<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QA-1
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[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1993
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or
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
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Commission File Number: 1-8029
THE RYLAND GROUP, INC.
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(Exact name of registrant as specified in its charter)
Maryland 52-0849948
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification No.)
11000 Broken Land Parkway, Columbia, Maryland 21044
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(Address of principal executive offices) (Zip Code)
(410) 715-7000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The number of shares of common stock of The Ryland Group, Inc.,
outstanding on October 29, 1993 was 15,283,942.
<PAGE>
THE RYLAND GROUP, INC.
FORM 10-Q
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
September 30, 1993 (unaudited) and
December 31, 1992 1-2
Consolidated Statements of Earnings
for the three months ended
September 30, 1993 and 1992 and the
nine months ended September 30, 1993 and
1992 (unaudited) 3
Consolidated Statements of Cash Flows
for the nine months ended September 30,
1993 and 1992 (unaudited) 4
Notes to Consolidated Financial
Statements (unaudited) 5-9
SIGNATURES 10
NOTE: This amendment is being filed to correct a misprint on the Consolidated
Statements of Earnings on page 3 resulting from the EDGAR electronic
transmission.
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1993 1992
-------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
HOMEBUILDING:
Cash $ 16,012 $ 10,413
Homebuilding inventories:
Sold homes and lots 209,681 148,846
Unsold homes, lots and land 338,936 336,338
------------------------------------
Total inventories 548,617 485,184
Investment in/advances to unconsolidated joint ventures 23,852 34,962
Property, plant and equipment 14,206 13,865
Purchase price in excess of net assets acquired 23,897 24,671
Other assets 44,646 32,194
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671,230 601,289
------------------------------------
FINANCIAL SERVICES:
Mortgage loans held for sale, net 402,762 392,533
Mortgage-backed securities held for sale, net 217,560 241,102
Purchased servicing and administration rights, net 16,883 19,056
Other assets 64,815 47,023
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702,020 699,714
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LIMITED-PURPOSE SUBSIDIARIES:
Collateral for bonds payable, net 918,776 1,559,661
Other assets 12,082 20,981
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930,858 1,580,642
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Net deferred taxes 33,509 3,267
Other assets 19,487 11,769
------------------------------------
TOTAL ASSETS $ 2,357,104 $ 2,896,681
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</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1993 1992
-------------------------------------
(unaudited)
<S> <C> <C>
LIABILITIES
HOMEBUILDING:
Accounts payable and other liabilities $ 70,421 $ 55,837
Current portion of long-term debt 24,952 146,668
Long-term debt 380,332 170,899
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475,705 373,404
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FINANCIAL SERVICES:
Accounts payable and other liabilities 76,896 31,145
Short-term notes payable 560,912 587,872
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637,808 619,017
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LIMITED-PURPOSE SUBSIDIARIES:
Accounts payable and other liabilities 26,288 37,928
Bonds payable, net * 896,352 1,533,237
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922,640 1,571,165
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Other liabilities 35,127 27,406
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TOTAL LIABILITIES 2,071,280 2,590,992
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STOCKHOLDERS' EQUITY
Convertible preferred stock, $1 par value
Authorized - 1,400,000 shares
Issued - 1,162,984 shares (1,198,533 for 1992) 1,163 1,199
Common stock, $1 par value
Authorized - 78,600,000 shares
Issued - 15,268,014 shares (15,390,314 for 1992) 15,268 15,390
Paid-in capital 115,066 119,100
Retained earnings 175,451 196,203
Other (21,124) (26,203)
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TOTAL STOCKHOLDERS' EQUITY 285,824 305,689
------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,357,104 $ 2,896,681
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See notes to consolidated financial statements.
<FN>
* The 'bonds payable, net' shown in the financial statements represent
obligations solely of the limited-purpose subsidiaries, which are secured by
the assets of the limited-purpose subsidiaries. The bonds are not guaranteed
or insured by The Ryland Group, Inc. or any of its subsidiaries.
</TABLE>
2
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1993 1992 1993 1992
--------------------------------- --------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Homebuilding $ 315,021 $ 305,468 $ 836,904 $ 777,438
Financial services 38,765 33,937 125,461 94,564*
Limited-purpose subsidiaries 24,966 50,411 89,207 174,471
----------------------------- ------------------------------
Total revenues 378,752 389,816 1,051,572 1,046,473*
EXPENSES:
Homebuilding:
Cost of sales 319,519 265,894 781,618 673,088
Interest expense 6,974 4,213 19,315 12,229
Selling, general and administrative expenses 29,930 27,595 81,868 79,024
----------------------------- ----------------------------
Total 356,423 297,702 882,801 764,341
Financial services:
Interest expense 7,480 7,596 21,898 19,360
General and administrative expenses 21,471 15,786 60,603 47,870
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Total 28,951 23,382 82,501 67,230
Limited-purpose subsidiaries :
Interest expense 23,867 46,035 84,605 161,899
Other expenses 1,059 3,331 4,478 9,665
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Total 24,926 49,366 89,083 171,564
Other expenses 3,119 4,100 11,463 11,388
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Total expenses 413,419 374,550 1,065,848 1,014,523
Equity in losses of
unconsolidated joint ventures (1,903) (560) (2,143) (757)
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(LOSS) EARNINGS BEFORE TAXES (36,570) 14,706 (16,419) 31,193
Tax (benefit) expense (14,014) 5,000 (6,156) 10,604
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NET (LOSS) EARNINGS $ (22,556) $ 9,706 $ (10,263) $ 20,589
----------------------------- -----------------------------
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Preferred dividends $ 642 $ 668 $ 1,952 $ 2,015
Net (loss) earnings applicable to common stockholders $ (23,198) $ 9,038 $ (12,215) $ 18,574
NET (LOSS) EARNINGS PER COMMON SHARE:
Primary $ (1.52) $ 0.58 $ (0.80) $ 1.26
Fully diluted (1.52) 0.54 (0.80) 1.18
Dividends per common share $ 0.15 $ 0.15 $ 0.45 $ 0.45
Dividends per preferred share 0.55 0.55 1.65 1.65
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See notes to consolidated financial statements.
<FN>
* THESE AMOUNTS ARE AMENDED TO CORRECT A MISPRINT RESULTING FROM THE EDGAR
ELECTRONIC TRANSMISSION. THIS CONSOLIDATED STATEMENTS OF EARNINGS NOW
CONFORMS TO THE CONSOLIDATED STATEMENTS OF EARNINGS AS REPORTED IN THE
PAPER COPY FILED WITH THE COMMISSION ON NOVEMBER 18, 1993.
</TABLE>
3
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended September 30,
1993 1992
--------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings $ (10,263) $ 20,589
Adjustments to reconcile net (loss) earnings to net cash
used for operating activities:
Depreciation and amortization 14,942 24,295
Increase in inventories (63,433) (128,178)
Net change in other assets, payables
and other liabilities (11,739) (4,927)
Equity in losses of unconsolidated
joint ventures 2,143 757
Decrease (increase) in investment in/advances to
unconsolidated joint ventures 8,809 (1,158)
Decrease (increase) in mortgage loans and
mortgage-backed securities held for resale, net 13,313 (341,229)
Gain on sale of investment (5,322) 0
--------------------------------
Net cash used for operating activities (51,550) (429,851)
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and equipment (9,123) (10,323)
Principal reduction of mortgage collateral 649,349 761,260
Other investing activities, net 6,726 (6,964)
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Net cash provided by investing activities 646,952 743,973
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CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term notes payable (26,960) 314,583
Cash proceeds of long-term debt 114,080 125,894
Reduction of long-term debt (26,363) (41,372)
Bond principal payments (643,151) (755,888)
Common stock issuance 0 66,863
Common and preferred stock dividends 8,850 (8,950)
Other financing activities, net 1,441 7,733
--------------------------------
Net cash used for financing activities (572,103) (291,137)
--------------------------------
Net increase in cash 23,299 22,985
Cash at beginning of year 10,413 3,001
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CASH AT END OF PERIOD $ 33,712 $ 25,986
--------------------------------
--------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 131,888 $ 210,007
Cash paid for income taxes $ 26,225 $ 19,178
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</TABLE>
See notes to consolidated financial statements.
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Note 1. Segment Information THREE MONTHS ENDED SEPTEMBER 30,
1993 1992
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<S> <C> <C>
Revenues:
Homebuilding $ 315,021 $ 305,468
Financial services 38,768 34,849
Limited-purpose subsidiaries 25,090 50,679
Intersegment transactions (127) (1,180)
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Total $ 378,752 $ 389,816
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Pretax (loss) earnings:
Homebuilding $ (43,305) $ 7,206
Financial services 9,817 10,826
Limited-purpose subsidiaries 37 774
Corporate expenses (3,119) (4,100)
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Total $ (36,570) $ 14,706
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</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1993 1992
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<S> <C> <C>
Revenues:
Homebuilding $ 836,904 $ 777,438
Financial services 125,496 95,511
Limited-purpose subsidiaries 89,612 174,506
Intersegment transactions (440) (982)
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Total $ 1,051,572 $ 1,046,473
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Pretax (loss) earnings:
Homebuilding $ (48,040) $ 12,340
Financial services 42,995 27,873
Limited-purpose subsidiaries 89 2,368
Corporate expenses (11,463) (11,388)
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Total $ (16,419) $ 31,193
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</TABLE>
5
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
Note 2. Consolidated Financial Statements
The consolidated financial statements include the accounts of The
Ryland Group, Inc. and its wholly owned subsidiaries (the company).
Additionally, certain investments in joint ventures are accounted for
by the equity method, as the company generally has a 50 percent or
less interest in the joint ventures. Intercompany transactions have
been eliminated in consolidation.
The consolidated balance sheet as of September 30, 1993, and the
consolidated statements of earnings for the three months and nine
months ended September 30, 1993 and 1992, and the consolidated
statements of cash flows for the nine months ended September 30, 1993
and 1992 have been prepared by the company, without audit. In the
opinion of management, all adjustments, which include normal
recurring adjustments necessary to present fairly the financial
position, results of operations and cash flows at September 30,
1993, and for all periods presented, have been made. The
consolidated balance sheet at December 31, 1992 has been taken from
the audited financial statements as of that date. Certain amounts in
the consolidated statements have been reclassified to conform to the
1993 presentation.
Certain information and footnote disclosures normally included in the
financial statements have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
financial statements and related notes included in the company's
December 31, 1992 annual report to shareholders. The results of
operations for the three months and nine months ended September 30,
1993 are not necessarily indicative of the operating results for the
full year. Assets presented in the financial statements are net of
any valuation allowances.
In calculating primary (loss) earnings per common share applicable to
stockholders, the dividend requirements of the preferred shares held
by the Ryland Retirement and Stock Ownership Plan Trust (the RSOP
Trust) have been added to net loss or deducted from net earnings as
appropriate. For the three and nine month periods ended September
30, 1992 the average shares outstanding have been increased by the
common stock equivalents relating to the employee stock option and
employee incentive plans. For the three and nine month periods ended
September 30, 1993 these common stock equivalents were not considered
as the effect would be anti-dilutive.
Net earnings used in calculating fully diluted earnings per common
share for the three and nine month periods ended September 30, 1992
were decreased by the amount of the additional RSOP contribution
required to fund the difference between the RSOP's earnings from
preferred stock dividends and the RSOP's potential earnings from
6
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
Note 2. Consolidated Financial Statements (continued)
common stock dividends after an assumed conversion. Net loss used in
calculating fully diluted loss per common share for the three and
nine month periods ending September 30, 1993 was increased by the
dividend requirements of the preferred shares held by the RSOP Trust,
as an adjustment for incremental dividends on convertible preferred
shares would be anti-dilutive.
Fully diluted earnings per common share for the three and nine month
periods ended September 30, 1992, gives effect to the common stock
equivalents and the assumed conversion of the preferred stock into
1,213,038 shares and 1,220,868 shares respectively, of common stock,
in accordance with the RSOP Trust Agreement. In computing fully
diluted loss per common share for the three and nine month periods
ended September 30, 1993, average shares outstanding have not been
increased by the common stock equivalents relating to the employee
stock option, employee incentive plans and the assumed conversion of
the preferred stock held by the RSOP Trust as the effect would be
anti-dilutive.
Note 3. Contingencies
Contingent liabilities may arise from the obligations incurred in the
ordinary course of business, or from the usual obligations of on-site
housing producers for the completion of contracts. In the opinion of
management, the completion of its obligations will not have a
material effect on the results of operations or financial condition
of the company.
Also see Part II, Item 1, Legal Proceedings.
Note 4. Valuation Reserves
During the third quarter of 1993, the company increased its valuation
allowance for inventories from $19 million to $62 million, and
increased its reserve allowance against investments in unconsolidated
joint ventures from $1 million to $3 million.
7
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
Note 5. Income Taxes
The company adopted Statement of Financial Accounting Standards No.
109 ("SFAS No. 109"), Accounting for Income Taxes, effective January
1, 1993. Prior to the adoption of SFAS No. 109, the company
accounted for its income taxes under SFAS No. 96. The impact of the
adoption of SFAS No. 109 was not material.
The company's income tax benefit for the nine months ended September
30, 1993 is summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
<S> <C>
Current:
Federal $ 19,823
State 4,263
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Total current 24,086
Deferred:
Federal $(24,889)
State ( 5,353)
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Total deferred (30,242)
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Total benefit $( 6,156)
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- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Components of the deferred income tax benefit for the nine months
ended September 30, 1993 are as follows (amounts in thousands):
<S> <C>
Operational reserves $(20,884)
Gross profit from sales reported
on the installment method ( 4,761)
Capitalization of costs to inventory ( 2,146)
Other, net ( 1,492)
Recognition of fees, discounts
and hedging ( 959)
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Total deferred income tax benefit $(30,242)
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</TABLE>
8
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
The balance of the net deferred tax asset is primarily comprised of
the following (amounts in thousands):
<TABLE>
<CAPTION>
9/30/93 12/31/92
<S> <C> <C>
Deferred tax liabilities:
Gross profit from sales reported
on the installment method $ (4,968) $(12,559)
Amortization of servicing and administration (1,922) ( 3,353)
Recognition of fees, discounts and hedging ( 1,575)
Other, net ( 3,428)
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Total deferred tax liabilities $ (6,890) $(20,915)
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Deferred tax assets:
Operational reserves $ 29,920 $12,436
Employee benefit plans 2,893 3,543
Capitalization of costs to inventory 3,968 6,036
Recognition of joint venture income 2,315 2,167
Other, net 1,303
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Total deferred tax assets $ 40,399 $24,182
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Net deferred tax asset $ 33,509 $3,267
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</TABLE>
The company has determined that no valuation allowance for the
deferred tax asset is required due to the prior years' tax history
as well as temporary differences attributable to the current year.
In the third quarter of 1993, the company revised its estimated
annual effective tax rate to reflect a change in the federal
statutory rate from 34% to 35% effective January 1, 1993. The actual
income tax rate of 37.5% for the nine months ended September 30, 1993
differs from the statutory rate by 2.5%. This difference is
primarily comprised of the effects of state income taxes, RSOP
dividends, and amortization of goodwill.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE RYLAND GROUP, INC.
----------------------
Registrant
January 25, 1994 By: /s/ Alan P. Hoblitzell, Jr.
- ---------------- ----------------------------------
Date Alan P. Hoblitzell, Jr.,
Director, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
January 25, 1994 By: /s/ Stephen B. Cook
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Date Stephen B. Cook, Vice President
and Corporate Controller
(Principal Accounting Officer)
10
