<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
---------
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999
--------------
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to .
----------- -----------
Commission File Number: 1-8029
THE RYLAND GROUP, INC.
----------------------
(Exact name of registrant as specified in its charter)
Maryland 52-0849948
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11000 Broken Land Parkway, Columbia, Maryland 21044
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(410) 715-7000
--------------
(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
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
May 6,1999 was 14,812,322.
<PAGE>
THE RYLAND GROUP, INC.
FORM 10-Q
INDEX
Page Number(s)
--------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1999
(unaudited) and December 31, 1998 1-2
Consolidated Statements of Earnings for the
three months ended March 31,1999 and 1998
(unaudited) 3
Consolidated Statements of Cash Flows for the
three months ended March 31, 1999 and 1998
(unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5-7
Item 2. Management's Discussion and Analysis of Results of
Operation and Financial Condition 8-12
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
INDEX OF EXHIBITS 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
March 31, December 31,
1999 1998
----------- -----------
(unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents $ 49,114 $ 48,100
Housing inventories:
Homes under construction 403,402 373,012
Land under development and
improved lots 281,706 268,750
---------- ----------
Total inventories 685,108 641,762
Property, plant and equipment 28,711 26,818
Purchase price in excess of net
assets acquired 23,032 23,473
Other assets 43,606 38,515
---------- ----------
829,571 778,668
---------- ----------
Financial Services:
Cash and cash equivalents 658 1,684
Mortgage loans held-for-sale 112,891 158,611
Mortgage-backed securities and
notes receivable 102,447 111,654
Other assets 12,704 14,734
---------- ----------
228,700 286,683
---------- ----------
Other Assets:
Collateral for bonds payable of
limited-purpose subsidiaries 86,509 92,403
Net deferred taxes 30,732 31,384
Other 30,406 26,260
---------- ----------
Total assets $1,205,918 $1,215,398
---------- ----------
See notes to consolidated financial statements.
1
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
March 31, December 31,
1999 1998
----------- ------------
(unaudited)
LIABILITIES
Homebuilding:
Accounts payable and other liabilities $ 152,675 $ 173,370
Long-term debt 367,591 308,152
---------- ----------
520,266 481,522
---------- ----------
Financial Services:
Accounts payable and other liabilities 14,418 16,473
Short-term notes payable 174,815 223,058
---------- ----------
189,233 239,531
---------- ----------
Other Liabilities:
Bonds payable of limited-purpose
subsidiaries 82,526 87,980
Other 56,189 60,082
---------- ----------
Total liabilities 848,214 869,115
---------- ----------
STOCKHOLDERS' EQUITY
Convertible preferred stock, $1 par value:
Authorized - 1,400,000 shares
Issued - 404,141 shares
(416,744 for 1998) 404 417
Common stock, $1 par value:
Authorized - 78,600,000 shares
Issued - 14,878,586 shares
(14,751,753 for 1998) 14,879 14,752
Paid-in capital 95,443 93,193
Retained earnings 245,215 236,011
Accumulated other comprehensive income 1,763 1,910
---------- ----------
Total stockholders' equity 357,704 346,283
---------- ----------
Total liabilities and
stockholders' equity $1,205,918 $1,215,398
---------- ----------
Stockholders' equity per common share $ 23.41 $ 22.83
---------- ----------
See notes to consolidated financial statements.
2
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(amounts in thousands, except share data)
Three months ended March 31,
1999 1998
---------- ----------
Revenues:
Homebuilding:
Residential revenue $ 387,260 $ 308,000
Other revenue 4,054 3,539
----------- -----------
Total homebuilding revenue 391,314 311,539
Financial services 10,588 21,682
Limited-purpose subsidiaries 2,137 3,084
----------- -----------
Total revenue 404,039 336,305
----------- -----------
Expenses:
Homebuilding:
Cost of sales 327,490 269,182
Selling, general and administrative 42,406 33,944
Interest 2,609 4,560
----------- -----------
Total homebuilding expenses 372,505 307,686
Financial services:
General and administrative 5,916 9,767
Interest 2,453 4,601
----------- -----------
Total financial services expenses 8,369 14,368
Limited-purpose subsidiaries expenses 2,137 3,084
Corporate expenses 4,159 3,350
----------- -----------
Total expenses 387,170 328,488
Earnings before taxes 16,869 7,817
Tax expense 6,748 3,127
----------- -----------
Net earnings $ 10,121 $ 4,690
----------- -----------
Net earnings per common share:
Basic $ 0.67 $ 0.30
Diluted $ 0.65 $ 0.29
Average common shares outstanding:
Basic 14,810,457 14,713,171
Diluted 15,669,174 15,245,489
See notes to consolidated financial statements.
3
<PAGE>
The Ryland Group, Inc. and subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(amounts in thousands) Three months ended March 31,
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 10,121 $ 4,690
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 6,232 5,460
(Increase) in inventories (43,346) (13,164)
Net change in other assets, payables
and other liabilities (29,698) (14,574)
Equity in losses of / distributions from
unconsolidated joint ventures (1,185) (505)
Decrease in mortgage loans held-for-sale 45,720 17,853
-------- --------
Net cash (used for) operating activities (12,156) (240)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net additions to property, plant and equipment (9,412) (3,960)
Principal reduction of mortgage collateral 9,188 8,551
Principal reduction of mortgage-backed
securities - available-for-sale 3,757 5,153
Principal reduction of mortgage-backed
securities - held-to-maturity 4,551 3,797
Other investing activities, net (2,962) 5,008
-------- --------
Net cash provided by investing activities 5,122 18,549
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds of long-term debt 59,498 10,000
Reduction of long-term debt (60) (1,222)
(Decrease) in short-term notes payable (48,243) (12,266)
Bond principal payments (5,765) (19,733)
Common and preferred stock dividends (820) (859)
Other financing activities, net 2,412 6,904
-------- --------
Net cash provided by (used for) financing activities 7,022 (17,176)
-------- --------
Net (decrease) increase in cash and cash equivalents (12) 1,133
Cash and cash equivalents at beginning of period 49,784 36,131
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 49,772 $ 37,264
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest (net of capitalized interest) $ 5,618 $ 12,949
Cash paid for income taxes (net of refunds) $ 7,404 $ 5,124
See notes to consolidated financial statements.
4
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(amounts in thousands, except for share data, in all notes)
Note 1. Consolidated Financial Statements
The consolidated financial statements include the accounts of The Ryland
Group, Inc. and its wholly-owned subsidiaries (the "Company"). Intercompany
transactions have been eliminated in consolidation.
The consolidated balance sheet as of March 31, 1999, the consolidated statements
of earnings for the three months ended March 31, 1999 and 1998, and the
consolidated statements of cash flows for the three months ended March 31, 1999
and 1998 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 March 31, 1999, and for all periods presented, have been made. The
consolidated balance sheet at December 31, 1998 is taken from the audited
financial statements as of that date. Certain amounts in the consolidated
statements have been reclassified to conform to the 1999 presentation.
Certain information and footnote disclosures normally included in the financial
statements have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and related notes included in
the Company's 1998 annual report to shareholders.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the operating results for the full year.
Assets presented in the financial statements are net of any valuation
allowances.
The following table is a summary of capitalized interest:
1999 1998
-------- --------
Capitalized interest as of January 1, $ 21,600 $ 23,644
Interest capitalized 6,029 4,350
Interest amortized to cost of sales (3,999) (4,148)
-------- --------
Capitalized interest as of March 31, $ 23,630 $ 23,846
5
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
Note 2. New Accounting Pronouncements
FASB 133
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is required to be adopted in years beginning
after June 15, 1999. The Statement requires all derivatives to be recorded on
the balance sheet at fair value and establishes new accounting procedures for
hedges that will effect the timing of recognition and the manner in which
hedging gains and losses are recognized in the Company's financial statements.
The Company has not completed its evaluation of this new Statement; however,
management does not anticipate that the adoption of the Statement will have a
material impact on the Company's earnings or financial position. The Company
currently expects to adopt this Statement beginning on January 1, 2000.
Note 3. Segment Information
Operations of the Company consist of two business segments: homebuilding and
financial services. The Company's homebuilding segment constructs and sells
single-family attached and detached homes in 21 markets. The financial services
segment provides mortgage-related products and services for retail customers and
conducts investment activities. Corporate expenses represent the costs of
corporate functions, which support the business segments.
Three months ended March 31,
1999 1998
-------- --------
Pretax earnings:
Homebuilding $ 18,809 $ 3,853
Financial services 2,219 7,314
Corporate and other (4,159) (3,350)
-------- --------
Total $ 16,869 $ 7,817
======== ========
6
<PAGE>
The Ryland Group, Inc. and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(unaudited)
Note 4. Earnings Per Share Reconciliation
The following table sets forth the computation of basic and diluted earnings per
share. The assumed conversion of preferred stock was dilutive for the three
months ended March 31, 1999. For the three month ended March 31, 1998, the
conversion of preferred stock was not assumed due to an anti-dilutive effect.
Three months ended March 31,
1999 1998
-------- --------
Numerator:
Net earnings $ 10,121 $ 4,690
Preferred stock dividends (223) (271)
-------- --------
Numerator for basic earnings per share -
income available to common stockholders $ 9,898 $ 4,419
Effect of dilutive securities:
Preferred stock dividends 223 0
Numerator for diluted earnings per share -
income available to common stockholders
after assumed conversion $ 10,121 $ 4,419
Denominator:
Denominator for basic earnings per share -
weighted-average shares 14,810,457 14,713,171
Effect of dilutive securities:
Stock options 311,226 421,674
Conversion of Preferred Shares 410,443 0
Other equity incentives 137,048 110,644
-------- --------
Dilutive potential common share 858,717 532,318
Denominator for diluted earnings per share -
adjusted weighted average shares and
assumed conversions 15,669,174 15,245,489
Basic earnings per share $ 0.67 $ 0.30
Dilutive earnings per share $ 0.65 $ 0.29
Note 5. Commitments and Contingencies
Refer to Part II, Other Information, Item 1, Legal Proceedings of this document
for updated information regarding the Company's Commitments and Contingencies.
Note 6. Comprehensive Income
Comprehensive income consists of net income and the increase or decrease in
unrealized gains or losses on the Company's available-for-sale securities and
totaled $10.3 million and $4.5 million for the three months ended March 31, 1999
and 1998, respectively.
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RESULTS OF OPERATIONS
CONSOLIDATED
For the first quarter of 1999, the Company reported consolidated net earnings
from operations of $10.1 million, or $.67 per share ($.65 per share diluted).
This compares with consolidated net earnings of $4.7 million, or $.30 per share
($.29 per share diluted)for the first quarter 1998.
The homebuilding segment reported pretax earnings of $18.8 million for the first
quarter of 1999, compared with pretax earnings of $3.9 million for the first
quarter 1998. Homebuilding results in the first quarter increased over last year
primarily due to improved gross profit margins and higher closing volume,
combined with lower interest expense. Pretax homebuilding margins reached 4.8
percent in the first quarter versus 1.2 percent for the first quarter of 1998.
The financial services segment reported operating pretax earnings of $2.2
million for the first quarter of 1999, compared with $1.2 million for the same
period in 1998. For the first quarter of 1998, the financial services segment
reported total pretax earnings of $7.3 million which included a $6.1 gain on the
bulk sale of servicing rights. The increase over the prior year was attributable
to higher capture rates of the mortgages from the Company's homebuilding
segment, increased profitability per loan and overhead reduction initiatives.
Corporate expenses represent the cost of corporate functions, which support the
business segments. Corporate expenses of $4.2 million for the first quarter of
1999, were up $.8 million from the prior year levels primarily due to increases
in incentive compensation attributable to the higher earnings levels.
The Company's limited-purpose subsidiaries no longer issue mortgage-backed
securities and mortgage-participation securities, but they continue to hold
collateral for previously issued mortgage-backed bonds in which the Company
maintains a residual interest. Revenues, expenses, and portfolio balances
continue to decline as the mortgage collateral pledged to secure the bonds
decreases due to scheduled payments, prepayments and exercises of early
redemption provisions. Revenues have approximated expenses for the last three
years.
HOMEBUILDING SEGMENT
Results of operations of the homebuilding segment are summarized as follows
(amounts in thousands, except average closing price):
Three months ended March 31,
1999 1998
---- ----
Revenues:
Home sales $387,260 $308,000
Land sales 4,054 3,539
-------- --------
Total 391,314 311,539
Gross profit 63,824 42,357
Selling, general and
administrative expenses 42,406 33,944
Interest expense 2,609 4,560
-------- --------
Homebuilding pretax earnings $ 18,809 $ 3,853
======== ========
8
<PAGE>
Operational Unit Data:
New orders (units) 2,980 2,631
Closings (units) 2,045 1,694
Outstanding contracts at
March 31:
Units 4,387 3,749
Dollar value $809,812 $679,512
Average closing price $189,000 $182,000
Homebuilding revenues increased 25 percent for the first quarter of 1999,
compared with the same period last year, due to a 21 percent increase in
closings and a 4 percent increase in average closing price.
Gross profit margins from home sales averaged 16.5 percent for the first quarter
of 1999, a 270 basis point increase from the 13.8 percent for the first quarter
of 1998. The improvement was primarily due to increased closings in new
communities, where the Company's strategic initiatives have resulted in
substantially improved gross profit margins.
New orders increased 13 percent from the first quarter of last year to 2,980
homes. Sales per community were up 18 percent reflecting fewer active
communities compared to first quarter of 1998. Outstanding contracts as of March
31, 1999 were 4,387 compared with 3,749 at March 31, 1998 and 3,452 at December
31, 1998. Outstanding contracts represent the Company's backlog of sold, but not
closed homes, which generally are built and closed, subject to cancellation,
over the next two quarters. The value of outstanding contracts at March 31, 1999
was $810 million, an increase of 19 percent from March 31, 1998 and an increase
of 24 percent from December 31, 1998.
Selling, general and administrative expenses as a percentage of revenues
decreased slightly to 10.8 percent for the first quarter of 1999 compared with
10.9 percent for the same period of 1998. Interest expense declined by $2
million in the first quarter versus 1998 due to a lower cost of funds and an
increase in the amount of interest capitalized due to an increase in land under
development.
FINANCIAL SERVICES
Results of operations of the Company's financial services segment are summarized
as follows (amounts in thousands):
Three months ended March 31,
1999 1998
---- ----
Retail revenues:
Interest and
net origination fees $ 1,547 $ 2,106
Gains on sales of mortgages
and servicing rights 3,934 9,048
Loan servicing 424 4,716
Title/escrow 2,032 1,991
------- -------
Total retail revenues 7,937 17,861
Revenues from investment
operations 2,651 3,821
------- -------
Total revenues $10,588 $21,682
9
<PAGE>
Expenses:
General and administrative 5,916 9,767
Interest 2,453 4,601
------- -------
Total expenses 8,369 14,368
------- -------
Pretax earnings $ 2,219 $ 7,314
======= =======
Pretax earnings by line of business were as follows (amounts in thousands):
Three months ended March 31,
1999 1998
---- ----
Retail $1,489 $6,269
Investments 730 1,045
------ ------
Total $2,219 $7,314
====== ======
OPERATIONAL DATA: Three months ended March 31,
1999 1998
---- ----
Retail operations:
Originations 1,552 1,833
Percent of Ryland Homes closings 81% 59%
Ryland Homes capture rate 68% 65%
Investment operations:
Portfolio average
balance (in millions) $107.7 $153.9
Revenues and general and administrative expenses for the financial services
segment decreased significantly for the three month period ended March 31, 1999,
compared with the same period of 1998. The decreases were primarily due to the
decline in the loan servicing operations related to the sale of a majority of
the loan servicing portfolio in the first quarter of 1998, and overhead
reduction initiatives. Interest expense decreased 47 percent for the three month
ended March 31, 1999, compared with 1998, due in part to a decrease in the
warehouse holding period for mortgage loans before they were sold in the
secondary market.
Retail operations include residential mortgage origination, loan servicing,
title, escrow and homeowners insurance services for retail customers. Retail
operations reported pretax earnings of $1.5 million for the first quarter of
1999, compared with $6.3 million for the same period last year. The Company sold
the majority of its loan servicing portfolio in the first quarter of 1998 and
realized a $6.1 million pretax gain, net of expenses and liabilities related to
the sale of servicing.
Mortgage origination volume decreased by 15 percent for the three month period
ended March 31, 1999, compared with the same period last year primarily due to a
decrease in refinancing activity partially offset by higher closing volume from
homebuilder loan originations.
Investment operations hold certain assets, primarily mortgage-backed securities
which were obtained as a result of the exercise of redemption rights on various
mortgage-backed bonds previously owned by the Company's limited-purpose
subsidiaries. Pretax earnings from investment operations were $.7 million for
the first quarter, compared with $1 million in the prior year. The decrease was
primarily due to a lower average portfolio balance which resulted in a decline
in interest and other income.
10
<PAGE>
YEAR 2000
The Company's Year 2000 remediation efforts have focused on its key business
computer applications representing those systems that the Company is dependent
upon for the conduct of day-to-day business operations. Starting in 1997, the
Company initiated a comprehensive review of its business applications to
determine their Year 2000 readiness and the adequacy of these systems to meet
future business requirements. Out of this effort, a number of systems were
identified that were not Year 2000 compliant. In most cases these systems were
already in the process of being replaced or upgraded.
As of March 1999, the Company believes that its key homebuilding business
systems are Year 2000 compliant. However, certain data, voice communication and
financial service's systems are in the process of being replaced or upgraded.
Some implementation and testing procedures were completed in 1998 and the
remainder are scheduled for completion in mid-1999. The costs of achieving Year
2000 compliance could aggregate between $1 to $2 million.
The Company is currently assessing other potential Year 2000 issues, including
non-information technology systems. The Company's relationships with vendors,
financial institutions and other third parties are being reviewed to determine
the status of their Year 2000 compliance and the impact their potential
noncompliance could have on the Company. The Company has no means of ensuring
that its third party service providers will be Year 2000 ready. In the event
that they are not ready on a timely basis, the Company will seek alternative
sources for goods and services, where practicable. The Company is in the process
of developing a Year 2000 contingency plan.
Although the Company will continue to monitor the situation, it is possible that
the Company or the third parties with whom it has significant relationships will
not successfully complete all of their Year 2000 remediation efforts. If this
were to occur, the Company could encounter disruptions to its business, but,
currently believes it unlikely that such disruptions will have a material
adverse effect on its financial results or results of operations. The Company
could also be impacted by financial market disruption or by Year 2000 computer
system failures at government agencies on which the Company is dependent for
zoning, building permits and related matters.
FINANCIAL CONDITION AND LIQUIDITY
The Company generally provides for the cash requirements of the homebuilding and
financial services businesses from outside borrowings and internally generated
funds. The Company believes that its current sources of cash are sufficient to
finance its current requirements.
The homebuilding segment borrowings include senior notes, senior subordinated
notes, an unsecured revolving credit facility, and nonrecourse secured notes
payable. Senior and senior subordinated notes outstanding totaled $308 million
as of March 31, 1999 and December 31, 1998.
The Company uses its unsecured revolving credit facility to finance increases in
its homebuilding inventory and working capital. This facility, which matures in
July 2000, provides for total borrowings of up to $300 million. There were $58
million in outstanding borrowings under this facility as of March 31, 1999 and
no outstanding borrowings at December 31, 1998. The Company had letters of
credit outstanding under this facility totaling $32 million at March 31, 1999
and $34 million at December 31, 1998. To finance land purchases, the Company may
also use seller-financed, non-recourse secured notes payable. At March 31, 1999,
such notes payable outstanding amounted to $1.6 million, compared with no
outstanding notes payable at December 31, 1998.
11
<PAGE>
Housing inventories increased to $685 million as of March 31, 1999, from $642
million as of December 31, 1998. The increase reflects higher sold inventory
related to the significant increase in backlog. The increase in inventory was
funded with internally generated funds and borrowing under the revolving credit
facility.
The financial services segment uses cash generated from operations and borrowing
arrangements to finance its operations. A bank credit facility, which matures on
June 1, 2000, provides up to $260 million for mortgage warehouse funding and $30
million for working capital advances. Currently, the financial services segment
is in the process of negotiating a renewal of its three year bank credit
facility which will provide up to $200 million for mortgage warehouse funding.
This facility will replace the bank credit facility which matures on June 1,
2000. Other borrowing arrangements as of March 31, 1999 included repurchase
agreement facilities aggregating $370 million, and a $100 million revolving
credit facility used to finance investment portfolio securities. At March 31,
1999 and December 31, 1998, the combined borrowings of the financial services
segment outstanding under all agreements were $175 million and $223 million,
respectively.
Mortgage loans, notes receivable, and mortgage-backed securities held by the
limited-purpose subsidiaries are pledged as collateral for the issued bonds, the
terms of which provide for the retirement of all bonds from the proceeds of the
collateral. The source of cash for the bond payments is cash received from the
mortgage loans, notes receivable and mortgage-backed securities.
The Company has not guaranteed the debt of the financial services segment or
limited-purpose subsidiaries.
As of December 31, 1998, the Company had Board authorization to repurchase up to
958,400 shares of its common stock. During 1999 to date the Company repurchased
approximately 77,000 shares of its outstanding common stock at a cost of
approximately $1.8 million. The Company repurchase program has been funded
through internally generated funds.
Note: Certain statements in Management's Discussion and Analysis of Results of
Operation and Financial Condition may be "forward-looking statements" within the
meaning of the Private Securities Litigation Act of 1995. Forward-looking
statements are based on various factors and assumptions that include risks and
uncertainties, such as the costs of Year 2000 compliance, the completion and
profitability of sales reported, the market for homes generally and in areas
where the Company operates, the availability and cost of land, changes in
economic conditions and interest rates, increases in raw material and labor
costs, consumer confidence, government regulation, and general competitive
factors, all or each of which may cause actual results to differ materially.
12
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company's market risk from December
31, 1998. For information regarding the Company's market risk, refer to Form
10-K for the fiscal year ended December 31, 1998 of The Ryland Group, Inc.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1.
The Company is party to various other legal proceedings generally incidental to
its businesses. Based on evaluation of these other matters and discussions with
counsel, management believes that liabilities to the Company arising from these
other matters will not have a material adverse effect on the overall financial
position of the Company. With regard to the previously disclosed potential
sanctions by the U.S. Department of Housing and Urban Development ("HUD")
against Ryland Mortgage Corporation, this matter was resolved without further
action being taken.
Page Number
-----------
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
27 Financial Data Schedule (filed herewith) 17
B. Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of 1999.
14
<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)
May 13, 1999 By: /s/ Michael D. Mangan
Date ---------------------
Michael D. Mangan,
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
May 13, 1999 By: /s/ David L. Fristoe
Date --------------------
David L. Fristoe, Vice President
and Corporate Controller
(Principal Accounting Officer)
15
<PAGE>
INDEX OF EXHIBITS
A. Exhibits Page of
Sequentially
Exhibit No. Numbered Pages
- ----------- --------------
27 Financial Data Schedule
(filed herewith) 17
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE RYLAND GROUP INC. FORM 10-Q FOR THE PERIOD ENDED
3/31/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 49,772
<SECURITIES> 102,447
<RECEIVABLES> 112,891
<ALLOWANCES> 0
<INVENTORY> 685,108
<CURRENT-ASSETS> 0
<PP&E> 28,711
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,205,918
<CURRENT-LIABILITIES> 0
<BONDS> 257,341
0
404
<COMMON> 14,879
<OTHER-SE> 342,421
<TOTAL-LIABILITY-AND-EQUITY> 1,205,918
<SALES> 391,314
<TOTAL-REVENUES> 404,039
<CGS> 327,490
<TOTAL-COSTS> 375,812
<OTHER-EXPENSES> 4,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,188
<INCOME-PRETAX> 16,869
<INCOME-TAX> 6,748
<INCOME-CONTINUING> 10,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,121
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.65
</TABLE>
