Senior Notes, Secured, and Unsecured Indebtedness (Tables)

9 Months Ended

Sep. 30, 2016

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



	September 30, 2016		December 31, 2015
Notes payable:
Construction notes payable	$	130,923	$	110,181
Seller financing	32,419		—
Revolving line of credit	96,000		65,000
Total notes payable	259,342		175,181

Subordinated amortizing notes	8,970		14,066

Senior notes:
5 ³/₄% Senior Notes due April 15, 2019	148,691		148,295
8 ¹/₂% Senior Notes due November 15, 2020	422,852		422,896
7% Senior Notes due August 15, 2022	345,829		345,338
Total senior notes	917,372		916,529

Total notes payable and senior notes	$	1,185,684	$	1,105,776

Schedule of Maturities of Notes Payable and Senior Notes

As of September 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	$	—
2017	78,844
2018	59,814
2019	279,654
2020	425,000
Thereafter	350,000
	$	1,193,312

The issuance date, facility size, maturity date and interest rate are listed in the table below as of September 30, 2016 (in millions):



Issuance Date	Facility Size		Outstanding		Maturity	Current Rate
March, 2016	$	33.4	$	15.8	September, 2018	3.53	%	(1)
January, 2016	35.0		18.8		February, 2019	3.78	%	(2)
November, 2015	42.5		19.5		November, 2017	4.50	%	(1)
August, 2015 (4)	14.2		0.7		August, 2017	4.50	%	(1)
August, 2015 (4)	37.5		7.0		August, 2017	4.50	%	(1)
July, 2015	22.5		14.8		July, 2018	4.00	%	(3)
April, 2015	18.5		13.9		October, 2017	4.00	%	(3)
November, 2014	24.0		13.1		November, 2017	4.00	%	(3)
November, 2014	22.0		12.7		November, 2017	4.00	%	(3)
March, 2014	26.0		14.6		April, 2018	3.53	%	(1)
	$	275.6	$	130.9

(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.

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of September 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	35,703		$	528		$	4,479		$	—		$	40,710
Restricted cash	—		—			—			—			—			—
Receivables	—		3,083			1,757			3,281			—			8,121
Escrow proceeds receivable	—		—			—			—			—			—
Real estate inventories	—		957,404			662,342			236,288			—			1,856,034
Investment in unconsolidated joint ventures	—		8,264			150			—			—			8,414
Goodwill	—		14,209			52,693			—			—			66,902
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		79,728			—			—			—			79,728
Other assets, net	—		15,804			1,197			320			—			17,321
Investments in subsidiaries	671,670		(25,323		)	(608,347		)	—			(38,000		)	—
Intercompany receivables	—		—			248,639			—			(248,639		)	—
Total assets	$	671,670	$	1,088,872		$	365,659		$	244,368		$	(286,639	)	$	2,083,930
LIABILITIES AND EQUITY
Accounts payable	$	—	$	54,287		$	16,343		$	6,291		$	—		$	76,921
Accrued expenses	—		75,808			6,098			106			—			82,012
Notes payable	—		133,126			2,979			123,237			—			259,342
Subordinated amortizing notes	—		8,970			—			—			—			8,970
5 ³/₄% Senior Notes	—		148,691			—			—			—			148,691
8¹/2% Senior Notes	—		422,852			—			—			—			422,852
7% Senior Notes	—		345,829			—			—			—			345,829
Intercompany payables	—		176,227			—			72,412			(248,639		)	—
Total liabilities	—		1,365,790			25,420			202,046			(248,639		)	1,344,617
Equity
William Lyon Homes stockholders’ equity (deficit)	671,670		(276,917		)	340,240			(25,323		)	(38,000		)	671,670
Noncontrolling interests	—		(1		)	—			67,644			—			67,643
Total liabilities and equity	$	671,670	$	1,088,872		$	365,660		$	244,367		$	(286,639	)	$	2,083,930

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

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	105,962		$	181,594		$	55,072		$	—		$	342,628
Construction services	—		86			—			—			—			86
Management fees	—		(1,541		)	—			—			1,541			—
	—		104,507			181,594			55,072			1,541			342,714
Operating costs
Cost of sales	—		(84,652		)	(151,306		)	(48,397		)	(1,541		)	(285,896		)
Construction services	—		(86		)	—			—			—			(86		)
Sales and marketing	—		(6,205		)	(9,774		)	(2,267		)	—			(18,246		)
General and administrative	—		(14,268		)	(3,091		)	(1		)	—			(17,360		)
Other	—		140			69			(11		)	—			198
	—		(105,071		)	(164,102		)	(50,676		)	(1,541		)	(321,390		)
Income from subsidiaries	13,069		3,548			—			—			(16,617		)	—
Operating income	13,069		2,984			17,492			4,396			(16,617		)	21,324
Equity in income from unconsolidated joint ventures	—		1,140			295			—			—			1,435
Other income (expense), net	—		2,550			(19		)	(481		)	—			2,050
Income before provision for income taxes	13,069		6,674			17,768			3,915			(16,617		)	24,809
Provision for income taxes	—		(8,295		)	—			—			—			(8,295		)
Net income	13,069		(1,621		)	17,768			3,915			(16,617		)	16,514
Less: Net income attributable to noncontrolling interests	—		—			—			(3,445		)	—			(3,445		)
Net income available to common stockholders	$	13,069	$	(1,621	)	$	17,768		$	470		$	(16,617	)	$	13,069

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended September 30, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	90,594		$	149,122		$	4,595		$	—		$	244,311
Construction services	—		4,896			—			—			—			4,896
Management fees	—		(138		)	—			—			138			—
	—		95,352			149,122			4,595			138			249,207
Operating costs
Cost of sales	—		(71,488		)	(124,476		)	(4,226		)	(138		)	(200,328		)
Construction services	—		(4,146		)	—			—			—			(4,146		)
Sales and marketing	—		(6,312		)	(8,244		)	(796		)	—			(15,352		)
General and administrative	—		(11,515		)	(2,466		)	—			—			(13,981		)
Amortization of intangible assets	—		(45		)	—			—			—			(45		)
Other	—		(889		)	297			—			—			(592		)
	—		(94,395		)	(134,889		)	(5,022		)	(138		)	(234,444		)
Income from subsidiaries	12,082		623			—			—			(12,705		)	—
Operating income (loss)	12,082		1,580			14,233			(427		)	(12,705		)	14,763
Equity in income from unconsolidated joint ventures	—		1,018			—			—			—			1,018
Other income (expense), net	—		1,395			368			(311		)	—			1,452
Income (loss) before provision for income taxes	12,082		3,993			14,601			(738		)	(12,705		)	17,233
Provision for income taxes	—		(4,956		)	—			—			—			(4,956		)
Net income (loss)	12,082		(963		)	14,601			(738		)	(12,705		)	12,277
Less: Net income attributable to noncontrolling interests	—		—			—			(195		)	—			(195		)
Net income (loss) available to common stockholders	$	12,082	$	(963	)	$	14,601		$	(933	)	$	(12,705	)	$	12,082

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2016

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	344,459		$	494,597		$	89,926		$	—		$	928,982
Construction services	—		3,810			—			—			—			3,810
Management fees	—		(2,587		)	—			—			2,587			—
	—		345,682			494,597			89,926			2,587			932,792
Operating costs
Cost of sales	—		(276,481		)	(411,339		)	(79,298		)	(2,587		)	(769,705		)
Construction services	—		(3,458		)	—			—			—			(3,458		)
Sales and marketing	—		(18,080		)	(26,731		)	(6,540		)	—			(51,351		)
General and administrative	—		(41,749		)	(10,129		)	(1		)	—			(51,879		)
Other	—		(587		)	(14		)	(11		)	—			(612		)
	—		(340,355		)	(448,213		)	(85,850		)	(2,587		)	(877,005		)
Income from subsidiaries	36,644		7,472			—			—			(44,116		)	—
Operating income (loss)	36,644		12,799			46,384			4,076			(44,116		)	55,787
Equity in income from unconsolidated joint ventures	—		3,001			809			—			—			3,810
Other income (expense), net	—		3,873			(34		)	(1,036		)	—			2,803
Income (loss) before provision for income taxes	36,644		19,673			47,159			3,040			(44,116		)	62,400
Provision for income taxes	—		(20,859		)	—			—			—			(20,859		)
Net income (loss)	36,644		(1,186		)	47,159			3,040			(44,116		)	41,541
Less: Net income attributable to noncontrolling interests	—		—			—			(4,897		)	—			(4,897		)
Net income (loss) available to common stockholders	$	36,644	$	(1,186	)	$	47,159		$	(1,857	)	$	(44,116	)	$	36,644

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Nine Months Ended September 30, 2015

(in thousands)



	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	285,136		$	368,519		$	28,111		$	—		$	681,766
Construction services	—		19,304			—			—			—			19,304
Management fees	—		(844		)	—			—			844			—
	—		303,596			368,519			28,111			844			701,070
Operating costs
Cost of sales	—		(220,846		)	(309,076		)	(23,891		)	(844		)	(554,657		)
Construction services	—		(16,073		)	—			—			—			(16,073		)
Sales and marketing	—		(18,478		)	(21,544		)	(2,458		)	—			(42,480		)
General and administrative	—		(33,503		)	(7,841		)	—						(41,344		)
Amortization of intangible assets	—		(710		)	—			—			—			(710		)
Other	—		(2,671		)	1,122			—			—			(1,549		)
	—		(292,281		)	(337,339		)	(26,349		)	(844		)	(656,813		)
Income from subsidiaries	31,041		(5,845		)	—			—			(25,196		)	—
Operating income (loss)	31,041		5,470			31,180			1,762			(25,196		)	44,257
Equity in income from unconsolidated joint ventures	—		1,781			—			—			—			1,781
Other income (expense), net	—		6,083			5,685			(8,893		)	—			2,875
Income (loss) before provision for income taxes	31,041		13,334			36,865			(7,131		)	(25,196		)	48,913
Provision for income taxes	—		(15,780		)	—			—			—			(15,780		)
Net income (loss)	31,041		(2,446		)	36,865			(7,131		)	(25,196		)	33,133
Less: Net income attributable to noncontrolling interests	—		—			—			(2,092		)	—			(2,092		)
Net income (loss) available to common stockholders	$	31,041	$	(2,446	)	$	36,865		$	(9,223	)	$	(25,196	)	$	31,041

Condensed Consolidating Statement of Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 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	$	(2,931	)	$	18,174		$	(35,182	)	$	(65,970	)	$	2,931		$	(82,978	)
Investing activities
Collection of related party note receivable	—			6,188			—			—			—			6,188
Purchases of property and equipment	—			(809		)	56			(20		)	—			(773		)
Investments in subsidiaries	—			(1,727		)	46,801			—			(45,074		)	—
Net cash (used in) provided by investing activities	—			3,652			46,857			(20		)	(45,074		)	5,415
Financing activities
Proceeds from borrowings on notes payable	—			2,211			—			109,781			—			111,992
Principal payments on notes payable	—			(10,440		)	—			(80,810		)	—			(91,250		)
Proceeds from borrowings on Revolver	—			198,000			—			—			—			198,000
Payments on Revolver	—			(167,000		)	—			—			—			(167,000		)
Principal payments on subordinated amortizing notes	—			(5,096		)	—			—			—			(5,096		)
Payment of deferred loan costs	—			(792		)	—			—			—			(792		)
Purchase of common stock	—			(918		)	—			—			—			(918		)
Excess income tax benefit from stock based awards	—			(238		)	—			—			—			(238		)
Noncontrolling interest contributions	—			—			—			36,140			—			36,140
Noncontrolling interest distributions	—			—			—			(12,768		)	—			(12,768		)
Advances to affiliates	—			—			(4,479		)	11,056			(6,577		)	—
Intercompany receivables/payables	2,931			(46,182		)	(9,391		)	3,922			48,720			—
Net cash provided by (used in) financing activities	2,931			(30,455		)	(13,870		)	67,321			42,143			68,070
Net (decrease) increase in cash and cash equivalents	—			(8,629		)	(2,195		)	1,331			—			(9,493		)
Cash and cash equivalents at beginning of period	—			44,332			2,723			3,148			—			50,203
Cash and cash equivalents at end of period	$	—		$	35,703		$	528		$	4,479		$	—		$	40,710

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Nine Months Ended September 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	$	(3,108	)	$	(148,129	)	$	(19,212	)	$	(52,390	)	$	2,485		$	(220,354	)
Investing activities
Investments in and advances to unconsolidated joint ventures	—			(1,000		)	—			—			—			(1,000		)
Purchases of property and equipment	—			(1,375		)	65			22			—			(1,288		)
Investments in subsidiaries	—			(6,572		)	27,885			—			(21,313		)	—
Net cash (used in) provided by investing activities	—			(8,947		)	27,950			22			(21,313		)	(2,288		)
Financing activities
Proceeds from borrowings on notes payable	—			30,415			—			54,511			—			84,926
Principal payments on notes payable	—			(8,725		)	(162		)	(12,236		)	—			(21,123		)
Proceeds from issuance of 7% notes	—			51,000			—			—			—			51,000
Proceeds from borrowings on Revolver	—			194,000			—			—			—			194,000
Payments on revolver	—			(109,000		)	—			—			—			(109,000		)
Principal payments on subordinated amortizing notes	—			(4,999		)	—			—			—			(4,999		)
Payment of deferred loan costs	—			(1,755		)	—			—			—			(1,755		)
Proceeds from exercise of stock options	—			106			—			—			—			106
Shares remitted to Company for employee tax witholding	—			(1,826		)	—			—			—			(1,826		)
Noncontrolling interest contributions	—			—			—			13,125			—			13,125
Noncontrolling interest distributions	—			—			—			(8,204		)	—			(8,204		)
Advances to affiliates	—			—			(4,810		)	9,327			(4,517		)	—
Intercompany receivables/payables	3,108			(21,706		)	(3,412		)	(1,335		)	23,345			—
Net cash provided by (used in) financing activities	3,108			127,510			(8,384		)	55,188			18,828			196,250
Net increase in cash and cash equivalents	—			(29,566		)	354			2,820			—			(26,392		)
Cash and cash equivalents at beginning of period	—			48,462			573			3,736			—			52,771
Cash and cash equivalents at end of period	$	—		$	18,896		$	927		$	6,556		$	—		$	26,379