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, 1996.
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 and Stock Ownership Plan
B. The Ryland Group, Inc.
11000 Broken Land Parkway
Columbia, Maryland, 2104
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 2-16
SIGNATURES 17
INDEX OF EXHIBITS 18
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 and Stock Ownership Plan as of
December 31, 1996 and 1995, 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, 1996 and 1995, 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, 1996 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 23, 1997
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 and Stock Ownership Plan
December 31, December 31,
1996 1995
------------ ------------
ASSETS
Receivables:
Accrued employer contributions $ 2,732,371 $ 1,879,172
Accrued interest and dividends 499,910 546,576
--------------- ------------
Total receivables 3,232,281 2,425,748
Investments at fair value:
Short-term investments 144,646 138,791
CIGNA Income Fund 5,599,646 6,196,142
Preferred stock of
The Ryland Group, Inc.
Unallocated 7,901,966 11,895,164
Allocated 14,072,430 12,153,810
Common stock of
The Ryland Group, Inc. 152,436 182,154
Mutual funds 31,037,164 28,897,369
Loans to participants 1,765,450 1,513,314
------------- -----------
Total investments 60,673,738 60,976,744
------------- -----------
Total Assets 63,906,019 63,402,492
------------- -----------
LIABILITIES
Accrued liabilities 409,360 534,302
Loan payable to
The Ryland Group, Inc. 16,390,810 21,393,457
------------- -----------
Total Liabilities 16,800,170 21,927,759
------------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 47,105,849 $ 41,474,733
============= ============
See notes to financial statements
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
The Ryland Group, Inc.
Retirement and Stock Ownership Plan
Year Ended Year Ended
December 31, December 31,
1996 1995
------------- -------------
ADDITIONS
Contributions:
Employer $ 7,263,783 $ 6,899,539
Participants 4,333,945 4,860,384
Rollovers 338,277 1,058,624
----------- -----------
Total contributions 11,936,005 12,818,547
Interest:
Short-term investments 1,471 15,521
CIGNA Income Fund 333,539 396,762
Participant loans 137,129 117,743
----------- ------------
Total interest 472,139 530,026
Dividends:
The Ryland Group, Inc.
Preferred stock 1,974,464 2,192,552
Common stock 7,481 11,370
Mutual funds 2,007,320 2,116,968
------------ ------------
Total dividends 3,989,265 4,320,890
------------ ------------
Total Additions 16,397,409 17,669,463
DEDUCTIONS
Benefit payments to participants 9,719,542 14,281,532
Interest expense 1,794,450 2,229,042
Administrative expenses 165,424 158,522
----------- ------------
Total Deductions 11,679,416 16,669,096
Net realized and unrealized appreciation
(depreciation) in fair value of investments 913,123 4,075,913
------------ ------------
Increase in net assets
available for plan benefits 5,631,116 5,076,280
Net assets available for plan benefits at
beginning of year 41,474,733 36,398,453
------------- ------------
NET ASSET AVAILABLE FOR PLAN BENEFITS
AT END OF YEAR $ 47,105,849 $ 41,474,733
============= ============
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The financial statements of The Ryland Group, Inc. Retirement and Stock
Ownership Plan ("the Plan" or "the RSOP") 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 guaranteed value of $25.25
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
$96,907 and $40,323 at December 31, 1996 and 1995, 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. These participant
contributions into the Plan are combined with Company contributions, which are
allocated to participants as a match of their pretax deferrals and as
discretionary contributions resulting from the Company's desire to share
profits with participants.
Employee Eligibility
- --------------------
In 1995, employees were eligible to participate in the Plan at the beginning
of the first pay period of the month following the employee's hire date,
provided the employee ultimately completes the period of service requirement
as defined below. As of January 1, 1996, the Plan was amended to make
employees eligible to participate in the Plan at the beginning of the first
pay period of the month that followed completion of a one-year period of
service. An employee was 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.
This amendment did not have a material impact on the net assets of the Plan.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
NOTE B: DESCRIPTION OF THE PLAN--CONTINUED
Employee Contributions and Investment Options
- ---------------------------------------------
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 may contribute more than $9,500
to the Plan for the 1996 calendar year. The RSOP offers the participants
several investment options for their contributions.
The following are descriptions of the participant investment options for 1996:
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, 1996 and 1995, 1,298 and 1,411 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, 1996, 1,106 employees
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, 1996
and 1995, 630 and 806 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, 1996 and 1995, 976 and 1,183
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, 1996, 163 employees 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, 1996 and 1995, 591 and 703
employees, respectively, were participating in this option.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
NOTE B: DESCRIPTION OF THE PLAN--CONTINUED
Employee Contributions and Investment Options - cont.
- -----------------------------------------------------
In 1995, the Employee Benefits Committee agreed to eliminate the Kemper Growth
Fund as an RSOP investment option for participants effective January 1, 1996.
The Fidelity Growth Company Fund and Wells Fargo Equity Index Fund were chosen
to replace this fund. Participant balances in the Kemper Growth Fund were
transferred at the participant's discretion among the available funds.
The replaced investment option for 1995 was:
Kemper Growth Fund - The Kemper Growth Fund is an equity mutual fund which
seeks growth of capital by primarily investing in common stocks of companies
that are typically characterized by above average profitability, leadership
position in the industry, good management, increasing demand for the
companies' products and services, and new product development. The investment
manager of this fund is Kemper Financial Services, Inc. At December 31, 1995,
1,177 employees 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
remain as frozen options which can be liquidated into the other investment
funds at the participant's option. At December 31, 1996 and 1995, 90 and 112
employees were maintaining balances in The Ryland Group, Inc. Common Stock
Fund.
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 is all or part of the
Company's contribution, it is divided among the current investment funds based
on each participant's current investment option selection. In instances where
both Preferred Shares and cash are contributed to participant accounts, all
participants receive an equal proportion of each. The Company made no
discretionary contributions for the years ended December 31, 1996 and 1995.
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" is a loan between the Company and the Plan; the proceeds were
used by the Plan to acquire the Preferred Stock (see Note C below). To the
extent employer contributions, including matching contributions and
discretionary contributions, are used to make an RSOP Loan amortization
payment, such contributions are made in cash. After each RSOP Loan
amortization payment is made, a number of shares of Preferred Stock is
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, the remaining shares of Preferred Stock
are allocated among the participants' accounts based on the amount of the
required matching contributions. Any remaining shares are allocated among the
participants' accounts based on compensation.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
NOTE B: DESCRIPTION OF THE PLAN--CONTINUED
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 market 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 and Stock Ownership Plan. Copies of this pamphlet are
- ----------------------------------------------
available from the Company's Employee Benefits Department.
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, or 7.0 percent of the purchase price per share, and is
convertible initially into one share of the Company's Common Stock. During
1996 and 1995, the Company paid approximately $1,974,000 and $2,193,000,
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 loan bears interest at the
annual rate of 9.99 percent and is expected to be repaid over 10 years by the
Plan through dividends received on the Preferred Stock and Company
contributions. The Plan incurred approximately $1,794,000 and $2,229,000 of
interest on this loan in 1996 and 1995. Participants receive allocations of
the Preferred Stock as debt payments are made. During 1996 and 1995, there
were 156,595 and 120,170 shares released, respectively, and allocated to
participants. The unallocated preferred shares are collateral to the loan
payable to Ryland. As of December 31, 1996, there were 309,881 unallocated
preferred shares with an approximate value of $7,902,000. At December 31,
1995, there were 466,477 unallocated preferred shares with an approximate
value of $11,895,000.
Maturities of the loan payable to Ryland for each of the remaining three years
of the loan are as follows:
1997 $ 9,217,801
1998 $ 6,914,306
1999 $ 258,703
NOTES TO FINANCIAL STATEMENTS--CONTINUED
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
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 of the
converted Preferred Shares.
NOTE E: INVESTMENTS
During 1996 and 1995, the Plan's investments (including investments bought and
sold, as well as held during the year) appreciated in fair value by $913,123
and $4,075,913, respectively.
Net (Depreciation)
Appreciation
For the Year Ended in Fair Value Fair Value at
December 31, 1996 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
========= ============
NOTES TO FINANCIAL STATEMENTS--CONTINUED
THE RYLAND GROUP, INC.
RETIREMENT AND STOCK OWNERSHIP PLAN
NOTE E: INVESTMENTS--CONTINUED
Net (Deprecation)
Appreciation in
For the Year Ended Fair Value Fair Value at
December 31, 1995 During Year End of Year
- ------------------------------ ------------------ ---------------
Common Stock-
The Ryland Group, Inc. $ (17,374) $ 182,154
Putnam Voyager Fund 2,408,791 10,043,695
Kemper Growth Fund 1,221,997 0
American Balanced Fund 1,214,243 7,883,646
Fidelity Growth Fund 0 7,767,441
CIGNA Income Fund 0 6,196,142
Wachovia Short-Term Investment Fund 0 138,791
Loans to Participants 0 1,513,314
Preferred Stock-
The Ryland Group, Inc. (1,086,329) 24,048,974
Standish Fixed Income Fund 334,585 3,202,587
------- ---------
Total $ 4,075,913 $ 60,976,744
========= ==========
The fair value of individual investments that represent 5% or more of the
Plan's net assets are as follows:
December 31, December 31,
1996 1995
---------------- --------------
Putnam Voyager Fund $ 11,188,498 $ 10,043,695
American Balance Fund $ 7,403,388 $ 7,883,646
Fidelity Growth Fund $ 8,839,414 $ 7,767,441
CIGNA Income Fund $ 5,599,646 $ 6,196,142
Standish Fixed Income Fund $ 3,034,816 $ 3,202,587
Preferred Stock-
The Ryland Group, Inc. $ 21,974,396 $ 24,048,974
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 AND STOCK OWNERSHIP 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, 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:
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:
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 G: NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND AS OF DECEMBER 31, 1995
Ryland Putnam American
Common Voyager Balanced
------ ------ --------
ASSETS
Receivables:
Accrued employer contributions
Accrued interest and dividends $ 15 $ 0 $ 0
--- --- ---
Total receivables 15 0 0
Investments at fair value:
Short-term investments 3,182
CIGNA Income Fund
Preferred stock of
The Ryland Group, Inc.
Common stock of
The Ryland Group, Inc. 182,000
Mutual funds 10,043,695 7,883,646
Loans to participants
------- ---------- ---------
Total investments 185,182 10,043,695 7,883,646
------- ---------- ---------
Total Assets 185,197 10,043,695 7,883,646
======= ========== =========
LIABILITIES
Accrued liabilities 0 0 0
Loan payable to
The Ryland Group, Inc.
------- ------ ------
Total Liabilities 0 0 0
-------- -------- ------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 185,197 $ 10,043,695 $ 7,883,646
========== ========== =========
Standish Fidelity
Fixed Income Growth CIGNA
------------ --------- --------
ASSETS
Receivables:
Accrued employer contributions
Accrued interest and dividends $ 0 $ 0 $ 25,641
------ ----- -------
Total receivables 0 0 25,641
Investments at fair value:
Short-term investments 129,621
CIGNA Income Fund 6,196,142
Preferred stock of
The Ryland Group, Inc.
Common stock of
The Ryland Group, Inc.
Mutual funds 3,202,587 7,767,441
Loans to participants
-------- ---------- ---------
Total investments 3,202,587 7,767,441 6,325,763
--------- --------- ---------
Total Assets 3,202,587 7,767,441 6,351,404
========= ========= =========
LIABILITIES
Accrued liabilities 0 0 0
Loan payable to
The Ryland Group, Inc.
------------ ----------- -----------
Total Liabilities 0 0 0
------------ ----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 3,202,587 $ 7,767,441 $ 6,351,404
============ =========== ===========
Ryland Loan
Preferred Fund Total
--------- ------ --------
ASSETS
Receivables:
Accrued employer contributions $ 1,879,172 $ 1,879,172
Accrued interest and dividends 520,920 $ 0 546,576
----------- --------- ----------
Total receivables 2,400,092 0 2,425,748
Investments at fair value:
Short-term investments 5,988 138,791
CIGNA Income Fund 6,196,142
Preferred stock of
The Ryland Group, Inc. 24,048,974 24,048,974
Common stock of
The Ryland Group, Inc. 154 182,154
Mutual funds 28,897,369
Loans to participants 1,513,314 1,513,314
---------- --------- ----------
Total investments 24,055,116 1,513,314 60,976,744
---------- --------- ----------
Total Assets 26,455,208 1,513,314 63,402,492
========== ========= ==========
LIABILITIES
Accrued liabilities 534,302 0 534,302
Loan payable to
The Ryland Group, Inc. 21,393,457 21,393,457
---------- ---------- ----------
Total Liabilities 21,927,759 0 21,927,759
---------- ---------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 4,527,449 $ 1,513,314 $ 41,474,733
============ =========== ============
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, 1996
Ryland Putnam American
Common Voyager Balanced
-------- --------- -------
ADDITIONS
Contributions:
Employer $ 207,612 $ 111,736
Participants 1,634,652 807,299
Rollovers 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 appreciation
(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 appreciation
(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 appreciation
(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 appreciation
(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
NOTE H: ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY
FUND FOR THE YEAR ENDED DECEMBER 31, 1995
Ryland Putnam Kemper
Common Voyager Growth
-------- --------- -------
ADDITIONS
Contributions:
Employer $ 587,342 $ 403,360
Participants 1,629,792 1,078,292
Rollovers 383,837 231,077
-------- --------- --------
Total contributions 0 2,600,971 1,712,729
Earnings on investments
Interest $ 516 4,945 4,115
Dividends 11,370 529,141 800,884
-------- --------- --------
Total Additions 11,886 3,135,057 2,517,728
-------- --------- --------
DEDUCTIONS
Benefit payments to participants 180,317 2,739,035 2,203,531
Interest expense 0 0 0
Administrative expenses 8 40,270 34,569
-------- --------- --------
Total Deductions 180,325 2,779,305 2,238,100
-------- --------- ---------
Net realized and unrealized appreciation
(depreciation) in fair value
of investments (17,374) 2,408,791 1,221,997
Interfund transfers (26,908) 454,957 (7,881,955)
-------- --------- -----------
Net (Decrease) Increase in net
assets available for plan benefits (212,721) 3,219,500 (6,380,330)
Net assets available for
plan benefits at beginning of year 397,918 6,824,195 6,380,330
-------- --------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT END OF YEAR $185,197 $10,043,695 $ 0
======== =========== =========
American Standish Fidelity
Balanced Fixed Income Growth
-------- --------- -------
ADDITIONS
Contributions:
Employer $396,146 $ 161,772 $ 0
Participants 1,048,834 421,378 0
Rollovers 211,103 123,908 0
-------- --------- --------
Total contributions 1,656,083 707,058 0
Earnings on investments
Interest 4,152 1,793 0
Dividends 562,132 224,811 0
-------- --------- --------
Total Additions 2,222,367 933,662 0
-------- --------- --------
DEDUCTIONS
Benefit payments to participants 2,120,001 784,119 0
Interest expense 0 0 0
Administrative expenses 35,121 15,455 0
-------- --------- --------
Total Deductions 2,155,122 799,574 0
-------- --------- --------
Net realized and unrealized appreciation
(depreciation) in fair value
of investments 1,214,243 334,585 0
Interfund transfers (171,459) (380,410) 7,767,441
-------- --------- --------
Net (Decrease) Increase in net
assets available for plan benefits 1,110,029 88,263 7,767,441
Net assets available for
plan benefits at beginning of year 6,773,617 3,114,324 0
-------- --------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT END OF YEAR $7,883,646 $3,202,587 $ 7,767,441
========== ========== ===========
Ryland
CIGNA Preferred
-------- -- -------
ADDITIONS
Contributions:
Employer $ 261,267 $ 5,089,652
Participants 682,088 0
Rollovers 108,699 0
-------- --------
Total contributions 1,052,054 5,089,652
Earnings on investments
Interest 396,762 0
Dividends 0 2,192,552
-------- --------
Total Additions 1,448,816 7,282,204
-------- --------
DEDUCTIONS
Benefit payments to participants 2,265,351 3,342,203
Interest expense 0 2,229,042
Administrative expenses 33,099 0
-------- --------
Total Deductions 2,298,450 5,571,245
-------- --------
Net realized and unrealized appreciation
(depreciation) in fair value
of investments 0 (1,086,329)
Interfund transfers 80,119 0
-------- --------
Net (Decrease) Increase in net
assets available for plan benefits (769,515) 624,630
Net assets available for
plan benefits at beginning of year 7,120,919 3,902,819
-------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT END OF YEAR $6,351,404 $4,527,449
========== ==========
Loan
Fund Total
-------- -- -------
ADDITIONS
Contributions:
Employer 0 $ 6,899,539
Participants 0 4,860,384
Rollovers 0 1,058,624
-------- --------
Total contributions 0 12,818,547
Earnings on investments
Interest $ 117,743 530,026
Dividends 0 4,320,890
-------- --------
Total Additions 117,743 17,669,463
-------- --------
DEDUCTIONS
Benefit payments to participants 646,975 14,281,532
Interest expense 0 2,229,042
Administrative expenses 0 158,522
-------- --------
Total Deductions 646,975 16,669,096
-------- --------
Net realized and unrealized appreciation
(depreciation) in fair value
of investments 0 4,075,913
Interfund transfers 158,215 0
-------- --------
Net (Decrease) Increase in net
assets available for plan benefits (371,017) 5,076,280
Net assets available for
plan benefits at beginning of year 1,884,331 36,398,453
-------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT END OF YEAR $1,513,314 $ 41,474,733
========== ============
The Ryland Group, Inc.
Retirement and Stock Ownership Plan
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
DESCRIPTION OF
INVESTMENT, INCLUDING
IDENTITY OF ISSUE, MATURITY DATE, RATE OF
BORROWER, LESSOR INTEREST, PAR OR CURRENT
OR SIMILAR PARTY MATURITY VALUE COST VALUE
(1) The Ryland Group, Inc. Common Stock $ 212,638 $ 152,436
(1) The Ryland Group, Inc. Preferred Stock $27,198,700 $21,974,396
CIGNA Income Fund Guaranteed Account $ 5,599,646 $ 5,599,646
Putnam Voyager Mutual Fund $ 9,230,716 $11,188,498
Fidelity Growth Mutual Fund $ 8,082,342 $ 8,839,414
Wells Fargo S&P 500 Mutual Fund $ 501,335 $ 571,048
American Balanced Mutual Fund $ 6,618,048 $ 7,403,388
Standish Income Mutual Fund $ 2,936,424 $ 3,034,816
Wachovia DTF Money Market
Short-term Investment Mutual Funds $ 144,646 $ 144,646
Participant Loans High - 9.5% $ 1,765,450 $ 1,765,450
Low - 9.25%
(1) Denotes party in-interest
The Ryland Group, Inc.
Retirement and Stock Ownership Plan
Item 27d - Schedule of Reportable Transactions
FOR THE YEAR ENDED DECEMBER 31, 1996
(a) (b) (c)
Description
of Assets
(including interest
rate and maturity in Purchase
Identity of Party Involved 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 $ 2,300,906
Wachovia DTF Short Term
Investment Fund Money Market Fund $ 7,767,441
Wachovia DTF Short Term
Investment Fund Money Market Fund n/a
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 $ 23,849,971
Wachovia DTF Short Term
Investment Fund Money Market Fund n/a
American Balanced Fund Mutual Fund $ 1,708,919
American Balanced Fund Mutual Fund n/a
CIGNA Income Fund Guaranteed Account $ 1,228,124
CIGNA Income Fund Guaranteed Account n/a
Fidelity Growth Fund Mutual Fund $ 2,366,334
Fidelity Growth Fund Mutual Fund n/a
Putnam Voyager Fund Mutual Fund $ 3,549,494
Putnam Voyager Fund Mutual Fund n/a
Ryland Preferred Stock (1) Preferred Stock n/a
Ryland Common Stock (1) Common Stock $ 1,176,834
Ryland Common Stock (1) Common Stock n/a
(1)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
Wachovia DTF Short Term
Investment Fund n/a n/a
Wachovia DTF Short Term
Investment Fund $ 7,767,441 n/a
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 $ 23,936,696 n/a
American Balanced Fund n/a n/a
American Balanced Fund $ 2,407,893 n/a
CIGNA Income Fund n/a n/a
CIGNA Income Fund $ 2,152,644 n/a
Fidelity Growth Fund n/a n/a
Fidelity Growth Fund $ 2,196,227 n/a
Putnam Voyager Fund n/a n/a
Putnam Voyager Fund $ 2,987,351 n/a
Ryland Preferred Stock (1) $ 2,111,477 n/a
Ryland Common Stock (1) n/a n/a
Ryland Common Stock (1) $ 1,208,019 n/a
(1)Denotes party in-interest
(f) (2)
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
Wachovia DTF Short Term
Investment Fund $0
Wachovia DTF Short Term
Investment Fund $0
Category (iii) - series of transactions in excess of 5 percent of plan assets
at beginning of the year.
Wachovia DTF Short Term
Investment Fund $0
Wachovia DTF Short Term
Investment Fund $0
American Balanced Fund $0
American Balanced Fund $0
CIGNA Income Fund $0
CIGNA Income Fund $0
Fidelity Growth Fund $0
Fidelity Growth Fund $0
Putnam Voyager Fund $0
Putnam Voyager Fund $0
Ryland Preferred Stock (1) $0
Ryland Common Stock (1) $51
Ryland Common Stock (1) $6,273
(1)Denotes party in-interest
(2) 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.
(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 $ 2,300,906 $ 2,300,906
Wachovia DTF Short Term
Investment Fund $ 7,767,441 $ 7,767,441
Wachovia DTF Short Term
Investment Fund $ 7,767,441 $ 7,767,441
Category (iii) - series of transactions in excess of 5 percent of plan assets
at beginning of the year.
Wachovia DTF Short Term
Investment Fund $ 23,849,971 $ 23,849,971
Wachovia DTF Short Term
Investment Fund $ 23,936,696 $ 23,936,696
American Balanced Fund $ 1,708,919 $ 1,708,919
American Balanced Fund $ 2,126,294 $ 2,407,893
CIGNA Income Fund $ 1,228,124 $ 1,228,124
CIGNA Income Fund $ 2,152,644 $ 2,152,644
Fidelity Growth Fund $ 2,366,334 $ 2,366,334
Fidelity Growth Fund $ 2,051,432 $ 2,196,227
Putnam Voyager Fund $ 3,549,494 $ 3,549,494
Putnam Voyager Fund $ 2,272,062 $ 2,987,351
Ryland Preferred Stock (1) $ 2,274,223 $ 2,111,477
Ryland Common Stock (1) $ 1,176,886 $ 1,176,834
Ryland Common Stock (1) $ 1,214,585 $ 1,208,019
(1)Denotes party in-interest
(i)
Identity of Party Involved Net Gain or (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
Wachovia DTF Short Term
Investment Fund n/a
Wachovia DTF Short Term
Investment Fund $ 0
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
Wachovia DTF Short Term
Investment Fund $ 0
American Balanced Fund n/a
American Balanced Fund $ 281,599
CIGNA Income Fund n/a
CIGNA Income Fund $ 0
Fidelity Growth Fund n/a
Fidelity Growth Fund $ 144,795
Putnam Voyager Fund n/a
Putnam Voyager Fund $ 715,289
Ryland Preferred Stock (1) $ (162,746)
Ryland Common Stock (1) n/a
Ryland Common Stock (1) $ (12,839)
(1)Denotes party in-interest
There were no category (ii) or (iv) reportable transactions during 1996.
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 AND STOCK OWNERSHIP PLAN
Date: June 27, 1997 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 19
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 and Stock Ownership Plan
of The Ryland Group, Inc. of our report dated June 23, 1997, with respect to
the financial statements and schedules of The Ryland Group, Inc. Retirement
and Stock Ownership Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1996.
/s/ Ernst & Young LLP
Baltimore, Maryland
June 24, 1997
