Senior Notes, Secured, and Subordinated Indebtedness

The Company's senior notes, secured, and subordinated indebtedness consists of the following (in thousands):



	December 31,
	2015		2014
Notes payable
Revolving line of credit	$	65,000	$	—
Construction notes payable	110,181		38,688
Seller financing	—		547
Total notes payable	$	175,181	$	39,235

Subordinated amortizing notes	14,066		20,717

Senior notes
5 ³/₄% Senior Notes due April 15, 2019	148,295		147,766
8¹/2% Senior Notes due November 15, 2020	422,896		422,889
7% Senior Notes due August 15, 2022	345,338		294,791

Total Debt	$	1,105,776	$	925,398

The maturities of the Company's Notes payable, Subordinated amortizing notes, 5 ³/₄% Senior Notes, 8 ¹/₂% Senior Notes, and 7% Senior Notes are as follows as of December 31, 2015 (in thousands):



Year Ended December 31,
2016	$	15,378
2017	160,607
2018	13,262
2019	150,000
2020	425,000
Thereafter	350,000
	$	1,114,247

Maturities above exclude premium on the 8 ¹/₂% and 7% Senior Notes in aggregate of $4,887, and deferred loan costs on the 5 ³/₄%, 8 ¹/₂%, and 7% Senior Notes in aggregate of $13,358 as of December 31, 2015.

Notes Payable

Revolving Lines of Credit

On March 27, 2015, William Lyon Homes, Inc., a California corporation ("California Lyon") and Parent entered into an amendment and restatement agreement pursuant to which its existing credit agreement for a revolving credit facility of up to $100 million (the "Revolver") was amended and restated in its entirety (as so amended and restated, the “Amended Facility”). The Amended Facility amends and restates the Revolver and provides for total lending commitments of $130.0 million. In addition, the Amended Facility has an uncommitted accordion feature under which the Company may increase the total principal amount up to a maximum aggregate of $200.0 million under certain circumstances (up from a maximum aggregate of $125.0 million under the previous facility), as well as a sublimit of $50.0 million for letters of credit, and extends the maturity date of the previous facility by one year to August 7, 2017.

The Amended Facility contains various covenants, including financial covenants relating to tangible net worth, leverage, liquidity and interest coverage, as well as a limitation on investments in joint ventures and non-guarantor subsidiaries. The Amended Facility contains customary events of default, subject to cure periods in certain circumstances, including: nonpayment of principal, interest and fees or other amounts; violation of covenants; inaccuracy of representations and warranties; cross default to certain other indebtedness; unpaid judgments; and certain bankruptcy and other insolvency events. The occurrence of any event of default could result in the termination of the commitments under the Amended Facility and permit the lenders to accelerate payment on outstanding borrowings under the Amended Facility and require cash collateralization of outstanding letters of credit. If a change in control (as defined in the Amended Facility) occurs, the lenders may terminate the commitments under the Amended Facility and require that the the Company repay outstanding borrowings under the Amended Facility and cash collateralize outstanding letters of credit. Interest rates on borrowings generally will be based on either LIBOR or a base rate, plus the applicable spread. The commitment fee on the unused portion of the Amended Facility currently accrues at an annual rate of 0.50%. The Company was in compliance with all covenants under the Amended Facility as of December 31, 2015.

Borrowings under the Amended Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by Parent and certain of Parent’s direct and indirect wholly-owned subsidiaries, are secured by a pledge of all equity interests held by such guarantors, and may be used for general corporate purposes. As of December 31, 2015, the Company had $65 million outstanding against the Amended Facility at an effective rate of 3.32%, as well as a letter of credit for $8.6 million. As of December 31, 2014, the Company had no amounts outstanding under the Amended Facility, with the exception of a letter of credit for $4.0 million.

Construction Notes Payable

Certain of the Company's consolidated joint ventures, as well as California Lyon, have entered into construction notes payable agreements. These loans will be repaid with proceeds from closings and are secured by the underlying projects. The issuance date, total availability under each facility outstanding, maturity date and interest rate are listed in the table below as of December 31, 2015 (in millions):



Issuance Date	Facility Size		Outstanding		Maturity	Current Rate
November, 2015	$	42.5	$	15.0	November, 2017	4.50	%	(1)
August, 2015	14.2		2.8		August, 2017	4.50	%	(1)
August, 2015	37.5		13.2		August, 2017	4.50	%	(1)
July, 2015	22.5		13.3		July, 2018	4.00	%	(2)
April, 2015	18.5		10.6		October, 2017	4.00	%	(2)
November, 2014	24.0		19.1		November, 2017	4.00	%	(2)
November, 2014	22.0		20.8		November, 2017	4.00	%	(2)
March, 2014	26.0		15.0		October, 2016	3.42	%	(1)
December, 2013	18.6		0.4		January, 2016	4.50	%	(1)
	$	225.8	$	110.2

(1) Loan bears interest at the Company's option of either LIBOR +3.0% or the prime rate +1.0%.

(2) Loan bears interest at the prime rate +0.5%

Seller Financing

At December 31, 2014, the Company had $0.5 million of notes payable outstanding related to two land acquisitions for which seller financing was provided. The first note had a balance of $0.4 million as of December 31, 2014, and bore interest at 7% per annum, was secured by the underlying land, and matured in May 2015. The second land acquisition note bore interest at 4% per annum, had a balance of $0.1 million as of December 31, 2014 and matured in January 2015.

Subordinated Amortizing Notes

On November 21, 2014, in order to pay down amounts borrowed under the one-year senior unsecured facility entered into in conjunction with the acquisition of Polygon, the Company completed its public offering and sale of 1,000,000 6.50% tangible equity units (“TEUs”, or "Units"), sold for a stated amount of $100 per Unit, featuring a 17.5% conversion premium. On December 3, 2014, the Company sold an additional 150,000 TEUs pursuant to an over-allotment option granted to the underwriters. Each TEU is a unit composed of two parts:


•	a prepaid stock purchase contract (a “purchase contract”); and


•	a senior subordinated amortizing note (an “amortizing note”).

Each amortizing note had an initial principal amount of $18.01, bears interest at the annual rate of 5.50% and has a final installment payment date of December 1, 2017. On each March 1, June 1, September 1 and December 1, commencing on March 1, 2015, William Lyon Homes will pay equal quarterly installments of $1.6250 on each amortizing note (except for the March 1, 2015 installment payment, which was $1.8056 per amortizing note). Each installment will constitute a payment of interest and a partial repayment of principal. The amortizing notes rank equally in right of payment to all of the Company's existing and future senior indebtedness, other than borrowings under the Amended Facility and the Company's secured project level financing, which will be senior in right of payment to the obligations under the amortizing notes, in each case to the extent of the value of the assets securing such indebtedness.

Each TEU may be separated into its constituent purchase contract and amortizing note on any business day during the period beginning on, and including, the business day immediately succeeding the date of initial issuance of the Units to, but excluding, the third scheduled trading day immediately preceding the mandatory settlement date. Prior to separation, the purchase contracts and amortizing notes may only be purchased and transferred together as Units. The net proceeds received from the TEU issuance were allocated between the amortizing note and the purchase contract under the relative fair value method, with amounts allocated to the purchase contract classified as additional paid-in capital. As of December 31, 2015 and 2014, the amortizing notes had an unamortized carrying value of $14.1 million and $20.7 million, respectively.

5 3/4% Senior Notes Due 2019

On March 31, 2014, California Lyon completed its private placement with registration rights of 5.75% Senior Notes due 2019 (the "5.75% Notes"), in an aggregate principal amount of $150 million. The 5.75% Notes were issued at 100% of their aggregate principal amount. In August 2014, the Company exchanged 100% of the 5.75% Notes for notes that are freely transferable and registered under the Securities Act of 1933, as amended (the "Securities Act").

As of December 31, 2015, the outstanding principal amount of the 5.75% Notes was $150 million, excluding deferred loan costs of $1.7 million. The 5.75% Notes bear interest at a rate of 5.75% per annum, payable semiannually in arrears on April 15 and October 15, and mature on April 15, 2019. The 5.75% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and by certain of Parent’s existing and future restricted subsidiaries. The 5.75% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $425 million in aggregate principal amount of 8.5% Senior Notes due 2020, and $350 million in aggregate principal amount of 7.00% Notes, each as described below. The 5.75% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.75% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

On or after April 15, 2016, California Lyon may redeem all or a portion of the 5.75% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount) set forth below plus accrued and unpaid interest to the applicable redemption date, if redeemed during the period beginning on each of the dates indicated below:



Year	Percentage
April 15, 2016	104.313	%
October 15, 2016	102.875	%
April 15, 2017	101.438	%
April 15, 2018 and thereafter	100.000	%

Prior to April 15, 2016, the 5.75% Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, and accrued and unpaid interest to, the redemption date.

In addition, any time prior to April 15, 2016, California Lyon may, at its option on one or more occasions, redeem the 5.75% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 5.75% Notes issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 105.75%, plus accrued and unpaid interest to the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings by Parent.

8 1/2% Senior Notes Due 2020

On November 8, 2012, William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company (“California Lyon”) completed its private placement with registration rights of 8.5% Senior Notes due 2020 (the "initial 8.5% Notes"), in an aggregate principal amount of $325 million. The initial 8.5% Notes were issued at 100% of their aggregate principal amount. The Company used the net proceeds from the sale of the initial 8.5% Notes, together with cash on hand, to refinance the Company’s (i) $235 million 10.25% Senior Secured Term Loan due 2015, (ii) approximately $76 million in aggregate principal amount of 12% Senior Subordinated Secured Notes due 2017, (iii) approximately $11 million in principal amount of project related debt, and (iv) to pay accrued and unpaid interest thereon. In July 2013, the Company exchanged 100% of the initial 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

On October 24, 2013, California Lyon completed its private placement with registration rights of an additional $100.0 million in aggregate principal amount of its 8.5% Senior Notes due 2020 (the “additional 8.5% Notes”, and together with the initial 8.5% Notes, the "8.5% Notes") at an issue price of 106.5% of their aggregate principal amount, plus accrued interest from and including May 15, 2013, in a private placement, resulting in net proceeds of approximately $104.7 million. In February 2014, the Company exchanged 100% of the additional 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

As of December 31, 2015 , the outstanding principal amount of the 8.5% Notes was $425 million, excluding unamortized premium of $3.9 million and deferred loan costs of $6.0 million. The 8.5% Notes bear interest at an annual rate of 8.5% per annum, payable semiannually in arrears on May 15 and November 15, commencing on May 15, 2013, and mature on November 15, 2020. The 8.5% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 8.5% Notes and the related guarantees are California Lyon's and the guarantors' unsecured senior obligations and rank equally in right of payment with all of California Lyon's and the guarantors' existing and future unsecured senior debt, including California Lyon's 5.75% Notes, as described above, and 7.00% Notes, as described below. The 8.5% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 8.5% Notes and the guarantees are and will be effectively junior to any of California Lyon’s and the guarantors’ existing and future secured debt.

On or after November 15, 2016, California Lyon may redeem all or a portion of the 8.5% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount) set forth below plus accrued and unpaid interest to the applicable redemption date, if redeemed during the 12-month period beginning on November 15 of the years indicated below:



Year	Percentage
2016	104.250	%
2017	102.125	%
2018 and thereafter	100.000	%

Prior to November 15, 2016 the 8.5% Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, and accrued and unpaid interest to, the redemption date.

In addition, any time prior to November 15, 2015, California Lyon may, at its option on one or more occasions, redeem 8.5% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 8.5% Notes issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 108.5%, plus accrued and unpaid interest to the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

7% Senior Notes Due 2022

On August 11, 2014, WLH PNW Finance Corp. (“Escrow Issuer”), completed its private placement with registration rights of 7.00% Senior Notes due 2022 (the “initial 7.00% Notes”), in an aggregate principal amount of $300 million. The initial 7.00% Notes were issued at 100% of their aggregate principal amount. On August 12, 2014, in connection with the consummation of the Acquisition, Escrow Issuer merged with and into California Lyon, and California Lyon assumed the obligations of the Escrow Issuer under initial 7.00% Notes and the related indenture by operation of law (the “Escrow Merger”). Following the Escrow Merger, California Lyon is the obligor under the initial 7.00% Notes. In January 2015, the Company exchanged 100% of the initial 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

On September 15, 2015, California Lyon completed its private placement with registration rights of an additional $50.0 million in aggregate principal amount of its 7.00% Senior Notes due 2022 (the "additional 7.00% Notes", and together with the initial 7.00% Notes, the "7.00 Notes"), at an issue price of 102.0% of their principal amount, plus accrued interest from August 15, 2015, resulting in net proceeds of approximately $50.5 million. In January 2016, the Company exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of December 31, 2015, the outstanding amount of the notes was $350 million, excluding unamortized premium of $1.0 million and deferred loan costs of $5.6 million. The notes bear interest at a rate of 7.00% per annum, payable semiannually in arrears on February 15 and August 15, and mature on August 15, 2022. The 7.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 7.00% Notes and the related guarantees are California Lyon’s and the guarantors’ unsecured senior obligations and rank equally in right of payment with all of California Lyon’s and the guarantors’ existing and future unsecured senior debt, including California Lyon’s $150 million in aggregate principal amount of 5.75% Senior Notes due 2019 and $425 million in aggregate principal amount of 8.5% Senior Notes due 2020, as described above. The 7.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 7.00% Notes and the guarantees are and will be effectively junior to California Lyon’s and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such debt.

On or after August 15, 2017, California Lyon may redeem all or a portion of the 7.00% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount) set forth below plus accrued and unpaid interest to the applicable redemption date, if redeemed during the period beginning on each of the dates indicated below:



Year	Percentage
August 15, 2017	103.500	%
August 15, 2018	101.750	%
August 15, 2019 and thereafter	100.000	%

Prior to August 15, 2017, the 7.00% Notes may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, and accrued and unpaid interest to, the redemption date.

In addition, any time prior to August 15, 2017, California Lyon may, at its option on one or more occasions, redeem the 7.00% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the 7.00% Notes issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 107.00%, plus accrued and unpaid interest to the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings by Parent.

Senior Note Covenant Compliance

The indentures governing the 5.75% Notes, the 8.5% Notes, and the 7.00% Notes contain covenants that limit the ability of Parent, California Lyon, and their restricted subsidiaries to, among other things: (i) incur or guarantee certain additional indebtedness; (ii) pay dividends, distributions, or repurchase equity or make payments in respect of subordinated indebtedness; (iii) make certain investments; (iv) sell assets; (v) incur liens; (vi) enter into agreements restricting the ability of the Company’s restricted subsidiaries to pay dividends or transfer assets; (vii) enter into transactions with affiliates; (viii) create unrestricted subsidiaries; and (viii) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to a number of important exceptions and qualifications as described in the indentures. The Company was in compliance with all such covenants as of December 31, 2015.

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of December 31, 2015 and 2014; consolidating statements of operations and cash flows for the years ended December 31, 2015, 2014 and 2013, of (a) William Lyon Homes, as the parent, or “Delaware Lyon”, (b) William Lyon Homes, Inc., as the subsidiary issuer, or “California Lyon”, (c) the guarantor subsidiaries, (d) the non-guarantor subsidiaries and (e) William Lyon Homes, Inc. on a consolidated basis; and

(2) Elimination entries necessary to consolidate Delaware Lyon, with William Lyon Homes, Inc. and its guarantor and non-guarantor subsidiaries.

William Lyon Homes owns 100% of all of its guarantor subsidiaries and all guarantees are full and unconditional, joint and several. As a result, in accordance with Rule 3-10 (d) of Regulation S-X promulgated by the SEC, no separate financial statements are required for these subsidiaries as of December 31, 2015 and 2014, and for the years ended December 31, 2015 2014, and 2013.

CONSOLIDATING BALANCE SHEET

December 31, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	44,331		$	2,724		$	3,148		$	—		$	50,203
Restricted cash	—		504			—			—			—			504
Receivables	—		8,986			937			4,915			—			14,838
Escrow proceeds receivable	—		2,020			1,021			—			—			3,041
Real estate inventories	—		922,990			589,762			162,354			—			1,675,106
Invest in unconsolidated joint ventures	—		5,263			150			—						5,413
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		79,726			—			—			—			79,726
Other assets	—		18,981			1,737			299			—			21,017
Investments in subsidiaries	632,095		(34,522		)	(561,546		)	—			(36,027		)	—
Intercompany receivables	—		—			239,248			—			(239,248		)	—
Total assets	$	632,095	$	1,062,488		$	333,426		$	170,716		$	(275,275	)	$	1,923,450
LIABILITIES AND EQUITY
Accounts payable	$	—	$	45,065		$	27,807		$	3,009		$	—		$	75,881
Accrued expenses	—		62,167			8,059			98			—			70,324
Notes payable	—		80,915			—			94,266			—			175,181
Subordinated Amortizing Notes	—		14,066			—			—						14,066
5 ³/₄% Senior Notes	—		148,295			—			—						148,295
8¹/2% Senior Notes	—		422,896			—			—			—			422,896
7% Senior Notes	—		345,338			—			—						345,338
Intercompany payables	—		170,757			—			68,491			(239,248		)	—
Total liabilities	—		1,289,499			35,866			165,864			(239,248		)	1,251,981
Equity
William Lyon Homes stockholders’ equity	632,095		(227,011		)	297,560			(34,522		)	(36,027		)	632,095
Noncontrolling interests	—		—			—			39,374			—			39,374
Total liabilities and equity	$	632,095	$	1,062,488		$	333,426		$	170,716		$	(275,275	)	$	1,923,450

CONSOLIDATING BALANCE SHEET

December 31, 2014

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	48,462		$	573		$	3,736		$	—		$	52,771
Restricted cash	—		504			—			—			—			504
Receivables	—		16,783			878			3,589			—			21,250
Escrow proceeds receivable	—		613			2,302			—			—			2,915
Real estate inventories	—		755,748			554,170			94,721			—			1,404,639
Investment in unconsolidated joint ventures	—		2,350			150			—			—			2,500
Goodwill	—		14,209			46,678			—			—			60,887
Intangibles, net	—		957			6,700			—			—			7,657
Deferred income taxes, net	—		88,039			—			—			—			88,039
Other assets	—		16,178			2,026			358			—			18,562
Investments in subsidiaries	569,915		(35,961		)	(574,129		)	—			40,175			—
Intercompany receivables	—		—			232,895			—			(232,895		)	—
Total assets	$	569,915	$	907,882		$	272,243		$	102,404		$	(192,720	)	$	1,659,724
LIABILITIES AND EQUITY
Accounts payable	$	—	$	28,792		$	19,023		$	3,999		$	—		$	51,814
Accrued expenses	—		76,664			8,610			92			—			85,366
Notes payable	—		384			162			38,689			—			39,235
Subordinated Amortizing Notes	—		20,717			—			—						20,717
5 ³/₄% Senior Notes	—		147,766			—			—						147,766
8¹/2% Senior Notes	—		422,889			—			—			—			422,889
7% Senior Notes	—		294,791			—			—						294,791
Intercompany payables	—		164,541			—			68,354			(232,895		)	—
Total liabilities	—		1,156,544			27,795			111,134			(232,895		)	1,062,578
Equity
William Lyon Homes stockholders’ equity	569,915		(248,662		)	244,448			(35,961		)	40,175			569,915
Noncontrolling interests	—		—			—			27,231			—			27,231
Total liabilities and equity	$	569,915	$	907,882		$	272,243		$	102,404		$	(192,720	)	$	1,659,724

CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	462,490		$	568,774		$	50,164		$	—		$	1,081,428
Construction services	—		25,124			—			—			—			25,124
Management fees	—		(1,506		)	—			—			1,506			—
	—		486,108			568,774			50,164			1,506			1,106,552
Operating costs
Cost of sales	—		(360,522		)	(475,043		)	(43,653		)	(1,506		)	(880,724		)
Construction services	—		(21,181		)	—			—			—			(21,181		)
Sales and marketing	—		(26,626		)	(31,231		)	(3,682		)	—			(61,539		)
General and administrative	—		(47,385		)	(11,776		)	—			—			(59,161		)
Amortization of intangible assets	—		(957		)	—			—			—			(957		)
Other	—		(3,477		)	1,505			—			—			(1,972		)
	—		(460,148		)	(516,545		)	(47,335		)	(1,506		)	(1,025,534		)
Income (loss) from subsidiaries	57,336		(2,395		)	—			—			(54,941		)	—
Operating income	57,336		23,565			52,229			2,829			(54,941		)	81,018
Equity in income of unconsolidated joint ventures	—		1,912			1,327			—			—			3,239
Other income (expense), net	—		7,140			4,793			(9,123		)	—			2,810
Income (loss) before provision for income taxes	57,336		32,617			58,349			(6,294		)	(54,941		)	87,067
Provision for income taxes	—		(26,806		)	—			—			—			(26,806		)
Net income (loss)	57,336		5,811			58,349			(6,294		)	(54,941		)	60,261
Less: Net income attributable to noncontrolling interests	—		—			—			(2,925		)	—			(2,925		)
Net income (loss) available to common stockholders	$	57,336	$	5,811		$	58,349		$	(9,219	)	$	(54,941	)	$	57,336

CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2014

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	524,990		$	236,245		$	97,716		$	—		$	858,951
Construction services	—		37,728			—			—			—			37,728
Management fees	—		(2,926		)	—			—			2,926			—
	—		559,792			236,245			97,716			2,926			896,679
Operating costs
Cost of sales	—		(400,712		)	(196,773		)	(78,649		)	(2,926		)	(679,060		)
Construction services	—		(30,700		)	—			—			—			(30,700		)
Sales and marketing	—		(27,418		)	(14,186		)	(4,299		)	—			(45,903		)
General and administrative	—		(47,353		)	(7,271		)	(2		)	—			(54,626		)
Transaction expenses	—		(5,832		)	—			—			—			(5,832		)
Amortization of intangible assets	—		(1,814		)	—			—			—			(1,814		)
Other	—		(3,685		)	825			(14		)	—			(2,874		)
	—		(517,514		)	(217,405		)	(82,964		)	(2,926		)	(820,809		)
Income from subsidiaries	44,625		11,575			—			—			(56,200		)	—
Operating income	44,625		53,853			18,840			14,752			(56,200		)	75,870
Income from unconsolidated joint ventures	—		—			555			—			—			555
Other income (expense), net	—		2,883			(23		)	(962		)	—			1,898
Income before provision for income taxes	44,625		56,736			19,372			13,790			(56,200		)	78,323
Provision for income taxes	—		(23,797		)	—			—			—			(23,797		)
Net income	44,625		32,939			19,372			13,790			(56,200		)	54,526
Less: Net income attributable to noncontrolling interests	—		—			—			(9,901		)	—			(9,901		)
Net income available to common stockholders	$	44,625	$	32,939		$	19,372		$	3,889		$	(56,200	)	$	44,625

CONSOLIDATING STATEMENT OF OPERATIONS

Year Ended December 31, 2013

(in thousands)



	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—		$	310,919		$	180,673		$	48,410		$	—		$	540,002
Construction services	—			32,533			—			—			—			32,533
Management fees	—			1,351			—			—			(1,351		)	—
	—			344,803			180,673			48,410			(1,351		)	572,535
Operating costs
Cost of sales	—			(236,165		)	(150,450		)	(34,924		)	1,351			(420,188		)
Construction services	—			(25,598		)	—			—			—			(25,598		)
Sales and marketing	—			(15,615		)	(8,908		)	(1,579		)	—			(26,102		)
General and administrative	—			(37,031		)	(3,720		)	(19		)	—			(40,770		)
Amortization of intangible assets	—			(1,854		)	—			—			—			(1,854		)
Other	—			(2,163		)	(3		)	—			—			(2,166		)
	—			(318,426		)	(163,081		)	(36,522		)	1,351			(516,678		)
Income from subsidiaries	129,132			21,889			—			—			(151,021		)	—
Operating income	129,132			48,266			17,592			11,888			(151,021		)	55,857
Interest expense, net of amounts capitalized	—			(2,476		)	(126		)	—			—			(2,602		)
Other income (expense), net	—			1,745			(147		)	(1,088		)	—			510
Income before reorganization items and benefit (provision) for income taxes	129,132			47,535			17,319			10,800			(151,021		)	53,765
Reorganization items, net	—			(464		)	—			—			—			(464		)
Income before benefit (provision) for income taxes	129,132			47,071			17,319			10,800			(151,021		)	53,301
Benefit (provision) for income taxes	—			82,315			(13		)	—			—			82,302
Net income	129,132			129,386			17,306			10,800			(151,021		)	135,603
Less: Net income attributable to noncontrolling interests	—			—			—			(6,471		)	—			(6,471		)
Net income attributable to William Lyon Homes	129,132			129,386			17,306			4,329			(151,021		)	129,132
Preferred stock dividends	(1,528		)	—			—			—			—			(1,528		)
Net income available to common stockholders	$	127,604		$	129,386		$	17,306		$	4,329		$	(151,021	)	$	127,604

CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(4,844	)	$	(123,099	)	$	26,398		$	(76,207	)	$	4,844		$	(172,908	)
Investing activities
Investment in and advances to joint ventures	—			(1,000		)	—			—			—			(1,000		)
Purchases of property and equipment	—			(4,918		)	89			29			—			(4,800		)
Investments in subsidiaries	—			(3,833		)	(12,584		)	—			16,417			—
Net cash (used in) provided by investing activities	—			(9,751		)	(12,495		)	29			16,417			(5,800		)
Financing activities
Proceeds from borrowings on notes payable	—			34,955			—			84,708			—			119,663
Principal payments on notes payable	—			(28,924		)	(162		)	(29,131		)	—			(58,217		)
Proceeds from issurance of 7 % Senior Notes	—			51,000			—			—			—			51,000
Proceeds from borrowings on revolver	—			229,000			—			—			—			229,000
Payments on revolver	—			(164,000		)	—			—			—			(164,000		)
Principle payments on Subordinated amortizing notes	—			(6,651		)	—			—			—			(6,651		)
Proceeds from stock options exercised	—			106			—			—			—			106
Purchase of common stock	—			(1,832		)	—			—			—			(1,832		)
Payments of deferred loan costs				(2,147		)				—			—			(2,147		)
Noncontrolling interest contributions	—			—			—			19,850			—			19,850
Noncontrolling interest distributions	—			—			—			(10,632		)	—			(10,632		)
Advances to affiliates	—			—			(5,237		)	10,658			(5,421		)	—
Intercompany receivables/payables	4,844			17,212			(6,353		)	137			(15,840		)	—
Net cash provided by (used in) by financing activities	4,844			128,719			(11,752		)	75,590			(21,261		)	176,140
Net (decrease) increase in cash and cash equivalents	—			(4,131		)	2,151			(588		)	—			(2,568		)
Cash and cash equivalents at beginning of period	—			48,462			573			3,736			—			52,771
Cash and cash equivalents at end of period	$	—		$	44,331		$	2,724		$	3,148		$	—		$	50,203

CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2014

(in thousands)



	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	(97,110	)	$	369,750		$	(510,453	)	$	(19,104	)	$	97,110		$	(159,807	)
Investing activities
Investment in and advances to joint ventures	—			—			(500		)	—			—			(500		)
Cash paid for acquisitions, net	—			(439,040		)	(53,378		)	—			—			(492,418		)
Purchases of property and equipment	—			(1,826		)	(267		)	15			—			(2,078		)
Investments in subsidiaries	—			57,515			574,125			—			(631,640		)	—
Net cash (used in) provided by investing activities	—			(383,351		)	519,980			15			(631,640		)	(494,996		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			95,227			—			95,227
Principal payments on notes payable	—			(11,898		)	(4,012		)	(80,555		)	—			(96,465		)
Proceeds from issuance of 5 ³/₄% Senior Notes	—			150,000			—			—			—			150,000
Proceeds from issurance of 7 % Senior Notes	—			300,000			—			—			—			300,000
Proceeds from issuance of bridge loan	—			120,000			—			—			—			120,000
Payments on bridge loan	—			(120,000		)	—			—			—			(120,000		)
Proceeds from borrowings on revolver	—			20,000			—			—			—			20,000
Payments on revolver	—			(20,000		)	—			—			—			(20,000		)
Issuance of TEUs - Purchase Contracts, net of offering costs	—			94,284			—			—			—			94,284
Offering costs related to issuance of TEUs	—			(3,830		)	—			—			—			(3,830		)
Issuance of TEUs - Subordinated amortizing notes	—			20,717			—			—			—			20,717
Proceeds from stock options exercised	—			285			—			—			—			285
Offering costs related to issuance of common stock	—			(105		)	—			—			—			(105		)
Purchase of common stock	—			(1,774		)	—			—			—			(1,774		)
Excess income tax benefit from stock based awards	—			1,866			—			—			—			1,866
Payments of deferred loan costs				(19,018		)				—			—			(19,018		)
Noncontrolling interest contributions	—			—			—			22,041			—			22,041
Noncontrolling interest distributions	—			—			—			(27,326		)	—			(27,326		)
Advances to affiliates	—			—			(99		)	(49,825		)	49,924			—
Intercompany receivables/payables	97,110			(634,980		)	(4,871		)	58,135			484,606			—
Net cash provided by (used in) financing activities	97,110			(104,453		)	(8,982		)	17,697			534,530			535,902
Net (decrease) increase in cash and cash equivalents	—			(118,054		)	545			(1,392		)	—			(118,901		)
Cash and cash equivalents at beginning of period	—			166,516			28			5,128			—			171,672
Cash and cash equivalents at end of period	$	—		$	48,462		$	573		$	3,736		$	—		$	52,771

CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2013

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash (used in) provided by operating activities	$	—	$	(164,848	)	$	15,759		$	(25,445	)	$	—		$	(174,534	)
Investing activities
Purchases of property and equipment	—		(3,651		)	(104		)	1			—			(3,754		)
Investments in subsidiaries	—		35,574			—			—			(35,574		)	—
Net cash provided by (used in) investing activities	—		31,923			(104		)	1			(35,574		)	(3,754		)
Financing activities
Proceeds from borrowings on notes payable	—		18,969			1,762			52,879			—			73,610
Principal payments on notes payable	—		(30,735		)	—			(34,302		)	—			(65,037		)
Proceeds from issurance of 8 1/2% Senior Notes	—		106,500			—			—			—			106,500
Proceeds from issuance of common stock	—		179,438			—			—			—			179,438
Offering costs related to issuance of common stock	—		(15,753		)	—			—			—			(15,753		)
Payment of deferred loan costs	—		(4,060		)	—			—			—			(4,060		)
Payment of preferred stock dividends	—		(2,550		)	—			—			—			(2,550		)
Noncontrolling interest contributions	—		—			—			37,184			—			37,184
Noncontrolling interest distributions	—		—			—			(30,447		)	—			(30,447		)
Advances to affiliates	—		—			362			(17,914		)	17,552			—
Intercompany receivables/payables	—		(21,744		)	(17,816		)	21,538			18,022			—
Net cash provided by (used in) financing activities	—		230,065			(15,692		)	28,938			35,574			278,885
Net increase (decrease) in cash and cash equivalents	—		97,140			(37		)	3,494			—			100,597
Cash and cash equivalents at beginning of period	—		69,376			65			1,634			—			71,075
Cash and cash equivalents at end of period	$	—	$	166,516		$	28		$	5,128		$	—		$	171,672