THE RYLAND GROUP, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, in all notes unless
otherwise noted)
NOTE I: LONG-TERM DEBT
Long-term debt consists of the following:
The Company has an unsecured credit agreement with a group of banks, which matures in
July 2000, with a total borrowing capacity of $300 million. Borrowings under this
agreement bear interest at variable short-term rates. The effective interest rates for
1998, 1997 and 1996 were 6.8 percent, 7.1 percent and 7.1 percent, respectively. There
were no amounts outstanding under this agreement at December 31, 1998 or 1997.
The Company has $100 million of 9.625% senior subordinated notes outstanding, due June
2004, with interest payable semi-annually, which may be redeemed at the option of the
Company, in whole or in part, at any time on or after December 1, 2000. In April 1998, the
Company issued $100 million of 8.25% senior subordinated notes, due April 2008, with
interest payable semi-annually, which may be redeemed at the option of the Company, in
whole or in part, at any time on or after April 1, 2003. In July 1998 the Company redeemed
$100 million of 10.5% senior subordinated notes due 2002 at the stated call price of
103.94 percent of par. As a result, the Company recognized an extraordinary loss on early
extinguishment of debt in 1998 of $3.3 million (net of a $2.2 million income tax benefit).
Senior subordinated notes are subordinated to all existing and future senior debt of the
Company.
The Company has $100 million of 10.5% senior notes due July 2006, with interest payable
semi-annually, which may be redeemed at the option of the Company, in whole or in part, at
any time on or after July 1, 2001. At December 31, 1998, the Company also has $8 million
of senior notes bearing a fixed rate of 10.5% which mature in August 2000.
Maturities of long-term debt for the next five years are as follows: 1999-$68;
2000-$8,000; 2001-$84, 2002 through 2003-$0.
The bank credit agreement, senior subordinated indenture agreements and senior note
agreements contain certain financial covenants. Under the loan covenants, the Company has
$56.1 million of retained earnings available for dividends at December 31, 1998. At
December 31, 1998, the Company is in compliance with its covenants.
