)
Comprehensive income	$	68,941		$	30,033	$	8,902		$	(38,914	)	$	68,962

	THREE MONTHS ENDED JUNE 30, 2014
Net income (loss)	$	32,042		$	14,931	$	(1,171	)	$	(13,760	)	$	32,042
Other comprehensive income, net:
Amortization of actuarial loss on defined benefit pension plan, net	4			—		—			—			4
Unrealized gain on marketable securities, available-for-sale, net	236			—		—			—			236
Other comprehensive income, net	240			—		—			—			240
Comprehensive income (loss)	$	32,282		$	14,931	$	(1,171	)	$	(13,760	)	$	32,282

	SIX MONTHS ENDED JUNE 30, 2014
Net income (loss)	$	55,569		$	25,624	$	(2,041	)	$	(23,583	)	$	55,569
Other comprehensive income, net:
Amortization of actuarial loss on defined benefit pension plan, net	9			—		—			—			9
Unrealized gain on marketable securities, available-for-sale, net	424			—		—			—			424
Other comprehensive income, net	433			—		—			—			433
Comprehensive income (loss)	$	56,002		$	25,624	$	(2,041	)	$	(23,583	)	$	56,002

CONSOLIDATING BALANCE SHEETS



	JUNE 30, 2015
(in thousands)	TRG, INC.		GUARANTOR SUBSIDIARIES		NON-GUARANTOR SUBSIDIARIES		GUARANTOR ELIMINATIONS			CONSOLIDATED TOTAL
ASSETS
Cash and cash equivalents	$	27,024	$	242,732	$	10,224	$	—		$	279,980
Marketable securities and restricted cash	17,341		—		18,727		—			36,068
Consolidated inventory owned	1,261,611		985,486		—		—			2,247,097
Consolidated inventory not owned	16,091		—		13,629		—			29,720
Total housing inventories	1,277,702		985,486		13,629		—			2,276,817
Investment in subsidiaries	469,513		—		—		(469,513		)	—
Intercompany receivables	728,147		—		—		(728,147		)	—
Other assets	212,992		70,311		145,578		—			428,881
TOTAL ASSETS	2,732,719		1,298,529		188,158		(1,197,660		)	3,021,746
LIABILITIES
Accounts payable and other accrued liabilities	269,351		134,295		18,496		—			422,142
Financial services credit facilities	—		—		122,607		—			122,607
Debt	1,295,953		—		—		—			1,295,953
Intercompany payables	—		724,026		4,121		(728,147		)	—
TOTAL LIABILITIES	1,565,304		858,321		145,224		(728,147		)	1,840,702
EQUITY
STOCKHOLDERS’ EQUITY	1,167,415		440,208		29,305		(469,513		)	1,167,415
NONCONTROLLING INTEREST	—		—		13,629		—			13,629
TOTAL LIABILITIES AND EQUITY	$	2,732,719	$	1,298,529	$	188,158	$	(1,197,660	)	$	3,021,746

	DECEMBER 31, 2014
ASSETS
Cash and cash equivalents	$	29,993	$	480,239	$	10,963	$	—		$	521,195
Marketable securities and restricted cash	33,611		—		19,954		—			53,565
Consolidated inventory owned	1,116,024		898,988		—		—			2,015,012
Consolidated inventory not owned	16,381		—		14,430		—			30,811
Total housing inventories	1,132,405		898,988		14,430		—			2,045,823
Investment in subsidiaries	439,627		—		—		(439,627		)	—
Intercompany receivables	915,926		—		—		(915,926		)	—
Other assets	208,842		59,171		163,493		—			431,506
TOTAL ASSETS	2,760,404		1,438,398		208,840		(1,355,553		)	3,052,089
LIABILITIES
Accounts payable and other accrued liabilities	272,752		125,333		22,533		—			420,618
Financial services credit facilities	—		—		129,389		—			129,389
Debt	1,403,079		—		—		—			1,403,079
Intercompany payables	—		902,874		13,052		(915,926		)	—
TOTAL LIABILITIES	1,675,831		1,028,207		164,974		(915,926		)	1,953,086
EQUITY
STOCKHOLDERS’ EQUITY	1,084,573		410,191		29,436		(439,627		)	1,084,573
NONCONTROLLING INTEREST	—		—		14,430		—			14,430
TOTAL LIABILITIES AND EQUITY	$	2,760,404	$	1,438,398	$	208,840	$	(1,355,553	)	$	3,052,089

CONSOLIDATING STATEMENTS OF CASH FLOWS



	SIX MONTHS ENDED JUNE 30, 2015
(in thousands)	TRG, INC.			GUARANTOR SUBSIDIARIES			NON-GUARANTOR SUBSIDIARIES			GUARANTOR ELIMINATIONS			CONSOLIDATED TOTAL
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	69,059		$	30,017		$	8,897		$	(38,914	)	$	69,059
Adjustments to reconcile net income to net cash (used for) provided by operating activities:	18,320			4,485			227			—			23,032
Changes in assets and liabilities	(170,716		)	(86,211		)	4,701			38,914			(213,312		)
Other operating activities, net	(3,182		)	—			—			—			(3,182		)
Net cash (used for) provided by operating activities	(86,519		)	(51,709		)	13,825			—			(124,403		)
CASH FLOWS FROM INVESTING ACTIVITIES
Return of investment in unconsolidated joint ventures, net	366			—			—			—			366
Additions to property, plant and equipment	(7,709		)	(6,662		)	(20		)	—			(14,391		)
Purchases of marketable securities, available-for-sale	—			—			(631		)	—			(631		)
Proceeds from sales and maturities of marketable securities, available-for-sale	349			—			531			—			880
Net cash used for investing activities	(6,994		)	(6,662		)	(120		)	—			(13,776		)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in debt	(126,481		)	—			—			—			(126,481		)
Decrease in borrowings against financial services credit facilities, net	—			—			(6,782		)	—			(6,782		)
Common stock dividends and stock-based compensation	13,629			—			—			—			13,629
Decrease in restricted cash	16,116			—			1,327			—			17,443
Intercompany balances	187,779			(178,848		)	(8,931		)	—			—
Other financing activities, net	(499		)	(288		)	(58		)	—			(845		)
Net cash provided by (used for) financing activities	90,544			(179,136		)	(14,444		)	—			(103,036		)
Net decrease in cash and cash equivalents	(2,969		)	(237,507		)	(739		)	—			(241,215		)
Cash and cash equivalents at beginning of period	29,993			480,239			10,963			—			521,195
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27,024		$	242,732		$	10,224		$	—		$	279,980



	SIX MONTHS ENDED JUNE 30, 2014
(in thousands)	TRG, INC.			GUARANTOR SUBSIDIARIES			NON-GUARANTOR SUBSIDIARIES			GUARANTOR ELIMINATIONS			CONSOLIDATED TOTAL
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations	$	55,569		$	25,624		$	(2,041	)	$	(23,583	)	$	55,569
Adjustments to reconcile net income (loss) from continuing operations to net cash (used for) provided by operating activities:	16,501			4,489			203			—			21,193
Changes in assets and liabilities	(207,804		)	(69,021		)	71,281			23,583			(181,961		)
Other operating activities, net	(992		)	—			—			—			(992		)
Net cash (used for) provided by operating activities from continuing operations	(136,726		)	(38,908		)	69,443			—			(106,191		)
CASH FLOWS FROM INVESTING ACTIVITIES
Return of investment in unconsolidated joint ventures, net	366			—			—			—			366
Additions to property, plant and equipment	(6,448		)	(3,380		)	(47		)	—			(9,875		)
Purchases of marketable securities, available-for-sale	(238,315		)	—			(800		)	—			(239,115		)
Proceeds from sales and maturities of marketable securities, available-for-sale	339,157			—			1,800			—			340,957
Net cash provided by (used for) investing activities from continuing operations	94,760			(3,380		)	953			—			92,333
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in borrowings against financial services credit facilities, net	—			—			(14,006		)	—			(14,006		)
Common stock dividends and stock-based compensation	20,243			—			—			—			20,243
Increase in restricted cash	(3,859		)	—			(1,776		)	—			(5,635		)
Intercompany balances	19,563			35,680			(55,243		)	—			—
Other financing activities, net	(376		)	—			(155		)	—			(531		)
Net cash provided by (used for) financing activities from continuing operations	35,571			35,680			(71,180		)	—			71
Net decrease in cash and cash equivalents from continuing operations	(6,395		)	(6,608		)	(784		)	—			(13,787		)
Cash flows from operating activities— discontinued operations	—			(27		)	—			—			(27		)
Cash and cash equivalents at beginning of period	25,521			193,383			9,109			—			228,013
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	19,126		$	186,748		$	8,325		$	—		$	214,199