Senior Notes, Secured, and Unsecured Indebtedness

Senior notes, secured, and unsecured indebtedness consist of the following (in thousands):



	June 30, 2016		December 31, 2015
Notes payable:
Construction notes payable	$	150,951	$	110,181
Seller financing	29,439		—
Revolving line of credit	59,000		65,000
Total notes payable	239,390		175,181

Subordinated amortizing notes	10,692		14,066

Senior notes:
5 ³/₄% Senior Notes due April 15, 2019	148,555		148,295
8 ¹/₂% Senior Notes due November 15, 2020	422,872		422,896
7% Senior Notes due August 15, 2022	345,661		345,338
Total senior notes	917,088		916,529

Total notes payable and senior notes	$	1,167,170	$	1,105,776

As of June 30, 2016, the maturities of the Notes payable, Subordinated amortizing notes, 5 ³/₄% Senior Notes, 8 ¹/₂% Senior Notes, and 7% Senior Notes are as follows (in thousands):



Year Ending December 31,
2016	$	16,636
2017	149,683
2018	44,327
2019	189,436
2020	425,000
Thereafter	350,000
	$	1,175,082

Maturities above exclude premium on the 8 ¹/₂% and 7% Senior Notes in an aggregate of $4.2 million, and deferred loan costs on the 5 ³/₄%, 8 ¹/₂% and 7% Senior Notes of $12.1 million as of June 30, 2016.

Notes Payable

Construction Notes Payable

The Company and certain of its consolidated joint ventures 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, facility size, maturity date and interest rate are listed in the table below as of June 30, 2016 (in millions):



Issuance Date	Facility Size		Outstanding		Maturity	Current Rate
March, 2016	$	33.4	$	14.9	September, 2018	3.45	%	(1)
January, 2016	35.0		18.3		February, 2019	3.72	%	(2)
November, 2015	42.5		16.3		November, 2017	4.50	%	(1)
August, 2015 (4)	14.2		1.7		August, 2017	4.50	%	(1)
August, 2015 (4)	37.5		8.3		August, 2017	4.50	%	(1)
July, 2015	22.5		21.2		July, 2018	4.00	%	(3)
April, 2015	18.5		18.4		October, 2017	4.00	%	(3)
November, 2014	24.0		18.2		November, 2017	4.00	%	(3)
November, 2014	22.0		17.0		November, 2017	4.00	%	(3)
March, 2014	26.0		16.6		October, 2016	3.45	%	(1)
	$	275.6	$	150.9

(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 LIBOR +3.25%

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

(4) Loan relates to a project that is wholly-owned by the Company.

Seller Financing

At June 30, 2016, the Company had $29.4 million of notes payable outstanding related to one land acquisition for which seller financing was provided. The note bears interest a rate of 7% per annum, is secured by the underlying land, and matures in June 2018.

Revolving Line of Credit

On July 1, 2016, subsequent to the period ended June 30, 2016, William Lyon Homes, Inc., a California corporation ("California Lyon") and Parent entered into an amendment and restatement agreement (the “Amendment and Restatement Agreement”), pursuant to which its existing credit agreement providing for a revolving credit facility, as previously amended and restated on March 27, 2015 as described below, was further amended and restated in its entirety (as so further amended and restated, the “Second Amended Facility”). The Second Amended Facility amends and restates the Company’s previous $130.0 million revolving credit facility and provides for total lending commitments of $145.0 million. In addition, the Second 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, as well as a sublimit of $50.0 million for letters of credit. The Second Amended Facility, among other things, also amended the maturity date of the previous facility to July 1, 2019, provided that the Second Amended Facility will terminate on January 14, 2019 (the “Springing Termination Date”) if, on the Springing Termination Date, the aggregate outstanding principal amount of California Lyon’s 5.75% senior notes due 2019 is equal to or greater than the sum of (a) 50% of the Consolidated EBITDA (as defined in the Second Amended Facility) of California Lyon, Parent, certain of the Parent’s direct and indirect wholly owned subsidiaries (together with California Lyon and Parent, the “Loan Parties”) and their Restricted Subsidiaries (as defined in the Second Amended Facility) for the four-quarter period ending September 30, 2018, plus (b) the Liquidity (as defined in the Second Amended Facility) of the Loan Parties and their consolidated subsidiaries on the Springing Termination Date.

Prior to the entry into the Second Amended Facility as described above, and as in place as of June 30, 2016, on March 27, 2015, 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 was amended and restated in its entirety (as so amended and restated, the “Amended Facility”). The Amended Facility amended and restated the Company's previous $100 million revolving credit facility and provided 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 extended the maturity date of the previous facility by one year to August 7, 2017.

Both the Second Amended Facility and the Amended Facility that was in place at June 30, 2016 (hereinafter, as applicable, the “Amended Facility”) contain 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 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. As of June 30, 2016, the commitment fee on the unused portion of the Amended Facility accrues at an annual rate of 0.50%. The Company was in compliance with all covenants under the Amended Facility as of June 30, 2016.

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 June 30, 2016 and December 31, 2015, the Company had $59.0 million and $65.0 million outstanding against the Amended Facility, respectively, at effective rates of 4.04% and 3.32%, respectively as well as a letter of credit for $8.6 million outstanding at both dates.

Subordinated Amortizing Notes

On November 21, 2014, in order to pay down amounts borrowed under the senior unsecured bridge loan facility entered into in conjunction with the Polygon Acquisition, 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”).

Unless settled earlier at the holder’s option, each purchase contract will automatically settle on December 1, 2017 (the "mandatory settlement date"), and the Company will deliver not more than 5.2247 shares of Class A Common Stock and not less than 4.4465 shares of Class A Common Stock on the mandatory settlement date, subject to adjustment, based upon the applicable settlement rate and applicable market value of Class A Common Stock.

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 June 30, 2016 and December 31, 2015, the amortizing notes had an unamortized carrying value of $10.7 million and $14.1 million, respectively.

Senior Notes

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, we exchanged 100% of the initial 5.75% Notes for notes that are freely transferable and registered under the Securities Act of 1933, as amended (the “Securities Act”).

As of June 30, 2016, the outstanding principal amount of the 5.75% Notes was $150 million, excluding deferred loan costs of $1.4 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 certain of its 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.

8 ¹/₂% Senior Notes Due 2020

On November 8, 2012, 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. In July 2013, we 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, resulting in net proceeds of approximately $104.7 million. In February 2014, we exchanged 100% of the additional 8.5% Notes for notes that are freely transferable and registered under the Securities Act.

As of June 30, 2016 the outstanding principal amount of the 8.5% Notes was $425 million, excluding unamortized premium of $3.3 million and deferred loan costs of $5.4 million. The 8.5% Notes bear interest at a rate of 8.5% per annum, payable semiannually in arrears on May 15 and November 15, and mature on November 15, 2020. The 8.5% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and by 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 the 5.75% Notes, as described above, and the 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 to the extent of the value of the collateral securing such debt.

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 Polygon Acquisition, Escrow Issuer merged with and into California Lyon, and California Lyon assumed the obligations of the Escrow Issuer under the 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, we 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 intial 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, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of June 30, 2016 the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.9 million and deferred loan costs of $5.2 million. The 7.00% 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, each 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.

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 June 30, 2016.

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of June 30, 2016 and December 31, 2015; consolidating statements of operations for the three and six months ended June 30, 2016 and 2015; and consolidating statements of cash flows for the six month periods ended June 30, 2016 and 2015, 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 California Lyon and its guarantor and non-guarantor subsidiaries.

Delaware Lyon 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 June 30, 2016 and December 31, 2015, and for the three and six month periods ended June 30, 2016 and 2015.

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of June 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	34,723		$	563		$	4,478		$	—		$	39,764
Restricted cash	—		—			—			—			—			—
Receivables	—		2,810			680			3,240			—			6,730
Escrow proceeds receivable	—		887			1,414			—			—			2,301
Real estate inventories	—		945,690			631,365			251,792			—			1,828,847
Investment in unconsolidated joint ventures	—		7,124			150			—			—			7,274
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		79,846			—			—			—			79,846
Other assets, net	—		17,056			1,176			294			—			18,526
Investments in subsidiaries	657,209		(26,354		)	(592,218		)	—			(38,637		)	—
Intercompany receivables	—		—			245,506			—			(245,506		)	—
Total assets	$	657,209	$	1,075,991		$	348,029		$	259,804		$	(284,143	)	$	2,056,890
LIABILITIES AND EQUITY
Accounts payable	$	—	$	63,320		$	20,533		$	5,240		$	—		$	89,093
Accrued expenses	—		68,725			5,025			105			—			73,855
Notes payable	—		98,481			—			140,909			—			239,390
Subordinated amortizing notes	—		10,692			—			—			—			10,692
5 ³/₄% Senior Notes	—		148,555			—			—			—			148,555
8¹/2% Senior Notes	—		422,872			—			—			—			422,872
7% Senior Notes	—		345,661			—			—			—			345,661
Intercompany payables	—		175,165			—			70,341			(245,506		)	—
Total liabilities	—		1,333,471			25,558			216,595			(245,506		)	1,330,118
Equity
William Lyon Homes stockholders’ equity (deficit)	657,209		(257,480		)	322,471			(26,354		)	(38,637		)	657,209
Noncontrolling interests	—		—			—			69,563			—			69,563
Total liabilities and equity	$	657,209	$	1,075,991		$	348,029		$	259,804		$	(284,143	)	$	2,056,890

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	44,332		$	2,723		$	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
Investment 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, net	—		18,980			1,738			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
8 ¹/₂% 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 (deficit)	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

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended June 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	137,673		$	175,203		$	12,183		$	—		$	325,059
Construction services	—		594			—			—			—			594
Management fees	—		(366		)	—			—			366			—
	—		137,901			175,203			12,183			366			325,653
Operating costs
Cost of sales	—		(112,950		)	(144,473		)	(10,849		)	(366		)	(268,638		)
Construction services	—		(548		)	—			—			—			(548		)
Sales and marketing	—		(5,925		)	(9,332		)	(2,855		)	—			(18,112		)
General and administrative	—		(13,475		)	(3,210		)	—			—			(16,685		)
Other	—		(358		)	(129		)	—			—			(487		)
	—		(133,256		)	(157,144		)	(13,704		)	(366		)	(304,470		)
Income from subsidiaries	14,561		1,687			—			—			(16,248		)	—
Operating income	14,561		6,332			18,059			(1,521		)	(16,248		)	21,183
Equity in income from unconsolidated joint ventures	—		859			335			—			—			1,194
Other income (expense), net	—		550			(6		)	(316		)	—			228
Income before provision for income taxes	14,561		7,741			18,388			(1,837		)	(16,248		)	22,605
Provision for income taxes	—		(7,519		)	—			—			—			(7,519		)
Net income	14,561		222			18,388			(1,837		)	(16,248		)	15,086
Less: Net income attributable to noncontrolling interests	—		—			—			(525		)	—			(525		)
Net income available to common stockholders	$	14,561	$	222		$	18,388		$	(2,362	)	$	(16,248	)	$	14,561

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended June 30, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	104,998		$	136,263		$	6,479		$	—		$	247,740
Construction services	—		6,955			—			—			—			6,955
Management fees	—		(195		)	—			—			195			—
	—		111,758			136,263			6,479			195			254,695
Operating costs
Cost of sales	—		(80,482		)	(114,216		)	(5,355		)	(195		)	(200,248		)
Construction services	—		(5,898		)	—			—			—			(5,898		)
Sales and marketing	—		(6,412		)	(7,776		)	(716		)	—			(14,904		)
General and administrative	—		(10,669		)	(2,746		)	—			—			(13,415		)
Amortization of intangible assets	—		(462		)	—			—			—			(462		)
Other	—		(646		)	225			—			—			(421		)
	—		(104,569		)	(124,513		)	(6,071		)	(195		)	(235,348		)
Income from subsidiaries	12,277		276			—			—			(12,553		)	—
Operating income (loss)	12,277		7,465			11,750			408			(12,553		)	19,347
Equity in income from unconsolidated joint ventures	—		245			270			—			—			515
Other income (expense), net	—		840			(14		)	(184		)	—			642
Income (loss) before provision for income taxes	12,277		8,550			12,006			224			(12,553		)	20,504
Provision for income taxes	—		(7,254		)	—			—			—			(7,254		)
Net income (loss)	12,277		1,296			12,006			224			(12,553		)	13,250
Less: Net income attributable to noncontrolling interests	—		—			—			(973		)	—			(973		)
Net income (loss) available to common stockholders	$	12,277	$	1,296		$	12,006		$	(749	)	$	(12,553	)	$	12,277

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Six Months Ended June 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	238,497		$	313,003		$	34,854		$	—		$	586,354
Construction services	—		3,724			—			—			—			3,724
Management fees	—		(1,046		)	—			—			1,046			—
	—		241,175			313,003			34,854			1,046			590,078
Operating costs
Cost of sales	—		(191,829		)	(260,033		)	(30,901		)	(1,046		)	(483,809		)
Construction services	—		(3,372		)	—			—			—			(3,372		)
Sales and marketing	—		(11,875		)	(16,957		)	(4,273		)	—			(33,105		)
General and administrative	—		(27,481		)	(7,038		)	—			—			(34,519		)
Amortization of intangible assets	—		—			—			—			—			—
Other	—		(727		)	(83		)	—			—			(810		)
	—		(235,284		)	(284,111		)	(35,174		)	(1,046		)	(555,615		)
Income from subsidiaries	23,575		3,924			—			—			(27,499		)	—
Operating income (loss)	23,575		9,815			28,892			(320		)	(27,499		)	34,463
Equity in income from unconsolidated joint ventures	—		1,861			514			—			—			2,375
Other income (expense), net	—		1,323			(15		)	(555		)	—			753
Income (loss) before provision for income taxes	23,575		12,999			29,391			(875		)	(27,499		)	37,591
Provision for income taxes	—		(12,564		)	—						—			(12,564		)
Net income (loss)	23,575		435			29,391			(875		)	(27,499		)	25,027
Less: Net income attributable to noncontrolling interests	—		—			—			(1,452		)	—			(1,452		)
Net income (loss) available to common stockholders	$	23,575	$	435		$	29,391		$	(2,327	)	$	(27,499	)	$	23,575

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Six Months Ended June 30, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	194,542		$	219,397		$	23,516		$	—		$	437,455
Construction services	—		14,408			—			—			—			14,408
Management fees	—		(706		)	—			—			706			—
	—		208,244			219,397			23,516			706			451,863
Operating costs
Cost of sales	—		(149,358		)	(184,600		)	(19,665		)	(706		)	(354,329		)
Construction services	—		(11,927		)	—			—			—			(11,927		)
Sales and marketing	—		(12,166		)	(13,300		)	(1,662		)	—			(27,128		)
General and administrative	—		(21,988		)	(5,375		)	—						(27,363		)
Amortization of intangible assets	—		(665		)	—			—			—			(665		)
Other	—		(1,782		)	825			—			—			(957		)
	—		(197,886		)	(202,450		)	(21,327		)	(706		)	(422,369		)
Income from subsidiaries	18,959		(6,468		)	—			—			(12,491		)	—
Operating income (loss)	18,959		3,890			16,947			2,189			(12,491		)	29,494
Equity in income from unconsolidated joint ventures	—		245			518			—			—			763
Other income (expense), net	—		5,206			4,799			(8,582		)	—			1,423
Income (loss) before provision for income taxes	18,959		9,341			22,264			(6,393		)	(12,491		)	31,680
Provision for income taxes	—		(10,824		)	—			—			—			(10,824		)
Net income (loss)	18,959		(1,483		)	22,264			(6,393		)	(12,491		)	20,856
Less: Net income attributable to noncontrolling interests	—		—			—			(1,897		)	—			(1,897		)
Net income (loss) available to common stockholders	$	18,959	$	(1,483	)	$	22,264		$	(8,290	)	$	(12,491	)	$	18,959

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Six Months Ended June 30, 2016

(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	$	(1,539	)	$	33,612		$	(22,138	)	$	(86,379	)	$	1,539		$	(74,905	)
Investing activities
Collection of related party note receivable	—			6,188			—			—			—			6,188
Purchases of property and equipment	—			(647		)	44			(16		)	—			(619		)
Investments in subsidiaries	—			(4,244		)	30,672			—			(26,428		)	—
Net cash (used in) provided by investing activities	—			1,297			30,716			(16		)	(26,428		)	5,569
Financing activities
Proceeds from borrowings on notes payable	—			2,211			—			80,658			—			82,869
Principal payments on notes payable	—			(8,084		)	—			(34,015		)				(42,099		)
Proceeds from borrowings on Revolver	—			120,000			—			—						120,000
Payments on Revolver	—			(126,000		)	—			—			—			(126,000		)
Principal payments on subordinated amortizing notes	—			(3,374		)	—			—			—			(3,374		)
Payment of deferred loan costs	—			(214		)	—			—			—			(214		)
Shares remitted to or withheld by Company for employee tax withholding	—			(844		)	—			—			—			(844		)
Excess income tax benefit from stock based awards	—			(178		)	—			—			—			(178		)
Noncontrolling interest contributions	—			—			—			33,963			—			33,963
Noncontrolling interest distributions	—			—			—			(5,226		)	—			(5,226		)
Advances to affiliates	—			—			(4,480		)	10,495			(6,015		)	—
Intercompany receivables/payables	1,539			(28,035		)	(6,258		)	1,850			30,904			—
Net cash provided by (used in) financing activities	1,539			(44,518		)	(10,738		)	87,725			24,889			58,897
Net (decrease) increase in cash and cash equivalents	—			(9,609		)	(2,160		)	1,330			—			(10,439		)
Cash and cash equivalents at beginning of period	—			44,332			2,723			3,148			—			50,203
Cash and cash equivalents at end of period	$	—		$	34,723		$	563		$	4,478		$	—		$	39,764

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Six Months Ended June 30, 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	$	(1,631	)	$	(98,069	)	$	13,591		$	(20,462	)	$	1,631		$	(104,940	)
Investing activities
Investments in and advances to unconsolidated joint ventures	—			(1,000		)	—			—			—			(1,000		)
Purchases of property and equipment	—			(303		)	41			15			—			(247		)
Investments in subsidiaries	—			(5,004		)	(6,627		)	—			11,631			—
Net cash (used in) provided by investing activities	—			(6,307		)	(6,586		)	15			11,631			(1,247		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			28,394			—			28,394
Principal payments on notes payable	—			(2,385		)	(162		)	(9,301		)	—			(11,848		)
Proceeds from borrowings on Revolver	—			144,000			—			—			—			144,000
Payments on revolver	—			(40,000		)	—			—			—			(40,000		)
Principal payments on subordinated amortizing notes	—			(3,368		)	—			—			—			(3,368		)
Payment of deferred loan costs	—			(799		)	—			—			—			(799		)
Proceeds from exercise of stock options	—			106			—			—			—			106
Shares remitted to Company for employee tax witholding	—			(1,632		)	—			—			—			(1,632		)
Noncontrolling interest contributions	—			—			—			5,625			—			5,625
Noncontrolling interest distributions	—			—			—			(6,417		)	—			(6,417		)
Advances to affiliates	—			—			(4,807		)	6,826			(2,019		)	—
Intercompany receivables/payables	1,631			12,599			(1,845		)	(1,142		)	(11,243		)	—
Net cash provided by (used in) financing activities	1,631			108,521			(6,814		)	23,985			(13,262		)	114,061
Net increase in cash and cash equivalents	—			4,145			191			3,538			—			7,874
Cash and cash equivalents at beginning of period	—			48,462			573			3,736			—			52,771
Cash and cash equivalents at end of period	$	—		$	52,607		$	764		$	7,274		$	—		$	60,645