10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________ 

FORM 10-Q

______________________________________ 

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

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 001-31625

______________________________________ 

WILLIAM LYON HOMES

(Exact name of registrant as specified in its charter)

______________________________________ 

Delaware	33-0864902
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
4695 MacArthur Court, 8th Floor Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 833-3600

______________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	WLH	New York Stock Exchange

Indicate by check mark whether 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  ý    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨
		Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding at May 7, 2019
Common stock, Class A, par value $0.01	32,995,972
Common stock, Class B, par value $0.01	4,817,394

WILLIAM LYON HOMES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements as of March 31, 2019, and for the three months ended March 31, 2019 and 2018 (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statement of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	53
PART II. OTHER INFORMATION		54
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
SIGNATURES		57
EXHIBIT INDEX		58

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this Quarterly Report on Form 10-Q, as well as some statements by the Company in periodic press releases and information included in oral statements or other written statements by the Company are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 of the Securities Exchange Act of 1934, as amended. Statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “hopes”, and similar expressions constitute forward-looking statements. Such statements may include, but are not limited to, information related to: anticipated operating results; home deliveries and backlog conversion; financial resources and condition; cash needs and liquidity; timing of project openings; leverage ratios and compliance with debt covenants; revenues and average selling prices of deliveries; sales price ranges for active and future communities; global and domestic economic conditions; market and industry trends; cycle times; profitability and gross margins; cost of revenues; selling, general and administrative expenses and leverage; interest expense; inventory write-downs; unrecognized tax benefits; land acquisition spending and timing; financial services and ancillary business performance and strategies; debt maturities; business and operational strategies and the anticipated effects thereof; the Company's ability to achieve tax benefits and utilize its tax attributes; sales pace; effects of home buyer cancellations; community count; joint ventures; the Company's ability to acquire land and pursue real estate opportunities; the Company's ability to gain approvals and open new communities; the Company's ability to sell homes and properties; the Company's ability to secure materials and subcontractors; the Company's ability to produce the liquidity and capital necessary to expand and take advantage of opportunities; and legal proceedings, insurance and claims. Forward-looking statements are based upon expectations and projections about future events and are subject to assumptions, risks and uncertainties about, among other things, the Company, economic and market factors and the homebuilding industry. There is no guarantee that any of the events anticipated by the forward-looking statements in this quarterly report on Form 10-Q will occur, or if any of the events occur, there is no guarantee what effect it will have on the Company's operations, financial condition or share price. The Company's past performance, and past or present economic conditions in its housing markets, are not indicative of future performance or conditions. Investors are urged not to place undue reliance on forward-looking statements. The Company will not, and undertakes no obligation to, update or revise forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to projections over time unless required by federal securities laws.

Actual events and results may differ materially from those expressed or forecasted in the forward-looking statements due to a number of factors. While it is impossible to identify all such factors, the major risks and uncertainties, and assumptions that are made, that affect the Company's business and may cause actual results to differ materially from those estimated by the Company include, but are not limited to: changes in mortgage and other interest rates; affordability pressures; the Company’s ability to successfully integrate RSI Communities’ homebuilding operations with its existing operations; the availability of skilled subcontractors, labor and homebuilding materials and increased construction cycle times; adverse weather conditions; the Company’s financial leverage and level of indebtedness and any inability to comply with financial and other covenants under its debt instruments; continued volatility and worsening in general economic conditions either internationally, nationally or in regions in which the Company operates; increased costs as a result of government-imposed tariffs; increased supply in our markets; changes in governmental laws and regulations and increased costs, fees and delays associated therewith; government actions, policies, programs and regulations directed at or affecting the housing market (including the Tax Cuts and Jobs Act (the “Tax Cuts and Job Act”), the Dodd-Frank Act, tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities; defects in manufactured products or other homebuilding materials; changes in existing tax laws or enacted corporate income tax rates, including pursuant to the Tax Cuts and Job Act; worsening in markets for residential housing; the impact of construction defect, product liability and home warranty claims, including the adequacy of self-insurance accruals, and the applicability and sufficiency of the Company’s insurance coverage; decline in real estate values resulting in impairment of the Company’s real estate assets; volatility in the banking industry, credit and capital markets; the timing of receipt of regulatory approvals and the opening of projects; the availability and cost of land for future development; restraints on foreign investment; terrorism or other hostilities involving the United States; building moratorium or “slow-growth” or “no-growth” initiatives that could be implemented in states in which the Company operates; conditions in the capital, credit and financial markets, including mortgage lending standards and the availability and timing of mortgage financing; changes in generally accepted accounting principles or interpretations of those principles; changes in prices of homebuilding materials; competition for home sales from other sellers of new and resale homes; cancellations and the Company’s ability to convert its backlog into deliveries; the occurrence of events such as landslides, soil subsidence and earthquakes that are uninsurable, not economically insurable or not subject to effective indemnification agreements; increased outside broker costs; changes in governmental laws and regulations; limitations on the Company’s ability to utilize its tax attributes; whether an ownership change occurred that could, under certain circumstances, have resulted in the limitation of the Company’s ability to offset prior years’ taxable income with net operating losses; and other factors, risks and uncertainties. These and other risks and uncertainties are more fully described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as well as those factors or conditions described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

1

EXPLANATORY NOTE

In this interim report on Form 10-Q, unless otherwise stated or the context otherwise requires, the “Company,” “we,” “our,” and “us” refer to William Lyon Homes, a Delaware corporation, and its subsidiaries. In addition, unless otherwise stated or the context otherwise requires, “Parent” refers to William Lyon Homes, and “California Lyon” refers to William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of Parent.

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except number of shares and par value per share)

	March 31, 2019		December 31, 2018
	(unaudited)
ASSETS
Cash and cash equivalents — Note 1	$	45,709	$	33,779
Receivables	15,417		13,502
Escrow proceeds receivable	2,659		—
Real estate inventories — Note 6
Owned	2,303,536		2,333,207
Not owned	294,085		315,576
Investment in unconsolidated joint ventures — Note 4	5,662		5,542
Goodwill	123,695		123,695
Intangibles, net of accumulated amortization of $4,640 as of March 31, 2019 and December 31, 2018	6,700		6,700
Deferred income taxes	46,900		47,241
Lease right-of-use assets	13,135		13,561
Other assets, net	37,515		36,971
Total assets	$	2,895,013	$	2,929,774
LIABILITIES AND EQUITY
Accounts payable	$	108,506	$	128,371
Accrued expenses	96,715		150,155
Liabilities from inventories not owned — Note 13	294,085		315,576
Notes payable — Note 7:
Revolving credit facility	110,000		45,000
Construction notes payable	1,204		1,231
Joint venture notes payable	144,027		151,788
7% Senior Notes due August 15, 2022 — Note 7	347,639		347,456
6% Senior Notes due September 1, 2023 — Note 7	344,206		343,878
5.875% Senior Notes due January 31, 2025 — Note 7	428,430		431,992
	1,874,812		1,915,447
Commitments and contingencies — Note 13
Equity:
William Lyon Homes stockholders’ equity
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized and no shares issued and outstanding at March 31, 2019 and December 31, 2018	—		—
Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 34,020,166 and 33,904,972 shares issued, 32,995,571 and 32,690,378 shares outstanding at March 31, 2019 and December 31, 2018, respectively	340		339
Common stock, Class B, par value $0.01 per share; 30,000,000 shares authorized; 4,817,394 shares issued and outstanding at March 31, 2019 and December 31, 2018	48		48
Additional paid-in capital	445,953		445,545
Retained earnings	425,509		417,390
Total William Lyon Homes stockholders’ equity	871,850		863,322
Noncontrolling interests — Note 3	148,351		151,005
Total equity	1,020,201		1,014,327
Total liabilities and equity	$	2,895,013	$	2,929,774

See accompanying notes to condensed consolidated financial statements

3

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except number of shares and per share data)

(unaudited)

	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Operating revenue
Home sales — Note 1	$	453,775		$	372,385
Construction services — Note 1	2,089			983
	455,864			373,368
Operating costs
Cost of sales — homes	(381,044		)	(307,308		)
Construction services — Note 1	(1,969		)	(983		)
Sales and marketing	(25,277		)	(22,693		)
General and administrative	(29,126		)	(24,521		)
Transaction expenses	—			(3,130		)
Other	(344		)	(298		)
	(437,760		)	(358,933		)
Operating income	18,104			14,435
Equity in income of unconsolidated joint ventures	912			932
Other income (loss), net	631			35
Income before extinguishment of debt	19,647			15,402
Gain on extinguishment of debt	383			—
Income before provision for income taxes	20,030			15,402
Provision for income taxes — Note 10	(4,896		)	(2,814		)
Net income	15,134			12,588
Less: Net income attributable to noncontrolling interests	(7,015		)	(4,260		)
Net income available to common stockholders	$	8,119		$	8,328
Income per common share:
Basic	$	0.22		$	0.22
Diluted	$	0.21		$	0.21
Weighted average common shares outstanding:
Basic	37,610,766			37,931,256
Diluted	38,755,113			39,855,683

See accompanying notes to condensed consolidated financial statements

4

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(in thousands)

(unaudited)

	William Lyon Homes Stockholders
	Common Stock					Additional Paid-In					Non- Controlling
	Shares		Amount			Capital			Retained Earnings		Interests			Total
Balance - December 31, 2017	39,085		$	392		$	454,286		$	325,794	$	80,158		$	860,630
Net income	—		—			—			8,328		4,260			12,588
Cash contributions from members of consolidated entities	—		—			—			—		4,062			4,062
Cash distributions to members of consolidated entities	—		—			—			—		(17,106		)	(17,106		)
Repurchases of common stock	(205	)	(2		)	(4,998		)	—		—			(5,000		)
Shares remitted to Company to satisfy employee tax obligations	(186	)	(2		)	(4,694		)	—		—			(4,696		)
Stock based compensation expense	577		5			3,176			—		—			3,181
Balance - March 31, 2018	39,271		$	393		$	447,770		$	334,122	$	71,374		$	853,659
Balance - December 31, 2018	38,722		387			445,545			417,390		151,005			1,014,327
Net income	—		—			—			8,119		7,015			15,134
Cash contributions from members of consolidated entities	—		—			—			—		1,389			1,389
Cash distributions to members of consolidated entities	—		—			—			—		(11,058		)	(11,058		)
Shares remitted to Company to satisfy employee tax obligations	(166	)	(1		)	(2,355		)	—		—			(2,356		)
Stock based compensation expense	281		2			2,763			—		—			2,765
Balance - March 31, 2019	38,837		$	388		$	445,953		$	425,509	$	148,351		$	1,020,201

See accompanying notes to condensed consolidated financial statements

5

WILLIAM LYON HOMES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three    Months   Ended   March 31,   2019			Three    Months   Ended   March 31,   2018
Operating activities
Net income	$	15,134		$	12,588
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	745			2,056
Net change in deferred income taxes	341			199
Stock based compensation expense	2,765			3,181
Equity in income of unconsolidated joint ventures	(912		)	(932		)
Distributions from unconsolidated joint ventures	951			3,575
(Gain) loss on extinguishment of debt	(383		)	—
Net changes in operating assets and liabilities:
Receivables	(2,074		)	(2,226		)
Escrow proceeds receivable	(2,659		)	1,767
Real estate inventories - owned	30,894			79,895
Other assets, net	(2,958		)	(1,275		)
Accounts payable	(19,865		)	20,739
Accrued expenses	(53,006		)	(21,539		)
Net cash (used in) provided by operating activities	(31,027		)	98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	—			(475,221		)
Sales (purchases) of property and equipment	1,404			(2,442		)
Net cash provided by (used in) investing activities	1,404			(477,663		)
Financing activities
Proceeds from borrowings on notes payable	30,111			20,194
Principal payments on notes payable	(37,899		)	(29,179		)
Principal payments on 5.75% Senior Notes	—			(150,000		)
Principal payments on 5.875% Senior Notes	(3,591		)	—
Proceeds from issuance of 6% Senior Notes	—			350,000
Proceeds from borrowings on revolver	190,000			110,000
Payments on revolver	(125,000		)	(25,000		)
Payment of deferred loan costs	(43		)	(5,877		)
Shares remitted to, or withheld by the Company for employee tax withholding	(2,356		)	(4,696		)
Payments to repurchase common stock	—			(5,000		)
Cash contributions from members of consolidated entities	1,389			4,062
Cash distributions to members of consolidated entities	(11,058		)	(17,106		)
Net cash provided by financing activities	41,553			247,398
Net increase (decrease) in cash and cash equivalents	11,930			(132,237		)
Cash and cash equivalents — beginning of period	33,779			182,710
Cash and cash equivalents — end of period	$	45,709		$	50,473
Supplemental disclosures:
Cash paid for taxes	$	—		$	104
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	78		$	1,696
Accrued deferred loan costs	$	8		$	879
Inventory reclassified to Other assets upon adoption of ASC 606	$	—		$	5,365
Non-cash additions to Real estate inventories - not owned and Liabilities from inventories not owned	$	(21,491	)	$	87,896

See accompanying notes to condensed consolidated financial statements

6

WILLIAM LYON HOMES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1—Basis of Presentation and Significant Accounting Policies

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand), Oregon (under the Polygon Northwest brand) and Texas.

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of March 31, 2019 and December 31, 2018 and revenues and expenses for the three month periods ended March 31, 2019 and 2018. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 3). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2018, which are included in our 2018 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09” or “ASC 606”).

Home Sales

Effective January 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, "Revenue Recognition" ("ASC 606"). Under ASC 606, revenue was recorded when a sale is consummated, the buyer’s initial and continuing investments is adequate, any receivables are not subject to future subordination, and the usual risks and rewards of ownership have transferred to the buyer. Revenue is recorded upon the close of escrow, at which point home sales are considered in the scope of a contract. Accordingly, the Company does not record homebuilding revenue for performance obligations that are unsatisfied or partially unsatisfied. No revenue was recorded in the 2019 period that did not result from current period performance.

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with ASC 606. Under ASC 606, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

The Company entered into construction management agreements to build, sell and market homes in certain communities. For such services, the Company will receive fees (generally 3 to 5 percent of the sales price, as defined) and may, under certain circumstances, receive additional compensation if certain financial thresholds are achieved.

7

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three months ended March 31, 2019, the Company did not have any land parcel sales. During the three months ended March 31, 2018, the Company had one land parcel sale, that resulted in a negligible loss for the period then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability for the three months ended March 31, 2019 and 2018, are as follows (in thousands):

	Three    Months   Ended   March 31,   2019			Three    Months   Ended   March 31,   2018
Warranty liability, beginning of period	$	13,000		$	13,643
Warranty provision during period (1)	2,416			2,504
Warranty payments, net of insurance recoveries during period	(3,815		)	(4,395		)
Warranty charges related to construction services projects	(17		)	7
Warranty liability, end of period	$	11,584		$	11,759

(1) In connection with the RSI Acquisition (see Note 2) in 2018, the Company assumed warranty liability of $0.6 million for units closed prior to the RSI Acquisition date and for which has been included in this line item for purposes of this table.

Interest incurred under the Company’s debt obligations, as more fully discussed in Note 7, is capitalized to qualifying real estate projects under development. Interest activity for the three months ended March 31, 2019 and 2018 are as follows (in thousands):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Interest incurred	$	24,081	$	19,258
Less: Interest capitalized	24,081		19,258
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	40,858	$	31,489

8

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments, including letters of credit, with off-balance sheet risk in the normal course of business which exposes it to credit risks. These off-balance sheet financial instruments are described in more detail in Note 13.

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of March 31, 2019 and December 31, 2018. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have seven reporting segments, as discussed in Note 5, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

9

Impact of Recent Accounting Pronouncements

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)" (“ASU 2016-18”). ASU 2016-18 requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

Note 2—Acquisition of RSI Communities

On March 9, 2018, the Company completed its acquisition of RSI Communities, a Southern California- and Texas-based homebuilder, pursuant to the Purchase and Sale Agreement (the “Purchase Agreement”) dated February 19, 2018 among California Lyon, RSI Communities, RS Equity Management L.L.C., Class B Sellers of RSI Communities, and RS Equity Management L.L.C. as the sellers’ representative, and its acquisition of three additional related real estate assets (the “Legacy Assets”) pursuant to each of the separate asset purchase agreements with each of RG Onion Creek, LLC, RSI Trails at Leander LLC and RSI Prado LLC (collectively referred to herein as "RSI Communities"), for an aggregate cash purchase price of $479.3 million, which is inclusive of approximately $15.2 million of net asset related adjustments at closing (collectively, the "RSI Acquisition"). Part of the acquired entities specific to the Southern California region now operate under the Company’s existing California segment. The remaining acquired entities now operate as a new segment of the Company in Texas, with core markets of Austin and San Antonio.

The Company financed the RSI Acquisition with a combination of proceeds from its issuance of $350 million in aggregate principal amount of 6.00% senior notes due 2023, cash on hand, and approximately $194.3 million of aggregate proceeds from a land banking arrangement with respect to land parcels in various stages of development.

As a result of the RSI Acquisition, the entities comprising the business of RSI Communities became wholly-owned direct or indirect subsidiaries of the Company, and its results are included in our condensed consolidated financial statements and related disclosures from the date of the RSI Acquisition.

The RSI Acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities of RSI Communities at their estimated fair values, with the excess allocated to Goodwill, as shown below. Goodwill represents the value the Company expects to achieve through the operational synergies and the expansion of the Company into new markets. The Company estimates that the entire $56.8 million of goodwill resulting from the RSI Acquisition will be tax deductible. Goodwill will be allocated to the California and Texas operating segments (see Note 5). A reconciliation of the consideration transferred as of the acquisition date is as follows:

Net proceeds received from RSI inventory involved in land banking transactions	$	194,131
Issuance of 6.00% Senior Notes due September 1, 2023	190,437
Cash on hand	94,760
	479,328

The Company completed its final estimate of the fair value of the net assets of RSI Communities during December 2018. The following table summarizes the amounts for acquired assets and liabilities recorded at their fair values as of the acquisition date (in thousands):

10

Assets Acquired
	Real estate inventories	$	434,628
	Goodwill	56,793
	Other	7,771
	Total Assets	$	499,192
Liabilities Assumed
	Accounts payable	$	9,315
	Accrued expenses	8,244
	Notes payable	2,305
	Total liabilities	19,864
	Net assets acquired	$	479,328

The Company determined the fair value of real estate inventories on a project level basis using a combination of discounted cash flow models, and market comparable land transactions, where available. These methods are significantly impacted by estimates relating to i) expected selling prices, ii) anticipated sales pace, iii) cost to complete estimates, iv) highest and best use of projects prior to acquisition, and v) comparable land values. These estimates were developed and used at the individual project level, and may vary significantly between projects.

Other assets, accounts payable, accrued expenses and notes payable were generally stated at historical value due to the short-term nature of these liabilities.

The Company recorded no acquisition related costs for the three months ended March 31, 2019 and $3.1 million in acquisition related costs for the three months ended March 31, 2018, which are included in the Condensed Consolidated Statement of Operations in Transaction expenses. Such costs were expensed as incurred in accordance with ASC 805.

Supplemental Pro Forma Information

The following table presents unaudited pro forma amounts for the three months ended March 31, 2018 as if the RSI Acquisition, had been completed as of January 1, 2017 (amounts in thousands, except per share data):

	Three Months Ended March 31, 2018
Operating revenues	$	401,600
Net income available to common stockholders	$	6,419
Income per share - basic	$	0.17
Income per share - diluted	$	0.16

The unaudited pro forma operating results have been determined after adjusting the unaudited operating results of RSI Communities, excluding the Legacy Assets, but including acquisition costs, to reflect the estimated purchase accounting and other acquisition adjustments. The unaudited pro forma results presented above do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquired entity, the costs to combine the operations of the Company and the acquired entity or the costs necessary to achieve any of the foregoing cost savings, operating synergies or revenue enhancements. As such, the unaudited pro forma amounts are for comparative purposes only and may not necessarily reflect the results of operations which would have resulted had the acquisition been completed at the beginning of the applicable period or indicative of the results that will be attained in the future.

11

Note 3—Variable Interest Entities and Noncontrolling Interests

As of March 31, 2019 and December 31, 2018, the Company was party to twenty-four and twenty joint ventures, respectively, for the purpose of land development and homebuilding activities which we have determined to be VIEs. The Company, as the managing member, has the power to direct the activities of the VIEs since it manages the daily operations and has exposure to the risks and rewards of the VIEs, based upon the allocation of income and loss per the respective joint venture agreements. Therefore, the Company is the primary beneficiary of the joint ventures, and the VIEs were consolidated as of March 31, 2019 and December 31, 2018.

As of March 31, 2019, the assets of the consolidated VIEs totaled $440.6 million, of which $9.4 million was cash and cash equivalents and $425.6 million was owned real estate inventories. The liabilities of the consolidated VIEs totaled $210.5 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

As of December 31, 2018, the assets of the consolidated VIEs totaled $434.8 million, of which $9.0 million was cash and cash equivalents and $422.7 million was owned real estate inventories. The liabilities of the consolidated VIEs totaled $209.4 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

Note 4—Investments in Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Revenues	$	4,197		$	3,709
Cost of sales	(2,342		)	(1,918		)
Income of unconsolidated joint ventures	$	1,855		$	1,791

Income from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income of our unconsolidated mortgage joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements less any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  For both of the three months ended March 31, 2019, and 2018, the Company recorded income of $0.9 million, from its unconsolidated joint ventures. This income was primarily attributable to our share of income related to mortgages that were generated and issued to qualifying home buyers during the periods.

12

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

			March 31, 2019		December 31, 2018
Assets
	Cash		$	6,958	$	8,093
	Loans held for sale		37,908		27,958
	Accounts receivable		982		884
	Other assets		169		115
		Total Assets	$	46,017	$	37,050
Liabilities and Equity
	Accounts payable		$	449	$	700
	Accrued expenses		1,221		1,988
	Credit lines payable		36,180		26,775
	Other liabilities		508		49
	Members equity		7,659		7,538
		Total Liabilities and Equity	$	46,017	$	37,050

Note 5—Segment Information

The Company operates one principal homebuilding business. In accordance with FASB ASC Topic 280, Segment Reporting ("ASC 280"), the Company has determined that each of its operating divisions is an operating segment. The Company’s President and Chief Executive Officer has been identified as the chief operating decision maker. The Company’s chief operating decision maker directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company’s homebuilding operations design, construct and sell a wide range of homes designed to meet the specific needs in each of its markets. In accordance with ASC 280, prior to the acquisition of RSI Communities (see Note 2), the Company's homebuilding operations had been grouped into six operating segments. During the three months ended March 31, 2018, the Company added one additional operating segment, Texas, as a result of the RSI Acquisition. As such, in accordance with the aggregation criteria defined by ASC 280, the Company’s homebuilding operating segments have been grouped into seven reportable segments:

California, consisting of operations in Orange, Los Angeles, San Diego, Alameda, Contra Costa, Santa Clara, Riverside and San Bernardino counties.

Arizona, consisting of operations in the Phoenix, Arizona metropolitan area.

Nevada, consisting of operations in the Las Vegas, Nevada metropolitan area.

Colorado, consisting of operations in the Denver, Colorado metropolitan area.

Washington, consisting of operations in the Seattle, Washington metropolitan area.

Oregon, consisting of operations in the Portland, Oregon metropolitan area.

Texas, consisting of operations in the Austin, Texas and San Antonio, Texas metropolitan areas.

Corporate develops and implements strategic initiatives and supports the Company’s operating segments by centralizing key administrative functions such as finance and treasury, information technology, risk management and litigation and human resources.

13

Segment financial information relating to the Company’s operations was as follows (in thousands):

	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Operating revenue:
California	$	186,118		$	134,812
Arizona	29,594			32,039
Nevada	37,705			49,176
Colorado	56,036			40,063
Washington (1)	43,940			55,651
Oregon	51,087			46,853
Texas	51,384			14,774
Total operating revenue	$	455,864		$	373,368
(1) Operating revenue in the Washington segment includes construction services revenue in the periods ended March 31, 2019 and 2018.
	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Income before provision for income taxes:
California	$	16,105		$	11,419
Arizona	2,493			2,487
Nevada	4,192			4,839
Colorado	6,024			3,164
Washington	1,145			4,511
Oregon	2,070			3,637
Texas	1,181			434
Corporate	(13,563		)	(15,089		)
Income before gain on extinguishment of debt	$	19,647		$	15,402
Corporate - Gain on extinguishment of debt	383			—
Income before provision for income taxes	$	20,030		$	15,402

14

	March 31, 2019		December 31, 2018
Homebuilding assets:
Owned:
California	$	878,608	$	930,714
Arizona	171,124		168,507
Nevada	190,787		189,363
Colorado	138,148		149,450
Washington	306,596		308,270
Oregon	429,448		440,105
Texas	271,652		234,093
Corporate (1)	214,565		193,696
	$	2,600,928	$	2,614,198
Not Owned:
California	$	78,543	$	91,849
Arizona	114,858		114,858
Washington	21,657		21,657
Texas	79,027		87,212
Total homebuilding assets	$	2,895,013	$	2,929,774

(1) Comprised primarily of cash and cash equivalents, receivables, deferred income taxes, and other assets.

Note 6—Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Real estate inventories:
Land deposits	$	143,736	$	147,327
Land and land under development	473,309		660,151
Finished lots	702,278		564,460
Homes completed and under construction	858,617		839,316
Model homes	125,596		121,953
Total	$	2,303,536	$	2,333,207
Real estate inventories not owned (1):
Other land options contracts — land banking arrangement	$	294,085	$	315,576

(1) Represents the consolidation of a land banking arrangement. Although the Company is not obligated to purchase the lots, based on certain factors, the Company has determined that it is economically compelled to purchase the lots in the land banking arrangement and thus, has consolidated the assets and liabilities associated with this land bank. Amounts are net of deposits.

15

Note 7—Senior Notes, Secured, and Unsecured Indebtedness

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

	March 31, 2019		December 31, 2018
Notes payable:
Revolving credit facility	$	110,000	$	45,000
Seller financing	—		—
Construction notes payable	1,204		1,231
Joint venture notes payable	144,027		151,788
Total notes payable	255,231		198,019
Senior notes:
7% Senior Notes due August 15, 2022	347,639		347,456
6% Senior Notes due September 1, 2023	344,206		343,878
5.875% Senior Notes due January 31, 2025	428,430		431,992
Total senior notes	1,120,275		1,123,326
Total notes payable and senior notes	$	1,375,506	$	1,321,345

As of March 31, 2019, the maturities of the Notes payable, 7% Senior Notes, 6% Senior Notes, and 5.875% Senior Notes are as follows (in thousands):

Year Ending December 31,
Remaining in 2019	$	15,217
2020	36,409
2021	203,605
2022	350,000
2023	350,000
Thereafter	436,886
	$	1,392,117

Maturities above exclude premium on the 7% Senior Notes of $0.5 million and discount on the 5.875% Senior Notes of $2.7 million, and deferred loan costs on the 7%, 6%, and 5.875% Senior Notes of $14.5 million as of March 31, 2019.

Notes Payable

Revolving Credit Facility

On May 21, 2018, California Lyon and Parent entered into a new credit agreement providing for an unsecured revolving credit facility of up to $325.0 million (the “New Facility”) with the lenders party thereto, which New Facility replaces the Company’s previous $170.0 million revolving credit facility, as described below. The New Facility will mature on May 21, 2021, unless terminated earlier pursuant to the terms of the New Facility. The New Facility contains an uncommitted accordion feature under which its aggregate principal amount can be increased to up to $500.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. Effective as of November 9, 2018, California Lyon increased the size of the commitment under its revolving credit facility by $40.0 million to an aggregate total of $365.0 million, through entry into a new lender supplement as of such date.

On December 31, 2018, California Lyon, Parent and the lenders party thereto entered into an amendment to the New Facility, which amended the maximum leverage ratio to extend the timing of the gradual step-downs, such that the leverage ratio remained at 65% through and including December 30, 3018, decreased to 62.5% on the last day of the 2018 fiscal year

16

through and including December 30, 2019, and further decreases and remains at 60% on December 31, 2019 and thereafter. The amendment did not revise any of our other financial covenants thereunder.

Borrowings under the New Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent’s wholly-owned subsidiaries (such subsidiaries, the “Guarantors”), and may be used for general corporate purposes. As of March 31, 2019, the commitment fee on the unused portion of the New Facility accrues at an annual rate of 0.50%. As of March 31, 2019, the Company had $110.0 million outstanding against the New Facility at an effective rate of 6.6%, as well as a letter of credit for $7.2 million. As of December 31, 2018, the Company had $45.0 million outstanding against the New Facility at an effective rate of 7.5%, as well as a letter of credit for $8.6 million.

The New Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $556.4 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65% as of December 30, 2018, further decreased to 62.5% effective as of December 31, 2018, through and including December 30, 2019, and further decreases to and remains at 60% thereafter, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the New Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The New Facility also 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 New Facility and permit the Lenders to accelerate payment on outstanding borrowings under the New Facility and require cash collateralization of outstanding letters of credit. If a change of control (as defined in the New Facility) occurs, the Lenders may terminate the commitments under the New Facility and require that the Borrower repay outstanding borrowings under the New 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 Company was in compliance with all covenants under the New Facility as of March 31, 2019.

On July 1, 2016, California Lyon and Parent had entered into an amendment and restatement agreement pursuant to which its then existing credit agreement providing for a revolving credit facility was amended and restated in its entirety (the "Second Amended Facility"). As described above, the Second Amended Facility was replaced by the New Facility on May 21, 2018. Previously, the Second Amended Facility had amended and restated the Company’s previous $130.0 million revolving credit facility and had provided for total lending commitments of $145.0 million, which had been scheduled to terminate on January 14, 2019 based on certain conditions, prior to the execution of the New Facility. In addition, the Second Amended Facility previously had an uncommitted accordion feature under which the Company could have increased 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. On November 28, 2017, California Lyon increased the size of the commitment under its Second Amended Facility by $25.0 million to an aggregate total of $170.0 million, through exercise of the facility’s accordion feature and entry into a new lender supplement as of such date.

Pursuant to the Second Amended Facility, the maximum leverage ratio was 65% from June 30, 2016 through and including December 30, 2016, decreased to 62.5% on the last day of the 2016 fiscal year, remained at 62.5% from

December 31, 2016 through and including June 29, 2017, and was scheduled to further decrease to 60% on the last day of the

second quarter of 2017 and to remain at 60% thereafter. On June 16, 2017, California Lyon, Parent and the lenders party thereto had entered into a second amendment to the Second Amended Facility, which amended the maximum leverage ratio to extend the timing of the gradual step-downs, such that the leverage ratio remained at 62.5% through and including December 30, 2017, and decreased to 60% on the last day of the 2017 fiscal year and was scheduled to remain at 60% thereafter. On March 9, 2018, California Lyon, Parent and the lenders party thereto entered into a third amendment to the Second Amended Facility, which temporarily increased the maximum leverage ratio, such that the leverage ratio remained at 60% through and including March 30, 2018, and was scheduled to increase to 70% on March 31, 2018 through and including June 29, 2018.

The Second Amended Facility previously contained certain financial maintenance covenants. The Company was in compliance with all covenants under the Second Amended Facility through its date of termination and replacement with the New Facility on May 21, 2018.

Borrowings under the previous Second Amended Facility were required to be guaranteed by the Parent and certain of the Parent's wholly-owned subsidiaries, were secured by a pledge of all equity interests held by such guarantors, and may have been used for general corporate purposes. Interest rates on borrowings generally were based on either LIBOR or a base rate,

17

plus the applicable spread. Through the date of termination of the Second Amended Facility, the commitment fee on the unused portion of the Second Amended Facility accrued at an annual rate of 0.50%. As of December 31, 2018, the Company had terminated the Second Amended Facility by entering into the New Facility.

Seller Financing

During the three months ended March 31, 2018, the Company paid in full prior to maturity, along with all accrued interest to date, a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum and was secured by the underlying land.

Notes Payable

The Company and certain of its consolidated joint ventures have entered into 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 of the joint ventures notes payable are listed in the table below as of March 31, 2019 (in millions):

Issuance Date	Facility Size	Outstanding		Maturity	Current Rate
March, 2019	18.9	$	0.4	November, 2020	5.38	%	(3)
May, 2018	128.0	86.7		May, 2021	5.49	%	(2)
May, 2018	13.3	11.1		June, 2020	5.38	%	(3)
July, 2017	66.2	31.7		February, 2021	5.56	%	(2)
January, 2016	35.0	14.0		August, 2019	5.75	%	(1)
	261.4	$	143.9

(1) Loan bears interest at LIBOR +3.25%.

(2) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

(3) Loan bears interest at LIBOR +2.90%.

In addition to the above, the Company had $1.2 million of construction notes payable outstanding related to projects that are wholly-owned by the Company.

The notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of March 31, 2019.

Senior Notes

5.75% 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”).

During the three months ended March 31, 2018, Parent, through California Lyon, used the net proceeds from the offering of 6.00% Senior Notes due 2023, as further described below, (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150 million in aggregate principal amount of 5.75% Notes such that the 5.75% Notes were satisfied and discharged prior to March 31, 2019.

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 of Polygon Northwest Homes, Escrow Issuer merged with and into California Lyon, and

18

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 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, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.5 million and deferred loan costs of $2.9 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 $350 million in aggregate principal amount of 6.00% Senior Notes due 2023 and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, each as described below. 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.

6% Senior Notes Due 2023

On March 9, 2018, California Lyon completed its private placement with registration rights of 6.00% Senior Notes due 2023 (the "6.00% Notes"), in an aggregate principal amount of $350 million. The 6.00% Notes were issued at 100% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 6.00% Notes offering to (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150 million of the outstanding aggregate principal amount of the 5.75% Notes. In September 2018, the Company exchanged 100% of the 6.00% Notes tendered in the exchange offer for notes that are freely transferable and registered under the Exchange Act.

As of March 31, 2019, the outstanding principal amount of the 6.00% Notes was $350 million, excluding deferred loan costs of $5.8 million. The 6.00% Notes bear interest at a rate of 6.00% per annum, payable semiannually in arrears on March 1 and September 1, and mature on September 1, 2023. The 6.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 6.00% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, as described above and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, as described below. The 6.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 6.00% 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 September 1, 2020, California Lyon may redeem all or a portion of the 6.00% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount on the redemption date) set forth below plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, if redeemed during the 12-month period commencing on each of the dates as set forth below:

Year	Percentage
September 1, 2020	103.00	%
September 1, 2021	101.50	%
September 1, 2022	100.00	%

Prior to September 1, 2020, the 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, if any, to, but not including, the redemption date.

19

In addition, any time prior to September 1, 2020, California Lyon may, at its option on one or more occasions, redeem Notes (including any additional notes that may be issued in the future under the 2023 Notes Indenture) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (including any additional notes that may be issued in the future under the 2023 Notes Indenture) issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 106.00%, plus accrued and unpaid interest, if any, to, but not including, the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the prior year 8.5% Notes such that the entire aggregate $425 million of previously outstanding 8.5% Notes were retired and extinguished as of December 31, 2018. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding principal amount of the 5.875% Notes was $437 million, excluding unamortized discount of $2.7 million and deferred loan costs of $5.8 million. During the three months ended March 31, 2019, the Company retired approximately $4.0 million of the principal balance, resulting in $0.4 million of gain on debt extinguishment recognized through earnings. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022 and $350 million in aggregate principal amount of 6.00% Senior Notes due 2023, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% 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 Notes Covenant Compliance

The indentures governing the 7.00% Notes, the 6.00% Notes, and the 5.875% 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 March 31, 2019.

20

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of March 31, 2019 and December 31, 2018; consolidating statements of operations for the three and three months ended March 31, 2019 and 2018; and consolidating statements of cash flows for the three month periods ended March 31, 2019 and 2018, 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 March 31, 2019 and December 31, 2018, and for the three and three month periods ended March 31, 2019 and 2018.

21

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	33,942		$	1,915		$	9,852		$	—		$	45,709
Receivables	—		5,109			5,304			5,004			—			15,417
Escrow proceeds receivable	—		2,659			—			—			—			2,659
Real estate inventories
Owned	—		725,596			1,140,340			437,600			—			2,303,536
Not owned	—		114,858			179,227			—			—			294,085
Investment in unconsolidated joint ventures	—		5,512			150			—			—			5,662
Goodwill	—		14,209			109,486			—			—			123,695
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		46,900			—			—			—			46,900
Lease right-of-use assets	—		13,135			—			—			—			13,135
Other assets, net	—		27,299			8,952			1,264			—			37,515
Investments in subsidiaries	871,850		23,425			(943,873		)	—			48,598			—
Intercompany receivables	—		—			294,625			(160		)	(294,465		)	—
Total assets	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013
LIABILITIES AND EQUITY
Accounts payable	$	—	$	63,991		$	30,492		$	14,023		$	—		$	108,506
Accrued expenses	—		84,459			12,156			100			—			96,715
Liabilities from inventories not owned	—		114,860			179,225			—			—			294,085
Notes payable	—		110,001			1,204			144,026			—			255,231
7% Senior Notes	—		347,639			—			—			—			347,639
6% Senior Notes	—		344,206			—			—			—			344,206
5.875% Senior Notes	—		428,430			—			—			—			428,430
Intercompany payables	—		170,830			—			123,635			(294,465		)	—
Total liabilities	—		1,664,416			223,077			281,784			(294,465		)	1,874,812
Equity
William Lyon Homes stockholders’ equity	871,850		(651,772		)	579,749			23,425			48,598			871,850
Noncontrolling interests	—		—			—			148,351			—			148,351
Total liabilities and equity	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013

22

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	21,450		$	2,888		$	9,441	$	—		$	33,779
Receivables	—		6,054			4,151			3,297		—			13,502
Escrow proceeds receivable														—
Real estate inventories
Owned	—		745,750			1,152,786			434,671		—			2,333,207
Not owned	—		114,859			200,717			—		—			315,576
Investment in unconsolidated joint ventures	—		5,392			150			—		—			5,542
Goodwill	—		14,209			109,486			—		—			123,695
Intangibles, net	—		—			6,700			—		—			6,700
Deferred income taxes, net	—		47,241			—			—		—			47,241
Lease right-of-use assets	—		13,561			—			—		—			13,561
Other assets, net	—		26,797			9,688			486		—			36,971
Investments in subsidiaries	863,322		16,059			(961,950		)	—		82,569			—
Intercompany receivables	—		—			285,675			—		(285,675		)	—
Total assets	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774
LIABILITIES AND EQUITY
Accounts payable	$	—	$	78,462		$	34,546		$	15,363	$	—		$	128,371
Accrued expenses	—		123,088			26,967			100		—			150,155
Liabilities from inventories not owned	—		114,859			200,717			—		—			315,576
Notes payable	—		45,000			1,231			151,788		—			198,019
7% Senior Notes	—		347,456			—			—		—			347,456
6% Senior Notes	—		343,878			—			—		—			343,878
5.875% Senior Notes	—		431,992			—			—		—			431,992
Intercompany payables	—		172,095			—			113,580		(285,675		)	—
Total liabilities	—		1,656,830			263,461			280,831		(285,675		)	1,915,447
Equity
William Lyon Homes stockholders’ equity	863,322		(645,458		)	546,830			16,059		82,569			863,322
Noncontrolling interests	—		—			—			151,005		—			151,005
Total liabilities and equity	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774

23

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	148,932		$	243,356		$	61,487		$	—		$	453,775
Construction services	—		—			2,089			—			—			2,089
Management fees	—		(1,857		)	—			—			1,857			—
	—		147,075			245,445			61,487			1,857			455,864
Operating costs
Cost of sales	—		(123,138		)	(207,594		)	(48,455		)	(1,857		)	(381,044		)
Construction services	—		—			(1,969		)	—			—			(1,969		)
Sales and marketing	—		(8,426		)	(14,736		)	(2,115		)	—			(25,277		)
General and administrative	—		(20,169		)	(8,957		)	—			—			(29,126		)
Other	—		(387		)	—			43			—			(344		)
	—		(152,120		)	(233,256		)	(50,527		)	(1,857		)	(437,760		)
Income from subsidiaries	8,119		6,926			—			—			(15,045		)	—
Operating income	8,119		1,881			12,189			10,960			(15,045		)	18,104
Equity in income of unconsolidated joint ventures	—		711			201			—			—			912
Other income (loss), net	—		929			81			(379		)	—			631
Income before extinguishment of debt	8,119		3,521			12,471			10,581			(15,045		)	19,647
Gain on extinguishment of debt	—		383			—			—			—			383
Income before provision for income taxes	8,119		3,904			12,471			10,581			(15,045		)	20,030
Provision for income taxes	—		(4,896		)	—			—			—			(4,896		)
Net income	8,119		(992		)	12,471			10,581			(15,045		)	15,134
Less: Net income attributable to noncontrolling interests	—		—			—			(7,015		)	—			(7,015		)
Net income available to common stockholders	$	8,119	$	(992	)	$	12,471		$	3,566		$	(15,045	)	$	8,119

24

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended March 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	135,173		$	182,944		$	54,268		$	—		$	372,385
Construction services	—		983			—			—			—			983
Management fees	—		(1,750		)	—			—			1,750			—
	—		134,406			182,944			54,268			1,750			373,368
Operating costs
Cost of sales	—		(110,245		)	(150,502		)	(44,811		)	(1,750		)	(307,308		)
Construction services	—		(983		)	—			—			—			(983		)
Sales and marketing	—		(8,383		)	(10,783		)	(3,527		)	—			(22,693		)
General and administrative	—		(18,553		)	(5,966		)	(2		)	—			(24,521		)
Transaction expenses	—		(3,130		)	—			—			—			(3,130		)
Other	—		(353		)	46			9			—			(298		)
	—		(141,647		)	(167,205		)	(48,331		)	(1,750		)	(358,933		)
Income from subsidiaries	8,328		8,107			—			—			(16,435		)	—
Operating income	8,328		866			15,739			5,937			(16,435		)	14,435
Equity in income from unconsolidated joint ventures	—		675			257			—			—			932
Other income (expense), net	—		309			56			(330		)	—			35
Income (loss) before provision for income taxes	8,328		1,850			16,052			5,607			(16,435		)	15,402
Provision for income taxes	—		(2,814		)	—			—			—			(2,814		)
Net income (loss)	8,328		(964		)	16,052			5,607			(16,435		)	12,588
Less: Net income attributable to noncontrolling interests	—		—			—			(4,260		)	—			(4,260		)
Net income (loss) attributable to William Lyon Homes	8,328		(964		)	16,052			1,347			(16,435		)	8,328

25

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	(409	)	$	(37,671	)	$	4,229		$	3,826		$	(1,002	)	$	(31,027	)
Investing activities
Sales (purchases) of property and equipment	—			—			1,404			—			—			1,404
Investments in subsidiaries	—			(1,851		)	(18,077		)	—			19,928			—
Net cash (used in) provided by investing activities	—			(1,851		)	(16,673		)	—			19,928			1,404
Financing activities
Proceeds from borrowings on notes payable	—			—			—			30,111			—			30,111
Principal payments on notes payable	—			—			(27		)	(37,872		)	—			(37,899		)
Principal payments on 5.875% Senior Notes	—			(3,591		)	—			—			—			(3,591		)
Proceeds from borrowings on Revolver	—			190,000			—			—			—			190,000
Payments on Revolver	—			(125,000		)	—			—			—			(125,000		)
Payment of deferred loan costs	—			(43		)	—			—			—			(43		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(2,356		)	—			—			—			(2,356		)
Noncontrolling interest contributions	—			—			—			1,389			—			1,389
Noncontrolling interest distributions	—			—			—			(11,058		)	—			(11,058		)
Advances to affiliates	—			—			20,448			3,800			(24,248		)	—
Intercompany receivables/payables	409			(6,996		)	(8,950		)	10,215			5,322			—
Net cash (used in) provided by financing activities	409			52,014			11,471			(3,415		)	(18,926		)	41,553
Net (decrease) increase in cash and cash equivalents	—			12,492			(973		)	411			—			11,930
Cash and cash equivalents - beginning of period	—			21,450			2,888			9,441			—			33,779
Cash and cash equivalents - end of period	$	—		$	33,942		$	1,915		$	9,852		$	—		$	45,709

26

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	6,515		$	(60,555	)	$	146,012		$	12,571		$	(6,515	)	$	98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	—			—			(475,221		)	—			—			(475,221		)
Purchases of property and equipment	—			(1,063		)	(1,391		)	12			—			(2,442		)
Investments in subsidiaries	—			9,624			343,067			—			(352,691		)	—
Net cash provided by (used in) investing activities	—			8,561			(133,545		)	12			(352,691		)	(477,663		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			20,194			—			20,194
Principal payments on notes payable	—			—			(14		)	(29,165		)	—			(29,179		)
Principal payments on 5.75% Senior Notes	—			(150,000		)	—			—			—			(150,000		)
Proceeds from issuance of 6.0% Senior Notes	—			350,000			—			—			—			350,000
Proceeds from borrowings on Revolver	—			110,000			—			—			—			110,000
Payments on Revolver	—			(25,000		)	—			—			—			(25,000		)
Payment of deferred loan costs	—			(5,877		)	—			—			—			(5,877		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(4,696		)	—			—			—			(4,696		)
Payments to repurchase common stock	—			(5,000		)	—			—			—			(5,000		)
Noncontrolling interest contributions	—			—			—			4,062			—			4,062
Noncontrolling interest distributions	—			—			—			(17,106		)	—			(17,106		)
Advances to affiliates	—			—			6,240			(2,864		)	(3,376		)	—
Intercompany receivables/payables	(6,515		)	(349,370		)	(15,273		)	8,576			362,582			—
Net cash (used in) provided by financing activities	(6,515		)	(79,943		)	(9,047		)	(16,303		)	359,206			247,398
Net (decrease) increase in cash and cash equivalents	—			(131,937		)	3,420			(3,720		)	—			(132,237		)
Cash and cash equivalents - beginning of period	—			171,434			156			11,120			—			182,710
Cash and cash equivalents - end of period	$	—		$	39,497		$	3,576		$	7,400		$	—		$	50,473

27

Note 8—Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), the Company is required to disclose the estimated fair value of financial instruments. As of March 31, 2019 and December 31, 2018, the Company used the following assumptions to estimate the fair value of each type of financial instrument for which it is practicable to estimate:

• Notes payable—The carrying amount is a reasonable estimate of fair value of the notes payable because of floating interest rate terms and/or the outstanding balance is expected to be repaid within one year.

• 7% Senior Notes due August 15, 2022 —The 7% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

•     6% Senior Notes due September 1, 2023 —The 6% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 5.875% Senior Notes due January 31, 2025 —The 5.875% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

The following table excludes cash and cash equivalents, receivables and accounts payable, which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	255,231	$	255,231	$	198,019	$	198,019
7% Senior Notes due 2022	347,639		351,330		347,456		350,000
6% Senior Notes due 2023	344,206		337,750		343,878		315,000
5.875% Senior Notes due 2025	428,430		411,241		431,992		378,611

ASC 820 establishes a framework for measuring fair value, expands disclosures regarding fair value measurements and defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The Company used Level 3 to measure the fair value of its Notes payable, and Level 2 to measure the fair value of its Senior notes. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The three levels of the hierarchy are as follows:

• Level 1—quoted prices for identical assets or liabilities in active markets;

• Level 2—quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3—valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Note 9—Related Party Transactions

On March 9, 2018, California Lyon completed its private placement with registration rights of the 6.00% Notes in an aggregate principal amount of $350 million (see Note 7), for which Credit Suisse Securities (USA) LLC (“Credit Suisse”) served as an initial purchaser and joint book-running manager, along with several other banks, and received customary underwriting fees as a member of the underwriting syndicate. On November 5, 2018, Eric A. Anderson commenced his service as a member of the Company's Board of Directors. Mr. Anderson had previously held the position of Vice Chairman, Investment Banking of Credit Suisse until November 3, 2018, at which point, Mr. Anderson was appointed as a Senior Advisor to Credit Suisse, a non-employee role pursuant to which he provides certain consultant services to Credit Suisse as an

28

independent contractor. As of and following the November 3, 2018 transition date, Mr. Anderson did not and will not receive any fees or compensation of any kind for any transactional relationships between Credit Suisse and the Company.

Note 10—Income Taxes

Since inception, the Company has operated solely within the United States. The Company’s effective income tax rate was 24.4% and 18.3% for the three months ended March 31,2019 and 2018, respectively. The significant drivers of the effective tax rate are allocation of income to noncontrolling interests for the three months March 31, 2019 and March 31, 2018.

Management assesses its deferred tax assets to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. At March 31, 2019, the Company had no valuation allowance recorded.

At March 31, 2019, the Company had no remaining federal net operating loss carryforwards and $46.4 million of remaining state net operating loss carryforwards. State net operating loss carryforwards begin to expire in 2031. In addition, as of March 31, 2019, the Company had unused federal and state built-in losses of $44.9 million and $7.5 million, respectively. The five year testing period for built-in losses expired in 2017 and the unused built-in loss carryforwards begin to expire in 2032. The Company had AMT credit carryovers of $1.4 million at March 31, 2019, which if not previously utilized are allowable as refundable credits under the Tax Cuts and Job Act through 2022.

FASB ASC Topic 740,Income Taxes (“ASC 740”), prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities. The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes. The Company has no unrecognized tax benefits.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal income tax examination for calendar tax years ended 2013 and forward. The Company is subject to various state income tax examinations for calendar tax years ended 2008 and forward. The Company is currently under examination by the Internal Revenue Service for the 2013 and 2014 tax years and under examination by California for the 2014 tax year.

29

Note 11—Income Per Common Share

Basic and diluted income per common share for the three months ended March 31, 2019 and 2018 were calculated as follows (in thousands, except number of shares and per share amounts):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Basic weighted average number of common shares outstanding	37,610,766		37,931,256
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,144,347		1,924,427
Diluted average shares outstanding	38,755,113		39,855,683
Net income available to common stockholders	$	8,119	$	8,328
Basic income per common share	$	0.22	$	0.22
Dilutive income per common share	$	0.21	$	0.21
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	—		—

Note 12—Stock Based Compensation

We account for share-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at the fair value on the date of grant. Compensation expense for awards with performance based conditions is recognized over the vesting period once achievement of the performance condition is deemed probable.

During the three months ended March 31, 2019, the Company granted 550,829 shares of time-based restricted stock, and 490,227 of performance stock units, including one award tied to a market performance condition. On the Consolidated Balance Sheets and Statement of Equity, the Company considers unvested shares of restricted stock to be issued, but not outstanding.

The Company recorded total stock based compensation expense during the three months ended March 31, 2019 and 2018 of $2.8 million and $3.2 million, respectively.

Performance Stock Units

    With respect to the performance stock units granted to certain employees during the three months ended March 31, 2019, the actual number of such stock units that will be earned is subject to the Company’s achievement of performance targets as of the end of the 2019 fiscal year, with each unit constituting the opportunity to earn up to two shares of Company common stock. The aforementioned awards represent 400,460 stock units that vest in three equal annual installments on March 1st of each of 2020, 2021 and 2022, subject to each grantee’s continued service through each vesting date. Based on the probability assessment as of March 31, 2019, management determined that the currently available data was not sufficient to support that the achievement of the preliminary performance targets is probable, and as such, no compensation expense has been recognized for these awards to date. The Company's Compensation Committee has elected to wait until the second quarter to set the final metric for the performance-based stock units target.

Performance Stock Units with Market Condition

With respect to the performance based stock units with market condition granted to a certain employee during the three months ended March 31, 2019, the actual number of stock units that will be earned is subject to the Company’s achievement of a pre-established market performance target as of the end of the vesting periods, with each unit constituting the opportunity to earn up to two shares of Company common stock. The aforementioned award represents 89,767 stock units that vest in two annual installments at the end of each performance period, subject to grantee’s continued service through each vesting date.

30

Time-Based Restricted Stock Awards

With respect to the restricted stock awards granted to certain employees during the three months ended March 31, 2019, 285,030 of such shares vest in three equal annual installments on each anniversary of the grant date, 134,650 of such shares vest in one installment on January 2, 2022, and 84,156 of such shares vest in two equal annual installments on each anniversary of the grant date, subject to the grantee’s continued service through each vesting date. With respect to the restricted stock awards granted to certain non-employee directors during the three months ended March 31, 2019, 46,993 of such shares vest in four equal quarterly installments on each three-month period beginning June 1st of 2019, subject to each grantee’s continued service on the board through each vesting date.

Note 13—Commitments and Contingencies

The Company’s commitments and contingent liabilities include the usual obligations incurred by real estate developers in the normal course of business. In the opinion of management, these matters will not have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

The Company is a defendant in various lawsuits related to its normal business activities. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of March 31, 2019, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized on our condensed consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings, and as appropriate, adjust them to reflect (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

On March 31, 2019, there was a fire in Wilsonville, Oregon in which we incurred damage to certain buildings in our Villebois community. We do not have an estimate yet as to the dollar amount of the damages. As of March 31, 2019, the Company has not recorded any amounts related to the damages incurred in its Consolidated Financial Statements, however the Company expects any and all damages to be paid by insurance less any associated deductibles.

The Company had outstanding performance and surety bonds of $341.4 million at March 31, 2019, related principally to its obligations for site improvements at various projects. The Company does not believe that draws upon these bonds, if any, will have a material effect on the Company’s financial position, results of operations or cash flows. As of March 31, 2019, the Company had $291.3 million of project commitments relating to the construction of projects.

See Note 7 for additional information relating to the Company’s guarantee arrangements.

In addition to the land bank agreement discussed below, the Company has entered into various purchase option agreements with third parties to acquire land. As of March 31, 2019, the Company has made non-refundable deposits of $143.7 million. The Company is under no obligation to purchase the land, but would forfeit remaining deposits if the land were not purchased. The total remaining purchase price under the option agreements is $744.2 million as of March 31, 2019.

Land Banking Arrangements

The Company enters into purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, thereby minimizing the use of funds from the Company’s available cash or other corporate financing sources and limiting the Company’s risk, the Company transfers the Company’s right in such purchase agreements to entities owned by third parties (“land banking arrangements”). These entities use equity contributions and/or incur debt to finance the acquisition and development of the land. The entities grant the Company an option to acquire lots in staged takedowns. In consideration for this option, the Company makes a non-refundable deposit of 15% to 25% of the total purchase price. The Company is under no obligation to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to penalties if the lots were not purchased. The Company does not have legal title to these entities or their assets and has not guaranteed their liabilities. These land banking arrangements help the Company manage the financial and market risk associated with land

31

holdings. As discussed above, with exception of the arrangement discussed below, these amounts are included in the total remaining purchase price mentioned above.

Summary information with respect to the Company’s consolidated land banking arrangements is as follows as of the period presented (dollars in thousands):

	March 31, 2019
Total number of land banking arrangements consolidated	3
Total number of lots	5,184
Total purchase price	$	452,967
Balance of lots still under option and not purchased:
Number of lots	4,002
Purchase price	$	294,085
Forfeited deposits if lots are not purchased	$	76,812

Lease Obligations

Lease obligations, as included in Accrued expenses on the consolidated balance sheets, were $14.2 million as of March 31, 2019 and $14.6 million as of December 31, 2018. The Company has non-cancelable operating leases primarily associated with office facilities, real estate and office equipment, in addition to one related sublease for an office facility. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Lease cost
Operating lease cost	$	1,444		$	2,009
Sublease income	—			(29		)
Total lease cost	$	1,444		$	1,980
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,223		$	1,767
Right-of-use assets obtained in exchange for new operating lease liabilities	$	78		$	1,696
Weighted-average discount rate	7.3		%	6.4		%

	March 31, 2019	December 31, 2018
Weighted-average remaining lease term (in years)	4.61	4.23

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2019 (in thousands).

32

Year Ending December 31,
Remaining in 2019	$	5,003
2020	5,126
2021	4,879
2022	3,553
2023	2,423
Thereafter	1,987
Total	$	22,971

33

Note 14—Subsequent Events

No events have occurred subsequent to March 31, 2019, that would require recognition or disclosure in the Company’s financial statements.

34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

WILLIAM LYON HOMES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The Company is one of the largest Western U.S. regional homebuilders. Headquartered in Newport Beach, California, the Company is primarily engaged in the design, construction, marketing and sale of single-family detached and attached homes in California, Arizona, Nevada, Colorado, Oregon, Washington and Texas. The Company’s core markets include Orange County, Los Angeles, San Diego, Riverside, San Bernardino, the South and East Bay Areas of San Francisco, Phoenix, Las Vegas, Denver, Fort Collins, Portland, Seattle, Houston, Austin and San Antonio. The Company has a distinguished legacy of more than 60 years of homebuilding operations, over which time it has sold in excess of 108,000 homes. The Company markets and sells its homes under the William Lyon Homes brand in all of its markets except for Washington and Oregon, where the Company operates under the Polygon Northwest brand. For the three months ended March 31, 2019 (the "2019 period"), the Company had revenues from homes sales of $453.8 million, a 22% increase from $372.4 million for the three months ended March 31, 2018 (the "2018 period"), which includes results from all seven reportable operating segments. The Company had net new home orders of 1,103 homes in the 2019 period, a decrease from 1,106 in the 2018 period, while the average number of sales locations increased 40% to 118 in the 2019 period from 84 in the 2018 period.

The following discussion of results of operations and financial condition contains forward-looking statements reflecting current expectations that involve risks and uncertainties. See the section titled, “CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS” included elsewhere in this Quarterly Report on Form 10-Q. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in such section.

Basis of Presentation

The accompanying condensed consolidated financial statements included herein have been prepared under U.S. Generally Accepted Accounting Principles ("U.S. GAAP"), and the rules and regulations of the Securities and Exchange Commission (the "SEC"), and are presented on a going concern basis, which assumes the Company will be able to operate in the ordinary course of its business and realize its assets and discharge its liabilities for the foreseeable future.

Overview

While the long-term fundamentals remain positive in the broader economy as well as our local markets, the cost of home ownership has increased with the significant price appreciation in several of our markets over the last few years. However, in conjunction with a relatively limited supply of new homes in all of our markets, we believe that homebuyer demand in the long term remains strong against our consistent homebuyer traffic levels.

Results of Operations

In the three months ended March 31, 2019, the Company delivered 949 homes, up 28%, and recognized home sales revenue of $453.8 million, up 22%, from the 2018 period, respectively. The Company generated net income available to common shareholders of $8.1 million for the three months ended March 31, 2019, and income per share of $0.22. The Company's average sales price ("ASP") of homes closed is $478,200, and our average sales price of homes in backlog is approximately $441,200 as of March 31, 2019, both of which are indicative of the Company's strategy to lower ASP through product segmentation, focusing on the entry level and first time move-up buyer.

On March 9, 2018, the Company completed its acquisition of the residential homebuilding operations of RSI Communities and its affiliates, such operations being referred herein as "RSI Communities", which marked the beginning of the Texas operating segment, in addition to expanding the Company's footprint in the California operating segment. Financial data herein as of March 31, 2018, and for the three months ended March 31, 2018 include operations for these operating segments for the period from March 9, 2018 (date of acquisition) through March 31, 2018, respectively.

As of March 31, 2019, the Company was selling homes in 122 communities. We had a consolidated backlog of 1,195 homes sold but not closed, with an associated sales value of $527.2 million.

Homebuilding gross margin percentage and adjusted homebuilding gross margin percentage was 16.0% and 20.5%, respectively, for the three months ended March 31, 2019, as compared to 17.5% and 22.7%, respectively, for the three months ended March 31, 2018.

35

Comparisons of the Three Months Ended March 31, 2019 to March 31, 2018

Revenues from homes sales increased 22% to $453.8 million during the three months ended March 31, 2019, compared to $372.4 million during the three months ended March 31, 2018. The increase in revenue is primarily due to the 28% increase in the number of homes closed during the 2018 period. The number of net new home orders for the three months ended March 31, 2019 was 1,103 homes, in-line with 1,106 homes for the three months ended March 31, 2018.

	Three Months Ended March 31,		Increase (Decrease)
	2019	2018	Amount		%
Number of Net New Home Orders
California	290	283	7		2	%
Arizona	112	108	4		4	%
Nevada	59	109	(50	)	(46	)%
Colorado	172	144	28		19	%
Washington	94	179	(85	)	(47	)%
Oregon	112	209	(97	)	(46	)%
Texas	264	74	190		257	%
Total	1,103	1,106	(3	)	—	%

Our orders activity for the quarter was in line with prior year on a consolidated basis, based on lower absorption in certain of our markets, and higher average sales locations. 2018 sales rates were significantly higher than 2017, and so during the first quarter of 2019, we have seen absorption more in line with 2017 levels.

	Three Months Ended March 31,				Increase (Decrease)
	2019		2018		%
Cancellation Rates
California	20	%	8	%	12	%
Arizona	12	%	15	%	(3	)%
Nevada	23	%	19	%	4	%
Colorado	9	%	9	%	—	%
Washington	5	%	9	%	(4	)%
Oregon	23	%	5	%	18	%
Texas	14	%	9	%	5	%
Overall	16	%	10	%	6	%

Cancellation rates during the 2019 period increased to 16% from 10% during the 2018 period. Cancellation rates typically are driven by personal factors affecting buyers and may not be indicative of any overarching trends. However, in California and Oregon, cancellation rates increased due to affordability concerns in the Bay Area of Northern California, and in Portland; two markets with significant price appreciation in 2017 and 2018.

36

	Three Months Ended March 31,		Increase (Decrease)
	2019	2018	Amount		%
Average Number of Sales Locations
California	35	22	13		59	%
Arizona	9	6	3		50	%
Nevada	13	12	1		8	%
Colorado	11	15	(4	)	(27	)%
Washington	10	9	1		11	%
Oregon	16	15	1		7	%
Texas	24	5	19		380	%
Total	118	84	34		40	%

The average number of sales locations for the Company increased to 118 locations for the three months ended March 31, 2019 compared to 84 for the three months ended March 31, 2018, driven by the 41 communities added in conjunction with a full quarter of operations in Texas and California, resulting from the prior year acquisition of RSI Communities.

	Three Months Ended March 31, 2019		Increase (Decrease)
	2019	2018
Quarterly Absorption Rates
California	8.3	12.9	(4.6)
Arizona	12.4	18.0	(5.6)
Nevada	4.5	9.1	(4.6)
Colorado	15.6	9.6	6.0
Washington	9.4	19.9	(10.5)
Oregon	7.0	13.9	(6.9)
Texas	11.0	14.8	(3.8)
Overall	9.3	13.2	(3.9)

The Company's consolidated quarterly absorption rate, representing the number of net new home orders divided by average sales locations for the period, decreased for the three months ended March 31, 2019 to 9.3 sales per project from 13.2 in the 2018 period driven primarily by lower absorption in certain of our markets, and higher average sales locations. As previously mentioned, 2018 sales rates were significantly higher than 2017, and so during the first quarter of 2019, we have seen absorption more in line with 2017 levels.

	March 31,		Increase (Decrease)
	2019	2018	Amount		%
Backlog (units)
California	261	388	(127	)	(33	)%
Arizona	181	164	17		10	%
Nevada	82	121	(39	)	(32	)%
Colorado	180	223	(43	)	(19	)%
Washington	63	176	(113	)	(64	)%
Oregon	120	177	(57	)	(32	)%
Texas	308	211	97		46	%
Total	1,195	1,460	(265	)	(18	)%

The Company’s backlog at March 31, 2019 decreased 18% to 1,195 units from 1,460 units at March 31, 2018. The decrease is primarily attributable to an increase in closings from the prior year coupled with a 91% backlog conversion rate during the three months ended March 31, 2019.

37

	March 31,				Increase (Decrease)
	2019		2018		Amount			%
	(dollars in thousands)
Backlog (dollars)
California	$	165,965	$	282,484	$	(116,519	)	(41	)%
Arizona	63,640		51,055		12,585			25	%
Nevada	42,467		80,379		(37,912		)	(47	)%
Colorado	79,875		90,312		(10,437		)	(12	)%
Washington	45,968		115,375		(69,407		)	(60	)%
Oregon	48,524		76,433		(27,909		)	(37	)%
Texas	80,752		56,093		24,659			44	%
Total	$	527,191	$	752,131	$	(224,940	)	(30	)%

The dollar amount of backlog of homes sold but not closed as of March 31, 2019 was $527.2 million, down 30% from $752.1 million as of March 31, 2018. The decrease primarily reflects a decrease in net new orders as described above, and a 14% decrease in the average sales price of homes in backlog when compared with the prior period. However, the Company is selling more spec units in the first quarter compared to the previous year.

In California, the dollar amount of backlog decreased to $166.0 million as of March 31, 2019 from $282.5 million as of March 31, 2018. This was primarily due to the 33% decrease in units in backlog, coupled with the decrease in ASP of homes in backlog for the 2018 period of 13% to $635,900 from $728,100 for the 2018 period.

In Arizona, the dollar amount of backlog increased 25% to $63.6 million as of March 31, 2019 from $51.1 million as of March 31, 2018, which is primarily attributable to a 10% increase in the number of units in backlog to 181 at March 31, 2019, from 164 at March 31, 2018 due to a 4% increase in new home orders, and a 13% increase in the ASP of homes in backlog when compared with the prior period.

In Nevada, the dollar amount of backlog decreased 47% to $42.5 million as of March 31, 2019 from $80.4 million as of March 31, 2018, primarily attributable to a 32% decrease in units in backlog to 82 as of March 31, 2019, from 121 as of March 31, 2018.

In Colorado, the dollar amount of backlog decreased 12% to $79.9 million as of March 31, 2019 from $90.3 million as of March 31, 2018, which is attributable to a 19% decrease in the number of units in backlog, to 180 units as of March 31, 2019, from 223 units as of March 31, 2018, partially offset by a 10% increase of the ASP of homes in backlog to $443,800 as of March 31, 2019 from $405,000 as of March 31, 2018.

In Washington, the dollar amount of backlog decreased 60% to $46.0 million as of March 31, 2019 from $115.4 million as of March 31, 2018, which is attributable to a 64% decrease in the number of units in backlog, to 63 units as of March 31, 2019, from 176 units as of March 31, 2018, partially offset by a 11% increase in the ASP of homes in backlog to $729,700 as of March 31, 2019 from $655,500 as of March 31, 2018.

In Oregon, the dollar amount of backlog decreased 37% to $48.5 million as of March 31, 2019 from $76.4 million as of March 31, 2018, which is primarily attributable to a 32% decrease in the number of units in backlog, to 120 units as of March 31, 2019, from 177 units as of March 31, 2018, and a 6% decrease in the ASP of homes in backlog to $404,400 in the 2019 period from $431,800 in the 2018 period.

In Texas, the dollar amount of backlog increased 44% to $80.8 million as of March 31, 2019 from $56.1 million as of March 31, 2018, which is primarily attributable to a 46% increase in the number of units in backlog, to 308 units as of March 31, 2019, from 211 units as of March 31, 2018, partially offset by a 1% decrease in the ASP of homes in backlog when compared with the prior period.

38

	Three Months Ended March 31,		Increase (Decrease)
	2019	2018	Amount		%
Number of Homes Closed
California	281	210	71		34	%
Arizona	89	105	(16	)	(15	)%
Nevada	71	74	(3	)	(4	)%
Colorado	126	93	33		35	%
Washington	72	94	(22	)	(23	)%
Oregon	120	104	16		15	%
Texas	190	60	130		217	%
Total	949	740	209		28	%

During the three months ended March 31, 2019, the number of homes closed increased 28% to 949 from 740 in the 2018 period. The increase was primarily attributable to an increase in homes closed in California and Colorado, bolstered by a full quarter of new home deliveries from the projects added through the acquisition of RSI Communities, which were slightly offset by the decreases in homes closed in Arizona, Nevada, and Washington.

	Three Months Ended March 31,				Increase (Decrease)
	2019		2018		Amount			%
	(dollars in thousands)
Home Sales Revenue
California	$	186,118	$	134,812	$	51,306		38	%
Arizona	29,594		32,039		(2,445		)	(8	)%
Nevada	37,705		49,176		(11,471		)	(23	)%
Colorado	56,036		40,063		15,973			40	%
Washington	41,851		54,668		(12,817		)	(23	)%
Oregon	51,087		46,853		4,234			9	%
Texas	51,384		14,774		36,610			248	%
Total	$	453,775	$	372,385	$	81,390		22	%

The 22% increase in homebuilding revenue is driven by the 28% increase in homes closed discussed above, slightly offset by the 5% decrease in the average sales price of homes closed between the 2019 and 2018 periods, which is primarily driven by product and geographical mix and was impacted by the lower price point from the Texas operating segment, which is below the Company average.

	Three Months Ended March 31,				Increase (Decrease)
	2019		2018		Amount			%
Average Sales Price of Homes Closed
California	$	662,300	$	642,000	$	20,300		3	%
Arizona	332,500		305,100		27,400			9	%
Nevada	531,100		664,500		(133,400		)	(20	)%
Colorado	444,700		430,800		13,900			3	%
Washington	581,300		581,600		(300		)	—	%
Oregon	425,700		450,500		(24,800		)	(6	)%
Texas	270,400		246,200		24,200			10	%
Company Average	$	478,200	$	503,200	$	(25,000	)	(5	)%

The average sales price of homes closed during the 2019 period decreased 5% primarily due to product and geographical mix, and was impacted by the lower price point from the Texas operating segment.

39

Construction Services Revenue

Construction services revenue was $2.1 million for the three months ended March 31, 2019, which was attributable to one project in Washington.

Gross Margin

Homebuilding gross margins decreased to 16.0% for the three months ended March 31, 2019 from 17.5% in the 2018 period, primarily driven by an increase in sales incentives, coupled with product and geographic mix for home deliveries.

For the comparison of the three months ended March 31, 2019 and the three months ended March 31, 2018, adjusted homebuilding gross margin percentage, which excludes previously capitalized interest included in cost of sales as well as the effect of adjustments recorded in relation to purchase accounting, was 20.5% for the 2019 period compared to 22.7% for the 2018 period. The decrease was primarily a result of the decrease in homebuilding gross margins described above coupled with the decrease in purchase accounting adjustments.

Adjusted homebuilding gross margin is a non-GAAP financial measure. The Company believes this information is meaningful as it isolates the impact that interest and purchase accounting have on homebuilding gross margin and permits investors to make better comparisons with the Company's competitors, who also break out and adjust gross margins in a similar fashion. For comparative purposes, purchase accounting is the net adjustment in basis related to the RSI Acquisition, specifically recorded to the California and Texas operating divisions. In the comparative presentation below, purchase accounting amounts related to previous acquisitions have been included in the prior period. See table set forth below reconciling this non-GAAP measure to homebuilding gross margin.

	Three Months Ended March 31,
	2019			2018
	(dollars in thousands)
Home sales revenue	$	453,775		$	372,385
Cost of home sales	381,044			307,308
Homebuilding gross margin	72,731			65,077
Homebuilding gross margin percentage	16.0		%	17.5		%
Add: Interest in cost of sales	20,415			18,804
Add: Purchase accounting adjustments	—			735
Adjusted homebuilding gross margin	$	93,146		$	84,616
Adjusted homebuilding gross margin percentage	20.5		%	22.7		%

Sales and Marketing, General and Administrative

	Three Months Ended March 31,				As a Percentage of Home Sales Revenue
	2019		2018		2019		2018
	(dollars in thousands)
Sales and Marketing	$	25,277	$	22,693	5.6	%	6.1	%
General and Administrative	29,126		24,521		6.4	%	6.6	%
Total Sales and Marketing & General and Administrative	$	54,403	$	47,214	12.0	%	12.7	%

Sales and marketing expense as a percentage of home sales revenue decreased to 5.6% in the 2019 period compared to 6.1% in the 2018 period, primarily due to a decrease in advertising and model operations expense during the current quarter. General and administrative expense decreased to 6.4% in the 2019 period compared to 6.6% in the 2018 period as a result of efficiencies gained from operating scale, partially offset by continued investment in our growing operating business, incremental information technology investment and further investment in building out our financial services group.

40

Equity in Income of Unconsolidated Joint Ventures

Equity in income of unconsolidated joint ventures remained consistent at $0.9 million for the three months ended March 31, 2019 and 2018.

Other Items

Interest activity for the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):

	Three Months Ended March 31,
	2019		2018
Interest incurred	$	24,081	$	19,258
Less: Interest capitalized	24,081		19,258
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	40,858	31,489

The increase in incurred interest for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 was due to an increase in the Company's borrowings in the 2019 period. In addition, the increase in cash paid for interest for the 2019 period compared to the 2018 period was due to timing of payments on interest for the Company's Senior Notes. The Company capitalized all of the interest it incurred during both periods presented due to its qualifying assets exceeding its outstanding debt.

Provision for Income Taxes

During the three months ended March 31, 2019, the Company recorded a provision for income taxes of $4.9 million, for an effective tax rate of 24.4%. During the three months ended March 31, 2018, the Company recorded a provision for income taxes of $2.8 million for an effective tax rate of 18.3%.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased to $7.0 million during the 2019 period, compared to $4.3 million during the 2018 period due to the increase in active projects the Company participates in through the joint ventures.

Net Income Available to Common Stockholders

As a result of the foregoing factors, net income available to common stockholders for the three months ended March 31, 2019 was $8.1 million, compared to net income available to common stockholders for the three months ended March 31, 2018 was $8.3 million.

41

Lots Owned and Controlled

The table below summarizes the Company’s lots owned and controlled as of the periods presented:

	March 31,		Increase (Decrease)
	2019	2018	Amount		%
Lots Owned
California	3,269	3,634	(365	)	(10	)%
Arizona	3,564	4,116	(552	)	(13	)%
Nevada	2,555	2,910	(355	)	(12	)%
Colorado	750	1,266	(516	)	(41	)%
Washington	1,423	1,377	46		3	%
Oregon	2,592	2,226	366		16	%
Texas	3,665	3,345	320		10	%
Total	17,818	18,874	(1,056	)	(6	)%
Lots Controlled (1)
California	1,292	1,985	(693	)	(35	)%
Arizona	660	651	9		1	%
Nevada	101	12	89		742	%
Colorado	2,333	822	1,511		184	%
Washington	758	793	(35	)	(4	)%
Oregon	1,652	1,910	(258	)	(14	)%
Texas	4,228	3,763	465		12	%
Total	11,024	9,936	1,088		11	%
Total Lots Owned and Controlled	28,842	28,810	32		—	%

(1) Lots controlled may be purchased by the Company as consolidated projects or may be purchased by newly formed joint ventures.

Total lots owned and controlled has increased to 28,842 lots owned and controlled at March 31, 2019 from 28,810 lots at March 31, 2018. Certain lots included in lots owned in California and Texas are associated with a land banking transaction that is consolidated on the Company’s accompanying balance sheet in accordance with ASC 470, as further discussed below.

42

Financial Condition and Liquidity

The U.S. housing market has continued to improve from the cyclical low points of the early years of the last real estate cycle. Strong housing markets have been associated with a healthy domestic economy and positive demographic trends, including employment and population growth. During the back half of 2018, with consumer concerns around affordability and rising interest rates, the Company experienced slower absorption rates than the first half of the year. Beginning in December 2018 and through 2019, consumer demand and absorption has improved, against a backdrop of lower interest rates. We believe that homebuyer demand in the long term remains strong against our consistent homebuyer traffic levels and relatively limited supply in all of our markets.

The Company benefits from a sizable and well-located lot supply, and as of March 31, 2019, the Company owned 17,818 lots, all of which are entitled, and had options to purchase an additional 11,024 lots. The Company’s lot supply reflects its balanced approach to land investment. The Company has a diverse mix of finished lots available for near-term homebuilding operations and longer-term strategic land positions to support future growth. The Company believes that its current inventory of owned and controlled lots is sufficient to supply the vast majority of its projected future home closings for the next several years. Consistent with the entire homebuilding industry, during 2018 and into 2019, the Company experienced increased cycle times and cost increases in a number of its operating segments due to weather delays and availability of qualified trades. The Company continues to implement new strategies to temper the impact of these challenges in an effort to manage cycle times and deliveries.

Since our initial public offering, which raised approximately $163.7 million of net proceeds, the Company has enjoyed access to the public equity and debt markets, which it has utilized as a significant source of financing for investing in land in our existing markets or financing expansion into new markets, such as the Company’s acquisition of RSI Communities during 2018 and Polygon Northwest Homes during 2014.

The Company provides for its ongoing cash requirements with the proceeds from capital markets transactions, as well as from internally generated funds from the sales of homes and/or land sales. During the three months ended March 31, 2019, the Company delivered 949 homes, and recognized home sales revenue of $453.8 million. During the three months ended March 31, 2019, the Company used cash in operations of $31.0 million, which included investment in land acquisitions of $70.8 million, for net cash generated by operations of $39.8 million, net of investment in land acquisitions. In addition, the Company has the option to use additional outside borrowing, form new joint ventures with partners that could provide a substantial portion of the capital required for certain projects, buy land via lot options or land banking arrangements, and engage in future transactions in the public equity and debt markets. The Company has financed, and may in the future finance, certain projects and land acquisitions with construction loans secured by real estate inventories, seller-provided financing, land banking transactions, and capital markets transactions. The Company may also draw on its revolving line of credit to fund land acquisitions, as discussed below. We believe we are well-positioned with a strong balance sheet and sufficient liquidity for supporting our ongoing operations and growth initiatives.

Acquisition of RSI Communities

On March 9, 2018, the Company acquired the residential homebuilding operations of RSI Communities for an aggregate cash purchase price of $479.3 million, which is inclusive of approximately $15.2 million of net asset related adjustments at closing. The Company financed the RSI Acquisition with a combination of proceeds from its issuance of $350 million in aggregate principal amount of 6.00% senior notes due 2023 and cash on hand including approximately $194.3 million of aggregate proceeds from a land banking arrangement with respect to land parcels located in California and Texas, including parcels acquired in the RSI Acquisition.

5.75% 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”).

During the three months ended March 31, 2018, the Company used the net proceeds from the offering of 6.00% Senior Notes due 2023, as further described below, (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150

43

million in aggregate principal amount of 5.75% Notes such that the 5.75% Notes were satisfied and discharged prior to December 31, 2018.

7 % Senior Notes due 2022

On August 11, 2014, WLH PNW Finance Corp. (“Escrow Issuer”), completed its offering 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 of Polygon Northwest Homes, 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 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, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.5 million and deferred loan costs of $2.9 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 $350 million in aggregate principal amount of 6.00% Senior Notes due 2023 and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, each as described below. 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.

6% Senior Notes Due 2023

On March 9, 2018, California Lyon completed its private placement with registration rights of 6.00% Senior Notes due 2023 (the "6.00% Notes"), in an aggregate principal amount of $350 million. The 6.00% Notes were issued at 100% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 6.00% Notes offering to (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150 million of the outstanding aggregate principal amount of the 5.75% Notes. In September 2018, the Company exchanged 100% of the 6.00% Notes tendered in the exchange offer for notes that are freely transferable and registered under the Exchange Act.

As of March 31, 2019, the outstanding principal amount of the 6.00% Notes was $350 million, excluding deferred loan costs of $5.8 million. The 6.00% Notes bear interest at a rate of 6.00% per annum, payable semiannually in arrears on March 1 and September 1, and mature on September 1, 2023. The 6.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 6.00% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, as described above and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, as described below. The 6.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 6.00% 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.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the prior year 8.5% Notes such that the entire aggregate $425

44

million of previously outstanding 8.5% Notes were retired and extinguished as of December 31, 2018. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding principal amount of the 5.875% Notes was $437 million, excluding unamortized discount of $2.7 million and deferred loan costs of $5.8 million. During the three months ended March 31, 2019, the Company retired approximately $4.0 million of the principal balance, resulting in $0.4 million of gain on debt extinguishment recognized through earnings. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022 and $350 million in aggregate principal amount of 6.00% Senior Notes due 2023, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% 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 Notes Covenant Compliance

The indentures governing the 7.00% Notes, the 6.00% Notes, and the 5.875% 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 Indenture. The Company was in compliance with all such covenants as of March 31, 2019.

Revolving Credit Facility

On May 21, 2018, California Lyon and Parent entered into a new credit agreement providing for an unsecured revolving credit facility of up to $325.0 million (the “New Facility”) with the lenders party thereto, which New Facility replaces the Company’s previous $170.0 million revolving credit facility, as described below. The New Facility will mature on May 21, 2021, unless terminated earlier pursuant to the terms of the New Facility. The New Facility contains an uncommitted accordion feature under which its aggregate principal amount can be increased to up to $500.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. Effective as of November 9, 2018, California Lyon increased the size of the commitment under its revolving credit facility by $40.0 million to an aggregate total of $365.0 million, through entry into a new lender supplement as of such date.

On December 31, 2018, California Lyon, Parent and the lenders party thereto entered into an amendment to the New Facility, which amended the maximum leverage ratio to extend the timing of the gradual step-downs, such that the leverage ratio remained at 65% through and included December 30, 3018, decreased to 62.5% on the last day of the 2018 fiscal year through and including December 30, 2019, and further decreases and remains at 60% on December 31, 2019 and thereafter. The amendment did not revise any of our other financial covenants thereunder.

Borrowings under the New Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent’s wholly-owned subsidiaries (such subsidiaries, the “Guarantors”), and may be used for general corporate purposes. As of March 31, 2019, the commitment fee on the unused portion of the New Facility accrues at an annual rate of 0.50%. As of March 31, 2019, the Company had $110.0 million outstanding against the New Facility at an effective rate of 6.6%, as well as a letter of credit for $7.2 million. As of December 31, 2018, the Company had $45.0 outstanding against the New Facility at an effective rate of 7.5%, as well as a letter of credit for $8.6 million.

The New Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $556.4 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65% as of December 30, 2018, further decreased to 62.5% effective as of December 31, 2018, through and including December 30, 2019, and further decreases to and remains at 60% thereafter, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our

45

consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the New Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The New Facility also 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 New Facility and permit the Lenders to accelerate payment on outstanding borrowings under the New Facility and require cash collateralization of outstanding letters of credit. If a change of control (as defined in the New Facility) occurs, the Lenders may terminate the commitments under the New Facility and require that the Borrower repay outstanding borrowings under the New 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 Company was in compliance with all covenants under the New Facility as of March 31, 2019. The following table summarizes these covenants pursuant to the New Facility, and our compliance with such covenants as of March 31, 2019:

	Covenant Requirements at			Actual at
Financial Covenant	March 31, 2019			March 31, 2019
Minimum Tangible Net Worth	$	642.5	million	$	901.5	million
Maximum Leverage Ratio	62.5		%	59.8		%
Interest Coverage Ratio; or (1)	1.5			2.5
Minimum Liquidity (1)	$	96.9	million	$	197.1	million

(1)    We are required to meet either the Interest Coverage Ratio or Minimum Liquidity, but not both.

Although the Company does not believe it is likely to breach any of the covenants listed above, including the maximum leverage ratio covenant, based on its current expectations and assumptions, there are certain steps that the Company could take to decrease the likelihood of any breach in the event it was determined that a breach was reasonably likely. The Company remains focused on continuing to drive top line revenue growth which it believes will improve cash flow and generate earnings. In addition, there are certain discretionary levers that the Company has the ability to utilize to the extent it is determined that near-term steps are needed to manage to covenant requirements. For example, land acquisition and development is a strategic investment by the Company to support our future growth plans. While the Company intends to continue to acquire land that it believes is accretive to the Company, the Company's currently owned and controlled land position enables it to be selective and nimble in its future acquisition strategy. The Company also has the option to form new joint ventures with partners that could provide a substantial portion of the capital required for certain projects, purchase land through lot options or land banking arrangements, as well as utilizing such financing structures as a means to generate incremental cash flow, or adjust the timing of housing starts. In addition, during the three months ended March 31, 2019, the Company paid approximately $70.8 million for land and land developments. Such spending related to land owned is a discretionary component that the Company can temper as needed to reduce cash outflow, and it believes it can do so without a significant impact on near-term operating results.

The New 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, including those financial covenants identified above; 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 New Facility and permit the lenders to accelerate payment on outstanding borrowings under the New Facility and require cash collateralization of outstanding letters of credit, if we are unable to amend the New Facility, secure a waiver of the default from the lenders or otherwise cure the default. Further, acceleration of the New Facility borrowings may result in the acceleration of other debt to which a cross-acceleration or cross-default provision applies, including but not limited to our senior notes as described above to the extent the acceleration is above certain threshold amounts, and the triggering default is not cured or waived or any acceleration rescinded, as well as certain notes payable.

In addition, if a change in control (as defined in the New Facility) occurs, the lenders may terminate the commitments under the New Facility and require that the Company repay outstanding borrowings under the New Facility and cash collateralize outstanding letters of credit.

46

The Company believes it has access to alternate sources of funding to pay off existing obligations or replace funding under the New Facility should there be a likelihood of, or anticipated, breach of any covenants, including cash generated from operations and opportunistic land sales. In addition, the Company has capacity under the restrictive covenants of its senior notes indentures to incur additional indebtedness which it can do through access to the debt capital markets, and the Company believes it can also raise equity in the capital markets.

Seller Financing

During thethree months ended March 31, 2018, the Company paid in full prior to maturity, along with all accrued interest to date, a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum and was secured by the underlying land.

Notes Payable

    The Company and certain of its consolidated joint ventures have entered into notes payable agreements. The issuance date, facility size, maturity date and interest rate of the joint ventures notes payable are listed in the table below as of March 31, 2019 (in millions):

Issuance Date	Facility Size		Outstanding		Maturity	Current Rate
March, 2019	18.9		$	0.4	November, 2020	5.38	%	(3)
May, 2018	128.0		86.7		May, 2021	5.49	%	(2)
May, 2018	13.3		11.1		June, 2020	5.38	%	(3)
July, 2017	66.2		31.7		February, 2021	5.56	%	(2)
January, 2016	35.0		14.0		August, 2019	5.75	%	(1)
	$	261.4	$	143.9

(1) Loan bears interest at LIBOR +3.25%.

(2) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

(3) Loan bears interest at LIBOR +2.90%.

In addition to the above, the Company had $1.2 million of construction notes payable outstanding related to projects that are wholly-owned by the Company.

The notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of March 31, 2019.

Net Debt to Total Capital

The Company’s ratio of net debt to total capital (net of cash) was 56.6% and 55.9% as of March 31, 2019 and December 31, 2018, respectively. The ratio of net debt to total capital (net of cash) is a non-GAAP financial measure, which is calculated by dividing notes payable and Senior Notes, net of cash and cash equivalents, by net book capital (notes payable and Senior Notes, net of cash and cash equivalents, plus total equity). The Company believes this calculation is a relevant and useful financial measure to investors in understanding the leverage employed in its operations, and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. See table set forth below reconciling this non-GAAP measure to the ratio of debt to total capital.

47

	March 31, 2019			December 31, 2018
	(dollars in thousands)
Notes payable and Senior Notes	$	1,375,506		$	1,321,345
Total equity	1,020,201			1,014,327
Total capital	$	2,395,707		$	2,335,672
Ratio of debt to total capital	57.4		%	56.6		%
Notes payable and Senior Notes	$	1,375,506		$	1,321,345
Less: Cash and cash equivalents	(45,709		)	(33,779		)
Net debt	1,329,797			1,287,566
Total equity	1,020,201			1,014,327
Total capital (net of cash)	$	2,349,998		$	2,301,893
Ratio of net debt to total capital (net of cash)	56.6		%	55.9		%

Land Banking Arrangements

As a method of acquiring land in staged takedowns, thereby minimizing the use of funds from the Company’s available cash or other corporate financing sources and limiting the Company’s risk, the Company transfers its right in such purchase agreements to entities owned by third parties, or land banking arrangements. These entities use equity contributions and/or incur debt to finance the acquisition and development of the land being purchased. The entities grant the Company an option to acquire lots in staged takedowns. In consideration for this option, the Company makes a non-refundable deposit of 15% to 25% of the total purchase price. The Company is under no obligation to purchase the balance of the lots, but would forfeit remaining deposits and could be subject to penalties if the lots were not purchased. The Company does not have legal title to these entities or their assets and has not guaranteed their liabilities. These land banking arrangements help the Company manage the financial and market risk associated with land holdings. The use of these land banking arrangements is dependent on, among other things, the availability of capital to the option provider, general housing market conditions and geographic preferences.

The Company participated in three land banking arrangements during the three months ended March 31, 2019 that were not variable interest entities in accordance with FASB ASC Topic 810, Consolidation (“ASC 810”), but was consolidated in accordance with FASB ASC Topic 470, Debt (“ASC 470”). Under the provisions of ASC 470, the Company had determined it is economically compelled, based on certain factors, to purchase the land in the land banking arrangements. Therefore, the Company has recorded the remaining purchase price of the land of $294.1 million as of March 31, 2019, which was included in Real estate inventories not owned and Liabilities from inventories not owned in the accompanying balance sheet.

Summary information with respect to the Company’s consolidated land banking arrangements is as follows as of the period presented (dollars in thousands):

	March 31, 2019
Total number of land banking arrangements consolidated	3
Total number of lots	5,184
Total purchase price	$	452,967
Balance of lots still under option and not purchased:
Number of lots	4,002
Purchase price	$	294,085
Forfeited deposits if lots are not purchased	$	76,812

Joint Venture Financing

The Company and certain of its subsidiaries are general partners or members in joint ventures involved in the development and sale of residential projects. As described more fully in Critical Accounting Policies—Variable Interest Entities, certain joint ventures have been determined to be variable interest entities in which the Company is considered the primary beneficiary. Accordingly, the assets, liabilities and operations of these joint ventures have been consolidated with the Company’s financial statements for the periods presented. The financial statements of joint ventures in which the Company is not considered the primary beneficiary are not consolidated with the Company’s financial statements. The Company’s investments in unconsolidated joint ventures are accounted for using the equity method because the Company has a 50% or less

48

voting or economic interest (and thus such joint ventures are not controlled by the Company). Based upon current estimates, substantially all future development and construction costs incurred by the joint ventures will be funded by the venture partners or from the proceeds of construction financing obtained by the joint ventures.

Cash Flows—Comparison of the Three Months Ended March 31, 2019 to the Three Months Ended March 31, 2018

For the three months ended March 31, 2019 and 2018, the comparison of cash flows is as follows:

• Net cash used in operating activities was $31.0 million in the 2019 period compared to $98.0 million provided by in the 2018 period. The change was primarily a result of (i) a net decrease in spending on real estate inventories-owned of $30.9 million, compared to $79.9 million in the 2018 period, (ii) a decrease in accrued expenses of $53.0 million in the 2019 period compared to a decrease of $21.5 million in the 2018 period, and (iii) a decrease in accounts payable of $19.9 million in the 2019 period compared to an increase of $20.7 million in the 2018 period due to timing of payments

• Net cash provided by investing activities was $1.4 million in the 2019 period due to an increase in purchases of property and equipment of $1.4 million in the 2019 period compared to $2.4 million in the 2018 period. During 2018, the Company had an outflow of $475.2 million relating to the acquisition of RSI Communities.

• Net cash provided by financing activities decreased to $41.6 million in the 2019 period from $247.4 million in the 2018 period. The change was primarily the result of (i) proceeds of $350.0 million from the issuance of the 6% Senior Notes in the 2018 period, for which there is no comparable amount in the 2019 period (ii) net proceeds from borrowings of $65.0 million against the revolving line of credit in the 2019 period, versus $85.0 million in the 2018 period, partially offset by (iii) principal payments of the 5.75% Senior Notes of $150.0 million in the 2018 period, for which there is no comparable amount in the 2019 period, (iv) net payments on borrowings of $7.8 million against notes payable in the 2019 period compared to $9.0 million in the 2018 period, and (v) net noncontrolling interest distributions of $9.7 million in the 2019 period compared to $13.0 million in the 2018 period

Based on capital market access and expected sales volume, the Company believes it has sufficient cash and sources of financing for at least the next twelve months.

Contractual Obligations and Off-Balance Sheet Arrangements

The Company enters into certain off-balance sheet arrangements including joint venture financing, option agreements, land banking arrangements and variable interests in unconsolidated entities. These arrangements are more fully described above and in Notes 3 and 13 of “Notes to Condensed Consolidated Financial Statements.” In addition, the Company is party to certain contractual obligations, including land purchases and project commitments, which are detailed in Note 13 of “Notes to Condensed Consolidated Financial Statements.”

Inflation

The Company’s revenues and profitability may be affected by increased inflation rates and other general economic conditions. In periods of high inflation, demand for the Company’s homes may be reduced by increases in mortgage interest rates. Further, the Company’s profits will be affected by increases in the costs of land, construction, labor and administrative expenses. The Company’s ability to raise prices at such times will depend upon demand and other competitive factors.

Description of Projects and Communities Under Development

The Company’s homebuilding projects usually take two to five years to develop. The following table presents project information relating to each of the Company’s homebuilding operating segments as of March 31, 2019, which includes lots owned as of March 31, 2019, lots consolidated in accordance with certain accounting principles as of March 31, 2019, homes either closed or in backlog as of or for the period ended March 31, 2019, parcels of undeveloped land held for future sale, and lots controlled as of March 31, 2019. The following table includes certain information that is forward-looking or predictive in nature and is based on expectations and projections about future events. Such information is subject to a number of risks and uncertainties, and actual results may differ materially from those expressed or forecast in the table below. In addition, we undertake no obligation to update or revise the information in the table below to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to projections over time. See "CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS" included in this Quarterly Report on Form 10-Q.

49

	Estimated Number of Homes at Completion (1)	Cumulative Homes Closed as of March 31, 2019 (2)	Backlog at March 31, 2019 (3) (4)	Lots Owned or Controlled as of March 31, 2019 (5)	Homes Closed for the Three Months Ended March 31, 2019	Estimated Sales Price Range (6)
California	6,319	1,758	261	4,561	281	$ 301,000 - 2,991,000
Arizona	5,466	1,242	181	4,224	89	$ 179,990 - 492,990
Nevada	2,178	771	82	2,656	71	$ 207,500 - 1,592,500
Colorado	3,848	765	180	3,083	126	$ 273,000 - 610,000
Washington	2,902	721	63	2,181	72	$ 284,990 - 1,319,990
Oregon	4,871	627	120	4,244	120	$ 199,990 - 894,990
Texas	8,722	790	308	7,893	190	$ 192,990 - 454,990
GRAND TOTALS	34,306	6,674	1,195	28,842	949

(1) The estimated number of homes to be built at completion is approximate and includes home sites in our backlog. Such estimated amounts are subject to change based on, among other things, future site planning, as well as zoning and permit changes, and there can be no assurance that the Company will build these homes. Further, certain projects may include lots that the Company controls, and that are also reflected in "Lots Owned or Controlled as of March 31, 2019".

(2) “Cumulative Homes Closed” represents homes closed since the project opened, and may include prior years, in addition to the homes closed during the current year presented.

(3) Backlog consists of homes sold under sales contracts that have not yet closed, and there can be no assurance that closings of sold homes will occur.

(4) Of the total homes subject to pending sales contracts as of March 31, 2019, 1,043 represent homes that are completed or under construction.

(5) Lots owned or controlled as of March 31, 2019 include lots in backlog at March 31, 2019 and projects with lots owned as of March 31, 2019 that are expected to open for sale and have an estimated year of first delivery of 2020 or later, as well as lots controlled as of March 31, 2019, and parcels of undeveloped land held for future sale. Certain lots controlled are under land banking arrangements which may become owned and produce deliveries during 2019. Actual homes at completion may change prior to the marketing and sales of homes in these projects and the sales price ranges for these projects are to be determined and will be based on current market conditions and other factors upon the commencement of active selling. There can be no assurance that the Company will acquire any of the controlled lots reflected in these amounts.

(6) Estimated sales price range reflects the most recent pricing updates of the base price only and excludes any lot premium, buyer incentive and buyer selected options, which vary from project to project. Sales prices reflect current pricing estimates and might not be indicative of past or future pricing. Further, any potential benefit to be gained from an increase in sales price ranges as compared to previously estimated amounts may be offset by increases in costs, profit participation, and other factors.

Income Taxes

See Note 10 of “Notes to Condensed Consolidated Financial Statements” for a description of the Company’s income taxes.

Critical Accounting Policies

The Company’s financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and costs and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those which impact its most critical accounting policies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, the Company’s most critical accounting policies are real estate inventories and cost of sales; impairment of real estate inventories; variable interest entities; and business combinations. Management believes that there have been no significant changes to these policies during the three months ended March 31, 2019, as compared to those

50

disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report on Form 10-K for the year ended December 31, 2018.

51

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk for changes in interest rates relates to the Company’s floating rate debt with a total outstanding balance at March 31, 2019 of $254.0 million where the interest rate is variable based upon certain bank reference or prime rates. The prime rate during the three months ended March 31, 2019 was approximately 5.50%. Based upon the amount of variable rate debt held by the Company, and holding the variable rate debt balance constant, each 1% increase in interest rates would increase the amount of interest expense incurred by the Company by approximately $1.4 million.

The following table presents principal cash flows by scheduled maturity, interest rates and the estimated fair value of our long-term fixed rate debt obligations as of March 31, 2019 (dollars in thousands):

	Years ending December 31,												Thereafter		Total		Fair Value at March 31, 2019
	2019		2020		2021		2022			2023
Fixed rate debt	$	1,204	$	—	$	—	$	350,000		$	350,000		$	436,886	$	1,138,090	$	1,101,525
Interest rate	—		—		—		7.0		%	6.0		%	5.875%

The Company does not utilize swaps, forward or option contracts on interest rates, foreign currencies or commodities, or other types of derivative financial instruments as of or during the three months ended March 31, 2019. The Company does not enter into or hold derivatives for trading or speculative purposes.

52

Item 4. Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and, in reaching a reasonable level of assurance, our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures.

Evaluation of Disclosure Controls and Procedures. We carried out an evaluation as of March 31, 2019, under the supervision and with the participation of our management, including our President and Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based upon their evaluation and subject to the foregoing, our President and Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2019, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting. Our management determined that as of March 31, 2019, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

53

WILLIAM LYON HOMES

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various legal proceedings, most of which relate to routine litigation and some of which are covered by insurance. These matters are subject to many uncertainties and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. Nevertheless, in the opinion of the Company’s management, the Company does not have any currently pending litigation of which the outcome will have a material adverse effect on the Company’s operations or financial position.

Item 1A. Risk Factors

You should carefully consider the risks described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2018, as our business, financial condition and results of operations could be adversely affected by any of the risks and uncertainties described therein. There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. Some statements in this Quarterly Report on Form 10-Q, including statements in the risk factors, constitute forward-looking statements. Please refer to the section titled, “CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS” included elsewhere in this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below summarizes the number of shares of our Class A Common Stock that were repurchased during the three month period ended March 31, 2019.

Month Ended	Total Number of Shares Purchased (1) (2)	Average Price Paid Per Share		Total Number of Shares Purchased from Certain Employees (1)	Total Number of Shares Purchased under the Stock Repurchase Program (2)	Approximate Dollar Value of Shares that may yet be Repurchased under the Stock Repurchase Program
January 31, 2019	—	N/A		—	—	$	31,537,306
February 28, 2019	—	N/A		—	—	31,537,306
March 31, 2019	165,822	$	14.10	165,822	—	31,537,306
Total	165,822			165,822	—

⁽¹⁾ The Company repurchased 165,822 shares from certain employees to facilitate income tax withholding payments pertaining to stock-based compensation awards that vested during the three month period ended March 31, 2019. Such shares were not repurchased pursuant to a publicly announced plan or program.

⁽²⁾ As announced on February 22, 2017, the Board of Directors of the Company has approved a stock repurchase program, authorizing the repurchase of up to an aggregate of $50 million of the Company's Class A common stock. The program allows the Company to repurchase shares of Class A common stock from time to time for cash in the open market or privately negotiated transactions or other transactions, as market and business conditions warrant and subject to applicable legal requirements. The stock repurchase program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time.

Item 3. Defaults Upon Senior Securities

None.

54

Item 4. Mine Safety Disclosure

Not applicable.

Item 5. Other Information

Not applicable.

55

Item 6. Exhibits

Exhibit Index

Exhibit No.	Description
10.1	Employment Agreement by and among William Lyon Homes, William Lyon Homes, Inc. and Matthew R. Zaist, dated as of January 18, 2019 (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed January 23, 2019).
10.2	Employment Agreement by and among William Lyon Homes, William Lyon Homes, Inc. and William H. Lyon, dated as of January 18, 2019 (incorporated by reference to Exhibit 10.2 of the Company's Form 8-K filed January 23, 2019).
10.3+	William Lyon Homes Amended and Restated 2012 Equity Incentive Plan Form of Performance Stock Unit Award Agreement
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

+

Filed herewith

*

The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

** Pursuant to Rule 406T of Regulation S-T, the XBRL information will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 and will not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those Sections.

56

WILLIAM LYON HOMES

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WILLIAM LYON HOMES,
	a Delaware corporation
Date: May 7, 2019	By:	/S/    COLIN T. SEVERN
		Colin T. Severn
		Senior Vice President, Chief Financial Officer (Principal Accounting Officer and Duly Authorized Signatory)

57

Exhibit Index

Exhibit No.	Description
10.1	Employment Agreement by and among William Lyon Homes, William Lyon Homes, Inc. and Matthew R. Zaist, dated as of January 18, 2019 (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed January 23, 2019).
10.2	Employment Agreement by and among William Lyon Homes, William Lyon Homes, Inc. and William H. Lyon, dated as of January 18, 2019 (incorporated by reference to Exhibit 10.2 of the Company's Form 8-K filed January 23, 2019).
10.3+	William Lyon Homes Amended and Restated 2012 Equity Incentive Plan Form of Performance Stock Unit Award Agreement
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document.
101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

+

Filed herewith

*

The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

** Pursuant to Rule 406T of Regulation S-T, the XBRL information will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 and will not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those Sections.

58

EX-10.3

WILLIAM LYON HOMES

AMENDED AND RESTATED 2012 EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD GRANT NOTICE

William Lyon Homes, a Delaware corporation, (the “Company”), pursuant to its Amended and Restated 2012 Equity Incentive Plan, as amended from time to time (the “Plan”), hereby grants to the individual listed below (the “Participant”), in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the number of Performance Stock Units set forth below (the “Performance Stock Units” or “PSUs”). If and when it vests, each PSU that becomes an Earned PSU (as defined in, and determined in accordance with, Exhibit B) entitles the Participant to receive a number of shares of the Company’s Class A Common Stock (each, a “Share”) as determined below. This PSU award is subject to all of the terms and conditions as set forth herein and in the Performance Stock Unit Award Agreement attached hereto as Exhibit A (the “Agreement”), the Performance Conditions attached hereto as Exhibit Band the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Performance Stock Unit Award Grant Notice (the “Grant Notice”) and the Agreement.

Participant:	[___]
Grant Date:	[___]
Total Number of PSUs:	[___]
Vesting:	Subject to the terms and conditions of the Plan, this Grant Notice and the Agreement, and subject to the Participant’s continued service to the Company through each applicable vesting date, the Earned PSUs (as determined in accordance with Exhibit B) shall vest as to one-third of the Earned PSUs on each of __________, 20__, 20__ and 20__. The maximum number of Shares that may be issued in respect of the PSUs is [___].

By the Participant’s signature and the Company’s signature below, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice. The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement. In addition, by signing below, the Participant also agrees that the Company, in its sole discretion, may satisfy any withholding obligations in accordance with Section 2.6(b) of the Agreement by (i) withholding Shares otherwise issuable to the Participant following the vesting of the PSUs, (ii) instructing a broker on the Participant’s behalf to sell Shares otherwise issuable to the Participant following the vesting of the PSUs and submit the proceeds of such sale to the Company, or (iii) using any other method permitted by Section 2.6(b) of the Agreement or the Plan.

1

WILLIAM LYON HOMES:	PARTICIPANT:
By:	By:
Print Name:	Print Name:
Title:
Address:	Address:

2

EXHIBIT A

TO PERFORMANCE STOCK UNIT AWARD GRANT NOTICE

PERFORMANCE STOCK UNIT AWARD AGREEMENT

William Lyon Homes, a Delaware corporation (the “Company”), pursuant to the Company’s Amended and Restated 2012 Equity Incentive Plan, as amended from time to time (the “Plan”) and in accordance with the Performance Stock Unit Award Grant Notice to which this Performance Stock Unit Award Agreement is attached (the “Grant Notice”), has granted to the Participant an award of performance stock units (“Performance Stock Units”or“PSUs”). The PSUs are subject to all of the terms and conditions set forth in this Performance Stock Unit Award Agreement (collectively with the Grant Notice and Exhibit B thereto, the “Agreement”) and the Plan.

ARTICLE I.

GENERAL

1.1Incorporation of Terms of Plan. The PSUs are subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

1.2Defined Terms. Wherever the following terms are used in this Agreement they shall have the meanings specified below, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.

(a)“Change in Control” shall have the meaning set forth in any employment, consulting or similar agreement with the Company or any of its Affiliates to which the Participant is a party on the date of grant, and in the absence of such agreement or definition, “Change in Control” shall have the meaning set forth in the Plan.

(b)“Termination of Consultancy” shall mean the time when the engagement of the Participant as a Consultant to the Company or an Affiliate is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation, discharge, death, Disability or retirement, but excluding: (a) terminations where there is a simultaneous employment or continuing employment of the Participant by the Company or any Affiliate, and (b) terminations where there is a simultaneous re-establishment of a consulting relationship or continuing consulting relationship between the Participant and the Company or any Affiliate. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Consultancy, including, but not by way of limitation, the question of whether a particular leave of absence constitutes a Termination of Consultancy. Notwithstanding any other provision of the Plan, the Company or any Affiliate has an absolute and unrestricted right to terminate a Consultant’s service at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in writing.

A-1

(c)“Termination of Directorship” shall mean the time when the Participant, if he or she is or becomes a Non-Employee Director, ceases to be a Non-Employee Director for any reason, including, but not by way of limitation, a termination by resignation, failure to be elected, death or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters and questions relating to Termination of Directorship with respect to Non-Employee Director.

(d)“Termination of Employment” shall mean the time when the employee-employer relationship between the Participant and the Company or any Affiliate is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement, but excluding: (a) terminations where there is a simultaneous reemployment or continuing employment of the Participant by the Company or any Affiliate, and (b) terminations where there is a simultaneous establishment of a consulting relationship or continuing consulting relationship between the Participant and the Company or any Affiliate. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, the question of whether a particular leave of absence constitutes a Termination of Employment.

(e)“Termination of Services” shall mean the Participant’s Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.

1.3General. Each PSU represents the right to receive a number of Shares determined in accordance with Exhibit B if and when it vests. The PSUs shall not be treated as property or as a trust fund of any kind.

ARTICLE II.

GRANT OF PERFORMANCE STOCK UNITS

2.1Grant of PSUs. In consideration of the Participant’s continued employment with or service to the Company or an Affiliate and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company granted the Participant the number of PSUs set forth in the Grant Notice.

2.2Company’s Obligation to Pay. Subject to and until the PSUs shall have vested in the manner set forth in Article II hereof, the Participant will have no right to payment of any such PSUs. Prior to actual payment of any vested PSUs, such PSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

2.3Vesting Schedule. Subject to Section 2.4, the PSUs will vest and become nonforfeitable according to the vesting schedule set forth in the Grant Notice. Except as set forth in Section 2.4 and unless otherwise determined by the Administrator, employment or service for a portion, even a substantial portion, of the vesting period will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a Termination of Services as provided in Section 2.5 below.

A-2

2.4Change in Control Treatment; Acceleration. Notwithstanding any other provision of this Agreement to the contrary, in the event of a Change in Control or Termination of Services, the vesting of the Earned PSUs (if any) shall notaccelerate except to the extent provided in an employment or other agreement between the Participant and the Company in effect as of the date of such Change in Control or Termination of Services. For purposes of this Section 2.4, in the event of a Change in Control or Termination of Services, “Earned PSUs” shall be the number of PSUs equal to (x) the “Target PSUs” (as defined in Exhibit B) before the “Determination Date” (as defined in Exhibit B), or (y) the “Earned PSUs” (as determined in accordance with Exhibit B) on or after the Determination Date.

2.5Forfeiture; Termination. Subject to Section 2.4, upon the Participant’s Termination of Services for any reason prior to a vesting date, any then-unvested PSUs will be automatically forfeited, terminated and cancelled as of the applicable termination date without payment of any consideration by the Company, and the Participant, or the Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder. In addition, any PSUs that do not become Earned PSUs on the Determination Date in accordance with Exhibit B will be automatically forfeited, terminated and cancelled as of the Determination Date without payment of any consideration by the Company, and the Participant, or the Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder.

2.6Payment after Vesting.

(a)As soon as administratively practicable following the vesting of any Earned PSUs pursuant to Section 2.3, but in no event later than the 30th day following the applicable vesting date, the Company shall deliver to the Participant that number of Shares equal to the number of Earned PSUs that vested on the applicable vesting date. Notwithstanding the foregoing, to the extent permitted by Section 409A (as defined below), in the event Shares cannot be issued because of the failure to meet one or more of the conditions set forth in Sections 2.9(a), (b) or (c) hereof, then the Shares shall be issued pursuant to the preceding sentence as soon as administratively practicable after the Administrator determines that Shares can again be issued in accordance with Sections 2.9(a), (b) and (c) hereof. In no event will the PSUs be settled in cash.

(b)The Company or its Affiliates shall be entitled to require a cash payment (or to elect, or permit the Participant to elect, such other form of payment determined in accordance with Section 10.1 of the Plan) by or on behalf of the Participant and/or to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to the PSUs or the issuance of Shares. In satisfaction of the foregoing requirement with respect to the PSUs or the issuance of Shares, unless otherwise determined by the Company, the Company or its Affiliates shall withhold Shares otherwise issuable in respect of the PSUs having a fair market value equal to the sums required to be withheld by federal, state and/or local tax law. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any new certificate representing Shares to the Participant or the Participant’s legal representative or enter any such Shares in book entry form unless and until the Participant or the Participant’s legal representative, as applicable,

A-3

shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant resulting from the PSUs or the issuance of Shares.

2.7Rights as Stockholder. As a holder of PSUs the Participant is not, and does not have any of the rights or privileges of, a stockholder of the Company, including, without limitation, any dividend rights or voting rights, in respect of the PSUs and any Shares issuable upon vesting or settlement thereof unless and until such Shares shall have been issued by the Company to the Participant.

2.8Dividends. The Participant shall be entitled to receive payments equal to any cash dividends and other distributions paid prior to the settlement of the PSUs with respect to that number of Shares issued following the vesting of the PSUs, such cash payment to be made at the same time that Shares are delivered to the Participant in respect of the PSUs. If any dividends or distributions are paid in Shares prior to the settlement of the PSUs, the number of PSUs shall be proportionately increased to reflect such Share dividend.

2.9Conditions to Delivery of Shares. Subject to Section 13.1 of the Plan, the Shares deliverable hereunder, or any portion thereof, may be either previously authorized but unissued Shares or issued Shares which have then been reacquired by the Company. Such Shares shall be fully paid and nonassessable. Unless an applicable exemption otherwise applies to the Company or the Participant, as applicable, the Company shall not be required to issue or deliver any Shares deliverable hereunder prior to fulfillment of all of the following conditions:

(a)The admission of such Shares to listing on all stock exchanges on which the Shares are then listed;

(b)The completion of any registration or other qualification of such Shares under any state, federal or foreign law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;

(c)The obtaining of any approval or other clearance from any state, federal or foreign governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;

(d)The receipt by the Company of full payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 2.6 hereof; and

(e)The lapse of such reasonable period of time following a vesting date as the Administrator may from time to time establish for reasons of administrative convenience.

ARTICLE III.

OTHER PROVISIONS

A-4

3.1Grant is Not Transferable. The PSUs may not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the PSUs, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, the PSUs will terminate immediately and will become null and void.

3.2Notices. Any notice to be given under the terms of this Agreement shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to the Participant shall be addressed to the Participant at the Participant’s last address reflected on the Company’s records. Any notice shall be deemed duly given when sent via email or when sent by reputable overnight courier or by certified mail (return receipt requested) through the United States Postal Service.

3.3Not a Contract of Service Relationship. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an Employee or other service provider of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and the Participant.

3.4Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

3.5Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state and foreign securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the PSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.    

3.6Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board, provided, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the PSUs in any material way without the Participant’s prior written consent.

3.7Successors and Assigns. The Company or any Affiliate may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company and its Affiliates. Subject to the restrictions on transfer herein set

A-5

forth in Section 3.3 hereof, this Agreement shall be binding upon the Participant and his heirs, executors, administrators, successors and assigns.

3.8Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, the Plan, the PSUs and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

3.9Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other service provider of the Company or any of its Affiliates.

3.10Entire Agreement. The Plan, the Grant Notice and this Agreement (including all Exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and its Affiliates and the Participant with respect to the subject matter hereof.

3.11Section 409A. The PSUs are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Agreement, if at any time the Administrator determines that the PSUs (or any portion thereof) may be subject to Section 409A, the Administrator shall adopt such amendments to the Plan or this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate either for the PSUs to be exempt from the application of Section 409A or to comply with the requirements of Section 409A, provided that no such amendments, policies, procedures or other alterations to this Agreement or the PSUs shall reduce the Participant’s originally-intended economic benefits.

3.12Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the PSUs, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to PSUs, as and when payable hereunder.

A-6

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew R. Zaist, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of William Lyon Homes;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2019	/S/ Matthew R. Zaist
	Matthew R. Zaist
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Colin T. Severn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of William Lyon Homes;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2019	/S/ COLIN T. SEVERN
	Colin T. Severn
	Senior Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew R. Zaist, Chief Executive Officer, President of William Lyon Homes (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ Matthew R. Zaist

Matthew R. Zaist

President and Chief Executive Officer

May 7, 2019

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Colin T. Severn, Chief Financial Officer of William Lyon Homes (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ COLIN T. SEVERN

Colin T. Severn

Senior Vice President, Chief Financial Officer

May 7, 2019

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 07, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	WLH
Entity Registrant Name	WILLIAM LYON HOMES
Entity Central Index Key	0001095996
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Common stock, Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		32,995,972
Common stock, Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,817,394

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents — Note 1	$ 45,709	$ 33,779
Receivables	15,417	13,502
Escrow proceeds receivable	2,659	0
Real estate inventories	2,303,536	2,333,207
Not owned	294,085	315,576
Investment in unconsolidated joint ventures — Note 4	5,662	5,542
Goodwill	123,695	123,695
Intangibles, net of accumulated amortization of $4,640 as of March 31, 2019 and December 31, 2018	6,700	6,700
Deferred income taxes	46,900	47,241
Lease right-of-use assets	13,135	13,561
Other assets, net	37,515	36,971
Total assets	2,895,013	2,929,774
LIABILITIES AND EQUITY
Accounts payable	108,506	128,371
Accrued expenses	96,715	150,155
Liabilities from inventories not owned	294,085	315,576
Notes payable — Note 7:
Notes payable	255,231	198,019
Total senior notes	1,375,506	1,321,345
Total liabilities	1,874,812	1,915,447
Commitments and contingencies
Equity:
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized and no shares issued and outstanding at March 31, 2019 and December 31, 2018	0	0
Additional paid-in capital	445,953	445,545
Retained earnings	425,509	417,390
Total William Lyon Homes stockholders’ equity	871,850	863,322
Noncontrolling interests	148,351	151,005
Total equity	1,020,201	1,014,327
Total liabilities and equity	2,895,013	2,929,774
Common stock, Class A, par value $0.01 per share; 150,000,000 shares authorized; 34,020,166 and 33,904,972 shares issued, 32,995,571 and 32,690,378 shares outstanding at March 31, 2019 and December 31, 2018, respectively
Equity:
Common stock	340	339
Common stock, Class B, par value $0.01 per share; 30,000,000 shares authorized; 4,817,394 shares issued and outstanding at March 31, 2019 and December 31, 2018
Equity:
Common stock	48	48
5 3/4% Senior Notes due April 15, 2019
Notes payable — Note 7:
Total senior notes		0
7% Senior Notes due August 15, 2022
Notes payable — Note 7:
Total senior notes	347,639	347,456
6% Senior Notes due September 1, 2023
Notes payable — Note 7:
Total senior notes	344,206	343,878
5 7/8% Senior Notes due January 31, 2025
Notes payable — Note 7:
Total senior notes	428,430	431,992
Seller financing
Notes payable — Note 7:
Notes payable	0	0
Construction notes payable
Notes payable — Note 7:
Notes payable	1,204	1,231
Joint venture notes payable
Notes payable — Note 7:
Notes payable	144,027	151,788
Revolving Credit Facility | Revolving credit facility
Notes payable — Note 7:
Notes payable	$ 110,000	$ 45,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Intangibles - Accumulated Amortization	$ 4,640	$ 4,640
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, Class A
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	34,150,104	34,267,510
Common stock, shares outstanding (in shares)	32,937,737	33,135,650
Common stock, Class B
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	4,817,394	4,817,394
Common stock, shares outstanding (in shares)	4,817,394	4,817,394
5 3/4% Senior Notes due April 15, 2019
Stated interest rate	5.75%	5.75%
7% Senior Notes due August 15, 2022
Stated interest rate	7.00%	7.00%
5 7/8% Senior Notes due January 31, 2025
Stated interest rate	5.875%	5.875%
6% Senior Notes due September 1, 2023
Stated interest rate	6.00%

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating revenue	$ 455,864	$ 373,368
Operating costs
Sales and marketing	(25,277)	(22,693)
General and administrative	(29,126)	(24,521)
Transaction expenses		(3,130)
Other	(344)	(298)
Total operating costs	(437,760)	(358,933)
Operating income (loss)	18,104	14,435
Equity in income of unconsolidated joint ventures	912	932
Other income (loss), net	631	35
Income before extinguishment of debt	19,647	15,402
Gain on extinguishment of debt	383	0
Income (loss) before provision for income taxes	20,030	15,402
Provision for income taxes	(4,896)	(2,814)
Net income (loss)	15,134	12,588
Less: Net income attributable to noncontrolling interests	(7,015)	(4,260)
Net income available to common stockholders	$ 8,119	$ 8,328
Income per common share:
Basic (in USD per share)	$ 0.22	$ 0.22
Diluted (in USD per share)	$ 0.21	$ 0.21
Weighted average common shares outstanding:
Basic (in shares)	37,610,766	37,931,256
Diluted (in shares)	38,755,113	39,855,683
Home sales
Operating revenue	$ 453,775	$ 372,385
Operating costs
Cost of goods and services sold	381,044	307,308
Construction services
Operating revenue	2,089	983
Operating costs
Cost of goods and services sold	$ 1,969	$ 983

XML

CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Non-Controlling Interests
Beginning Balance at Dec. 31, 2017	$ 860,630	$ 392	$ 454,286	$ 325,794	$ 80,158
Beginning Balance (in shares) at Dec. 31, 2017		39,085
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	12,588			8,328	4,260
Cash contributions from members of consolidated entities	4,062				4,062
Cash distributions to members of consolidated entities	(17,106)				(17,106)
Stock Repurchased During Period, Shares		(205)
Stock Repurchased During Period, Value	(5,000)	$ (2)	(4,998)
Shares remitted to Company to satisfy employee tax obligations	(4,696)	$ (2)	(4,694)
Shares remitted to Company to satisfy employee tax obligations (in shares)		(186)
Stock based compensation expense	3,181	$ 5	3,176
Stock based compensation expense (in shares)		577
Ending Balance at Mar. 31, 2018	853,659	$ 393	447,770	334,122	71,374
Ending Balance (in shares) at Mar. 31, 2018		39,271
Beginning Balance at Dec. 31, 2018	1,014,327	$ 387	445,545	417,390	151,005
Beginning Balance (in shares) at Dec. 31, 2018		38,722
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	15,134			8,119	7,015
Cash contributions from members of consolidated entities	1,389				1,389
Cash distributions to members of consolidated entities	(11,058)				(11,058)
Shares remitted to Company to satisfy employee tax obligations	(2,356)	$ (1)	(2,355)
Shares remitted to Company to satisfy employee tax obligations (in shares)		(166)
Stock based compensation expense	2,765	$ 2	2,763
Stock based compensation expense (in shares)		281
Ending Balance at Mar. 31, 2019	$ 1,020,201	$ 388	$ 445,953	$ 425,509	$ 148,351
Ending Balance (in shares) at Mar. 31, 2019		38,837

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net income	$ 15,134	$ 12,588
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	745	2,056
Net change in deferred income taxes	341	199
Stock based compensation expense	2,765	3,181
Equity in income of unconsolidated joint ventures	(912)	(932)
Distributions from unconsolidated joint ventures	951	3,575
(Gain) loss on extinguishment of debt	(383)	0
Net changes in operating assets and liabilities:
Receivables	(2,074)	(2,226)
Escrow proceeds receivable	(2,659)	1,767
Real estate inventories - owned	30,894	79,895
Other assets, net	(2,958)	(1,275)
Accounts payable	(19,865)	20,739
Accrued expenses	(53,006)	(21,539)
Net cash (used in) provided by operating activities	(31,027)	98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	0	475,221
Sales (purchases) of property and equipment	1,404	(2,442)
Net cash provided by (used in) investing activities	1,404	(477,663)
Financing activities
Proceeds from borrowings on notes payable	30,111	20,194
Principal payments on notes payable	(37,899)	(29,179)
Proceeds from borrowings on revolver	190,000	110,000
Payments on revolver	(125,000)	(25,000)
Payment of deferred loan costs	(43)	(5,877)
Shares remitted to, or withheld by the Company for employee tax withholding	(2,356)	(4,696)
Payments to repurchase common stock	0	(5,000)
Cash contributions from members of consolidated entities	1,389	4,062
Cash distributions to members of consolidated entities	(11,058)	(17,106)
Net cash provided by financing activities	41,553	247,398
Net increase (decrease) in cash and cash equivalents	11,930	(132,237)
Cash and cash equivalents — beginning of period	33,779	182,710
Cash and cash equivalents — end of period	45,709	50,473
Supplemental disclosures:
Cash paid for taxes	0	104
Supplemental disclosures of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	78	1,696
Accrued deferred loan costs	8	879
Inventory reclassified to Other assets upon adoption of ASC 606	0	5,365
Non-cash additions to Real estate inventories - not owned and Liabilities from inventories not owned	(21,491)	87,896
8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of 7% senior notes		350,000
5 3/4% Senior Notes due April 15, 2019
Financing activities
Principal payments of 8.5% Senior Notes	0	(150,000)
5 7/8% Senior Notes due January 31, 2025
Financing activities
Principal payments of 8.5% Senior Notes	(3,591)	0
Payments on revolver		(25,000)
6% Senior Notes due September 1, 2023
Financing activities
Proceeds from issuance of 7% senior notes	$ 0	$ 350,000

XML

Basis of Presentation and Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand), Oregon (under the Polygon Northwest brand) and Texas.

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of March 31, 2019 and December 31, 2018 and revenues and expenses for the three month periods ended March 31, 2019 and 2018. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 3). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2018, which are included in our 2018 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09” or “ASC 606”).

Home Sales

Effective January 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, "Revenue Recognition" ("ASC 606"). Under ASC 606, revenue was recorded when a sale is consummated, the buyer’s initial and continuing investments is adequate, any receivables are not subject to future subordination, and the usual risks and rewards of ownership have transferred to the buyer. Revenue is recorded upon the close of escrow, at which point home sales are considered in the scope of a contract. Accordingly, the Company does not record homebuilding revenue for performance obligations that are unsatisfied or partially unsatisfied. No revenue was recorded in the 2019 period that did not result from current period performance.

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with ASC 606. Under ASC 606, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

The Company entered into construction management agreements to build, sell and market homes in certain communities. For such services, the Company will receive fees (generally 3 to 5 percent of the sales price, as defined) and may, under certain circumstances, receive additional compensation if certain financial thresholds are achieved.

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three months ended March 31, 2019, the Company did not have any land parcel sales. During the three months ended March 31, 2018, the Company had one land parcel sale, that resulted in a negligible loss for the period then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. Changes in the Company’s warranty liability for the three months ended March 31, 2019 and 2018, are as follows (in thousands):

	Three    Months   Ended   March 31,   2019			Three    Months   Ended   March 31,   2018
Warranty liability, beginning of period	$	13,000		$	13,643
Warranty provision during period (1)	2,416			2,504
Warranty payments, net of insurance recoveries during period	(3,815		)	(4,395		)
Warranty charges related to construction services projects	(17		)	7
Warranty liability, end of period	$	11,584		$	11,759

(1) In connection with the RSI Acquisition (see Note 2) in 2018, the Company assumed warranty liability of $0.6 million for units closed prior to the RSI Acquisition date and for which has been included in this line item for purposes of this table.

Interest incurred under the Company’s debt obligations, as more fully discussed in Note 7, is capitalized to qualifying real estate projects under development. Interest activity for the three months ended March 31, 2019 and 2018 are as follows (in thousands):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Interest incurred	$	24,081	$	19,258
Less: Interest capitalized	24,081		19,258
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	40,858	$	31,489

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments, including letters of credit, with off-balance sheet risk in the normal course of business which exposes it to credit risks. These off-balance sheet financial instruments are described in more detail in Note 13.

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of March 31, 2019 and December 31, 2018. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have seven reporting segments, as discussed in Note 5, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

Impact of Recent Accounting Pronouncements

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)" (“ASU 2016-18”). ASU 2016-18 requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements or notes to its consolidated financial statements.

XML

Acquisition of RSI Communities Acquisition of RSI Communities

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisition of RSI Communities

Acquisition of RSI Communities

On March 9, 2018, the Company completed its acquisition of RSI Communities, a Southern California- and Texas-based homebuilder, pursuant to the Purchase and Sale Agreement (the “Purchase Agreement”) dated February 19, 2018 among California Lyon, RSI Communities, RS Equity Management L.L.C., Class B Sellers of RSI Communities, and RS Equity Management L.L.C. as the sellers’ representative, and its acquisition of three additional related real estate assets (the “Legacy Assets”) pursuant to each of the separate asset purchase agreements with each of RG Onion Creek, LLC, RSI Trails at Leander LLC and RSI Prado LLC (collectively referred to herein as "RSI Communities"), for an aggregate cash purchase price of $479.3 million, which is inclusive of approximately $15.2 million of net asset related adjustments at closing (collectively, the "RSI Acquisition"). Part of the acquired entities specific to the Southern California region now operate under the Company’s existing California segment. The remaining acquired entities now operate as a new segment of the Company in Texas, with core markets of Austin and San Antonio.

The Company financed the RSI Acquisition with a combination of proceeds from its issuance of $350 million in aggregate principal amount of 6.00% senior notes due 2023, cash on hand, and approximately $194.3 million of aggregate proceeds from a land banking arrangement with respect to land parcels in various stages of development.

As a result of the RSI Acquisition, the entities comprising the business of RSI Communities became wholly-owned direct or indirect subsidiaries of the Company, and its results are included in our condensed consolidated financial statements and related disclosures from the date of the RSI Acquisition.

The RSI Acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities of RSI Communities at their estimated fair values, with the excess allocated to Goodwill, as shown below. Goodwill represents the value the Company expects to achieve through the operational synergies and the expansion of the Company into new markets. The Company estimates that the entire $56.8 million of goodwill resulting from the RSI Acquisition will be tax deductible. Goodwill will be allocated to the California and Texas operating segments (see Note 5). A reconciliation of the consideration transferred as of the acquisition date is as follows:

Net proceeds received from RSI inventory involved in land banking transactions	$	194,131
Issuance of 6.00% Senior Notes due September 1, 2023	190,437
Cash on hand	94,760
	479,328

The Company completed its final estimate of the fair value of the net assets of RSI Communities during December 2018. The following table summarizes the amounts for acquired assets and liabilities recorded at their fair values as of the acquisition date (in thousands):

Assets Acquired
	Real estate inventories	$	434,628
	Goodwill	56,793
	Other	7,771
	Total Assets	$	499,192
Liabilities Assumed
	Accounts payable	$	9,315
	Accrued expenses	8,244
	Notes payable	2,305
	Total liabilities	19,864
	Net assets acquired	$	479,328

The Company determined the fair value of real estate inventories on a project level basis using a combination of discounted cash flow models, and market comparable land transactions, where available. These methods are significantly impacted by estimates relating to i) expected selling prices, ii) anticipated sales pace, iii) cost to complete estimates, iv) highest and best use of projects prior to acquisition, and v) comparable land values. These estimates were developed and used at the individual project level, and may vary significantly between projects.

Other assets, accounts payable, accrued expenses and notes payable were generally stated at historical value due to the short-term nature of these liabilities.

The Company recorded no acquisition related costs for the three months ended March 31, 2019 and $3.1 million in acquisition related costs for the three months ended March 31, 2018, which are included in the Condensed Consolidated Statement of Operations in Transaction expenses. Such costs were expensed as incurred in accordance with ASC 805.

Supplemental Pro Forma Information

The following table presents unaudited pro forma amounts for the three months ended March 31, 2018 as if the RSI Acquisition, had been completed as of January 1, 2017 (amounts in thousands, except per share data):

	Three Months Ended March 31, 2018
Operating revenues	$	401,600
Net income available to common stockholders	$	6,419
Income per share - basic	$	0.17
Income per share - diluted	$	0.16

The unaudited pro forma operating results have been determined after adjusting the unaudited operating results of RSI Communities, excluding the Legacy Assets, but including acquisition costs, to reflect the estimated purchase accounting and other acquisition adjustments. The unaudited pro forma results presented above do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquired entity, the costs to combine the operations of the Company and the acquired entity or the costs necessary to achieve any of the foregoing cost savings, operating synergies or revenue enhancements. As such, the unaudited pro forma amounts are for comparative purposes only and may not necessarily reflect the results of operations which would have resulted had the acquisition been completed at the beginning of the applicable period or indicative of the results that will be attained in the future.

XML

Variable Interest Entities and Noncontrolling Interests

3 Months Ended

Mar. 31, 2019

Noncontrolling Interest [Abstract]

Variable Interest Entities and Noncontrolling Interests

Variable Interest Entities and Noncontrolling Interests

As of March 31, 2019 and December 31, 2018, the Company was party to twenty-four and twenty joint ventures, respectively, for the purpose of land development and homebuilding activities which we have determined to be VIEs. The Company, as the managing member, has the power to direct the activities of the VIEs since it manages the daily operations and has exposure to the risks and rewards of the VIEs, based upon the allocation of income and loss per the respective joint venture agreements. Therefore, the Company is the primary beneficiary of the joint ventures, and the VIEs were consolidated as of March 31, 2019 and December 31, 2018.

As of March 31, 2019, the assets of the consolidated VIEs totaled $440.6 million, of which $9.4 million was cash and cash equivalents and $425.6 million was owned real estate inventories. The liabilities of the consolidated VIEs totaled $210.5 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

As of December 31, 2018, the assets of the consolidated VIEs totaled $434.8 million, of which $9.0 million was cash and cash equivalents and $422.7 million was owned real estate inventories. The liabilities of the consolidated VIEs totaled $209.4 million, primarily comprised of notes payable, accounts payable and accrued liabilities.

XML

Investments in Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Revenues	$	4,197		$	3,709
Cost of sales	(2,342		)	(1,918		)
Income of unconsolidated joint ventures	$	1,855		$	1,791

Income from unconsolidated joint ventures reflected in the accompanying consolidated statements of operations represents our share of the income of our unconsolidated mortgage joint ventures, which is allocated based on the provisions of the underlying joint venture operating agreements less any additional impairments recorded against our investments in joint ventures which we do not deem recoverable.  For both of the three months ended March 31, 2019, and 2018, the Company recorded income of $0.9 million, from its unconsolidated joint ventures. This income was primarily attributable to our share of income related to mortgages that were generated and issued to qualifying home buyers during the periods.

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

			March 31, 2019		December 31, 2018
Assets
	Cash		$	6,958	$	8,093
	Loans held for sale		37,908		27,958
	Accounts receivable		982		884
	Other assets		169		115
		Total Assets	$	46,017	$	37,050
Liabilities and Equity
	Accounts payable		$	449	$	700
	Accrued expenses		1,221		1,988
	Credit lines payable		36,180		26,775
	Other liabilities		508		49
	Members equity		7,659		7,538
		Total Liabilities and Equity	$	46,017	$	37,050

XML

Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates one principal homebuilding business. In accordance with FASB ASC Topic 280, Segment Reporting ("ASC 280"), the Company has determined that each of its operating divisions is an operating segment. The Company’s President and Chief Executive Officer has been identified as the chief operating decision maker. The Company’s chief operating decision maker directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company’s homebuilding operations design, construct and sell a wide range of homes designed to meet the specific needs in each of its markets. In accordance with ASC 280, prior to the acquisition of RSI Communities (see Note 2), the Company's homebuilding operations had been grouped into six operating segments. During the three months ended March 31, 2018, the Company added one additional operating segment, Texas, as a result of the RSI Acquisition. As such, in accordance with the aggregation criteria defined by ASC 280, the Company’s homebuilding operating segments have been grouped into seven reportable segments:

California, consisting of operations in Orange, Los Angeles, San Diego, Alameda, Contra Costa, Santa Clara, Riverside and San Bernardino counties.

Arizona, consisting of operations in the Phoenix, Arizona metropolitan area.

Nevada, consisting of operations in the Las Vegas, Nevada metropolitan area.

Colorado, consisting of operations in the Denver, Colorado metropolitan area.

Washington, consisting of operations in the Seattle, Washington metropolitan area.

Oregon, consisting of operations in the Portland, Oregon metropolitan area.

Texas, consisting of operations in the Austin, Texas and San Antonio, Texas metropolitan areas.

Corporate develops and implements strategic initiatives and supports the Company’s operating segments by centralizing key administrative functions such as finance and treasury, information technology, risk management and litigation and human resources.

Segment financial information relating to the Company’s operations was as follows (in thousands):

	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Operating revenue:
California	$	186,118		$	134,812
Arizona	29,594			32,039
Nevada	37,705			49,176
Colorado	56,036			40,063
Washington (1)	43,940			55,651
Oregon	51,087			46,853
Texas	51,384			14,774
Total operating revenue	$	455,864		$	373,368
(1) Operating revenue in the Washington segment includes construction services revenue in the periods ended March 31, 2019 and 2018.
	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Income before provision for income taxes:
California	$	16,105		$	11,419
Arizona	2,493			2,487
Nevada	4,192			4,839
Colorado	6,024			3,164
Washington	1,145			4,511
Oregon	2,070			3,637
Texas	1,181			434
Corporate	(13,563		)	(15,089		)
Income before gain on extinguishment of debt	$	19,647		$	15,402
Corporate - Gain on extinguishment of debt	383			—
Income before provision for income taxes	$	20,030		$	15,402

	March 31, 2019		December 31, 2018
Homebuilding assets:
Owned:
California	$	878,608	$	930,714
Arizona	171,124		168,507
Nevada	190,787		189,363
Colorado	138,148		149,450
Washington	306,596		308,270
Oregon	429,448		440,105
Texas	271,652		234,093
Corporate (1)	214,565		193,696
	$	2,600,928	$	2,614,198
Not Owned:
California	$	78,543	$	91,849
Arizona	114,858		114,858
Washington	21,657		21,657
Texas	79,027		87,212
Total homebuilding assets	$	2,895,013	$	2,929,774

(1) Comprised primarily of cash and cash equivalents, receivables, deferred income taxes, and other assets.

XML

Real Estate Inventories

3 Months Ended

Mar. 31, 2019

Real Estate [Abstract]

Real Estate Inventories

Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Real estate inventories:
Land deposits	$	143,736	$	147,327
Land and land under development	473,309		660,151
Finished lots	702,278		564,460
Homes completed and under construction	858,617		839,316
Model homes	125,596		121,953
Total	$	2,303,536	$	2,333,207
Real estate inventories not owned (1):
Other land options contracts — land banking arrangement	$	294,085	$	315,576

(1) Represents the consolidation of a land banking arrangement. Although the Company is not obligated to purchase the lots, based on certain factors, the Company has determined that it is economically compelled to purchase the lots in the land banking arrangement and thus, has consolidated the assets and liabilities associated with this land bank. Amounts are net of deposits.

XML

Senior Notes, Secured, and Unsecured Indebtedness

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Senior Notes, Secured, and Unsecured Indebtedness

Senior Notes, Secured, and Unsecured Indebtedness

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

	March 31, 2019		December 31, 2018
Notes payable:
Revolving credit facility	$	110,000	$	45,000
Seller financing	—		—
Construction notes payable	1,204		1,231
Joint venture notes payable	144,027		151,788
Total notes payable	255,231		198,019
Senior notes:
7% Senior Notes due August 15, 2022	347,639		347,456
6% Senior Notes due September 1, 2023	344,206		343,878
5.875% Senior Notes due January 31, 2025	428,430		431,992
Total senior notes	1,120,275		1,123,326
Total notes payable and senior notes	$	1,375,506	$	1,321,345

As of March 31, 2019, the maturities of the Notes payable, 7% Senior Notes, 6% Senior Notes, and 5.875% Senior Notes are as follows (in thousands):

Year Ending December 31,
Remaining in 2019	$	15,217
2020	36,409
2021	203,605
2022	350,000
2023	350,000
Thereafter	436,886
	$	1,392,117

Maturities above exclude premium on the 7% Senior Notes of $0.5 million and discount on the 5.875% Senior Notes of $2.7 million, and deferred loan costs on the 7%, 6%, and 5.875% Senior Notes of $14.5 million as of March 31, 2019.

Notes Payable

Revolving Credit Facility

On May 21, 2018, California Lyon and Parent entered into a new credit agreement providing for an unsecured revolving credit facility of up to $325.0 million (the “New Facility”) with the lenders party thereto, which New Facility replaces the Company’s previous $170.0 million revolving credit facility, as described below. The New Facility will mature on May 21, 2021, unless terminated earlier pursuant to the terms of the New Facility. The New Facility contains an uncommitted accordion feature under which its aggregate principal amount can be increased to up to $500.0 million under certain circumstances, as well as a sublimit of $50.0 million for letters of credit. Effective as of November 9, 2018, California Lyon increased the size of the commitment under its revolving credit facility by $40.0 million to an aggregate total of $365.0 million, through entry into a new lender supplement as of such date.

On December 31, 2018, California Lyon, Parent and the lenders party thereto entered into an amendment to the New Facility, which amended the maximum leverage ratio to extend the timing of the gradual step-downs, such that the leverage ratio remained at 65% through and including December 30, 3018, decreased to 62.5% on the last day of the 2018 fiscal year through and including December 30, 2019, and further decreases and remains at 60% on December 31, 2019 and thereafter. The amendment did not revise any of our other financial covenants thereunder.

Borrowings under the New Facility, the availability of which is subject to a borrowing base formula, are required to be guaranteed by the Parent and certain of the Parent’s wholly-owned subsidiaries (such subsidiaries, the “Guarantors”), and may be used for general corporate purposes. As of March 31, 2019, the commitment fee on the unused portion of the New Facility accrues at an annual rate of 0.50%. As of March 31, 2019, the Company had $110.0 million outstanding against the New Facility at an effective rate of 6.6%, as well as a letter of credit for $7.2 million. As of December 31, 2018, the Company had $45.0 million outstanding against the New Facility at an effective rate of 7.5%, as well as a letter of credit for $8.6 million.

The New Facility contains certain financial maintenance covenants, including (a) a minimum tangible net worth requirement of $556.4 million (which is subject to increase over time based on subsequent earnings and proceeds from equity offerings, as well as deferred tax assets to the extent included on the Company's financial statements), (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 65% as of December 30, 2018, further decreased to 62.5% effective as of December 31, 2018, through and including December 30, 2019, and further decreases to and remains at 60% thereafter, and (c) a covenant requiring us to maintain either (i) an interest coverage ratio (EBITDA to interest incurred, as defined therein) of at least 1.50 to 1.00 or (ii) liquidity (as defined therein) of an amount not less than the greater of our consolidated interest incurred during the trailing 12 months and $50.0 million. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the New Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The New Facility also 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 New Facility and permit the Lenders to accelerate payment on outstanding borrowings under the New Facility and require cash collateralization of outstanding letters of credit. If a change of control (as defined in the New Facility) occurs, the Lenders may terminate the commitments under the New Facility and require that the Borrower repay outstanding borrowings under the New 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 Company was in compliance with all covenants under the New Facility as of March 31, 2019.

On July 1, 2016, California Lyon and Parent had entered into an amendment and restatement agreement pursuant to which its then existing credit agreement providing for a revolving credit facility was amended and restated in its entirety (the "Second Amended Facility"). As described above, the Second Amended Facility was replaced by the New Facility on May 21, 2018. Previously, the Second Amended Facility had amended and restated the Company’s previous $130.0 million revolving credit facility and had provided for total lending commitments of $145.0 million, which had been scheduled to terminate on January 14, 2019 based on certain conditions, prior to the execution of the New Facility. In addition, the Second Amended Facility previously had an uncommitted accordion feature under which the Company could have increased 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. On November 28, 2017, California Lyon increased the size of the commitment under its Second Amended Facility by $25.0 million to an aggregate total of $170.0 million, through exercise of the facility’s accordion feature and entry into a new lender supplement as of such date.

Pursuant to the Second Amended Facility, the maximum leverage ratio was 65% from June 30, 2016 through and including December 30, 2016, decreased to 62.5% on the last day of the 2016 fiscal year, remained at 62.5% from

December 31, 2016 through and including June 29, 2017, and was scheduled to further decrease to 60% on the last day of the

second quarter of 2017 and to remain at 60% thereafter. On June 16, 2017, California Lyon, Parent and the lenders party thereto had entered into a second amendment to the Second Amended Facility, which amended the maximum leverage ratio to extend the timing of the gradual step-downs, such that the leverage ratio remained at 62.5% through and including December 30, 2017, and decreased to 60% on the last day of the 2017 fiscal year and was scheduled to remain at 60% thereafter. On March 9, 2018, California Lyon, Parent and the lenders party thereto entered into a third amendment to the Second Amended Facility, which temporarily increased the maximum leverage ratio, such that the leverage ratio remained at 60% through and including March 30, 2018, and was scheduled to increase to 70% on March 31, 2018 through and including June 29, 2018.

The Second Amended Facility previously contained certain financial maintenance covenants. The Company was in compliance with all covenants under the Second Amended Facility through its date of termination and replacement with the New Facility on May 21, 2018.

Borrowings under the previous Second Amended Facility were required to be guaranteed by the Parent and certain of the Parent's wholly-owned subsidiaries, were secured by a pledge of all equity interests held by such guarantors, and may have been used for general corporate purposes. Interest rates on borrowings generally were based on either LIBOR or a base rate, plus the applicable spread. Through the date of termination of the Second Amended Facility, the commitment fee on the unused portion of the Second Amended Facility accrued at an annual rate of 0.50%. As of December 31, 2018, the Company had terminated the Second Amended Facility by entering into the New Facility.

Seller Financing

During the three months ended March 31, 2018, the Company paid in full prior to maturity, along with all accrued interest to date, a note payable outstanding related to a land acquisition for which seller financing was provided. The note bore interest at a rate of 7% per annum and was secured by the underlying land.

Notes Payable

The Company and certain of its consolidated joint ventures have entered into 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 of the joint ventures notes payable are listed in the table below as of March 31, 2019 (in millions):

Issuance Date	Facility Size	Outstanding		Maturity	Current Rate
March, 2019	18.9	$	0.4	November, 2020	5.38	%	(3)
May, 2018	128.0	86.7		May, 2021	5.49	%	(2)
May, 2018	13.3	11.1		June, 2020	5.38	%	(3)
July, 2017	66.2	31.7		February, 2021	5.56	%	(2)
January, 2016	35.0	14.0		August, 2019	5.75	%	(1)
	261.4	$	143.9

(1) Loan bears interest at LIBOR +3.25%.

(2) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

(3) Loan bears interest at LIBOR +2.90%.

In addition to the above, the Company had $1.2 million of construction notes payable outstanding related to projects that are wholly-owned by the Company.

The notes payable contain certain financial maintenance covenants. The Company was in compliance with all such covenants as of March 31, 2019.

Senior Notes

5.75% 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”).

During the three months ended March 31, 2018, Parent, through California Lyon, used the net proceeds from the offering of 6.00% Senior Notes due 2023, as further described below, (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150 million in aggregate principal amount of 5.75% Notes such that the 5.75% Notes were satisfied and discharged prior to March 31, 2019.

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 of Polygon Northwest Homes, 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 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, we exchanged 100% of the additional 7.00% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding amount of the 7.00% Notes was $350 million, excluding unamortized premium of $0.5 million and deferred loan costs of $2.9 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 $350 million in aggregate principal amount of 6.00% Senior Notes due 2023 and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, each as described below. 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.

6% Senior Notes Due 2023

On March 9, 2018, California Lyon completed its private placement with registration rights of 6.00% Senior Notes due 2023 (the "6.00% Notes"), in an aggregate principal amount of $350 million. The 6.00% Notes were issued at 100% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 6.00% Notes offering to (i) together with cash generated from certain land banking arrangements, and cash on hand, to finance the RSI Acquisition and to pay related fees and expenses and (ii) to repay all of California Lyon's $150 million of the outstanding aggregate principal amount of the 5.75% Notes. In September 2018, the Company exchanged 100% of the 6.00% Notes tendered in the exchange offer for notes that are freely transferable and registered under the Exchange Act.

As of March 31, 2019, the outstanding principal amount of the 6.00% Notes was $350 million, excluding deferred loan costs of $5.8 million. The 6.00% Notes bear interest at a rate of 6.00% per annum, payable semiannually in arrears on March 1 and September 1, and mature on September 1, 2023. The 6.00% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 6.00% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022, as described above and $437 million in aggregate principal amount of 5.875% Senior Notes due 2025, as described below. The 6.00% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 6.00% 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 September 1, 2020, California Lyon may redeem all or a portion of the 6.00% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount on the redemption date) set forth below plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, if redeemed during the 12-month period commencing on each of the dates as set forth below:

Year	Percentage
September 1, 2020	103.00	%
September 1, 2021	101.50	%
September 1, 2022	100.00	%

Prior to September 1, 2020, the 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, if any, to, but not including, the redemption date.

In addition, any time prior to September 1, 2020, California Lyon may, at its option on one or more occasions, redeem Notes (including any additional notes that may be issued in the future under the 2023 Notes Indenture) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (including any additional notes that may be issued in the future under the 2023 Notes Indenture) issued prior to such date at a redemption price (expressed as a percentage of principal amount) of 106.00%, plus accrued and unpaid interest, if any, to, but not including, the redemption date, with an amount equal to the net cash proceeds from one or more equity offerings.

5.875% Senior Notes Due 2025

On January 31, 2017, California Lyon completed its private placement with registration rights of 5.875% Senior Notes due 2025 (the "5.875% Notes"), in an aggregate principal amount of $450 million. The 5.875% Notes were issued at 99.215% of their aggregate principal amount. Parent, through California Lyon, used the net proceeds from the 5.875% Notes offering to purchase the outstanding aggregate principal amount of the prior year 8.5% Notes such that the entire aggregate $425 million of previously outstanding 8.5% Notes were retired and extinguished as of December 31, 2018. In May 2017, the Company exchanged 100% of the 5.875% Notes for notes that are freely transferable and registered under the Securities Act.

As of March 31, 2019, the outstanding principal amount of the 5.875% Notes was $437 million, excluding unamortized discount of $2.7 million and deferred loan costs of $5.8 million. During the three months ended March 31, 2019, the Company retired approximately $4.0 million of the principal balance, resulting in $0.4 million of gain on debt extinguishment recognized through earnings. The 5.875% Notes bear interest at a rate of 5.875% per annum, payable semiannually in arrears on January 31 and July 31, and mature on January 31, 2025. The 5.875% Notes are unconditionally guaranteed on a joint and several unsecured basis by Parent and certain of its existing and future restricted subsidiaries. The 5.875% 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 $350 million in aggregate principal amount of 7.00% Senior Notes due 2022 and $350 million in aggregate principal amount of 6.00% Senior Notes due 2023, each as described above. The 5.875% Notes rank senior in right of payment to all of California Lyon’s and the guarantors’ future subordinated debt. The 5.875% 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 Notes Covenant Compliance

The indentures governing the 7.00% Notes, the 6.00% Notes, and the 5.875% 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 March 31, 2019.

GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The following consolidating financial information includes:

(1) Consolidating balance sheets as of March 31, 2019 and December 31, 2018; consolidating statements of operations for the three and three months ended March 31, 2019 and 2018; and consolidating statements of cash flows for the three month periods ended March 31, 2019 and 2018, 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 March 31, 2019 and December 31, 2018, and for the three and three month periods ended March 31, 2019 and 2018.

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	33,942		$	1,915		$	9,852		$	—		$	45,709
Receivables	—		5,109			5,304			5,004			—			15,417
Escrow proceeds receivable	—		2,659			—			—			—			2,659
Real estate inventories
Owned	—		725,596			1,140,340			437,600			—			2,303,536
Not owned	—		114,858			179,227			—			—			294,085
Investment in unconsolidated joint ventures	—		5,512			150			—			—			5,662
Goodwill	—		14,209			109,486			—			—			123,695
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		46,900			—			—			—			46,900
Lease right-of-use assets	—		13,135			—			—			—			13,135
Other assets, net	—		27,299			8,952			1,264			—			37,515
Investments in subsidiaries	871,850		23,425			(943,873		)	—			48,598			—
Intercompany receivables	—		—			294,625			(160		)	(294,465		)	—
Total assets	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013
LIABILITIES AND EQUITY
Accounts payable	$	—	$	63,991		$	30,492		$	14,023		$	—		$	108,506
Accrued expenses	—		84,459			12,156			100			—			96,715
Liabilities from inventories not owned	—		114,860			179,225			—			—			294,085
Notes payable	—		110,001			1,204			144,026			—			255,231
7% Senior Notes	—		347,639			—			—			—			347,639
6% Senior Notes	—		344,206			—			—			—			344,206
5.875% Senior Notes	—		428,430			—			—			—			428,430
Intercompany payables	—		170,830			—			123,635			(294,465		)	—
Total liabilities	—		1,664,416			223,077			281,784			(294,465		)	1,874,812
Equity
William Lyon Homes stockholders’ equity	871,850		(651,772		)	579,749			23,425			48,598			871,850
Noncontrolling interests	—		—			—			148,351			—			148,351
Total liabilities and equity	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	21,450		$	2,888		$	9,441	$	—		$	33,779
Receivables	—		6,054			4,151			3,297		—			13,502
Escrow proceeds receivable														—
Real estate inventories
Owned	—		745,750			1,152,786			434,671		—			2,333,207
Not owned	—		114,859			200,717			—		—			315,576
Investment in unconsolidated joint ventures	—		5,392			150			—		—			5,542
Goodwill	—		14,209			109,486			—		—			123,695
Intangibles, net	—		—			6,700			—		—			6,700
Deferred income taxes, net	—		47,241			—			—		—			47,241
Lease right-of-use assets	—		13,561			—			—		—			13,561
Other assets, net	—		26,797			9,688			486		—			36,971
Investments in subsidiaries	863,322		16,059			(961,950		)	—		82,569			—
Intercompany receivables	—		—			285,675			—		(285,675		)	—
Total assets	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774
LIABILITIES AND EQUITY
Accounts payable	$	—	$	78,462		$	34,546		$	15,363	$	—		$	128,371
Accrued expenses	—		123,088			26,967			100		—			150,155
Liabilities from inventories not owned	—		114,859			200,717			—		—			315,576
Notes payable	—		45,000			1,231			151,788		—			198,019
7% Senior Notes	—		347,456			—			—		—			347,456
6% Senior Notes	—		343,878			—			—		—			343,878
5.875% Senior Notes	—		431,992			—			—		—			431,992
Intercompany payables	—		172,095			—			113,580		(285,675		)	—
Total liabilities	—		1,656,830			263,461			280,831		(285,675		)	1,915,447
Equity
William Lyon Homes stockholders’ equity	863,322		(645,458		)	546,830			16,059		82,569			863,322
Noncontrolling interests	—		—			—			151,005		—			151,005
Total liabilities and equity	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	148,932		$	243,356		$	61,487		$	—		$	453,775
Construction services	—		—			2,089			—			—			2,089
Management fees	—		(1,857		)	—			—			1,857			—
	—		147,075			245,445			61,487			1,857			455,864
Operating costs
Cost of sales	—		(123,138		)	(207,594		)	(48,455		)	(1,857		)	(381,044		)
Construction services	—		—			(1,969		)	—			—			(1,969		)
Sales and marketing	—		(8,426		)	(14,736		)	(2,115		)	—			(25,277		)
General and administrative	—		(20,169		)	(8,957		)	—			—			(29,126		)
Other	—		(387		)	—			43			—			(344		)
	—		(152,120		)	(233,256		)	(50,527		)	(1,857		)	(437,760		)
Income from subsidiaries	8,119		6,926			—			—			(15,045		)	—
Operating income	8,119		1,881			12,189			10,960			(15,045		)	18,104
Equity in income of unconsolidated joint ventures	—		711			201			—			—			912
Other income (loss), net	—		929			81			(379		)	—			631
Income before extinguishment of debt	8,119		3,521			12,471			10,581			(15,045		)	19,647
Gain on extinguishment of debt	—		383			—			—			—			383
Income before provision for income taxes	8,119		3,904			12,471			10,581			(15,045		)	20,030
Provision for income taxes	—		(4,896		)	—			—			—			(4,896		)
Net income	8,119		(992		)	12,471			10,581			(15,045		)	15,134
Less: Net income attributable to noncontrolling interests	—		—			—			(7,015		)	—			(7,015		)
Net income available to common stockholders	$	8,119	$	(992	)	$	12,471		$	3,566		$	(15,045	)	$	8,119

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)

Three Months Ended March 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating revenue
Sales	$	—	$	135,173		$	182,944		$	54,268		$	—		$	372,385
Construction services	—		983			—			—			—			983
Management fees	—		(1,750		)	—			—			1,750			—
	—		134,406			182,944			54,268			1,750			373,368
Operating costs
Cost of sales	—		(110,245		)	(150,502		)	(44,811		)	(1,750		)	(307,308		)
Construction services	—		(983		)	—			—			—			(983		)
Sales and marketing	—		(8,383		)	(10,783		)	(3,527		)	—			(22,693		)
General and administrative	—		(18,553		)	(5,966		)	(2		)	—			(24,521		)
Transaction expenses	—		(3,130		)	—			—			—			(3,130		)
Other	—		(353		)	46			9			—			(298		)
	—		(141,647		)	(167,205		)	(48,331		)	(1,750		)	(358,933		)
Income from subsidiaries	8,328		8,107			—			—			(16,435		)	—
Operating income	8,328		866			15,739			5,937			(16,435		)	14,435
Equity in income from unconsolidated joint ventures	—		675			257			—			—			932
Other income (expense), net	—		309			56			(330		)	—			35
Income (loss) before provision for income taxes	8,328		1,850			16,052			5,607			(16,435		)	15,402
Provision for income taxes	—		(2,814		)	—			—			—			(2,814		)
Net income (loss)	8,328		(964		)	16,052			5,607			(16,435		)	12,588
Less: Net income attributable to noncontrolling interests	—		—			—			(4,260		)	—			(4,260		)
Net income (loss) attributable to William Lyon Homes	8,328		(964		)	16,052			1,347			(16,435		)	8,328

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	(409	)	$	(37,671	)	$	4,229		$	3,826		$	(1,002	)	$	(31,027	)
Investing activities
Sales (purchases) of property and equipment	—			—			1,404			—			—			1,404
Investments in subsidiaries	—			(1,851		)	(18,077		)	—			19,928			—
Net cash (used in) provided by investing activities	—			(1,851		)	(16,673		)	—			19,928			1,404
Financing activities
Proceeds from borrowings on notes payable	—			—			—			30,111			—			30,111
Principal payments on notes payable	—			—			(27		)	(37,872		)	—			(37,899		)
Principal payments on 5.875% Senior Notes	—			(3,591		)	—			—			—			(3,591		)
Proceeds from borrowings on Revolver	—			190,000			—			—			—			190,000
Payments on Revolver	—			(125,000		)	—			—			—			(125,000		)
Payment of deferred loan costs	—			(43		)	—			—			—			(43		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(2,356		)	—			—			—			(2,356		)
Noncontrolling interest contributions	—			—			—			1,389			—			1,389
Noncontrolling interest distributions	—			—			—			(11,058		)	—			(11,058		)
Advances to affiliates	—			—			20,448			3,800			(24,248		)	—
Intercompany receivables/payables	409			(6,996		)	(8,950		)	10,215			5,322			—
Net cash (used in) provided by financing activities	409			52,014			11,471			(3,415		)	(18,926		)	41,553
Net (decrease) increase in cash and cash equivalents	—			12,492			(973		)	411			—			11,930
Cash and cash equivalents - beginning of period	—			21,450			2,888			9,441			—			33,779
Cash and cash equivalents - end of period	$	—		$	33,942		$	1,915		$	9,852		$	—		$	45,709

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	6,515		$	(60,555	)	$	146,012		$	12,571		$	(6,515	)	$	98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	—			—			(475,221		)	—			—			(475,221		)
Purchases of property and equipment	—			(1,063		)	(1,391		)	12			—			(2,442		)
Investments in subsidiaries	—			9,624			343,067			—			(352,691		)	—
Net cash provided by (used in) investing activities	—			8,561			(133,545		)	12			(352,691		)	(477,663		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			20,194			—			20,194
Principal payments on notes payable	—			—			(14		)	(29,165		)	—			(29,179		)
Principal payments on 5.75% Senior Notes	—			(150,000		)	—			—			—			(150,000		)
Proceeds from issuance of 6.0% Senior Notes	—			350,000			—			—			—			350,000
Proceeds from borrowings on Revolver	—			110,000			—			—			—			110,000
Payments on Revolver	—			(25,000		)	—			—			—			(25,000		)
Payment of deferred loan costs	—			(5,877		)	—			—			—			(5,877		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(4,696		)	—			—			—			(4,696		)
Payments to repurchase common stock	—			(5,000		)	—			—			—			(5,000		)
Noncontrolling interest contributions	—			—			—			4,062			—			4,062
Noncontrolling interest distributions	—			—			—			(17,106		)	—			(17,106		)
Advances to affiliates	—			—			6,240			(2,864		)	(3,376		)	—
Intercompany receivables/payables	(6,515		)	(349,370		)	(15,273		)	8,576			362,582			—
Net cash (used in) provided by financing activities	(6,515		)	(79,943		)	(9,047		)	(16,303		)	359,206			247,398
Net (decrease) increase in cash and cash equivalents	—			(131,937		)	3,420			(3,720		)	—			(132,237		)
Cash and cash equivalents - beginning of period	—			171,434			156			11,120			—			182,710
Cash and cash equivalents - end of period	$	—		$	39,497		$	3,576		$	7,400		$	—		$	50,473

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”), the Company is required to disclose the estimated fair value of financial instruments. As of March 31, 2019 and December 31, 2018, the Company used the following assumptions to estimate the fair value of each type of financial instrument for which it is practicable to estimate:

• Notes payable—The carrying amount is a reasonable estimate of fair value of the notes payable because of floating interest rate terms and/or the outstanding balance is expected to be repaid within one year.

• 7% Senior Notes due August 15, 2022 —The 7% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

•     6% Senior Notes due September 1, 2023 —The 6% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

• 5.875% Senior Notes due January 31, 2025 —The 5.875% Senior Notes are traded over the counter and their fair values were based upon quotes from industry sources.

The following table excludes cash and cash equivalents, receivables and accounts payable, which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	255,231	$	255,231	$	198,019	$	198,019
7% Senior Notes due 2022	347,639		351,330		347,456		350,000
6% Senior Notes due 2023	344,206		337,750		343,878		315,000
5.875% Senior Notes due 2025	428,430		411,241		431,992		378,611

ASC 820 establishes a framework for measuring fair value, expands disclosures regarding fair value measurements and defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements. The Company used Level 3 to measure the fair value of its Notes payable, and Level 2 to measure the fair value of its Senior notes. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The three levels of the hierarchy are as follows:

• Level 1—quoted prices for identical assets or liabilities in active markets;

• Level 2—quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3—valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

On March 9, 2018, California Lyon completed its private placement with registration rights of the 6.00% Notes in an aggregate principal amount of $350 million (see Note 7), for which Credit Suisse Securities (USA) LLC (“Credit Suisse”) served as an initial purchaser and joint book-running manager, along with several other banks, and received customary underwriting fees as a member of the underwriting syndicate. On November 5, 2018, Eric A. Anderson commenced his service as a member of the Company's Board of Directors. Mr. Anderson had previously held the position of Vice Chairman, Investment Banking of Credit Suisse until November 3, 2018, at which point, Mr. Anderson was appointed as a Senior Advisor to Credit Suisse, a non-employee role pursuant to which he provides certain consultant services to Credit Suisse as an independent contractor. As of and following the November 3, 2018 transition date, Mr. Anderson did not and will not receive any fees or compensation of any kind for any transactional relationships between Credit Suisse and the Company.

XML

Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Since inception, the Company has operated solely within the United States. The Company’s effective income tax rate was 24.4% and 18.3% for the three months ended March 31,2019 and 2018, respectively. The significant drivers of the effective tax rate are allocation of income to noncontrolling interests for the three months March 31, 2019 and March 31, 2018.

Management assesses its deferred tax assets to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. At March 31, 2019, the Company had no valuation allowance recorded.

At March 31, 2019, the Company had no remaining federal net operating loss carryforwards and $46.4 million of remaining state net operating loss carryforwards. State net operating loss carryforwards begin to expire in 2031. In addition, as of March 31, 2019, the Company had unused federal and state built-in losses of $44.9 million and $7.5 million, respectively. The five year testing period for built-in losses expired in 2017 and the unused built-in loss carryforwards begin to expire in 2032. The Company had AMT credit carryovers of $1.4 million at March 31, 2019, which if not previously utilized are allowable as refundable credits under the Tax Cuts and Job Act through 2022.

FASB ASC Topic 740,Income Taxes (“ASC 740”), prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities. The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes. The Company has no unrecognized tax benefits.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal income tax examination for calendar tax years ended 2013 and forward. The Company is subject to various state income tax examinations for calendar tax years ended 2008 and forward. The Company is currently under examination by the Internal Revenue Service for the 2013 and 2014 tax years and under examination by California for the 2014 tax year.

XML

Income Per Common Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Income Per Common Share

Income Per Common Share

Basic and diluted income per common share for the three months ended March 31, 2019 and 2018 were calculated as follows (in thousands, except number of shares and per share amounts):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Basic weighted average number of common shares outstanding	37,610,766		37,931,256
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,144,347		1,924,427
Diluted average shares outstanding	38,755,113		39,855,683
Net income available to common stockholders	$	8,119	$	8,328
Basic income per common share	$	0.22	$	0.22
Dilutive income per common share	$	0.21	$	0.21
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	—		—

XML

Stock Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Stock Based Compensation

We account for share-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at the fair value on the date of grant. Compensation expense for awards with performance based conditions is recognized over the vesting period once achievement of the performance condition is deemed probable.

During the three months ended March 31, 2019, the Company granted 550,829 shares of time-based restricted stock, and 490,227 of performance stock units, including one award tied to a market performance condition. On the Consolidated Balance Sheets and Statement of Equity, the Company considers unvested shares of restricted stock to be issued, but not outstanding.

The Company recorded total stock based compensation expense during the three months ended March 31, 2019 and 2018 of $2.8 million and $3.2 million, respectively.

Performance Stock Units

    With respect to the performance stock units granted to certain employees during the three months ended March 31, 2019, the actual number of such stock units that will be earned is subject to the Company’s achievement of performance targets as of the end of the 2019 fiscal year, with each unit constituting the opportunity to earn up to two shares of Company common stock. The aforementioned awards represent 400,460 stock units that vest in three equal annual installments on March 1st of each of 2020, 2021 and 2022, subject to each grantee’s continued service through each vesting date. Based on the probability assessment as of March 31, 2019, management determined that the currently available data was not sufficient to support that the achievement of the preliminary performance targets is probable, and as such, no compensation expense has been recognized for these awards to date. The Company's Compensation Committee has elected to wait until the second quarter to set the final metric for the performance-based stock units target.

Performance Stock Units with Market Condition

With respect to the performance based stock units with market condition granted to a certain employee during the three months ended March 31, 2019, the actual number of stock units that will be earned is subject to the Company’s achievement of a pre-established market performance target as of the end of the vesting periods, with each unit constituting the opportunity to earn up to two shares of Company common stock. The aforementioned award represents 89,767 stock units that vest in two annual installments at the end of each performance period, subject to grantee’s continued service through each vesting date.

Time-Based Restricted Stock Awards

With respect to the restricted stock awards granted to certain employees during the three months ended March 31, 2019, 285,030 of such shares vest in three equal annual installments on each anniversary of the grant date, 134,650 of such shares vest in one installment on January 2, 2022, and 84,156 of such shares vest in two equal annual installments on each anniversary of the grant date, subject to the grantee’s continued service through each vesting date. With respect to the restricted stock awards granted to certain non-employee directors during the three months ended March 31, 2019, 46,993 of such shares vest in four equal quarterly installments on each three-month period beginning June 1st of 2019, subject to each grantee’s continued service on the board through each vesting date.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company’s commitments and contingent liabilities include the usual obligations incurred by real estate developers in the normal course of business. In the opinion of management, these matters will not have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

The Company is a defendant in various lawsuits related to its normal business activities. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of March 31, 2019, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized on our condensed consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings, and as appropriate, adjust them to reflect (i) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (ii) the advice and analyses of counsel; and (iii) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

On March 31, 2019, there was a fire in Wilsonville, Oregon in which we incurred damage to certain buildings in our Villebois community. We do not have an estimate yet as to the dollar amount of the damages. As of March 31, 2019, the Company has not recorded any amounts related to the damages incurred in its Consolidated Financial Statements, however the Company expects any and all damages to be paid by insurance less any associated deductibles.

The Company had outstanding performance and surety bonds of $341.4 million at March 31, 2019, related principally to its obligations for site improvements at various projects. The Company does not believe that draws upon these bonds, if any, will have a material effect on the Company’s financial position, results of operations or cash flows. As of March 31, 2019, the Company had $291.3 million of project commitments relating to the construction of projects.

See Note 7 for additional information relating to the Company’s guarantee arrangements.

In addition to the land bank agreement discussed below, the Company has entered into various purchase option agreements with third parties to acquire land. As of March 31, 2019, the Company has made non-refundable deposits of $143.7 million. The Company is under no obligation to purchase the land, but would forfeit remaining deposits if the land were not purchased. The total remaining purchase price under the option agreements is $744.2 million as of March 31, 2019.

Land Banking Arrangements

The Company enters into purchase agreements with various land sellers. As a method of acquiring land in staged takedowns, thereby minimizing the use of funds from the Company’s available cash or other corporate financing sources and limiting the Company’s risk, the Company transfers the Company’s right in such purchase agreements to entities owned by third parties (“land banking arrangements”). These entities use equity contributions and/or incur debt to finance the acquisition and development of the land. The entities grant the Company an option to acquire lots in staged takedowns. In consideration for this option, the Company makes a non-refundable deposit of 15% to 25% of the total purchase price. The Company is under no obligation to purchase the balance of the lots, but would forfeit any existing deposits and could be subject to penalties if the lots were not purchased. The Company does not have legal title to these entities or their assets and has not guaranteed their liabilities. These land banking arrangements help the Company manage the financial and market risk associated with land holdings. As discussed above, with exception of the arrangement discussed below, these amounts are included in the total remaining purchase price mentioned above.

Summary information with respect to the Company’s consolidated land banking arrangements is as follows as of the period presented (dollars in thousands):

	March 31, 2019
Total number of land banking arrangements consolidated	3
Total number of lots	5,184
Total purchase price	$	452,967
Balance of lots still under option and not purchased:
Number of lots	4,002
Purchase price	$	294,085
Forfeited deposits if lots are not purchased	$	76,812

Lease Obligations

Lease obligations, as included in Accrued expenses on the consolidated balance sheets, were $14.2 million as of March 31, 2019 and $14.6 million as of December 31, 2018. The Company has non-cancelable operating leases primarily associated with office facilities, real estate and office equipment, in addition to one related sublease for an office facility. The determination of which discount rate to use when measuring the lease obligation was deemed a significant judgment. Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Lease cost
Operating lease cost	$	1,444		$	2,009
Sublease income	—			(29		)
Total lease cost	$	1,444		$	1,980
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,223		$	1,767
Right-of-use assets obtained in exchange for new operating lease liabilities	$	78		$	1,696
Weighted-average discount rate	7.3		%	6.4		%

	March 31, 2019	December 31, 2018
Weighted-average remaining lease term (in years)	4.61	4.23

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2019 (in thousands).

Year Ending December 31,
Remaining in 2019	$	5,003
2020	5,126
2021	4,879
2022	3,553
2023	2,423
Thereafter	1,987
Total	$	22,971

XML

Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

No events have occurred subsequent to March 31, 2019, that would require recognition or disclosure in the Company’s financial statements.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Operations

Operations

William Lyon Homes, a Delaware corporation (“Parent” and together with its subsidiaries, the “Company”), is primarily engaged in designing, constructing, marketing and selling single-family detached and attached homes in California, Arizona, Nevada, Colorado, Washington (under the Polygon Northwest brand), Oregon (under the Polygon Northwest brand) and Texas.

Basis of Presentation

Basis of Presentation

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities as of March 31, 2019 and December 31, 2018 and revenues and expenses for the three month periods ended March 31, 2019 and 2018. Accordingly, actual results could differ from those estimates. The significant accounting policies using estimates include real estate inventories and cost of sales, impairment of real estate inventories, warranty reserves, loss contingencies, accounting for variable interest entities, business combinations, and valuation of deferred tax assets. The current economic environment increases the uncertainty inherent in these estimates and assumptions.

The condensed consolidated financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries and joint ventures, and certain joint ventures and other entities which have been determined to be variable interest entities ("VIEs") in which the Company is considered the primary beneficiary (see Note 3). The accounting policies of the joint ventures are substantially the same as those of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated financial statements were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements as of and for the year ended December 31, 2018, which are included in our 2018 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report.

Revenue Recognition

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (“ASU 2014-09” or “ASC 606”).

Home Sales

Effective January 1, 2018, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, "Revenue Recognition" ("ASC 606"). Under ASC 606, revenue was recorded when a sale is consummated, the buyer’s initial and continuing investments is adequate, any receivables are not subject to future subordination, and the usual risks and rewards of ownership have transferred to the buyer. Revenue is recorded upon the close of escrow, at which point home sales are considered in the scope of a contract. Accordingly, the Company does not record homebuilding revenue for performance obligations that are unsatisfied or partially unsatisfied. No revenue was recorded in the 2019 period that did not result from current period performance.

Construction Services

The Company accounts for construction management agreements using the Percentage of Completion Method in accordance with ASC 606. Under ASC 606, the Company records revenues and expenses as a contracted project progresses, and based on the percentage of costs incurred to date compared to the total estimated costs of the contract.

The Company entered into construction management agreements to build, sell and market homes in certain communities. For such services, the Company will receive fees (generally 3 to 5 percent of the sales price, as defined) and may, under certain circumstances, receive additional compensation if certain financial thresholds are achieved.

Real Estate Inventories

Real Estate Inventories

Real estate inventories are carried at cost net of impairment losses, if any. Real estate inventories consist primarily of land deposits, land and land under development, homes completed and under construction, and model homes. All direct and indirect land costs, offsite and onsite improvements and applicable interest and other carrying charges are capitalized to real estate projects during periods when the project is under development. Land, offsite costs and all other common costs are allocated to land parcels benefited based upon relative fair values before construction. Onsite construction costs and related carrying charges (principally interest and property taxes) are allocated to the individual homes within a phase based upon the relative sales value of the homes. The Company relieves its real estate inventories through cost of sales for the estimated cost of homes sold. Selling expenses and other marketing costs are expensed in the period incurred. From time to time the Company sells land to third parties. The Company does not consider these sales to be core to its homebuilding business, and any gain or loss recognized on these transactions is recorded in other non-operating income. During the three months ended March 31, 2019, the Company did not have any land parcel sales. During the three months ended March 31, 2018, the Company had one land parcel sale, that resulted in a negligible loss for the period then ended.

A provision for warranty costs relating to the Company’s limited warranty plans is included in cost of sales and accrued expenses at the time the sale of a home is recorded. The Company generally reserves a percent of the sales price of its homes, or a set amount per home closed depending on the operating division, against the possibility of future charges relating to its warranty programs and similar potential claims. Factors that affect the Company’s warranty liability include the number of homes under warranty, historical and anticipated rates of warranty claims, and cost per claim. The Company continually assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.

Construction Services

Financial Instruments

Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, receivables, and deposits. The Company typically places its cash and cash equivalents in investment grade short-term instruments. Deposits, included in other assets, are due from municipalities or utility companies and are generally collected from such entities through fees assessed to other developers. The Company is an issuer of, or subject to, financial instruments, including letters of credit, with off-balance sheet risk in the normal course of business which exposes it to credit risks.

Cash and Cash Equivalents

Cash and Cash Equivalents

Short-term investments with a maturity of three months or less when purchased are considered cash equivalents. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of March 31, 2019 and December 31, 2018. The Company monitors the cash balances in its operating accounts, however, these cash balances could be negatively impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

Deferred Loan Costs

Deferred Loan Costs

Deferred loan costs represent debt issuance costs and are primarily amortized to interest incurred using the straight line method which approximates the effective interest method.

Goodwill

Goodwill

In accordance with the provisions of ASC 350, Intangibles, Goodwill and Other, goodwill amounts are not amortized, but rather are analyzed for impairment at the reporting segment level. Goodwill is analyzed on an annual basis, or when indicators of impairment exist. We have determined that we have seven reporting segments, as discussed in Note 5, and we perform an annual goodwill impairment analysis during the fourth quarter of each fiscal year.

Intangibles

Intangibles

Recorded intangible assets primarily relate to brand names of acquired entities, construction management contracts, homes in backlog, and joint venture management fee contracts recorded in conjunction with FASB ASC Topic 852, Reorganizations ("ASC 852"), or FASB ASC Topic 805, Business Combinations ("ASC 805"). All intangible assets with the exception of those relating to brand names were valued based on expected cash flows related to home closings, and the asset is amortized on a per unit basis, as homes under the contracts close. Our brand name intangible assets are deemed to have an indefinite useful life.

Income per common share

ncome per common share

The Company computes income per common share in accordance with FASB ASC Topic 260, Earnings per Share, which requires income per common share for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and a company’s participating security holders.

Basic income per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of determining diluted income per common share, basic income per common share is further adjusted to include the effect of potential dilutive common shares.

Income Taxes

Income Taxes

Income taxes are accounted for under the provisions of Financial Accounting Standards Board ASC 740, Income Taxes, using an asset and liability approach. Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating loss and tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided to reduce net deferred tax assets to an amount that is more likely than not to be realized. ASC 740 prescribes a recognition threshold and a measurement criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered “more-likely-than-not” to be sustained upon examination by taxing authorities. In addition, the Company has elected to recognize interest and penalties related to uncertain tax positions in the income tax provision.

Impact of Recent Accounting Pronouncements

Impact of Recent Accounting Pronouncements

Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows.

XML

Basis of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Changes in Warranty Liability

Changes in the Company’s warranty liability for the three months ended March 31, 2019 and 2018, are as follows (in thousands):

	Three    Months   Ended   March 31,   2019			Three    Months   Ended   March 31,   2018
Warranty liability, beginning of period	$	13,000		$	13,643
Warranty provision during period (1)	2,416			2,504
Warranty payments, net of insurance recoveries during period	(3,815		)	(4,395		)
Warranty charges related to construction services projects	(17		)	7
Warranty liability, end of period	$	11,584		$	11,759

(1) In connection with the RSI Acquisition (see Note 2) in 2018, the Company assumed warranty liability of $0.6 million for units closed prior to the RSI Acquisition date and for which has been included in this line item for purposes of this table.

Schedule of Interest Activity

Interest activity for the three months ended March 31, 2019 and 2018 are as follows (in thousands):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Interest incurred	$	24,081	$	19,258
Less: Interest capitalized	24,081		19,258
Interest expense, net of amounts capitalized	$	—	$	—
Cash paid for interest	$	40,858	$	31,489

XML

Acquisition of RSI Communities (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Schedule of Reconciliation of Consideration Transferred as of Acquisition Date

A reconciliation of the consideration transferred as of the acquisition date is as follows:

Net proceeds received from RSI inventory involved in land banking transactions	$	194,131
Issuance of 6.00% Senior Notes due September 1, 2023	190,437
Cash on hand	94,760
	479,328

Summary of Preliminary Amounts for Acquired Assets and Liabilities Recorded at Fair Value

The following table summarizes the amounts for acquired assets and liabilities recorded at their fair values as of the acquisition date (in thousands):

Assets Acquired
	Real estate inventories	$	434,628
	Goodwill	56,793
	Other	7,771
	Total Assets	$	499,192
Liabilities Assumed
	Accounts payable	$	9,315
	Accrued expenses	8,244
	Notes payable	2,305
	Total liabilities	19,864
	Net assets acquired	$	479,328

Summary of Unaudited Pro Forma Amounts of Polygon Northwest Homes Acquisition

The following table presents unaudited pro forma amounts for the three months ended March 31, 2018 as if the RSI Acquisition, had been completed as of January 1, 2017 (amounts in thousands, except per share data):

	Three Months Ended March 31, 2018
Operating revenues	$	401,600
Net income available to common stockholders	$	6,419
Income per share - basic	$	0.17
Income per share - diluted	$	0.16

XML

Investments in Unconsolidated Joint Ventures (Tables)

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Summary of Unaudited Financials for Unconsolidated Joint Ventures

The table set forth below summarizes the combined unaudited statements of operations for our unconsolidated mortgage joint ventures that we accounted for under the equity method (in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Revenues	$	4,197		$	3,709
Cost of sales	(2,342		)	(1,918		)
Income of unconsolidated joint ventures	$	1,855		$	1,791

The table set forth below summarizes the combined unaudited balance sheets for our unconsolidated joint ventures that we accounted for under the equity method (in thousands):

			March 31, 2019		December 31, 2018
Assets
	Cash		$	6,958	$	8,093
	Loans held for sale		37,908		27,958
	Accounts receivable		982		884
	Other assets		169		115
		Total Assets	$	46,017	$	37,050
Liabilities and Equity
	Accounts payable		$	449	$	700
	Accrued expenses		1,221		1,988
	Credit lines payable		36,180		26,775
	Other liabilities		508		49
	Members equity		7,659		7,538
		Total Liabilities and Equity	$	46,017	$	37,050

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Segment Financial Information Relating to Operations

Segment financial information relating to the Company’s operations was as follows (in thousands):

	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Operating revenue:
California	$	186,118		$	134,812
Arizona	29,594			32,039
Nevada	37,705			49,176
Colorado	56,036			40,063
Washington (1)	43,940			55,651
Oregon	51,087			46,853
Texas	51,384			14,774
Total operating revenue	$	455,864		$	373,368
(1) Operating revenue in the Washington segment includes construction services revenue in the periods ended March 31, 2019 and 2018.
	Three   Months   Ended   March 31,   2019			Three   Months   Ended   March 31,   2018
Income before provision for income taxes:
California	$	16,105		$	11,419
Arizona	2,493			2,487
Nevada	4,192			4,839
Colorado	6,024			3,164
Washington	1,145			4,511
Oregon	2,070			3,637
Texas	1,181			434
Corporate	(13,563		)	(15,089		)
Income before gain on extinguishment of debt	$	19,647		$	15,402
Corporate - Gain on extinguishment of debt	383			—
Income before provision for income taxes	$	20,030		$	15,402

Schedule of Segment Homebuilding Assets

	March 31, 2019		December 31, 2018
Homebuilding assets:
Owned:
California	$	878,608	$	930,714
Arizona	171,124		168,507
Nevada	190,787		189,363
Colorado	138,148		149,450
Washington	306,596		308,270
Oregon	429,448		440,105
Texas	271,652		234,093
Corporate (1)	214,565		193,696
	$	2,600,928	$	2,614,198
Not Owned:
California	$	78,543	$	91,849
Arizona	114,858		114,858
Washington	21,657		21,657
Texas	79,027		87,212
Total homebuilding assets	$	2,895,013	$	2,929,774

(1) Comprised primarily of cash and cash equivalents, receivables, deferred income taxes, and other assets.

XML

Real Estate Inventories (Tables)

3 Months Ended

Mar. 31, 2019

Real Estate [Abstract]

Summary of Real Estate Inventories

Real estate inventories consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Real estate inventories:
Land deposits	$	143,736	$	147,327
Land and land under development	473,309		660,151
Finished lots	702,278		564,460
Homes completed and under construction	858,617		839,316
Model homes	125,596		121,953
Total	$	2,303,536	$	2,333,207
Real estate inventories not owned (1):
Other land options contracts — land banking arrangement	$	294,085	$	315,576

(1) Represents the consolidation of a land banking arrangement. Although the Company is not obligated to purchase the lots, based on certain factors, the Company has determined that it is economically compelled to purchase the lots in the land banking arrangement and thus, has consolidated the assets and liabilities associated with this land bank. Amounts are net of deposits.

XML

Senior Notes, Secured, and Unsecured Indebtedness (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Debt

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

	March 31, 2019		December 31, 2018
Notes payable:
Revolving credit facility	$	110,000	$	45,000
Seller financing	—		—
Construction notes payable	1,204		1,231
Joint venture notes payable	144,027		151,788
Total notes payable	255,231		198,019
Senior notes:
7% Senior Notes due August 15, 2022	347,639		347,456
6% Senior Notes due September 1, 2023	344,206		343,878
5.875% Senior Notes due January 31, 2025	428,430		431,992
Total senior notes	1,120,275		1,123,326
Total notes payable and senior notes	$	1,375,506	$	1,321,345

Schedule of Maturities of Notes Payable and Senior Notes

As of March 31, 2019, the maturities of the Notes payable, 7% Senior Notes, 6% Senior Notes, and 5.875% Senior Notes are as follows (in thousands):

Year Ending December 31,
Remaining in 2019	$	15,217
2020	36,409
2021	203,605
2022	350,000
2023	350,000
Thereafter	436,886
	$	1,392,117

The issuance date, facility size, maturity date and interest rate of the joint ventures notes payable are listed in the table below as of March 31, 2019 (in millions):

Issuance Date	Facility Size	Outstanding		Maturity	Current Rate
March, 2019	18.9	$	0.4	November, 2020	5.38	%	(3)
May, 2018	128.0	86.7		May, 2021	5.49	%	(2)
May, 2018	13.3	11.1		June, 2020	5.38	%	(3)
July, 2017	66.2	31.7		February, 2021	5.56	%	(2)
January, 2016	35.0	14.0		August, 2019	5.75	%	(1)
	261.4	$	143.9

(1) Loan bears interest at LIBOR +3.25%.

(2) Loan bears interest at the greatest of the prime rate, federal funds effective rate +1.0%, or LIBOR +1.0%.

(3) Loan bears interest at LIBOR +2.90%.

Debt Instrument Redemption

On or after September 1, 2020, California Lyon may redeem all or a portion of the 6.00% Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount on the redemption date) set forth below plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, if redeemed during the 12-month period commencing on each of the dates as set forth below:

Year	Percentage
September 1, 2020	103.00	%
September 1, 2021	101.50	%
September 1, 2022	100.00	%

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)

As of March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	33,942		$	1,915		$	9,852		$	—		$	45,709
Receivables	—		5,109			5,304			5,004			—			15,417
Escrow proceeds receivable	—		2,659			—			—			—			2,659
Real estate inventories
Owned	—		725,596			1,140,340			437,600			—			2,303,536
Not owned	—		114,858			179,227			—			—			294,085
Investment in unconsolidated joint ventures	—		5,512			150			—			—			5,662
Goodwill	—		14,209			109,486			—			—			123,695
Intangibles, net	—		—			6,700			—			—			6,700
Deferred income taxes, net	—		46,900			—			—			—			46,900
Lease right-of-use assets	—		13,135			—			—			—			13,135
Other assets, net	—		27,299			8,952			1,264			—			37,515
Investments in subsidiaries	871,850		23,425			(943,873		)	—			48,598			—
Intercompany receivables	—		—			294,625			(160		)	(294,465		)	—
Total assets	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013
LIABILITIES AND EQUITY
Accounts payable	$	—	$	63,991		$	30,492		$	14,023		$	—		$	108,506
Accrued expenses	—		84,459			12,156			100			—			96,715
Liabilities from inventories not owned	—		114,860			179,225			—			—			294,085
Notes payable	—		110,001			1,204			144,026			—			255,231
7% Senior Notes	—		347,639			—			—			—			347,639
6% Senior Notes	—		344,206			—			—			—			344,206
5.875% Senior Notes	—		428,430			—			—			—			428,430
Intercompany payables	—		170,830			—			123,635			(294,465		)	—
Total liabilities	—		1,664,416			223,077			281,784			(294,465		)	1,874,812
Equity
William Lyon Homes stockholders’ equity	871,850		(651,772		)	579,749			23,425			48,598			871,850
Noncontrolling interests	—		—			—			148,351			—			148,351
Total liabilities and equity	$	871,850	$	1,012,644		$	802,826		$	453,560		$	(245,867	)	$	2,895,013

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon		California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated Company
ASSETS
Cash and cash equivalents	$	—	$	21,450		$	2,888		$	9,441	$	—		$	33,779
Receivables	—		6,054			4,151			3,297		—			13,502
Escrow proceeds receivable														—
Real estate inventories
Owned	—		745,750			1,152,786			434,671		—			2,333,207
Not owned	—		114,859			200,717			—		—			315,576
Investment in unconsolidated joint ventures	—		5,392			150			—		—			5,542
Goodwill	—		14,209			109,486			—		—			123,695
Intangibles, net	—		—			6,700			—		—			6,700
Deferred income taxes, net	—		47,241			—			—		—			47,241
Lease right-of-use assets	—		13,561			—			—		—			13,561
Other assets, net	—		26,797			9,688			486		—			36,971
Investments in subsidiaries	863,322		16,059			(961,950		)	—		82,569			—
Intercompany receivables	—		—			285,675			—		(285,675		)	—
Total assets	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774
LIABILITIES AND EQUITY
Accounts payable	$	—	$	78,462		$	34,546		$	15,363	$	—		$	128,371
Accrued expenses	—		123,088			26,967			100		—			150,155
Liabilities from inventories not owned	—		114,859			200,717			—		—			315,576
Notes payable	—		45,000			1,231			151,788		—			198,019
7% Senior Notes	—		347,456			—			—		—			347,456
6% Senior Notes	—		343,878			—			—		—			343,878
5.875% Senior Notes	—		431,992			—			—		—			431,992
Intercompany payables	—		172,095			—			113,580		(285,675		)	—
Total liabilities	—		1,656,830			263,461			280,831		(285,675		)	1,915,447
Equity
William Lyon Homes stockholders’ equity	863,322		(645,458		)	546,830			16,059		82,569			863,322
Noncontrolling interests	—		—			—			151,005		—			151,005
Total liabilities and equity	$	863,322	$	1,011,372		$	810,291		$	447,895	$	(203,106	)	$	2,929,774

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2019

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	(409	)	$	(37,671	)	$	4,229		$	3,826		$	(1,002	)	$	(31,027	)
Investing activities
Sales (purchases) of property and equipment	—			—			1,404			—			—			1,404
Investments in subsidiaries	—			(1,851		)	(18,077		)	—			19,928			—
Net cash (used in) provided by investing activities	—			(1,851		)	(16,673		)	—			19,928			1,404
Financing activities
Proceeds from borrowings on notes payable	—			—			—			30,111			—			30,111
Principal payments on notes payable	—			—			(27		)	(37,872		)	—			(37,899		)
Principal payments on 5.875% Senior Notes	—			(3,591		)	—			—			—			(3,591		)
Proceeds from borrowings on Revolver	—			190,000			—			—			—			190,000
Payments on Revolver	—			(125,000		)	—			—			—			(125,000		)
Payment of deferred loan costs	—			(43		)	—			—			—			(43		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(2,356		)	—			—			—			(2,356		)
Noncontrolling interest contributions	—			—			—			1,389			—			1,389
Noncontrolling interest distributions	—			—			—			(11,058		)	—			(11,058		)
Advances to affiliates	—			—			20,448			3,800			(24,248		)	—
Intercompany receivables/payables	409			(6,996		)	(8,950		)	10,215			5,322			—
Net cash (used in) provided by financing activities	409			52,014			11,471			(3,415		)	(18,926		)	41,553
Net (decrease) increase in cash and cash equivalents	—			12,492			(973		)	411			—			11,930
Cash and cash equivalents - beginning of period	—			21,450			2,888			9,441			—			33,779
Cash and cash equivalents - end of period	$	—		$	33,942		$	1,915		$	9,852		$	—		$	45,709

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)

Three Months Ended March 31, 2018

(in thousands)

	Unconsolidated
	Delaware Lyon			California Lyon			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated Company
Operating activities
Net cash provided by (used in) operating activities	$	6,515		$	(60,555	)	$	146,012		$	12,571		$	(6,515	)	$	98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	—			—			(475,221		)	—			—			(475,221		)
Purchases of property and equipment	—			(1,063		)	(1,391		)	12			—			(2,442		)
Investments in subsidiaries	—			9,624			343,067			—			(352,691		)	—
Net cash provided by (used in) investing activities	—			8,561			(133,545		)	12			(352,691		)	(477,663		)
Financing activities
Proceeds from borrowings on notes payable	—			—			—			20,194			—			20,194
Principal payments on notes payable	—			—			(14		)	(29,165		)	—			(29,179		)
Principal payments on 5.75% Senior Notes	—			(150,000		)	—			—			—			(150,000		)
Proceeds from issuance of 6.0% Senior Notes	—			350,000			—			—			—			350,000
Proceeds from borrowings on Revolver	—			110,000			—			—			—			110,000
Payments on Revolver	—			(25,000		)	—			—			—			(25,000		)
Payment of deferred loan costs	—			(5,877		)	—			—			—			(5,877		)
Shares remitted to, or withheld by the Company for employee tax withholding	—			(4,696		)	—			—			—			(4,696		)
Payments to repurchase common stock	—			(5,000		)	—			—			—			(5,000		)
Noncontrolling interest contributions	—			—			—			4,062			—			4,062
Noncontrolling interest distributions	—			—			—			(17,106		)	—			(17,106		)
Advances to affiliates	—			—			6,240			(2,864		)	(3,376		)	—
Intercompany receivables/payables	(6,515		)	(349,370		)	(15,273		)	8,576			362,582			—
Net cash (used in) provided by financing activities	(6,515		)	(79,943		)	(9,047		)	(16,303		)	359,206			247,398
Net (decrease) increase in cash and cash equivalents	—			(131,937		)	3,420			(3,720		)	—			(132,237		)
Cash and cash equivalents - beginning of period	—			171,434			156			11,120			—			182,710
Cash and cash equivalents - end of period	$	—		$	39,497		$	3,576		$	7,400		$	—		$	50,473

XML

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	255,231	$	255,231	$	198,019	$	198,019
7% Senior Notes due 2022	347,639		351,330		347,456		350,000
6% Senior Notes due 2023	344,206		337,750		343,878		315,000
5.875% Senior Notes due 2025	428,430		411,241		431,992		378,611

XML

Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Income Per Common Share Calculation

Basic and diluted income per common share for the three months ended March 31, 2019 and 2018 were calculated as follows (in thousands, except number of shares and per share amounts):

	Three   Months   Ended   March 31,   2019		Three   Months   Ended   March 31,   2018
Basic weighted average number of common shares outstanding	37,610,766		37,931,256
Effect of dilutive securities:
Stock options, unvested common shares, and warrants	1,144,347		1,924,427
Diluted average shares outstanding	38,755,113		39,855,683
Net income available to common stockholders	$	8,119	$	8,328
Basic income per common share	$	0.22	$	0.22
Dilutive income per common share	$	0.21	$	0.21
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Unvested stock options	—		—

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Lease Costs

Lease cost, as included in general and administrative expense in our consolidated statements of operations for the respective periods, and additional information regarding lease terms are as follows (dollars in thousands):

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Lease cost
Operating lease cost	$	1,444		$	2,009
Sublease income	—			(29		)
Total lease cost	$	1,444		$	1,980
Other information
Cash paid for amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows	$	1,223		$	1,767
Right-of-use assets obtained in exchange for new operating lease liabilities	$	78		$	1,696
Weighted-average discount rate	7.3		%	6.4		%

	March 31, 2019	December 31, 2018
Weighted-average remaining lease term (in years)	4.61	4.23

Schedule of Future Minimum Rental Payments for Operating Leases

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2019 (in thousands).

Year Ending December 31,
Remaining in 2019	$	5,003
2020	5,126
2021	4,879
2022	3,553
2023	2,423
Thereafter	1,987
Total	$	22,971

XML

Basis of Presentation and Significant Accounting Policies - Narrative (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($) land_parcel segment	Mar. 31, 2018 USD ($) land_parcel	Dec. 31, 2018
Significant Accounting Policies [Line Items]
Number of land parcels sold | land_parcel	0	1
Operating revenue	$ 455,864,000	$ 373,368,000
Number of reportable segments | segment	7
Minimum
Significant Accounting Policies [Line Items]
Percentage of sales price fee from construction management agreements			300.00%
Maximum
Significant Accounting Policies [Line Items]
Percentage of sales price fee from construction management agreements			5.00%
Land
Significant Accounting Policies [Line Items]
Operating revenue	$ 1,900,000

XML

Basis of Presentation and Significant Accounting Policies - Summary of Changes in Warranty Liability (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Movement in Standard Product Warranty Accrual [Roll Forward]
Warranty liability, beginning of period	$ 13,000	$ 13,643	$ 13,643
Warranty provision during period (1)	2,416	2,504
Warranty payments, net of insurance recoveries during period	(3,815)	(4,395)
Warranty charges related to construction services projects	(17)	7
Warranty liability, end of period	$ 11,584	$ 11,759	13,000
RSI Communities
Movement in Standard Product Warranty Accrual [Roll Forward]
Warranty provision during period (1)			$ 600

XML

Basis of Presentation and Significant Accounting Policies - Schedule of Interest Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accounting Policies [Abstract]
Interest incurred	$ 24,081	$ 19,258
Less: Interest capitalized	24,081	19,258
Interest expense, net of amounts capitalized	0	0
Cash paid for interest	$ 40,858	$ 31,489

XML

Acquisition of RSI Communities - Narrative (Details)		3 Months Ended
	Mar. 09, 2018 USD ($) Property	Mar. 31, 2019 USD ($) segment	Mar. 31, 2018 USD ($)	Dec. 31, 2018	Mar. 08, 2018
Business Acquisition [Line Items]
Business Combination, Acquisition Related Costs			$ 3,130,000
Number Of Additional Real Estate Properties | Property	3
Number of operating segments as a result of acquired business | segment		1
Total operating revenue		$ 455,864,000	373,368,000
Provision for income taxes		$ (4,896,000)	(2,814,000)
6% Senior Notes due September 1, 2023
Business Acquisition [Line Items]
Stated interest rate		6.00%
6% Senior Notes due September 1, 2023 | Senior notes
Business Acquisition [Line Items]
Principal amount		$ 350,000,000
Stated interest rate	6.00%	6.00%		6.00%	6.00%
Proceeds from land banking arrangements	$ 194,300,000
RSI Communities
Business Acquisition [Line Items]
Cash purchase price	479,300,000
Working capital adjustments	15,200,000.000000000
Goodwill, expected tax deductible amount	$ 56,800,000
RSI Communities | Selling, General and Administrative Expenses
Business Acquisition [Line Items]
Business Combination, Acquisition Related Costs		$ 0	$ 3,130,000

XML

Acquisition of RSI Communities - Schedule of Reconciliation of Consideration Transferred as of Acquisition Date (Details) - USD ($) $ in Thousands	Mar. 09, 2018	Mar. 31, 2019	Dec. 31, 2018	Mar. 08, 2018
RSI Communities
Business Acquisition [Line Items]
Net proceeds received from RSI inventory involved in land banking transactions	$ 194,131
Issuance of 6.00% Senior Notes due September 1, 2023	(190,437)
Cash on hand	94,760
Total consideration transferred	$ 479,328
6% Senior Notes due September 1, 2023
Business Acquisition [Line Items]
Stated interest rate		6.00%
6% Senior Notes due September 1, 2023 | Senior notes
Business Acquisition [Line Items]
Stated interest rate	6.00%	6.00%	6.00%	6.00%

XML

Acquisition of RSI Communities - Summary of Preliminary Amounts for Acquired Assets and Liabilities Recorded at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 09, 2018
Assets Acquired
Goodwill	$ 123,695	$ 123,695
RSI Communities
Assets Acquired
Real estate inventories			$ 434,628
Goodwill			56,793
Other			7,771
Total Assets			499,192
Liabilities Assumed
Accounts payable			9,315
Accrued expenses			8,244
Notes payable			2,305
Total liabilities			19,864
Net assets acquired			$ 479,328

XML

Acquisition of RSI Communities - Summary of Unaudited Pro Forma Amounts of RSI Communities Acquisition (Details) - RSI Communities $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares
Business Acquisition [Line Items]
Operating revenues | $	$ 401,600
Net income available to common stockholders | $	$ 6,419
Income per share - basic (in USD per share) | $ / shares	$ 0.17
Income per share - diluted (in USD per share) | $ / shares	$ 0.16

XML

Variable Interest Entities and Noncontrolling Interests - Narrative (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($) joint_venture	Dec. 31, 2018 USD ($) joint_venture
Noncontrolling Interest [Line Items]
Number of joint ventures | joint_venture	24	20
Consolidated variable interest entities, assets	$ 440.6	$ 434.8
Consolidated variable interest entities, liabilities	210.5	209.4
Cash
Noncontrolling Interest [Line Items]
Consolidated variable interest entities, assets	9.4	9.0
Real estate
Noncontrolling Interest [Line Items]
Consolidated variable interest entities, assets	$ 425.6	$ 422.7

XML

Investments in Unconsolidated Joint Ventures - Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Schedule of Equity Method Investments [Line Items]
Revenues	$ 455,864	$ 373,368
Cost of sales	(437,760)	(358,933)
Operating income (loss)	18,104	14,435
Unconsolidated joint venture income	912	932
Joint Ventures
Schedule of Equity Method Investments [Line Items]
Revenues	4,197	3,709
Cost of sales	(2,342)	(1,918)
Operating income (loss)	$ 1,855	$ 1,791

XML

Investments in Unconsolidated Joint Ventures - Financial Position (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
ASSETS
Other assets	$ 37,515	$ 36,971
Total assets	2,895,013	2,929,774
LIABILITIES AND EQUITY
Accounts payable	108,506	128,371
Accrued expenses	96,715	150,155
Total liabilities and equity	2,895,013	2,929,774
Joint Ventures
ASSETS
Cash	6,958	8,093
Loans held for sale	37,908	27,958
Accounts receivable	982	884
Other assets	169	115
Total assets	46,017	37,050
LIABILITIES AND EQUITY
Accounts payable	449	700
Accrued expenses	1,221	1,988
Credit lines payable	36,180	26,775
Other liabilities	508	49
Members equity	7,659	7,538
Total liabilities and equity	$ 46,017	$ 37,050

XML

Segment Information - Narrative (Details) - segment	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting [Abstract]
Number of operating segments	1
Additional operating segments during period		1
Number of reportable segments	7

XML

Segment Information - Schedule of Segment Financial Information Relating to Operations (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Operating revenue
Total operating revenue		$ 455,864	$ 373,368
Income before provision for income taxes:
Income before provision for income taxes		20,030	15,402
Income before extinguishment of debt		19,647	15,402
Gain on extinguishment of debt		383	0
Corporate
Income before provision for income taxes:
Income before provision for income taxes		(13,563)	(15,089)
California
Operating revenue
Total operating revenue	[1]	186,118	134,812
California | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		16,105	11,419
Arizona
Operating revenue
Total operating revenue		29,594	32,039
Arizona | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		2,493	2,487
Nevada
Operating revenue
Total operating revenue		37,705	49,176
Nevada | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		4,192	4,839
Colorado
Operating revenue
Total operating revenue		56,036	40,063
Colorado | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		6,024	3,164
Washington
Operating revenue
Total operating revenue		43,940	55,651
Washington | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		1,145	4,511
Oregon
Operating revenue
Total operating revenue		51,087	46,853
Oregon | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		2,070	3,637
Texas
Operating revenue
Total operating revenue		51,384	14,774
Texas | Reportable Operating Segments
Income before provision for income taxes:
Income before provision for income taxes		$ 1,181	$ 434

[1] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOmE1M2JkNWZkYTY5OTQ5NWRhZWUxZTg2NDM3ZjU5MzExfFRleHRTZWxlY3Rpb246MDQ1QUNCRjQ2RUFGNTg1OEI5NzU0NTEwMTZDRTBBRjMM}

XML

Segment Information - Schedule of Segment Homebuilding Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Homebuilding assets:
Total homebuilding assets	$ 2,895,013	$ 2,929,774
Not owned	294,085	315,576
Corporate
Homebuilding assets:
Total homebuilding assets	214,565	193,696
California
Homebuilding assets:
Not owned	78,543	91,849
California | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	878,608	930,714
Arizona
Homebuilding assets:
Not owned	114,858	114,858
Arizona | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	171,124	168,507
Nevada | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	190,787	189,363
Colorado | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	138,148	149,450
Washington
Homebuilding assets:
Not owned	21,657	21,657
Washington | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	306,596	308,270
Oregon | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	429,448	440,105
Texas
Homebuilding assets:
Not owned	79,027	87,212
Texas | Reportable Operating Segments
Homebuilding assets:
Total homebuilding assets	271,652	234,093
Real Estate Owned [Member]
Homebuilding assets:
Total homebuilding assets	$ 2,600,928	$ 2,614,198

XML

Real Estate Inventories - Summary of Real Estate Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real estate inventories:
Land deposits	$ 143,736	$ 147,327
Land and land under development	473,309	660,151
Finished lots	702,278	564,460
Homes completed and under construction	858,617	839,316
Model homes	125,596	121,953
Total	2,303,536	2,333,207
Not owned	$ 294,085	$ 315,576

XML

Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 09, 2018	Mar. 08, 2018	Jan. 31, 2017	Aug. 11, 2014	Mar. 31, 2014
Debt Instrument [Line Items]
Total notes payable	$ 255,231	$ 198,019
Total debt	$ 1,375,506	1,321,345
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Total debt		$ 0
Stated interest rate	5.75%	5.75%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Total debt	$ 347,639	$ 347,456
Stated interest rate	7.00%	7.00%
6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Total debt	$ 344,206	$ 343,878
Stated interest rate	6.00%
5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Total debt	$ 428,430	$ 431,992
Stated interest rate	5.875%	5.875%
Seller financing
Debt Instrument [Line Items]
Total notes payable	$ 0	$ 0
Construction notes payable
Debt Instrument [Line Items]
Total notes payable	1,204	1,231
Joint venture notes payable
Debt Instrument [Line Items]
Total notes payable	144,027	151,788
Senior notes
Debt Instrument [Line Items]
Total debt	$ 1,120,275	$ 1,123,326
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate	5.75%	5.75%					5.75%
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Total debt	$ 347,639	$ 347,456
Stated interest rate	7.00%	7.00%				7.00%
Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Total debt	$ 344,206	$ 343,878
Stated interest rate	6.00%	6.00%	6.00%	6.00%
Senior notes | 5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Total debt	$ 428,430	$ 431,992
Stated interest rate	5.875%				5.875%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Notes Payable, Senior Unsecured Facility, 5 3/4% and 8 1/2% Senior Notes (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 1,375,506	$ 1,321,345
Senior Notes and Subordinated Amortizing Notes
Debt Instrument [Line Items]
Remaining in 2019	15,217
2019	36,409
2020	203,605
2021	350,000
2022	350,000
Thereafter	436,886
Total debt	$ 1,392,117

XML

Senior Notes, Secured, and Unsecured Indebtedness - Revolving Line of Credit - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 18, 2018	Nov. 09, 2018	May 21, 2018	Mar. 30, 2018	Mar. 09, 2018	Mar. 08, 2018	Dec. 31, 2017	Dec. 30, 2017	Nov. 28, 2017	Jul. 01, 2017	Jun. 29, 2017	Mar. 31, 2017	Dec. 30, 2016	Jul. 01, 2016	Mar. 31, 2014
Debt Instrument [Line Items]
Gain on extinguishment of debt	$ 383,000	$ 0
Notes payable	$ 255,231,000			$ 198,019,000
6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate	6.00%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate	5.75%			5.75%
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity						$ 365,000,000.0							$ 170,000,000.0
Line of Credit Facility, Increase in Borrowing Capacity						$ 40,000,000.0							$ 25,000,000.0
Revolving Credit Facility | Amended Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 130,000,000.0
Commitment fee percentage		50.00%
Revolving Credit Facility | New Facility
Debt Instrument [Line Items]
Maximum borrowing capacity																$ 325,000,000.0
Additional capacity under accordion feature							$ 500,000,000.0
Debt Instrument, Covenant, Leverage Ratio, Maximum	65.00%			62.50%	65.00%
Commitment fee percentage	0.50%
Effective rate	6.60%			7.50%
Revolving Credit Facility | Second Amended Facility
Debt Instrument [Line Items]
Maximum borrowing capacity																		$ 145,000,000.0
Additional capacity under accordion feature																		200,000,000.0
Debt Instrument, Covenant, Tangible Net Worth, Minimum	$ 556,400,000.0
Debt Instrument, Covenant, Leverage Ratio, Maximum		60.00%		60.00%							62.50%	62.50%		60.00%	62.50%		65.00%
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum	1.50
Debt Instrument, Covenant, Interest Coverage Ratio, Maximum Liquidity Used in Calculation	$ 50,000,000.0
Revolving Credit Facility | Amendment to Second Amended Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum		70.00%						60.00%
Letter of Credit
Debt Instrument [Line Items]
Outstanding letter of credit	7,200,000			$ 8,600,000
Letter of Credit | Amended Facility
Debt Instrument [Line Items]
Outstanding letter of credit	$ 7,900,000			$ 7,800,000
Letter of Credit | New Facility
Debt Instrument [Line Items]
Minimum borrowing capacity							$ 50,000,000.0
Letter of Credit | Second Amended Facility
Debt Instrument [Line Items]
Minimum borrowing capacity																		$ 50,000,000.0
Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate	6.00%			6.00%					6.00%	6.00%
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate	5.75%			5.75%															5.75%
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Notes payable	$ 110,000,000			$ 45,000,000
Subsequent Event | Revolving Credit Facility | New Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum			60.00%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Narrative (Details) - USD ($)	1 Months Ended				3 Months Ended
	Sep. 30, 2018	May 31, 2017	Jan. 31, 2015	Aug. 31, 2014	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 18, 2018	Mar. 30, 2018	Mar. 09, 2018	Mar. 08, 2018	Dec. 31, 2017	Dec. 30, 2017	Jul. 01, 2017	Jun. 29, 2017	Jan. 31, 2017	Dec. 30, 2016	Aug. 11, 2014	Mar. 31, 2014
Debt Instrument [Line Items]
Gain on extinguishment of debt					$ 383,000	$ 0
Deferred loan costs					(14,500,000)
Notes payable					$ 255,231,000			$ 198,019,000
8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate					8.50%			8.50%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate					7.00%			7.00%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate					5.75%			5.75%
5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Stated interest rate					5.875%			5.875%
6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate					6.00%
Senior notes | 8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate					6.00%
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate					7.00%			7.00%											7.00%
Percent exchanged			100.00%
Unamortized premium					$ 500,000
Deferred loan costs					$ (2,900,000)
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate					5.75%			5.75%												5.75%
Percent exchanged				100.00%
Deferred loan costs					$ (5,800,000)
Senior notes | 5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Stated interest rate					5.875%												5.875%
Percent exchanged		100.00%
Deferred loan costs					$ (5,800,000)
Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate					6.00%			6.00%			6.00%	6.00%
Percent exchanged	100.00%
Seller financing
Debt Instrument [Line Items]
Notes payable					$ 0			$ 0
Seller financing | Note Payable Maturing in June 2018
Debt Instrument [Line Items]
Stated interest rate					7.00%
Construction notes payable
Debt Instrument [Line Items]
Notes payable					$ 1,204,000			$ 1,231,000
Revolving Credit Facility | Second Amended Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Tangible Net Worth, Minimum					$ 556,400,000.0
Debt Instrument, Covenant, Leverage Ratio, Maximum						60.00%		60.00%					62.50%	62.50%	60.00%	62.50%		65.00%
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum					1.50
Debt Instrument, Covenant, Interest Coverage Ratio, Maximum Liquidity Used in Calculation					$ 50,000,000.0
Revolving Credit Facility | New Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum					65.00%			62.50%	65.00%
Revolving Credit Facility | Amendment to Second Amended Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum						70.00%				60.00%
Subsequent Event | Revolving Credit Facility | New Facility
Debt Instrument [Line Items]
Debt Instrument, Covenant, Leverage Ratio, Maximum							60.00%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Construction Notes Payable (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total notes payable	$ 255,231	$ 198,019
Construction Loans
Debt Instrument [Line Items]
Total notes payable	261,400
Outstanding	143,900
Construction Loans | March 2019 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	18,900
Outstanding	$ 400
Current Rate	5.38%
Construction Loans | May 2018, Maturity May 2021 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 128,000
Outstanding	$ 86,700
Current Rate	5.49%
Construction Loans | May 2018, Maturity June 2020 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 13,300
Outstanding	$ 11,100
Current Rate	5.38%
Construction Loans | July 2017 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 66,200
Outstanding	$ 31,700
Current Rate	5.56%
Construction Loans | January 2016 Construction Notes Payable
Debt Instrument [Line Items]
Total notes payable	$ 35,000
Outstanding	$ 14,000
Current Rate	5.75%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Schedule of Maturities of Construction Notes Payable (Footnote) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Debt Instrument [Line Items]
Gain on extinguishment of debt	$ 383	$ 0
Construction Notes Payable, January 2016 | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
May 2018, Maturity May 2021 Construction Notes Payable | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
May 2018, Maturity May 2021 Construction Notes Payable | Federal Funds Effective Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
May 2018, Maturity June 2020 Construction Notes Payable | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.90%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Subordinated Amortizing Notes - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 1,375,506	$ 1,321,345

XML

Senior Notes, Secured, and Unsecured Indebtedness - Senior Notes - Narrative (Details) - USD ($)						1 Months Ended					3 Months Ended		12 Months Ended
	Mar. 09, 2018	Jan. 31, 2017	Sep. 15, 2015	Aug. 11, 2014	Mar. 31, 2014	Sep. 30, 2018	May 31, 2017	Jan. 31, 2016	Jan. 31, 2015	Aug. 31, 2014	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Mar. 08, 2018
Debt Instrument [Line Items]
Gain (Loss) on Extinguishment of Debt											$ 383,000	$ 0
Deferred loan costs											$ (14,500,000)
6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate											6.00%
7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate											7.00%		7.00%
5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate											5.75%		5.75%
5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Stated interest rate											5.875%		5.875%
8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate											8.50%		8.50%
Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Stated interest rate	6.00%										6.00%		6.00%	6.00%
Principal amount											$ 350,000,000
Percentage of principal amount	100.00%
Percent exchanged						100.00%
Outstanding amount													$ 350,000,000
Senior notes | 7% Senior Notes due August 15, 2022
Debt Instrument [Line Items]
Stated interest rate				7.00%							7.00%		7.00%
Principal amount			$ 50,000,000.0	$ 300,000,000
Percentage of principal amount			102.00%	100.00%
Percent exchanged									100.00%
Deferred loan costs											$ (2,900,000)
Net proceeds from issuance of debt			$ 50,500,000
Expected percent exchanged								100.00%
Outstanding amount											350,000,000
Unamortized premium											$ 500,000
Senior notes | 5 3/4% Senior Notes due April 15, 2019
Debt Instrument [Line Items]
Stated interest rate					5.75%						5.75%		5.75%
Principal amount					$ 150,000,000
Percentage of principal amount					100.00%
Percent exchanged										100.00%
Deferred loan costs											$ (5,800,000)
Senior notes | 5 7/8% Senior Notes due January 31, 2025
Debt Instrument [Line Items]
Stated interest rate		5.875%									5.875%
Principal amount		$ 450,000,000
Percentage of principal amount		99.215%
Percent exchanged							100.00%
Deferred loan costs											$ (5,800,000)
Outstanding amount											437,000,000
Debt Instrument, Unamortized Discount											$ (2,700,000)
Senior notes | 8 1/2% Senior Notes due November 15, 2020
Debt Instrument [Line Items]
Stated interest rate											6.00%
Outstanding amount											$ 425,000,000
California Lyon | Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Senior Notes Redemption Price Percentage											100.00%
Redemption price, percentage													106.00%
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed													35.00%
Minimum | Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Redemption Notice Period											30 days
Maximum | Senior notes | 6% Senior Notes due September 1, 2023
Debt Instrument [Line Items]
Redemption Notice Period											60 days

XML

Senior Notes, Secured, and Unsecured Indebtedness - Summary of Senior Notes Redemption Prices Percentage (Details) - California Lyon - Senior notes - 6% Senior Notes due September 1, 2023	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Redemption price, percentage		106.00%
September 1, 2020
Debt Instrument [Line Items]
Redemption price, percentage	103.00%
September 1, 2021
Debt Instrument [Line Items]
Redemption price, percentage	101.50%
September 1, 2022
Debt Instrument [Line Items]
Redemption price, percentage	100.00%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Guarantor and Non-Guarantor Financial Statements - Narrative (Details)	Mar. 31, 2019
Parent
Debt Instrument [Line Items]
Ownership percentage	100.00%

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 45,709	$ 33,779	$ 50,473	$ 182,710
Receivables	15,417	13,502
Escrow proceeds receivable	2,659	0
Real estate inventories	2,303,536	2,333,207
Not owned	294,085	315,576
Investment in unconsolidated joint ventures	5,662	5,542
Goodwill	123,695	123,695
Intangibles, net	6,700	6,700
Deferred income taxes	46,900	47,241
Lease right-of-use assets	13,135	13,561
Other assets	37,515	36,971
Investments In Subsidiaries	0	0
Intercompany Receivable	0	0
Assets	2,895,013	2,929,774
LIABILITIES AND EQUITY
Accounts payable	108,506	128,371
Accrued expenses	96,715	150,155
Liabilities from inventories not owned	294,085	315,576
Notes payable	255,231	198,019
Total debt	1,375,506	1,321,345
Intercompany Payable	0	0
Liabilities	1,874,812	1,915,447
Equity
Stockholders' Equity Attributable to Parent	871,850	863,322
Noncontrolling interests	148,351	151,005
Total liabilities and equity	$ 2,895,013	2,929,774
5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt		$ 0
Equity
Stated interest rate	5.75%	5.75%
7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	$ 347,639	$ 347,456
Equity
Stated interest rate	7.00%	7.00%
6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	$ 344,206	$ 343,878
Equity
Stated interest rate	6.00%
5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	$ 428,430	$ 431,992
Equity
Stated interest rate	5.875%	5.875%
Reporting Entities | Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	$ 1,915	$ 2,888	3,576	156
Receivables	5,304	4,151
Escrow proceeds receivable	0
Real estate inventories	1,140,340	1,152,786
Not owned	179,227	200,717
Investment in unconsolidated joint ventures	150	150
Goodwill	109,486	109,486
Intangibles, net	6,700	6,700
Deferred income taxes	0	0
Lease right-of-use assets	0	0
Other assets	8,952	9,688
Investments In Subsidiaries	(943,873)	(961,950)
Intercompany Receivable	294,625	285,675
Assets	802,826	810,291
LIABILITIES AND EQUITY
Accounts payable	30,492	34,546
Accrued expenses	12,156	26,967
Liabilities from inventories not owned	179,225	200,717
Notes payable	1,204	1,231
Intercompany Payable	0	0
Liabilities	223,077	263,461
Equity
Stockholders' Equity Attributable to Parent	579,749	546,830
Noncontrolling interests	0	0
Total liabilities and equity	802,826	810,291
Reporting Entities | Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt
Reporting Entities | Guarantor Subsidiaries | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Guarantor Subsidiaries | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Guarantor Subsidiaries | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Non-Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	9,852	9,441	7,400	11,120
Receivables	5,004	3,297
Escrow proceeds receivable	0
Real estate inventories	437,600	434,671
Not owned	0	0
Investment in unconsolidated joint ventures	0	0
Goodwill	0	0
Intangibles, net	0	0
Deferred income taxes	0	0
Lease right-of-use assets	0	0
Other assets	1,264	486
Investments In Subsidiaries	0	0
Intercompany Receivable	(160)	0
Assets	453,560	447,895
LIABILITIES AND EQUITY
Accounts payable	14,023	15,363
Accrued expenses	100	100
Liabilities from inventories not owned	0	0
Notes payable	144,026	151,788
Intercompany Payable	123,635	113,580
Liabilities	281,784	280,831
Equity
Stockholders' Equity Attributable to Parent	23,425	16,059
Noncontrolling interests	148,351	151,005
Total liabilities and equity	453,560	447,895
Reporting Entities | Non-Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt
Reporting Entities | Non-Guarantor Subsidiaries | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Non-Guarantor Subsidiaries | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Non-Guarantor Subsidiaries | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	0	0
Reporting Entities | Parent
ASSETS
Real estate inventories		0
Not owned		0
Investment in unconsolidated joint ventures		0
Goodwill		0
Intangibles, net		0
Deferred income taxes		0
Lease right-of-use assets		0
Other assets		0
Investments In Subsidiaries		863,322
Intercompany Receivable		0
Assets		863,322
LIABILITIES AND EQUITY
Accounts payable		0
Accrued expenses		0
Liabilities from inventories not owned		0
Notes payable		0
Intercompany Payable		0
Liabilities		0
Equity
Stockholders' Equity Attributable to Parent		863,322
Noncontrolling interests		0
Total liabilities and equity		863,322
Reporting Entities | Parent | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt		0
Reporting Entities | Parent | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt		0
Reporting Entities | Parent | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt		0
Reporting Entities | Parent | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt		0
Reporting Entities | Subsidiary Issuer [Member]
ASSETS
Real estate inventories		745,750
Not owned		114,859
Investment in unconsolidated joint ventures		5,392
Goodwill		14,209
Intangibles, net		0
Deferred income taxes		47,241
Lease right-of-use assets		13,561
Other assets		26,797
Investments In Subsidiaries		16,059
Intercompany Receivable		0
Assets		1,011,372
LIABILITIES AND EQUITY
Accounts payable		78,462
Accrued expenses		123,088
Liabilities from inventories not owned		114,859
Notes payable		45,000
Intercompany Payable		172,095
Liabilities		1,656,830
Equity
Stockholders' Equity Attributable to Parent		(645,458)
Noncontrolling interests		0
Total liabilities and equity		1,011,372
Reporting Entities | Subsidiary Issuer [Member] | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt
Reporting Entities | Subsidiary Issuer [Member] | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt		347,456
Reporting Entities | Subsidiary Issuer [Member] | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt		343,878
Reporting Entities | Subsidiary Issuer [Member] | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt		431,992
Reporting Entities | Delaware Lyon
ASSETS
Cash and cash equivalents	0	0	0	0
Receivables	0	0
Escrow proceeds receivable	0
Real estate inventories	0
Not owned	0
Investment in unconsolidated joint ventures	0
Goodwill	0
Intangibles, net	0
Deferred income taxes	0
Lease right-of-use assets	0
Other assets	0
Investments In Subsidiaries	871,850
Intercompany Receivable	0
Assets	871,850
LIABILITIES AND EQUITY
Accounts payable	0
Accrued expenses	0
Liabilities from inventories not owned	0
Notes payable	0
Intercompany Payable	0
Liabilities	0
Equity
Stockholders' Equity Attributable to Parent	871,850
Noncontrolling interests	0
Total liabilities and equity	871,850
Reporting Entities | Delaware Lyon | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | Delaware Lyon | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | Delaware Lyon | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	0
Reporting Entities | California Lyon
ASSETS
Cash and cash equivalents	33,942	21,450	39,497	171,434
Receivables	5,109	6,054
Escrow proceeds receivable	2,659
Real estate inventories	725,596
Not owned	114,858
Investment in unconsolidated joint ventures	5,512
Goodwill	14,209
Intangibles, net	0
Deferred income taxes	46,900
Lease right-of-use assets	13,135
Other assets	27,299
Investments In Subsidiaries	23,425
Intercompany Receivable	0
Assets	1,012,644
LIABILITIES AND EQUITY
Accounts payable	63,991
Accrued expenses	84,459
Liabilities from inventories not owned	114,860
Notes payable	110,001
Intercompany Payable	170,830
Liabilities	1,664,416
Equity
Stockholders' Equity Attributable to Parent	(651,772)
Noncontrolling interests	0
Total liabilities and equity	1,012,644
Reporting Entities | California Lyon | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	347,639
Reporting Entities | California Lyon | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	344,206
Reporting Entities | California Lyon | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	428,430
Consolidation, Eliminations
ASSETS
Cash and cash equivalents	0	0	$ 0	$ 0
Receivables	0	0
Escrow proceeds receivable	0
Real estate inventories	0	0
Not owned	0	0
Investment in unconsolidated joint ventures	0	0
Goodwill	0	0
Intangibles, net	0	0
Deferred income taxes	0	0
Lease right-of-use assets	0	0
Other assets	0	0
Investments In Subsidiaries	48,598	82,569
Intercompany Receivable	(294,465)	(285,675)
Assets	(245,867)	(203,106)
LIABILITIES AND EQUITY
Accounts payable	0	0
Accrued expenses	0	0
Liabilities from inventories not owned	0	0
Notes payable	0	0
Intercompany Payable	(294,465)	(285,675)
Liabilities	(294,465)	(285,675)
Equity
Stockholders' Equity Attributable to Parent	48,598	82,569
Noncontrolling interests	0	0
Total liabilities and equity	(245,867)	(203,106)
Consolidation, Eliminations | 5 3/4% Senior Notes due April 15, 2019
LIABILITIES AND EQUITY
Total debt
Consolidation, Eliminations | 7% Senior Notes due August 15, 2022
LIABILITIES AND EQUITY
Total debt	0	0
Consolidation, Eliminations | 6% Senior Notes due September 1, 2023
LIABILITIES AND EQUITY
Total debt	0	0
Consolidation, Eliminations | 5 7/8% Senior Notes due January 31, 2025
LIABILITIES AND EQUITY
Total debt	$ 0	$ 0

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating revenue
Sales	$ 455,864	$ 373,368
Operating costs
Sales and marketing	(25,277)	(22,693)
General and administrative	(29,126)	(24,521)
Transaction expenses		(3,130)
Other	(344)	(298)
Cost of sales	(437,760)	(358,933)
Income from subsidiaries	0	0
Operating Income (Loss)	18,104	14,435
Equity in income of unconsolidated joint ventures	912	932
Other Nonoperating Income (Expense)	631	35
Income before extinguishment of debt	19,647	15,402
Gain on extinguishment of debt	383	0
Income before provision for income taxes	20,030	15,402
Provision for income taxes	(4,896)	(2,814)
Net income (loss)	15,134	12,588
Less: Net income attributable to noncontrolling interests	(7,015)	(4,260)
Net income available to common stockholders	8,119	8,328
Reporting Entities | Guarantor Subsidiaries
Operating revenue
Sales	245,445	182,944
Operating costs
Sales and marketing	(14,736)	(10,783)
General and administrative	(8,957)	(5,966)
Transaction expenses		0
Other	0	46
Cost of sales	(233,256)	(167,205)
Income from subsidiaries	0	0
Operating Income (Loss)	12,189	15,739
Equity in income of unconsolidated joint ventures	201	257
Other Nonoperating Income (Expense)	81	56
Income before extinguishment of debt	12,471
Gain on extinguishment of debt	0
Income before provision for income taxes	12,471	16,052
Provision for income taxes	0	0
Net income (loss)	12,471	16,052
Less: Net income attributable to noncontrolling interests	0	0
Net income available to common stockholders	12,471	16,052
Reporting Entities | Non-Guarantor Subsidiaries
Operating revenue
Sales	61,487	54,268
Operating costs
Sales and marketing	(2,115)	(3,527)
General and administrative	0	(2)
Transaction expenses		0
Other	43	9
Cost of sales	(50,527)	(48,331)
Income from subsidiaries	0	0
Operating Income (Loss)	10,960	5,937
Equity in income of unconsolidated joint ventures	0	0
Other Nonoperating Income (Expense)	(379)	(330)
Income before extinguishment of debt	10,581
Gain on extinguishment of debt	0
Income before provision for income taxes	10,581	5,607
Provision for income taxes	0	0
Net income (loss)	10,581	5,607
Less: Net income attributable to noncontrolling interests	(7,015)	(4,260)
Net income available to common stockholders	3,566	1,347
Reporting Entities | Parent
Operating costs
Sales and marketing		0
General and administrative		0
Transaction expenses		0
Other		0
Cost of sales		0
Income from subsidiaries		8,328
Operating Income (Loss)		8,328
Equity in income of unconsolidated joint ventures		0
Income before extinguishment of debt	8,119
Gain on extinguishment of debt	0
Provision for income taxes		0
Net income (loss)		8,328
Less: Net income attributable to noncontrolling interests		0
Net income available to common stockholders		8,328
Reporting Entities | Subsidiary Issuer [Member]
Operating costs
Sales and marketing		(8,383)
General and administrative		(18,553)
Transaction expenses		(3,130)
Other		(353)
Cost of sales		(141,647)
Income from subsidiaries		8,107
Operating Income (Loss)		866
Equity in income of unconsolidated joint ventures		675
Income before extinguishment of debt	3,521
Gain on extinguishment of debt	383
Provision for income taxes		(2,814)
Net income (loss)		(964)
Less: Net income attributable to noncontrolling interests		0
Net income available to common stockholders		(964)
Reporting Entities | Delaware Lyon
Operating revenue
Sales	0	0
Operating costs
Sales and marketing	0
General and administrative	0
Other	0
Cost of sales	0
Income from subsidiaries	8,119
Operating Income (Loss)	8,119
Equity in income of unconsolidated joint ventures	0
Other Nonoperating Income (Expense)	0	0
Income before provision for income taxes	8,119	8,328
Provision for income taxes	0
Net income (loss)	8,119
Less: Net income attributable to noncontrolling interests	0
Net income available to common stockholders	8,119
Reporting Entities | California Lyon
Operating revenue
Sales	147,075	134,406
Operating costs
Sales and marketing	(8,426)
General and administrative	(20,169)
Other	(387)
Cost of sales	(152,120)
Income from subsidiaries	6,926
Operating Income (Loss)	1,881
Equity in income of unconsolidated joint ventures	711
Other Nonoperating Income (Expense)	929	309
Income before provision for income taxes	3,904	1,850
Provision for income taxes	(4,896)
Net income (loss)	(992)
Less: Net income attributable to noncontrolling interests	0
Net income available to common stockholders	(992)
Consolidation, Eliminations
Operating revenue
Sales	1,857	1,750
Operating costs
Sales and marketing	0	0
General and administrative	0	0
Transaction expenses		0
Other	0	0
Cost of sales	(1,857)	(1,750)
Income from subsidiaries	(15,045)	(16,435)
Operating Income (Loss)	(15,045)	(16,435)
Equity in income of unconsolidated joint ventures	0	0
Other Nonoperating Income (Expense)	0	0
Income before extinguishment of debt	(15,045)
Gain on extinguishment of debt	0
Income before provision for income taxes	(15,045)	(16,435)
Provision for income taxes	0	0
Net income (loss)	(15,045)	(16,435)
Less: Net income attributable to noncontrolling interests	0	0
Net income available to common stockholders	(15,045)	(16,435)
Home sales
Operating revenue
Sales	453,775	372,385
Operating costs
Cost of goods and services sold	(381,044)	(307,308)
Home sales | Reporting Entities | Guarantor Subsidiaries
Operating revenue
Sales	243,356	182,944
Operating costs
Cost of goods and services sold	(207,594)	(150,502)
Home sales | Reporting Entities | Non-Guarantor Subsidiaries
Operating revenue
Sales	61,487	54,268
Operating costs
Cost of goods and services sold	(48,455)	(44,811)
Home sales | Reporting Entities | Parent
Operating costs
Cost of goods and services sold		0
Home sales | Reporting Entities | Subsidiary Issuer [Member]
Operating costs
Cost of goods and services sold		(110,245)
Home sales | Reporting Entities | Delaware Lyon
Operating revenue
Sales	0	0
Operating costs
Cost of goods and services sold	0
Home sales | Reporting Entities | California Lyon
Operating revenue
Sales	148,932	135,173
Operating costs
Cost of goods and services sold	(123,138)
Home sales | Consolidation, Eliminations
Operating revenue
Sales	0	0
Operating costs
Cost of goods and services sold	(1,857)	(1,750)
Construction services
Operating revenue
Sales	2,089	983
Operating costs
Cost of goods and services sold	(1,969)	(983)
Construction services | Reporting Entities | Guarantor Subsidiaries
Operating revenue
Sales	2,089	0
Operating costs
Cost of goods and services sold	(1,969)	0
Construction services | Reporting Entities | Non-Guarantor Subsidiaries
Operating revenue
Sales	0	0
Operating costs
Cost of goods and services sold	0	0
Construction services | Reporting Entities | Parent
Operating costs
Cost of goods and services sold		0
Construction services | Reporting Entities | Subsidiary Issuer [Member]
Operating costs
Cost of goods and services sold		(983)
Construction services | Reporting Entities | Delaware Lyon
Operating revenue
Sales	0	0
Operating costs
Cost of goods and services sold	0
Construction services | Reporting Entities | California Lyon
Operating revenue
Sales	0	983
Operating costs
Cost of goods and services sold	0
Construction services | Consolidation, Eliminations
Operating revenue
Sales	0	0
Operating costs
Cost of goods and services sold	0	0
Management fees
Operating revenue
Sales	0	0
Management fees | Reporting Entities | Guarantor Subsidiaries
Operating revenue
Sales	0	0
Management fees | Reporting Entities | Non-Guarantor Subsidiaries
Operating revenue
Sales	0	0
Management fees | Reporting Entities | Delaware Lyon
Operating revenue
Sales	0	0
Management fees | Reporting Entities | California Lyon
Operating revenue
Sales	(1,857)	(1,750)
Management fees | Consolidation, Eliminations
Operating revenue
Sales	$ 1,857	$ 1,750

XML

Senior Notes, Secured, and Unsecured Indebtedness - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net cash provided by (used in) operating activities	$ (31,027)	$ 98,028
Investing activities
Cash paid for acquisitions, net of cash acquired	0	(475,221)
Sales (purchases) of property and equipment	1,404	(2,442)
Investments in subsidiaries	0
Net cash provided by (used in) investing activities	1,404	(477,663)
Financing activities
Proceeds from borrowings on notes payable	30,111	20,194
Repayments of Notes Payable	(37,899)	(29,179)
Proceeds from borrowings on revolver	190,000	110,000
Payments on revolver	(125,000)	(25,000)
Payment of deferred loan costs	(43)	(5,877)
Shares remitted to, or withheld by the Company for employee tax withholding	(2,356)	(4,696)
Cash contributions from members of consolidated entities	1,389	4,062
Cash distributions to members of consolidated entities	(11,058)	(17,106)
Advances to affiliates	0	0
Intercompany receivables/payables	0	0
Payments to repurchase common stock	0	(5,000)
Net cash provided by financing activities	41,553	247,398
Net increase (decrease) in cash and cash equivalents	11,930	(132,237)
Cash and cash equivalents — beginning of period	33,779	182,710
Cash and cash equivalents — end of period	45,709	50,473
5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt	0	(150,000)
6% Senior Notes due September 1, 2023
Financing activities
Proceeds from issuance of senior notes	0	350,000
8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		350,000
5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	(3,591)	0
Payments on revolver		(25,000)
Reporting Entities | Guarantor Subsidiaries
Operating activities
Net cash provided by (used in) operating activities	4,229	146,012
Investing activities
Cash paid for acquisitions, net of cash acquired		(475,221)
Sales (purchases) of property and equipment	1,404	(1,391)
Investments in subsidiaries	(18,077)	343,067
Net cash provided by (used in) investing activities	(16,673)	(133,545)
Financing activities
Proceeds from borrowings on notes payable	0	0
Repayments of Notes Payable	(27)	(14)
Proceeds from borrowings on revolver	0	0
Payments on revolver	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Cash contributions from members of consolidated entities	0	0
Cash distributions to members of consolidated entities	0	0
Advances to affiliates	20,448	6,240
Intercompany receivables/payables	(8,950)	(15,273)
Payments to repurchase common stock		0
Net cash provided by financing activities	11,471	(9,047)
Net increase (decrease) in cash and cash equivalents	(973)	3,420
Cash and cash equivalents — beginning of period	2,888	156
Cash and cash equivalents — end of period	1,915	3,576
Reporting Entities | Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt		0
Reporting Entities | Guarantor Subsidiaries | 8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		0
Reporting Entities | Guarantor Subsidiaries | 5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	0
Payments on revolver		0
Reporting Entities | Non-Guarantor Subsidiaries
Operating activities
Net cash provided by (used in) operating activities	3,826	12,571
Investing activities
Cash paid for acquisitions, net of cash acquired		0
Sales (purchases) of property and equipment	0	12
Investments in subsidiaries	0	0
Net cash provided by (used in) investing activities	0	12
Financing activities
Proceeds from borrowings on notes payable	30,111	20,194
Repayments of Notes Payable	(37,872)	(29,165)
Proceeds from borrowings on revolver	0	0
Payments on revolver	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Cash contributions from members of consolidated entities	1,389	4,062
Cash distributions to members of consolidated entities	(11,058)	(17,106)
Advances to affiliates	3,800	(2,864)
Intercompany receivables/payables	10,215	8,576
Payments to repurchase common stock		0
Net cash provided by financing activities	(3,415)	(16,303)
Net increase (decrease) in cash and cash equivalents	411	(3,720)
Cash and cash equivalents — beginning of period	9,441	11,120
Cash and cash equivalents — end of period	9,852	7,400
Reporting Entities | Non-Guarantor Subsidiaries | 5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt		0
Reporting Entities | Non-Guarantor Subsidiaries | 8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		0
Reporting Entities | Non-Guarantor Subsidiaries | 5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	0
Payments on revolver		0
Reporting Entities | Parent
Investing activities
Cash paid for acquisitions, net of cash acquired		0
Financing activities
Proceeds from borrowings on notes payable		0
Shares remitted to, or withheld by the Company for employee tax withholding		0
Reporting Entities | Subsidiary Issuer [Member]
Investing activities
Cash paid for acquisitions, net of cash acquired		0
Financing activities
Proceeds from borrowings on notes payable		0
Shares remitted to, or withheld by the Company for employee tax withholding		(4,696)
Reporting Entities | Delaware Lyon
Operating activities
Net cash provided by (used in) operating activities	(409)	6,515
Investing activities
Sales (purchases) of property and equipment	0	0
Investments in subsidiaries	0	0
Net cash provided by (used in) investing activities	0	0
Financing activities
Proceeds from borrowings on notes payable	0
Repayments of Notes Payable	0	0
Proceeds from borrowings on revolver	0	0
Payments on revolver	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0
Cash contributions from members of consolidated entities	0	0
Cash distributions to members of consolidated entities	0	0
Advances to affiliates	0	0
Intercompany receivables/payables	409	(6,515)
Payments to repurchase common stock		0
Net cash provided by financing activities	409	(6,515)
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents — beginning of period	0	0
Cash and cash equivalents — end of period	0	0
Reporting Entities | Delaware Lyon | 5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt		0
Reporting Entities | Delaware Lyon | 8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		0
Reporting Entities | Delaware Lyon | 5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	0
Payments on revolver		0
Reporting Entities | California Lyon
Operating activities
Net cash provided by (used in) operating activities	(37,671)	(60,555)
Investing activities
Sales (purchases) of property and equipment	0	(1,063)
Investments in subsidiaries	(1,851)	9,624
Net cash provided by (used in) investing activities	(1,851)	8,561
Financing activities
Proceeds from borrowings on notes payable	0
Repayments of Notes Payable	0	0
Proceeds from borrowings on revolver	190,000	110,000
Payments on revolver	(125,000)
Payment of deferred loan costs	(43)	(5,877)
Shares remitted to, or withheld by the Company for employee tax withholding	(2,356)
Cash contributions from members of consolidated entities	0	0
Cash distributions to members of consolidated entities	0	0
Advances to affiliates	0	0
Intercompany receivables/payables	(6,996)	(349,370)
Payments to repurchase common stock		(5,000)
Net cash provided by financing activities	52,014	(79,943)
Net increase (decrease) in cash and cash equivalents	12,492	(131,937)
Cash and cash equivalents — beginning of period	21,450	171,434
Cash and cash equivalents — end of period	33,942	39,497
Reporting Entities | California Lyon | 5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt		(150,000)
Reporting Entities | California Lyon | 8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		350,000
Reporting Entities | California Lyon | 5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	(3,591)
Payments on revolver		(25,000)
Consolidation, Eliminations
Operating activities
Net cash provided by (used in) operating activities	(1,002)	(6,515)
Investing activities
Cash paid for acquisitions, net of cash acquired		0
Sales (purchases) of property and equipment	0	0
Investments in subsidiaries	19,928	(352,691)
Net cash provided by (used in) investing activities	19,928	(352,691)
Financing activities
Proceeds from borrowings on notes payable	0	0
Repayments of Notes Payable	0	0
Proceeds from borrowings on revolver	0	0
Payments on revolver	0
Payment of deferred loan costs	0	0
Shares remitted to, or withheld by the Company for employee tax withholding	0	0
Cash contributions from members of consolidated entities	0	0
Cash distributions to members of consolidated entities	0	0
Advances to affiliates	(24,248)	(3,376)
Intercompany receivables/payables	5,322	362,582
Payments to repurchase common stock		0
Net cash provided by financing activities	(18,926)	359,206
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents — beginning of period	0	0
Cash and cash equivalents — end of period	0	0
Consolidation, Eliminations | 5 3/4% Senior Notes due April 15, 2019
Financing activities
Repayments of Senior Debt		0
Consolidation, Eliminations | 8 1/2% Senior Notes due November 15, 2020
Financing activities
Proceeds from issuance of senior notes		0
Consolidation, Eliminations | 5 7/8% Senior Notes due January 31, 2025
Financing activities
Repayments of Senior Debt	$ 0
Payments on revolver		$ 0

XML

Fair Value of Financial Instruments - Schedule of Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial liabilities:
Notes payable, fair value	$ 255,231	$ 198,019
5 3/4% Senior Notes due April 15, 2019
Financial liabilities:
Stated interest rate	5.75%	5.75%
7% Senior Notes due August 15, 2022
Financial liabilities:
Long-term debt, fair value	$ 351,330	$ 350,000
Stated interest rate	7.00%	7.00%
6% Senior Notes due September 1, 2023
Financial liabilities:
Long-term debt, fair value	$ 337,750	$ 315,000
Stated interest rate	6.00%
5 7/8% Senior Notes due January 31, 2025
Financial liabilities:
Long-term debt, fair value	$ 411,241	$ 378,611
Stated interest rate	5.875%	5.875%
Carrying Amount
Financial liabilities:
Notes payable, fair value	$ 255,231	$ 198,019
Carrying Amount | 7% Senior Notes due August 15, 2022
Financial liabilities:
Long-term debt, fair value	347,639	347,456
Carrying Amount | 6% Senior Notes due September 1, 2023
Financial liabilities:
Long-term debt, fair value	344,206	343,878
Carrying Amount | 5 7/8% Senior Notes due January 31, 2025
Financial liabilities:
Long-term debt, fair value	$ 428,430	$ 431,992

XML

Related Party Transactions - Narrative (Details) - 6% Senior Notes due September 1, 2023 - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 09, 2018	Mar. 08, 2018
Related Party Transaction [Line Items]
Stated interest rate	6.00%
Senior notes
Related Party Transaction [Line Items]
Stated interest rate	6.00%	6.00%	6.00%	6.00%
Outstanding amount		$ 350

XML

Income Taxes - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Taxes [Line Items]
Effective income tax rate	24.40%	18.30%
Valuation allowance	$ 0
Testing period	5 years
AMT credit carryovers	$ 1,400,000
Unrecognized tax benefits	0
Federal
Income Taxes [Line Items]
Operating loss carryforwards	0
Unused built-in losses	44,900,000
State
Income Taxes [Line Items]
Operating loss carryforwards	46,400,000
Unused built-in losses	$ 7,500,000

XML

Income Per Common Share - Schedule of Basic and Diluted Income Per Common Share Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Basic weighted average number of common shares outstanding (in shares)	37,610,766	37,931,256
Effect of dilutive securities:
Diluted average shares outstanding (in shares)	38,755,113	39,855,683
Net income available to common stockholders	$ 8,119	$ 8,328
Basic income per common share (in USD per share)	$ 0.22	$ 0.22
Dilutive income per common share (in USD per share)	$ 0.21	$ 0.21
Stock Options, Unvested Common Shares, and Warrants
Effect of dilutive securities:
Stock options, unvested common shares, and warrants (in shares)	1,144,347	1,924,427
Unvested Stock Options
Antidilutive securities not included in the calculation of diluted income per common share (weighted average):
Antidilutive securities (in shares)	0	0

XML

Stock Based Compensation - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost	$ 2
Stock based compensation expense	2,765,000	$ 3,181,000
Allocated Share-based Compensation Expense	$ 0
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	550,829
Restricted stock | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	46,993
Performance Stock Unit [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	490,227
Performance Stock Unit [Member] | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	400,460
Performance Stock Unit With Market Condition [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	1
One Year Vesting Restricted Stock [Member] | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	134,650
One Year Vesting Restricted Stock [Member] | Share-based Compensation Award, Tranche One | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	100.00%
Two Year Vesting Restricted Stock, March Schedule [Member] | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	89,767
Two Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	50.00%
Two Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche Two | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	50.00%
Three Year Vesting Restricted Stock [Member] | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	285,030
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche Three | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Two Year Vesting Restricted Stock, Grant Date Schedule [Member] | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of stock (in shares)	84,156
Two Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche One | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	50.00%
Two Year Vesting Restricted Stock, Grant Date Schedule [Member] | Share-based Compensation Award, Tranche Two | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	50.00%
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche One | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche Two | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%
Three Year Vesting Restricted Stock, March Schedule [Member] | Share-based Compensation Award, Tranche Three | Other Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, vesting percentage	33.33%

XML

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Loss Contingency, Inestimable Loss	0
Outstanding performance and surety bonds	$ 341.4
Non-refundable deposits	143.7
Remaining purchase price of land	744.2
Project construction commitment
Loss Contingencies [Line Items]
Other commitment	291.3
Accrued Expenses
Loss Contingencies [Line Items]
Lease liability	$ 14.2	$ 14.6

XML

Commitments and Contingencies - Summary of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Lease cost
Operating lease cost	$ 1,444	$ 2,009
Sublease income	0	(29)
Total lease cost	1,444	1,980
Operating cash flows	1,223	1,767
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 78	$ 1,696
Weighted-average discount rate	7.30%	6.40%

XML

Commitments and Contingencies - Weighted Average Remaining Lease Term (Details)	Mar. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease term (in years)	4 years 7 months 9 days	4 years 2 months 23 days

XML

Commitments and Contingencies - Schedule of Future Minimum Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Future Minimum Payments Under Non-cancelable Operating Leases
Remaining in 2019	$ 5,003
2019	5,126
2020	4,879
2021	3,553
2022	2,423
Thereafter	1,987
Total	$ 22,971

XML

Commitments and Contingencies - Land Banking Arrangements (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) Project lot	Dec. 31, 2018 USD ($)
Property, Plant and Equipment [Line Items]
Real estate inventories not owned	$ 294,085,000	$ 315,576,000
Liabilities from inventories not owned	294,085,000	$ 315,576,000
Land, Banking Arrangement
Property, Plant and Equipment [Line Items]
Real estate inventories not owned	294,085,000
Liabilities from inventories not owned	$ 209,800,000
Total number of land banking arrangements consolidated | Project	3
Total number of lots | lot	5,184,000
Total purchase price	$ 452,967,000
Balance of lots still under option and not purchased, number of lots | lot	4,002,000
Forfeited deposits if lots are not purchased	$ 76,812
Minimum | Land, Banking Arrangement
Property, Plant and Equipment [Line Items]
Non-refundable deposit of total purchase price, percentage	15.00%
Maximum | Land, Banking Arrangement
Property, Plant and Equipment [Line Items]
Non-refundable deposit of total purchase price, percentage	25.00%