UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended June 30, 2015
or
o	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 1-35796

TRI Pointe Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	 	61-1763235	
(State or other Jurisdiction of
Incorporation or Organization)	 	(I.R.S. Employer
Identification No.)	
19540 Jamboree Road, Suite 300
Irvine, California 92612
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (949) 438-1400
 
Indicate by check mark whether the 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   x     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   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x	
 	 	 	 	
Non-accelerated filer	¨   (Do not check if a smaller reporting company)	Smaller reporting company	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x
Registrant’s shares of common stock outstanding at August 1, 2015: 161,737,684

 

NOTE REGARDING THIS QUARTERLY REPORT
On July 7, 2015, TRI Pointe Homes, Inc., a Delaware corporation (“TRI Pointe Homes”), reorganized its corporate structure (the “Reorganization”) whereby TRI Pointe Homes became a direct, wholly owned subsidiary of TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”).  As a result of the reorganization, each share of common stock, par value $0.01 per share, of TRI Pointe Homes (“Homes Common Stock”) was cancelled and converted automatically into the right to receive one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of TRI Pointe Group (“Group Common Stock”), each share having the same designations, rights, powers and preferences, and the qualifications, limitations and restrictions thereof as the shares of Homes Common Stock being so converted.  TRI Pointe Group, as the successor issuer to TRI Pointe Homes (pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), began making filings under the Securities Act of 1933, as amended, and the Exchange Act on July 7, 2015.
In connection with the Reorganization, TRI Pointe Group (i) became a co-issuer of TRI Pointe Homes' 4.375% Senior Notes due 2019 and TRI Pointe Homes' 5.875% Senior Notes due 2024; and (ii) replaced TRI Pointe Homes as the borrower under TRI Pointe Homes' existing unsecured revolving credit facility.
The business, executive officers and directors of TRI Pointe Group, and the rights and limitations of the holders of Group Common Stock immediately following the Reorganization were identical to the business, executive officers and directors of TRI Pointe Homes, and the rights and limitations of holders of Homes Common Stock immediately prior to the Reorganization.
References to “TRI Pointe”, “ the Company”, “we”, “us”, or “our” in this Quarterly Report on Form 10-Q (including in the  consolidated financial statements and condensed notes thereto in this report) have the following meanings, unless the context otherwise requires:
·	For periods prior to July 7, 2015: TRI Pointe Homes and its subsidiaries	
·	For periods from and after July 7, 2015: TRI Pointe Group and its subsidiaries	

 

TRI POINTE GROUP, INC.
FORM 10-Q
INDEX
June 30, 2015
 
 	 	Page
Number	
PART I.  FINANCIAL INFORMATION	
 	 	 	
Item 1.	Financial Statements for TRI Pointe Homes, Inc.	3	
 	 	 	
 	Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	3	
 	 	 	
 	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2015 and 2014)	4	
 	 	 	
 	Consolidated Statements of Equity for the Year Ended December 31, 2014 and the Six Months Ended June 30, 2015 (unaudited)	5	
 	 	 	
 	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (unaudited)	6	
 	 	 	
 	Condensed Notes to Consolidated Financial Statements (unaudited)	7	
 	 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48	
 	 	 	
Item 4.	Controls and Procedures	48	
 	
Part II.  OTHER INFORMATION	
 	 	 	
Item 1.	Legal Proceedings	49	
 	 	 	
Item 1A.	Risk Factors	49	
 	 	 	
Item 6.	Exhibits	50	
 	 	 	
SIGNATURES	52	

 

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 PART I. FINANCI AL INFORMATION
 Item 1. Financial Statements
TRI POINTE HOMES, INC.
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
 	 	(unaudited)	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	121,907	 	 	$	170,629	 	
Receivables	 	 	34,189	 	 	 	20,118	 	
Real estate inventories	 	 	2,535,753	 	 	 	2,280,183	 	
Investments in unconsolidated entities	 	 	17,325	 	 	 	16,805	 	
Goodwill and other intangible assets, net	 	 	162,296	 	 	 	162,563	 	
Deferred tax assets	 	 	148,367	 	 	 	157,821	 	
Other assets	 	 	87,350	 	 	 	105,405	 	
Total assets	 	$	3,107,187	 	 	$	2,913,524	 	
Liabilities	 	 	 	 	 	 	 	 	
Accounts payable	 	$	51,009	 	 	$	68,860	 	
Accrued expenses and other liabilities	 	 	205,422	 	 	 	210,009	 	
Unsecured revolving credit facility	 	 	399,392	 	 	 	260,000	 	
Seller financed loans	 	 	12,390	 	 	 	14,677	 	
Senior notes	 	 	888,267	 	 	 	887,502	 	
Total liabilities	 	 	1,556,480	 	 	 	1,441,048	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies (Note 15)	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Stockholders' Equity:	 	 	 	 	 	 	 	 	
Preferred stock, $0.01 par value, 50,000,000 shares authorized;
   no shares issued and outstanding as of June 30, 2015 and December 31, 2014,
   respectively	 	 	—	 	 	 	—	 	
Common stock, $0.01 par value, 500,000,000 shares authorized; 161,737,684 and
   161,355,490 shares issued and outstanding at June 30, 2015 and
   December   31, 2014, respectively	 	 	1,617	 	 	 	1,614	 	
Additional paid-in capital	 	 	910,520	 	 	 	906,159	 	
Retained earnings	 	 	616,634	 	 	 	546,407	 	
Total stockholders' equity	 	 	1,528,771	 	 	 	1,454,180	 	
Noncontrolling interests	 	 	21,936	 	 	 	18,296	 	
Total equity	 	 	1,550,707	 	 	 	1,472,476	 	
Total liabilities and equity	 	$	3,107,187	 	 	$	2,913,524	 	
 
See accompanying condensed notes to the unaudited consolidated financial statements.

 
 
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TRI POINTE HOMES, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Home sales	 	$	427,238	 	 	$	309,609	 	 	$	801,503	 	 	$	551,511	 	
Land and lot sales	 	 	67,490	 	 	 	27,512	 	 	 	69,490	 	 	 	30,899	 	
Other operations	 	 	789	 	 	 	5,442	 	 	 	1,782	 	 	 	8,285	 	
 	 	 	495,517	 	 	 	342,563	 	 	 	872,775	 	 	 	590,695	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of home sales	 	 	341,742	 	 	 	242,709	 	 	 	641,648	 	 	 	433,977	 	
Cost of land and lot sales	 	 	11,564	 	 	 	24,765	 	 	 	13,873	 	 	 	27,928	 	
Other operations	 	 	592	 	 	 	567	 	 	 	1,154	 	 	 	2,199	 	
Sales and marketing	 	 	25,634	 	 	 	23,798	 	 	 	48,920	 	 	 	44,703	 	
General and administrative	 	 	28,299	 	 	 	18,184	 	 	 	56,478	 	 	 	36,189	 	
Restructuring charges	 	 	498	 	 	 	520	 	 	 	720	 	 	 	2,178	 	
Total expenses	 	 	408,329	 	 	 	310,543	 	 	 	762,793	 	 	 	547,174	 	
Income from operations	 	 	87,188	 	 	 	32,020	 	 	 	109,982	 	 	 	43,521	 	
Equity in loss of unconsolidated entities	 	 	(155	)	 	 	(69	)	 	 	(81	)	 	 	(137	)	
Transaction expenses	 	 	—	 	 	 	(448	)	 	 	—	 	 	 	(506	)	
Other income (loss), net	 	 	(31	)	 	 	(1,476	)	 	 	225	 	 	 	(741	)	
Income before taxes	 	 	87,002	 	 	 	30,027	 	 	 	110,126	 	 	 	42,137	 	
Provision for income taxes	 	 	(30,240	)	 	 	(5,802	)	 	 	(38,067	)	 	 	(10,331	)	
Net income	 	 	56,762	 	 	 	24,225	 	 	 	72,059	 	 	 	31,806	 	
Less: net income attributable to noncontrolling interests	 	 	(1,832	)	 	 	—	 	 	 	(1,832	)	 	 	—	 	
Net income available to common stockholders	 	$	54,930	 	 	$	24,225	 	 	$	70,227	 	 	$	31,806	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
Diluted	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
Weighted average shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	161,686,570	 	 	 	129,700,000	 	 	 	161,589,310	 	 	 	129,700,000	 	
Diluted	 	 	162,308,099	 	 	 	129,700,000	 	 	 	162,265,155	 	 	 	129,700,000	 	
 
See accompanying condensed notes to the unaudited consolidated financial statements.

 
 
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TRI POINTE HOMES, INC.
 CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)
 
 	 	Number of	 	 	 	 	 	 	Additional	 	 	 	 	 	 	Total	 	 	 	 	 	 	 	 	 	
 	 	Common	 	 	Common	 	 	Paid-in	 	 	Retained	 	 	Stockholders'	 	 	Noncontrolling	 	 	Total	 	
 	 	Shares (Note 1)	 	 	Stock	 	 	Capital	 	 	Earnings	 	 	Equity	 	 	Interests	 	 	Equity	 	
Balance at December 31, 2013	 	 	129,700,000	 	 	$	1,297	 	 	$	333,589	 	 	$	462,210	 	 	$	797,096	 	 	$	28,421	 	 	$	825,517	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	84,197	 	 	 	84,197	 	 	 	—	 	 	 	84,197	 	
Capital contribution by Weyerhaeuser, net	 	 	—	 	 	 	—	 	 	 	63,355	 	 	 	—	 	 	 	63,355	 	 	 	—	 	 	 	63,355	 	
Common shares issued in connection
   with the Merger (Note 2)	 	 	31,632,533	 	 	 	317	 	 	 	498,656	 	 	 	—	 	 	 	498,973	 	 	 	—	 	 	 	498,973	 	
Shares issued under share-based awards	 	 	22,957	 	 	 	—	 	 	 	176	 	 	 	—	 	 	 	176	 	 	 	—	 	 	 	176	 	
Excess tax benefit of share-based awards, net	 	 	—	 	 	 	—	 	 	 	1,757	 	 	 	—	 	 	 	1,757	 	 	 	—	 	 	 	1,757	 	
Stock-based compensation expense	 	 	—	 	 	 	—	 	 	 	8,626	 	 	 	—	 	 	 	8,626	 	 	 	—	 	 	 	8,626	 	
Distributions to noncontrolling interests, net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(17,248	)	 	 	(17,248	)	
Net effect of consolidations, de-
   consolidations and other transactions	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	7,123	 	 	 	7,123	 	
Balance at December 31, 2014	 	 	161,355,490	 	 	 	1,614	 	 	 	906,159	 	 	 	546,407	 	 	 	1,454,180	 	 	 	18,296	 	 	 	1,472,476	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	70,227	 	 	 	70,227	 	 	 	1,832	 	 	 	72,059	 	
Shares issued under share-based awards	 	 	382,194	 	 	 	3	 	 	 	657	 	 	 	—	 	 	 	660	 	 	 	—	 	 	 	660	 	
Excess tax benefit of share-based awards, net	 	 	—	 	 	 	—	 	 	 	352	 	 	 	—	 	 	 	352	 	 	 	—	 	 	 	352	 	
Minimum tax withholding paid on behalf of
    employees for restricted stock units	 	 	—	 	 	 	—	 	 	 	(2,190	)	 	 	—	 	 	 	(2,190	)	 	 	—	 	 	 	(2,190	)	
Stock-based compensation expense	 	 	—	 	 	 	—	 	 	 	5,542	 	 	 	—	 	 	 	5,542	 	 	 	—	 	 	 	5,542	 	
Distributions to noncontrolling interests, net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,121	)	 	 	(2,121	)	
Net effect of consolidations, de-
   consolidations and other transactions	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	3,929	 	 	 	3,929	 	
Balance at June 30, 2015	 	 	161,737,684	 	 	$	1,617	 	 	$	910,520	 	 	$	616,634	 	 	$	1,528,771	 	 	$	21,936	 	 	$	1,550,707	 	
 
See accompanying condensed notes to the unaudited consolidated financial statements.

 
 
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TRI POINTE HOMES, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net income	 	$	72,059	 	 	$	31,806	 	
Adjustments to reconcile net income to net cash (used in)
   provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	3,171	 	 	 	6,230	 	
Equity in loss of unconsolidated entities, net	 	 	81	 	 	 	137	 	
Deferred income taxes, net	 	 	9,454	 	 	 	120,822	 	
Amortization of stock-based compensation	 	 	5,542	 	 	 	2,703	 	
Charges for impairments and lot option abandonments	 	 	1,538	 	 	 	572	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
Real estate inventories	 	 	(255,416	)	 	 	(88,352	)	
Receivables	 	 	(14,071	)	 	 	23,578	 	
Other assets	 	 	23,483	 	 	 	7,347	 	
Accounts payable	 	 	(17,851	)	 	 	34,570	 	
Pension and other postretirement benefits	 	 	—	 	 	 	1,624	 	
Accrued expenses and other liabilities	 	 	(5,085	)	 	 	(34,888	)	
Other operating cash flows	 	 	—	 	 	 	(1,574	)	
Net cash (used in) provided by operating activities	 	 	(177,095	)	 	 	104,575	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	 	(613	)	 	 	(4,256	)	
Proceeds from sale of property and equipment	 	 	—	 	 	 	7	 	
Investments in unconsolidated entities	 	 	(1,257	)	 	 	236	 	
Net cash used in investing activities	 	 	(1,870	)	 	 	(4,013	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	
Borrowings from debt	 	 	140,000	 	 	 	—	 	
Repayment of debt	 	 	(2,895	)	 	 	(25,508	)	
Debt issuance costs	 	 	(2,688	)	 	 	—	 	
Proceeds from issuance of senior notes	 	 	—	 	 	 	886,698	 	
Change in book overdrafts	 	 	—	 	 	 	(5,534	)	
Distributions to Weyerhaeuser	 	 	—	 	 	 	(8,606	)	
Net repayments of debt held by variable interest entities	 	 	(875	)	 	 	3,145	 	
Contributions from noncontrolling interests	 	 	2,034	 	 	 	1,385	 	
Distributions to noncontrolling interests	 	 	(4,155	)	 	 	(9,334	)	
Proceeds from issuance of common stock under share-based awards	 	 	660	 	 	 	—	 	
Excess tax benefits of share-based awards	 	 	352	 	 	 	1,572	 	
Minimum tax withholding paid on behalf of employees for restricted stock units	 	 	(2,190	)	 	 	—	 	
Net cash provided by financing activities	 	 	130,243	 	 	 	843,818	 	
Net (decrease) increase in cash and cash equivalents	 	 	(48,722	)	 	 	944,380	 	
Cash and cash equivalents - beginning of period	 	 	170,629	 	 	 	4,510	 	
Cash and cash equivalents - end of period	 	$	121,907	 	 	$	948,890	 	
 
See accompanying condensed notes to the unaudited consolidated financial statements.

 
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TRI POINTE HOMES, INC.
 CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.	Organization, Basis of Presentation and Summary of Significant Accounting Policies	
Organization
The Company is engaged in the design, construction and sale of innovative single-family homes through its portfolio of six quality brands across eight states, including Maracay Homes in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California and Colorado and Winchester Homes in Maryland and Virginia.  
On July 7, 2015, TRI Pointe Homes, Inc., a Delaware corporation, (“TRI Pointe Homes”) reorganized its corporate structure (the “Reorganization”) whereby TRI Pointe Homes became a direct, wholly owned subsidiary of TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”).  See “Note Regarding This Quarterly Report” for information concerning the reorganization effected on July 7, 2015.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as described in “Reverse Acquisition” below, as well as other entities in which the Company has a controlling interest and variable interest entities (“VIE”) in which the Company is the primary beneficiary.  The noncontrolling interests as of June 30, 2015 and December 31, 2014 represent the outside owners’ interests in the Company’s consolidated entities and the net equity of the VIE owners.  All significant intercompany accounts have been eliminated upon consolidation.  Certain prior period amounts have been reclassified to conform to current period presentation.  Subsequent events have been evaluated through the date the financial statements were issued.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included.
The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The results of operations for the three or six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.
Because the accompanying notes to consolidated financial statements are condensed, they should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10‑K for the year ended December 31, 2014.  
Reverse Acquisition
On July 7, 2014 (the “Closing Date”), TRI Pointe consummated the previously announced merger (the “Merger”) of our wholly owned subsidiary, Topaz Acquisition, Inc. (“Merger Sub”), with and into Weyerhaeuser Real Estate Company (“WRECO”), with WRECO surviving the Merger and becoming our wholly owned subsidiary, as contemplated by the Transaction Agreement, dated as of November 3, 2013 (the “Transaction Agreement”), by and among us, Weyerhaeuser Company (“Weyerhaeuser”), WRECO and Merger Sub. The Merger is accounted for in accordance with ASC Topic 805, Business Combinations (“ASC 805”). For accounting purposes, the Merger is treated as a “reverse acquisition” and WRECO is considered the accounting acquirer. Accordingly, WRECO is reflected as the predecessor and acquirer and therefore the accompanying consolidated financial statements reflect the historical consolidated financial statements of WRECO for all periods presented and do not include the historical financial statements of TRI Pointe prior to the Closing Date. Subsequent to the Closing Date, the consolidated financial statements reflect the results of the combined company.
 
- 7 -

See Note 2, Merger with Weyerhaeuser Real Estate Company, for further information on the Me rger. In the Merger, each issued and outstanding WRECO common share was converted into 1.297 shares of TRI Pointe common stock. The historical issued and outstanding WRECO common shares (100,000,000 common shares for all periods presented prior to the Merg er) have been recast (as 129,700,000 common shares of the Company for all periods prior to the Merger) in all periods presented to reflect this conversion.
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Recently Issued Accounting Standards
In April 2014, the FASB issued amendments to Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The update requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. We adopted ASU 2014-08 on January 1, 2015 and the adoption had no impact on our current or prior year financial statements.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 supersedes the revenue-recognition requirements in ASC Topic 605, Revenue Recognition , most industry-specific guidance throughout the industry topics of the accounting standards codification, and some cost guidance related to construction-type and production-type contracts. On July 9, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year and is now effective for public entities for the annual periods ending after December 15, 2017, and for annual and interim periods thereafter.  Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. We are currently evaluating the approach for implementation and the potential impact of adopting this guidance on our consolidated financial statements.
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which requires management to evaluate, in connection with preparing financial statements for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and provide related disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We believe the adoption of this guidance will not have a material effect on our consolidated financial statements.
In February 2015, the FASB issued Accounting Standards Update No. 2015-02, (“ASU 2015-02”), Consolidation (Topic 810): Amendments to the Consolidation Analysis.   ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. ASU 2015-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We believe the adoption of ASU 2015-02 will not have a material effect on our consolidated financial statements.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, (“ASU 2015-03”), Interest - Imputation of Interest (Subtopic 835-30).   ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company plans to early adopt this guidance at the beginning of the fourth quarter of 2015.  Had the Company early adopted ASU 2015-03, the impact for the period ended June 30, 2015 on our consolidated balance sheet would have been a balance sheet reclassification of deferred loan costs currently included in Other Assets resulting in a decrease to Other Assets of $24.7 million, a decrease to Senior Notes of $22.1 million and a decrease to unsecured revolving credit facility of $2.6 million. The impact for the period ended December 31, 2014, would have been a decrease to Other Assets of $23.7 million and a decrease to Senior Notes of $23.7 million.
 
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Reclassifications
Certain amounts in our consolidated financial statements for prior years have been reclassified to conform to the current period presentation.

2.	Merger with Weyerhaeuser Real Estate Company	
In the Merger, TRI Pointe issued 129,700,000 shares of TRI Pointe common stock to the former holders of WRECO common shares, together with cash in lieu of any fractional shares. On the Closing Date, WRECO became a wholly owned subsidiary of TRI Pointe. Immediately following the consummation of the Merger, the ownership of TRI Pointe common stock on a fully diluted basis was as follows: (i) the WRECO common shares held by former Weyerhaeuser shareholders were converted into the right to receive, in the aggregate, 79.6% of the then outstanding TRI Pointe common stock, (ii) the TRI Pointe common stock outstanding immediately prior to the consummation of the Merger represented 19.4% of the then outstanding TRI Pointe common stock, and (iii) the outstanding equity awards of WRECO and TRI Pointe employees represented the remaining 1.0% of the then outstanding TRI Pointe common stock. On the Closing Date, the former direct parent entity of WRECO paid TRI Pointe $31.5 million in cash in accordance with the Transaction Agreement.  Following the Merger, WRECO changed its name to TRI Pointe Holdings, Inc.
Assumption of Senior Notes
On the Closing Date, TRI Pointe assumed WRECO’s obligations as issuer of $450 million aggregate principal amount of its 4.375% Senior Notes due 2019 (the “2019 Notes”) and $450 million aggregate principal amount of its 5.875% Senior Notes due 2024 (the “2024 Notes” and together with the 2019 Notes, the “Senior Notes”). Additionally, WRECO and certain of its subsidiaries (collectively, the “Guarantors”) entered into supplemental indentures pursuant to which they guaranteed TRI Pointe’s obligations with respect to the Senior Notes. The Guarantors also entered into a joinder agreement to the Purchase Agreement, dated as of June 4, 2014, among WRECO, TRI Pointe, and the initial purchasers of the Senior Notes (collectively, the “Initial Purchasers”), pursuant to which the Guarantors became parties to the Purchase Agreement. Additionally, TRI Pointe and the Guarantors entered into joinder agreements to the Registration Rights Agreements, dated as of June 13, 2014, among WRECO and the Initial Purchasers with respect to the Senior Notes, pursuant to which TRI Pointe and the Guarantors were joined as parties to the Registration Rights Agreements.
The net proceeds of $861.3 million from the offering of the Senior Notes were deposited into two separate escrow accounts following the closing of the offering on June 13, 2014. Upon release of the escrowed funds on the Closing Date and prior to the consummation of the Merger, WRECO paid $743.7 million in cash to its former direct parent, which cash was retained by Weyerhaeuser and its subsidiaries (other than WRECO and its subsidiaries). The payment consisted of the $739.0 million Payment Amount (as defined in the Transaction Agreement) as well as $4.7 million in payment of all unpaid interest on the debt payable to Weyerhaeuser that accrued from November 3, 2013 to the Closing Date. The remaining $117.6 million of proceeds was retained by TRI Pointe.
 
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Fair Value of Assets Acquired and Liabilities Assumed
The following table summarizes the calculation of the fair value of the total consideration transferred and the provisional amounts recognized as of the Closing Date (in thousands, except shares and closing stock price):
 
Calculation of consideration transferred	 	 	 	 	
TRI Pointe shares outstanding	 	 	31,632,533	 	
TRI Pointe closing stock price on July 7, 2014	 	$	15.85	 	
Consideration attributable to common stock	 	$	501,376	 	
Consideration attributable to TRI Pointe share-based
equity awards	 	 	1,072	 	
Total consideration transferred	 	$	502,448	 	
Assets acquired and liabilities assumed	 	 	 	 	
Cash and cash equivalents	 	$	53,800	 	
Accounts receivable	 	 	654	 	
Real estate inventories	 	 	539,677	 	
Intangible asset	 	 	17,300	 	
Goodwill	 	 	139,304	 	
Other assets	 	 	28,060	 	
Total assets acquired	 	 	778,795	 	
Accounts payable	 	 	26,105	 	
Accrued expenses and other liabilities	 	 	23,114	 	
Notes payable and other borrowings	 	 	227,128	 	
Total liabilities assumed	 	 	276,347	 	
Total net assets acquired	 	$	502,448	 	
 
Cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued payroll liabilities, and accrued expenses and other liabilities were generally stated at historical carrying values given the short-term nature of these assets and liabilities. Notes payable and other borrowings are stated at carrying value due to the limited amount of time since the notes payable and other borrowings were entered into prior to the Closing Date.
The Company determined the fair value of real estate inventories on a community-by-community basis primarily using a combination of market-comparable land transactions, land residual analysis and discounted cash flow models. The estimated fair value is significantly impacted by estimates related to expected average selling prices, sales pace, cancellation rates and construction and overhead costs. Such estimates must be made for each individual community and may vary significantly between communities.
The fair value of the acquired intangible asset was determined based on a valuation performed by an independent valuation specialist. The $17.3 million intangible asset is related to the TRI Pointe Homes trade name which is deemed to have an indefinite useful life.
Goodwill is primarily attributed to expected synergies from combining WRECO’s and TRI Pointe’s existing businesses, including, but not limited to, expected cost synergies from overhead savings resulting from streamlining certain redundant corporate functions, improved operating efficiencies, including provision of certain corporate level administrative and support functions at a lower cost than was historically allocated to WRECO for such services by its former direct parent, and growth of ancillary operations in various markets as permitted under applicable law, including a mortgage business, a title company and other ancillary operations. The Company also anticipates opportunities for growth through expanded geographic and customer segment diversity and the ability to leverage additional brands.  The acquired goodwill is not deductible for income tax purposes.
The Company completed its business combination accounting during the first quarter of 2015.
 
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Supplemental Pro Forma Information (Unaudited)
The following represents unaudited pro forma operating results as if the acquisition had been completed as of January 1, 2014 (in thousands, except per share amounts):
 
 	 	 	 	Three Months Ended
June 30, 2014	 	 	Six Months Ended
June 30, 2014	 	
Total revenues	 	 	 	$	429,899	 	 	$	750,843	 	
Net income	 	 	 	$	32,200	 	 	$	44,514	 	
Earnings per share – basic	 	 	 	$	0.20	 	 	$	0.28	 	
Earnings per share – diluted	 	 	 	$	0.20	 	 	$	0.27	 	
 
The unaudited pro forma operating results have been determined after adjusting the operating results of TRI Pointe to reflect the purchase accounting and other acquisition adjustments including interest expense associated with the debt used to fund a portion of the Merger. The unaudited pro forma results do not reflect any cost savings, operating synergies or other enhancements that we may achieve as a result of the Merger or the costs necessary to integrate the operations to achieve these cost savings and synergies. Accordingly, the unaudited pro forma amounts are for comparative purposes only and may not necessarily reflect the results of operations had the Merger been completed at the beginning of the period or be indicative of the results we will achieve in the future.

3.	Restructuring	
In connection with the Merger, the Company initiated a restructuring plan to reduce duplicate corporate and divisional overhead costs and expenses. In addition, WRECO previously recognized restructuring expenses related to general cost reduction initiatives. Restructuring costs were comprised of the following (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Employee-related costs	 	$	23	 	 	$	60	 	 	$	135	 	 	$	1,307	 	
Lease termination costs	 	 	475	 	 	 	460	 	 	 	585	 	 	 	871	 	
Total	 	$	498	 	 	$	520	 	 	$	720	 	 	$	2,178	 	
 
Lease termination costs for the three and six months ended June 30, 2015, and 2014, respectively, relate to contract terminations as a result of general cost reduction initiatives.
Changes in employee-related restructuring reserves were as follows (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Accrued employee-related costs, beginning of period	 	$	533	 	 	$	—	 	 	$	3,844	 	 	$	4,336	 	
Current year charges	 	 	23	 	 	 	60	 	 	 	135	 	 	 	1,307	 	
Payments	 	 	(447	)	 	 	(60	)	 	 	(3,870	)	 	 	(5,643	)	
Accrued employee-related costs, end of period	 	$	109	 	 	$	—	 	 	$	109	 	 	$	—	 	
 
Changes in lease termination related restructuring reserves were as follows (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Accrued lease termination costs, beginning of period	 	$	926	 	 	$	2,758	 	 	$	1,394	 	 	$	3,506	 	
Current year charges	 	 	475	 	 	 	460	 	 	 	585	 	 	 	871	 	
Payments	 	 	(757	)	 	 	(764	)	 	 	(1,335	)	 	 	(1,923	)	
Accrued lease termination costs, end of period	 	$	644	 	 	$	2,454	 	 	$	644	 	 	$	2,454	 	
 
Employee and lease termination restructuring reserves are included in accrued expenses and other liabilities on our consolidated balance sheets.

 
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4.	Segment Information	
Our operations consist of six homebuilding companies that acquire and develop land and construct and sell single-family homes.  In accordance with ASC Topic 280, Segment Reporting , in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply.  Based on our aggregation analysis, we have not exercised any aggregation of our operating segments, which are represented by the following six reportable segments: Maracay, consisting of operations in Arizona; Pardee, consisting of operations in California and Nevada; Quadrant, consisting of operations in Washington; Trendmaker, consisting of operations in Texas; TRI Pointe, consisting of operations in California and Colorado; and Winchester, consisting of operations in Maryland and Virginia.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate is allocated to the homebuilding reporting segments.
The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 1. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.
Total revenues and income before taxes for each of our reportable segments were as follows (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Total revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	 	$	33,574	 	 	$	35,045	 	 	$	66,051	 	 	$	70,275	 	
Pardee	 	 	166,064	 	 	 	145,247	 	 	 	251,723	 	 	 	217,709	 	
Quadrant	 	 	38,896	 	 	 	31,785	 	 	 	84,525	 	 	 	64,039	 	
Trendmaker	 	 	65,982	 	 	 	67,756	 	 	 	122,191	 	 	 	129,156	 	
TRI Pointe	 	 	130,735	 	 	 	—	 	 	 	237,592	 	 	 	—	 	
Winchester	 	 	60,266	 	 	 	62,730	 	 	 	110,693	 	 	 	109,516	 	
Total	 	$	495,517	 	 	$	342,563	 	 	$	872,775	 	 	$	590,695	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before taxes	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	 	$	1,068	 	 	$	2,387	 	 	$	2,108	 	 	$	6,010	 	
Pardee	 	 	67,734	 	 	 	18,656	 	 	 	81,292	 	 	 	25,793	 	
Quadrant	 	 	766	 	 	 	5,459	 	 	 	2,347	 	 	 	6,240	 	
Trendmaker	 	 	6,040	 	 	 	7,825	 	 	 	10,400	 	 	 	14,202	 	
TRI Pointe	 	 	14,564	 	 	 	—	 	 	 	25,695	 	 	 	—	 	
Winchester	 	 	5,957	 	 	 	6,868	 	 	 	6,338	 	 	 	11,037	 	
Corporate	 	 	(9,127	)	 	 	(11,168	)	 	 	(18,054	)	 	 	(21,145	)	
Total	 	$	87,002	 	 	$	30,027	 	 	$	110,126	 	 	$	42,137	 	

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Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Real estate inventories	 	 	 	 	 	 	 	 	
Maracay	 	$	189,036	 	 	$	153,577	 	
Pardee	 	 	999,972	 	 	 	924,362	 	
Quadrant	 	 	170,506	 	 	 	153,493	 	
Trendmaker	 	 	196,015	 	 	 	176,696	 	
TRI Pointe	 	 	696,811	 	 	 	613,666	 	
Winchester	 	 	283,413	 	 	 	258,389	 	
Total	 	$	2,535,753	 	 	$	2,280,183	 	
 	 	 	 	 	 	 	 	 	
Total assets	 	 	 	 	 	 	 	 	
Maracay	 	$	201,628	 	 	$	170,932	 	
Pardee	 	 	1,067,332	 	 	 	1,000,489	 	
Quadrant	 	 	181,502	 	 	 	167,796	 	
Trendmaker	 	 	218,531	 	 	 	195,829	 	
TRI Pointe	 	 	867,043	 	 	 	781,301	 	
Winchester	 	 	311,004	 	 	 	281,547	 	
Corporate	 	 	260,147	 	 	 	315,630	 	
Total	 	$	3,107,187	 	 	$	2,913,524	 	

5.	Earnings Per Share	
The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Numerator:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income available to
     common stockholders	 	$	54,930	 	 	$	24,225	 	 	$	70,227	 	 	$	31,806	 	
Denominator:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic weighted-average
     shares outstanding	 	 	161,686,570	 	 	 	129,700,000	 	 	 	161,589,310	 	 	 	129,700,000	 	
Effect of dilutive shares:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options and
    unvested restricted
    stock units	 	 	621,529	 	 	 	—	 	 	 	675,845	 	 	 	—	 	
Diluted weighted-average
     shares outstanding	 	 	162,308,099	 	 	 	129,700,000	 	 	 	162,265,155	 	 	 	129,700,000	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
Diluted	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
Antidilutive unvested restricted
   stock units and stock options not
   included in diluted earnings per
   share	 	 	2,343,905	 	 	 	—	 	 	 	2,563,137	 	 	 	—	 	

 
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6.	Receivables	
Receivables consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Escrow proceeds and other accounts receivable, net	 	$	23,363	 	 	$	9,771	 	
Warranty insurance receivable (Note 15)	 	 	10,526	 	 	 	10,047	 	
Notes and contracts receivable	 	 	300	 	 	 	300	 	
Total receivables	 	$	34,189	 	 	$	20,118	 	

7.	Real Estate Inventories	
Real estate inventories consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Real estate inventories owned:	 	 	 	 	 	 	 	 	
Homes completed or under construction	 	$	726,553	 	 	$	461,712	 	
Land under development	 	 	1,349,956	 	 	 	1,391,303	 	
Land held for future development	 	 	256,865	 	 	 	245,673	 	
Model homes	 	 	128,839	 	 	 	103,270	 	
Total real estate inventories owned	 	 	2,462,213	 	 	 	2,201,958	 	
Real estate inventories not owned:	 	 	 	 	 	 	 	 	
Land purchase and land option deposits	 	 	36,976	 	 	 	44,155	 	
Consolidated inventory held by VIEs	 	 	36,564	 	 	 	34,070	 	
Total real estate inventories not owned	 	 	73,540	 	 	 	78,225	 	
Total real estate inventories	 	$	2,535,753	 	 	$	2,280,183	 	
 
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future.
Real estate inventories not owned represents deposits related to land purchase and land option agreements as well as consolidated inventory held by variable interest entities. For further details, see Note 9, Variable Interest Entities .
During the quarter ended June 30, 2015 the Company sold a 15.72 acre employment center located in the Pacific Highlands Ranch community in the San Diego, California division of our Pardee Homes reporting segment.  The land sold under this sale was classified as land under development and represented $53.0 million of land and lot sales revenue in the consolidated statement of operations for the quarter. 
Interest incurred, capitalized and expensed were as follows (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Interest incurred	 	$	15,149	 	 	$	6,551	 	 	$	30,325	 	 	$	10,589	 	
Interest capitalized	 	 	(15,149	)	 	 	(4,339	)	 	 	(30,325	)	 	 	(8,148	)	
Interest expensed	 	$	—	 	 	$	2,212	 	 	$	—	 	 	$	2,441	 	
Capitalized interest in beginning inventory	 	$	132,872	 	 	$	137,979	 	 	$	124,461	 	 	$	138,233	 	
Interest capitalized as a cost of inventory	 	 	15,149	 	 	 	4,339	 	 	 	30,325	 	 	 	8,148	 	
Interest previously capitalized as a cost of
     inventory, included in cost of sales	 	 	(7,915	)	 	 	(28,553	)	 	 	(14,680	)	 	 	(32,616	)	
Capitalized interest in ending inventory	 	$	140,106	 	 	$	113,765	 	 	$	140,106	 	 	$	113,765	 	

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Interest is capitalized to real estate inventory during development and other qualifying activities. Interest that is capitalized to real estate inventory is included in cost of home sales as relate d units are delivered.  Interest that is expensed as incurred is included in other income (expense).
Real estate inventory impairments and land and lot option abandonments
Real estate inventory impairments and land option abandonments consisted of the following (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Real estate inventory impairments	 	$	878	 	 	$	42	 	 	$	1,044	 	 	$	52	 	
Land and lot option abandonments and pre-
    acquisition costs	 	 	300	 	 	 	62	 	 	 	494	 	 	 	520	 	
Total	 	$	1,178	 	 	$	104	 	 	$	1,538	 	 	$	572	 	
 
Impairments of homebuilding assets and related charges relate primarily to projects or communities held for development. Within a community that is held for development, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges above.  Charges for inventory impairments are expensed to cost of sales.
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time. Charges for such forfeitures are expensed to cost of sales.

8.	Investments in Unconsolidated Entities	
As of June 30, 2015, we held equity investments in six active real estate partnerships or limited liability companies. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 55%, depending on the investment, with no controlling interest held in any of these investments.
Investments Held
Our cumulative investment in entities accounted for on the equity method, including our share of earnings and losses, consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Limited partnership and limited liability company interests	 	$	13,961	 	 	$	13,710	 	
General partnership interests	 	 	3,364	 	 	 	3,095	 	
Total	 	$	17,325	 	 	$	16,805	 	
 
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investment in unconsolidated entities or on our consolidated statement of operations as equity in loss of unconsolidated entities.
 
- 15 -

Assets and liabilities of unconsolida ted entities (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Assets	 	 	 	 	 	 	 	 	
Cash	 	$	14,374	 	 	$	17,154	 	
Receivables	 	 	9,550	 	 	 	9,550	 	
Real estate inventories	 	 	89,801	 	 	 	95,500	 	
Other assets	 	 	814	 	 	 	620	 	
Total assets	 	$	114,539	 	 	$	122,824	 	
Liabilities and equity	 	 	 	 	 	 	 	 	
Accounts payable and other liabilities	 	$	11,706	 	 	$	10,914	 	
Company's equity	 	 	17,325	 	 	 	16,805	 	
Outside interests' equity	 	 	85,508	 	 	 	95,105	 	
Total liabilities and equity	 	$	114,539	 	 	$	122,824	 	
 
Results of operations from unconsolidated entities (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Net sales	 	$	1,377	 	 	$	336	 	 	$	1,453	 	 	$	407	 	
Other operating expense	 	 	(1,805	)	 	$	(1,146	)	 	 	(2,541	)	 	 	(2,157	)	
Other income	 	 	5	 	 	$	12	 	 	 	7	 	 	 	14	 	
Net loss	 	$	(423	)	 	$	(798	)	 	$	(1,081	)	 	$	(1,736	)	
Company's equity in loss of
    unconsolidated entities	 	$	(155	)	 	$	(69	)	 	$	(81	)	 	$	(137	)	

9.	Variable Interest Entities	
In the ordinary course of business, we enter into land option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. Such deposits are recorded as land purchase and land option deposits under real estate inventories not owned in the accompanying consolidated balance sheets.
We analyze each of our land option agreements and other similar contracts under the provisions of ASC 810 Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land option agreements have no recourse against us. The maximum exposure to loss under our land option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the land owner and budget shortfalls and savings will be borne by us.
 
- 16 -

The following provides a summary of our interests in land option agreements (in thousands):
 
 	 	June 30, 2015	 	 	December 31, 2014	 	
 	 	 	 	 	 	Remaining	 	 	Consolidated	 	 	 	 	 	 	Remaining	 	 	Consolidated	 	
 	 	 	 	 	 	Purchase	 	 	Inventory	 	 	 	 	 	 	Purchase	 	 	Inventory	 	
 	 	Deposits	 	 	Price	 	 	Held by VIEs	 	 	Deposits	 	 	Price	 	 	Held by VIEs	 	
Consolidated VIEs	 	$	7,359	 	 	$	36,038	 	 	$	36,564	 	 	$	8,071	 	 	$	43,432	 	 	$	34,070	 	
Unconsolidated VIEs	 	 	7,760	 	 	 	72,298	 	 	N/A	 	 	 	13,309	 	 	 	129,637	 	 	N/A	 	
Other land option agreements	 	 	29,216	 	 	 	283,969	 	 	N/A	 	 	 	30,846	 	 	 	284,819	 	 	N/A	 	
Total	 	$	44,335	 	 	$	392,305	 	 	$	36,564	 	 	$	52,226	 	 	$	457,888	 	 	$	34,070	 	
 
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not considered VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land option contracts consisted of capitalized pre-acquisition costs of $4.9 million and $5.3 million as of June 30, 2015 and December 31, 2014, respectively. These pre-acquisition costs were included in real estate inventories as land under development on our consolidated balance sheets.

10.	Goodwill and Other Intangible Assets	
In connection with the Merger, $139.3 million of goodwill has been recorded as of June 30, 2015.  For further details on the goodwill, see Note 2, Merger with Weyerhaeuser Real Estate Company.
We have two intangible assets recorded as of June 30, 2015, including an existing trade name from the acquisition of Maracay in 2006 which has a 20 year useful life and a new trade name, TRI Pointe Homes, resulting from the Merger which has an indefinite useful life. For further details on the TRI Pointe Homes trade name see Note 2, Merger with Weyerhaeuser Real Estate Company.
Goodwill and other intangible assets consisted of the following (in thousands):
 
 	 	June 30, 2015	 	 	December 31, 2014	 	
 	 	Gross	 	 	 	 	 	 	Net	 	 	Gross	 	 	 	 	 	 	Net	 	
 	 	Carrying	 	 	Accumulated	 	 	Carrying	 	 	Carrying	 	 	Accumulated	 	 	Carrying	 	
 	 	Amount	 	 	Amortization	 	 	Amount	 	 	Amount	 	 	Amortization	 	 	Amount	 	
Goodwill	 	$	139,303	 	 	$	—	 	 	$	139,303	 	 	$	139,304	 	 	$	—	 	 	$	139,304	 	
Trade names	 	 	27,979	 	 	 	(4,986	)	 	 	22,993	 	 	 	27,979	 	 	 	(4,720	)	 	 	23,259	 	
Total	 	$	167,282	 	 	$	(4,986	)	 	$	162,296	 	 	$	167,283	 	 	$	(4,720	)	 	$	162,563	 	
The remaining useful life of our amortizing intangible asset related to the Maracay trade name was 10.7 and 11.2 years as of June 30, 2015 and December 31, 2014, respectively. Amortization expense related to this intangible asset was $133,000 for each of the three month periods ended June 30, 2015 and 2014, respectively and was $266,000 for each of the six month periods ended June 30, 2015 and 2014, respectively.  Amortization of this intangible asset was charged to sales and marketing expense.  Our $17.3 million indefinite life intangible asset related to the TRI Pointe Homes trade name is not amortizing.
Expected amortization of our intangible asset related to Maracay for the remainder of 2015, the next four years and thereafter is (in thousands):
 
Remainder of 2015	 	$	268	 	
2016	 	 	534	 	
2017	 	 	534	 	
2018	 	 	534	 	
2019	 	 	534	 	
Thereafter	 	 	3,289	 	
Total	 	$	5,693	 	

 
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11.	Other Assets	
Other assets consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Prepaid expenses	 	$	22,758	 	 	$	29,111	 	
Refundable fees and other deposits	 	 	16,557	 	 	 	15,581	 	
Development rights, held for future use or sale	 	 	6,447	 	 	 	7,409	 	
Deferred loan costs	 	 	24,669	 	 	 	23,686	 	
Operating properties and equipment, net	 	 	10,511	 	 	 	11,719	 	
Income tax receivable	 	 	—	 	 	 	10,713	 	
Other	 	 	6,408	 	 	 	7,186	 	
Total	 	$	87,350	 	 	$	105,405	 	

12.	Accrued Expenses and Other Liabilities	
Accrued expenses and other liabilities consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Accrued payroll and related costs	 	$	16,437	 	 	$	24,717	 	
Warranty reserves (Note 15)	 	 	35,375	 	 	 	33,270	 	
Estimated cost for completion of real estate inventories	 	 	54,771	 	 	 	54,437	 	
Customer deposits	 	 	20,101	 	 	 	14,229	 	
Debt (nonrecourse) held by VIEs (Note 9)	 	 	8,337	 	 	 	9,512	 	
Income tax liability to Weyerhaeuser (Note 18)	 	 	15,894	 	 	 	15,659	 	
Accrued income taxes payable	 	 	3,883	 	 	 	—	 	
Liability for uncertain tax positions (Note 17)	 	 	16,095	 	 	 	13,797	 	
Accrued interest	 	 	2,632	 	 	 	3,059	 	
Accrued insurance expense	 	 	4,199	 	 	 	9,180	 	
Other	 	 	27,698	 	 	 	32,149	 	
Total	 	$	205,422	 	 	$	210,009	 	

13.	Senior Notes, Unsecured Revolving Credit Facility and Seller Financed Loans	
Senior Notes
Senior Notes consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
4.375% Senior Notes due June 15, 2019, net of discount	 	$	445,955	 	 	$	445,501	 	
5.875% Senior Notes due June 15, 2024, net of discount	 	 	442,312	 	 	 	442,001	 	
Total	 	$	888,267	 	 	$	887,502	 	
 
As discussed in Note 2, Merger with Weyerhaeuser Real Estate Company , on the Closing Date, TRI Pointe assumed WRECO’s obligations as issuer of the Senior Notes. The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds of $861.3 million, after debt issuance costs and discounts, from the offering were deposited into two separate escrow accounts following the closing of the offering on June 13, 2014.
The 2019 Notes and the 2024 Notes mature on June 15, 2019 and June 15, 2024, respectively. Interest is payable semiannually in arrears on June 15 and December 15. As of June 30, 2015, no principal has been paid on the Senior Notes, and there was $22.1 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $1.9 million as of June 30, 2015.
 
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Unsecured Revolving Credit Facility
Unsecured revolving credit facility consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Unsecured revolving credit facility	 	$	399,392	 	 	$	260,000	 	
In May 2015, the Company amended its unsecured credit revolving credit facility (the “Credit Facility”) from $425 million to $550 million.  The Credit Facility matures on July 1, 2018, and contains a sublimit of $75 million for letters of credit. The Company may borrow under the Credit Facility in the ordinary course of business to fund its operations, including its land development and homebuilding activities. Borrowings under the Credit Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the Credit Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.45% to 2.20%, depending on the Company’s leverage ratio. As of June 30, 2015, the outstanding balance under the Credit Facility was $399.4 million with an interest rate of 2.14% per annum and $141.1 million of availability after considering the borrowing base provisions and outstanding letters of credit.  As of June 30, 2015 there was $2.6 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the life of the Credit Facility, maturing on July 1, 2018.  Accrued interest related to the Credit Facility was $685,000 as of June 30, 2015.
At June 30, 2015 we had outstanding letters of credit of $9.5 million.  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
Seller Financed Loans
Seller financed loans consisted of the following (in thousands):
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Seller financed loans	 	$	12,390	 	 	$	14,677	 	
As of June 30, 2015, the Company had $12.4 million outstanding related to seller financed loans to acquire lots for the construction of homes.  Principal and interest payments on these loans are due at various maturity dates, including at the time individual homes associated with the acquired land are delivered.  As of June 30, 2015, the seller financed loans accrue interest at a weighted average rate of 6.97% per annum, with interest calculated on a daily basis. Any remaining unpaid balance on these loans is due in May 2016. Accrued interest on these loans were $25,000 as of June 30, 2015.
Interest Incurred
During the three month periods ended June 30, 2015 and 2014, the Company incurred interest of $15.1 million and $6.6 million, respectively, related to all notes payable, Senior Notes and debt payable to Weyerhaeuser outstanding during the period. Of the interest incurred, $15.1 million and $4.3 million was capitalized to inventory for the six-month period ended June 30, 2015 and 2014, respectively. Included in interest incurred was amortization of deferred financing and Senior Note discount costs of $1.3 million for the three month period ended June 30, 2015 with no deferred financing cost in the same prior year period. During the six month periods ended June 30, 2015 and 2014, the Company incurred interest of $30.3 million and $10.6 million, respectively, related to all notes payable, Senior Notes and debt payable to Weyerhaeuser outstanding during the period.   Of the interest incurred, $30.3 million and $8.1 million was capitalized to inventory for the period ended June 30, 2015 and 2014, respectively.  Included in interest incurred was amortization of deferred financing and Senior Note discount costs of $2.5 million for the six month period ended June 30, 2015 with no deferred financing cost in the same prior year period.  Accrued interest related to all outstanding debt at June 30, 2015 and December 31, 2014 was $2.6 million and $3.1 million, respectively.  
Covenant Requirements
The Senior Notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions.
Under the Credit Facility, the Company is required to comply with certain financial covenants, including but not limited to (i) a minimum consolidated tangible net worth; (ii) a maximum total leverage ratio; and (iii) a minimum interest coverage ratio.
 
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The Company was in compliance with all applicable financial covenants as of June 30, 2015 and December 31, 2014.

14.	Fair Value Disclosures	
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures , defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
·	Level 1—Quoted prices for identical instruments in active markets	
·	Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date	
·	Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date	
Fair Value of Financial Instruments
A summary of assets and liabilities at June 30, 2015 and December 31, 2014, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):
 
 	 	 	 	June 30, 2015	 	 	December 31, 2014	 	
 	 	Hierarchy	 	Book Value	 	 	Fair Value	 	 	Book Value	 	 	Fair Value	 	
Receivables (1)	 	Level 3	 	$	34,189	 	 	$	34,189	 	 	$	20,118	 	 	$	20,118	 	
Senior Notes (2)	 	Level 2	 	 	888,267	 	 	 	879,750	 	 	 	887,502	 	 	 	896,625	 	
Unsecured revolving credit facility (3)	 	Level 3	 	 	399,392	 	 	 	399,392	 	 	 	260,000	 	 	 	260,000	 	
Seller financed loans (4)	 	Level 3	 	 	12,390	 	 	 	12,390	 	 	 	14,677	 	 	 	14,677	 	
 
At June 30, 2015 and December 31, 2014, the carrying value of cash and cash equivalents approximated fair value.
(1)	The estimated fair value of our receivables was based on the discounted value of the expected future cash flows using current rates for similar receivables. The book value of our receivables equaled the fair value as of June 30, 2015 and December 31, 2014 due to the short-term nature of the remaining receivables.	
(2)	The estimated fair value of our Senior Notes at June 30, 2015 and December 31, 2014 is based on quoted market prices.	
(3)	We believe that the carrying value of our Credit Facility approximates fair value based on the short term nature of the current market rate amended on May 18, 2015.	
(4)	We believe that the carrying value of our Seller financed loans approximates fair value based on a two year treasury curve analysis.	
Fair Value of Nonfinancial Assets
Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicate the carrying value is not recoverable. The following table presents impairment charges and the remaining net fair value for nonfinancial assets that were measured during the periods presented (in thousands):
 
 	 	 	 	Six Months Ended	 	 	Year Ended	 	
 	 	 	 	June 30, 2015	 	 	December 31, 2014	 	
 	 	 	 	 	 	 	 	Fair Value	 	 	 	 	 	 	Fair Value	 	
 	 	 	 	Impairment	 	 	Net of	 	 	Impairment	 	 	Net of	 	
 	 	Hierarchy	 	Charge	 	 	Impairment	 	 	Charge	 	 	Impairment	 	
Real estate inventories	 	Level 3	 	$	1,044	 	 	$	15,348	 	 	$	931	 	 	$	20,329	 	

 
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15.	Commitments and Contingencies	
Legal Matters
Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.
We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise these estimates when necessary.
In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements.
Warranty
Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.
We maintain general liability insurance designed to protect us against a portion of our risk of loss from construction-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy. Included in our warranty reserve accrual are allowances to cover our estimated costs of self-insured retentions and deductible amounts under these policies and estimated costs for claims that may not be covered by applicable insurance or indemnities.  Estimation of these accruals include consideration of our claims history, including current claims and estimates of claims incurred but not yet reported.  In addition, we record expected recoveries from insurance carriers when proceeds are probable and estimable.  Outstanding warranty insurance receivables were $10.5 million and $10.0 million as of June 30, 2015 and December 31, 2014, respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheet.
There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.
Warranty reserves consisted of the following (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Warranty reserves, beginning of period	 	$	33,965	 	 	$	24,378	 	 	$	33,270	 	 	$	24,450	 	
Warranty reserves accrued	 	 	3,354	 	 	 	2,153	 	 	 	6,226	 	 	 	3,764	 	
Adjustments to pre-existing reserves	 	 	999	 	 	 	232	 	 	 	1,300	 	 	 	1,018	 	
Warranty expenditures	 	 	(2,943	)	 	 	(2,439	)	 	 	(5,421	)	 	 	(4,908	)	
Warranty reserves, end of period	 	$	35,375	 	 	$	24,324	 	 	$	35,375	 	 	$	24,324	 	
 
Performance Bonds
We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. As of June 30, 2015 and December 31, 2014, the Company had outstanding surety bonds totaling $407.9 million and $355.2 million, respectively. The beneficiaries of the bonds are various municipalities.

 
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16.	Stock-Based Compensation	
2013 Long-Term Incentive Plan
The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by TRI Pointe in January 2013 and amended with the approval of our stockholders in 2014. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, common stock, restricted stock, restricted stock units and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.
As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive Plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of our common stock generally shall again be available under the 2013 Incentive Plan. As of June 30, 2015 there were 9,525,870 shares available for future grant under the 2013 Incentive Plan.
Converted Awards
Under the Transaction Agreement, each outstanding Weyerhaeuser equity award held by an employee of WRECO was converted into a similar equity award with TRI Pointe, based on the final exchange ratio of 2.1107 (the “Exchange Ratio”), rounded down to the nearest whole number of shares of common stock. The Company filed a registration statement on Form S-8 (Registration No. 333-197461) on July 16, 2014 to register 4,105,953 shares related to these equity awards. The converted awards have the same terms and conditions as the Weyerhaeuser equity awards except that all performance share units were surrendered in exchange for time-vesting restricted stock units without any performance-based vesting conditions or requirements and the exercise price of each converted stock option is equal to the original exercise price divided by the Exchange Ratio. There will be no future grants under the WRECO equity incentive plans.  Refer to Note 2, Merger with Weyerhaeuser Real Estate Company , for additional information on the Merger.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Total stock-based compensation	 	$	3,161	 	 	$	1,410	 	 	$	5,542	 	 	$	2,703	 	
 
As of June 30, 2015, total unrecognized stock-based compensation related to all stock-based awards was $22.4 million and the weighted average term over which the expense was expected to be recognized was 1.94 years.
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the six months ended June 30, 2015:

 	 	 	 	 	 	Weighted	 	 	Weighted	 	 	 	 	 	
 	 	 	 	 	 	Average	 	 	Average	 	 	Aggregate	 	
 	 	 	 	 	 	Exercise	 	 	Remaining	 	 	Intrinsic	 	
 	 	 	 	 	 	Price	 	 	Contractual	 	 	Value	 	
 	 	Options	 	 	Per Share	 	 	Life	 	 	(in thousands)	 	
Options outstanding at December 31, 2014	 	 	3,467,086	 	 	$	13.05	 	 	 	6.0	 	 	$	7,642	 	
Granted	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Exercised	 	 	(91,880	)	 	 	10.63	 	 	 	 	 	 	 	 	 	
Forfeited	 	 	(11,303	)	 	 	8.39	 	 	 	 	 	 	 	 	 	
Options outstanding at June 30, 2015	 	 	3,363,903	 	 	 	13.12	 	 	 	5.6	 	 	 	7,349	 	
Options exercisable at June 30, 2015	 	 	2,872,860	 	 	 	12.41	 	 	 	4.9	 	 	 	8,309	 	

- 22 -

Summary of Restricted Stock Unit Activity
The following table presents a summary of restricted stock units (“RSUs”) for the six months ended June 30, 2015:

 	 	 	 	 	 	Weighted	 	 	 	 	 	
 	 	 	 	 	 	Average	 	 	Aggregate	 	
 	 	Restricted	 	 	Grant Date	 	 	Intrinsic	 	
 	 	Stock	 	 	Fair Value	 	 	Value	 	
 	 	Units	 	 	Per Share	 	 	(in thousands)	 	
Nonvested RSUs at December 31, 2014	 	 	900,547	 	 	$	15.62	 	 	$	13,461	 	
Granted	 	 	1,511,491	 	 	 	11.46	 	 	 	17,315	 	
Vested	 	 	(453,685	)	 	 	13.85	 	 	 	 	 	
Forfeited	 	 	(10,193	)	 	 	13.58	 	 	 	 	 	
Nonvested RSUs at June 30, 2015	 	 	1,948,160	 	 	 	12.20	 	 	 	29,807	 	
 
On March 5, 2015, the Company granted an aggregate of 440,800 restricted stock units to employees and officers. The restricted stock units granted vest annually on the anniversary of the grant date over a three year period.  The fair value of each restricted stock award granted on March 5, 2015 was measured using a price of $14.97 per share, which was the closing stock price on the date of grant.  Each award will be expensed on a straight-line basis over the vesting period.
On March 9, 2015, the Company granted 411,804, 384,351, and 274,536 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively, with 1/3 of the performance-based RSU amounts being allocated to each of the three following separate performance goals: total shareholder return (compared to a group of similarly sized homebuilders); earnings per share; and stock price. The performance-based restricted stock units granted will vest in each case, if at all, based on the percentage of attainment of the applicable performance goal. The performance periods for the performance-based RSUs with vesting based on total shareholder return and earnings per share are January 1, 2015 to December 31, 2017. The performance period for the performance-based RSUs with vesting based on stock price is January 1, 2016 to December 31, 2017. The fair value of the performance-based RSUs related to the total shareholder return and stock price performance goals was determined to be $7.55 and $7.90 per share, respectively, based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of $14.57 per share, which was the closing stock price on the date of grant. Each grant will be expensed on a straight-line basis over the expected vesting period.   
As restricted stock units vest, a portion of the shares awarded is generally withheld to cover employee taxes. As a result, the number of restricted stock units vested and the number of shares of TRI Pointe common stock issued will differ.

17.	Income Taxes	
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered.  Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740.  We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable.  Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.
We had net deferred tax assets of $148.4 million and $157.8 million as of June 30, 2015 and December 31, 2014, respectively.  We had a valuation allowance related to those net deferred tax assets of $4.6 million and $6.2 million as of June 30, 2015 and December 31, 2014, respectively.  The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the Company's future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the Company's estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company's consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the Company's deferred tax assets.
 
- 23 -

Our provision for income taxes totaled $30.2 million and $5.8 million for the three months ended June 30, 2015 and 2014, respectively.  Our provision for income taxes totaled $38.1 million and $10.3 million for the six months en ded June 30, 2015 and 2014, respectively.  The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense.  The Company had $16.1 million and $13.8 million of liabilities for uncertain tax p ositions recorded as of June 30, 2015 and December 31, 2014, respectively.  The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years. 

18.	Related Party Transactions	
Prior to the Merger, WRECO was a wholly owned subsidiary of Weyerhaeuser.  Weyerhaeuser provided certain services including payroll processing and related employee benefits, other corporate services such as corporate governance, cash management and other treasury services, administrative services such as government relations, tax, internal audit, legal, accounting, human resources and equity-based compensation plan administration, lease of office space, aviation services and insurance coverage. WRECO was allocated a portion of Weyerhaeuser corporate general and administrative costs on either a proportional cost or usage basis.
Weyerhaeuser-allocated corporate general and administrative expenses were as follows (in thousands):
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	 	2015	 	 	 	2014	 	 	 	2015	 	 	 	2014	 	
Weyerhaeuser-allocated costs	 	$	—	 	 	$	5,188	 	 	$	—	 	 	$	10,735	 	
 
These expenses are not indicative of the actual level of expense WRECO would have incurred if it had operated as an independent company or of expenses expected to be incurred in the future after the Closing Date.
TRI Pointe has certain liabilities with Weyerhaeuser related to a tax sharing agreement.   As of June 30, 2015 and December 31, 2014, we had an income tax liability to Weyerhaeuser of $15.9 million and $15.7 million, respectively, which is recorded in accrued expenses and other liabilities on the accompanying balance sheet.
In January of 2015, TRI Pointe acquired 46 lots located in Castle Rock, Colorado, for a purchase price of approximately $2.8 million from an entity managed by an affiliate of the Starwood Capital Group. This acquisition was approved by TRI Pointe independent directors.

19.	Supplemental Disclosure to Consolidated Statements of Cash Flow	
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):
 
 	 	Six Months Ended	 	
 	 	June 30,	 	
 	 	2015	 	 	2014	 	
Supplemental disclosure of cash flow information:	 	 	 	 	 	 	 	 	
Cash paid during the period for:	 	 	 	 	 	 	 	 	
Interest, net of amounts capitalized	 	$	—	 	 	$	97	 	
Income taxes	 	$	11,354	 	 	$	14,962	 	
Supplemental disclosures of noncash activities:	 	 	 	 	 	 	 	 	
Amortization of senior note discount	 	$	765	 	 	$	—	 	
Effect of net consolidation and de-consolidation of
   variable interest entities:	 	 	 	 	 	 	 	 	
Increase in consolidated real estate
   inventory not owned	 	$	3,629	 	 	$	28,208	 	
Increase in accrued expenses and other liabilities	 	$	300	 	 	$	—	 	
Increase in noncontrolling interests	 	$	(3,929	)	 	$	(28,208	)	

 
- 24 -

20.	Supplemental Guarantor Information	
On the Closing Date, the Company assumed WRECO’s obligations as issuer of the Senior Notes.  Additionally, all of TRI Pointe’s wholly owned subsidiaries that are guarantors of the Company’s unsecured $550 million revolving credit facility, including WRECO and certain of its wholly owned subsidiaries, entered into supplemental indentures pursuant to which they jointly and severally guaranteed TRI Pointe’s obligations with respect to the Senior Notes.
Presented below are the condensed consolidating balance sheets at June 30, 2015 and December 31, 2014, condensed consolidating statements of operations for the three and six months ended June 30, 2015 and cash flows for the six month period ended June 30, 2015.  TRI Pointe’s non-guarantor subsidiaries represent less than 3% on an individual and aggregate basis of consolidated total assets, total revenues, income from operations before taxes and cash flow from operating activities.  Therefore, the non-guarantor subsidiaries’ information is not separately presented in the tables below.
As discussed in Note 1, the Merger was treated as a “reverse acquisition” with WRECO being considered the accounting acquirer.  Accordingly, the financial statements reflect the historical results of WRECO for all periods and do not include the historical financial information of TRI Pointe prior to the Closing Date.  Subsequent to the Closing Date, the consolidated financial statements reflect the results of the combined company.  As a result, we have not included condensed consolidating statements of operations for the three or six months ended June 30, 2014 or cash flows for the six months ended June 30, 2014 because those results are of WRECO and are already included on the face of the consolidated financial statements.  In addition, there is no financial information for TRI Pointe, issuer of the Senior Notes, in the periods prior to the Closing Date.  
Condensed Consolidating Balance Sheet (in thousands):
 
 	 	June 30, 2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Consolidated	 	
 	 	TRI Pointe	 	 	Guarantor	 	 	Consolidating	 	 	TRI Pointe	 	
 	 	Homes, Inc.	 	 	Subsidiaries	 	 	Adjustments	 	 	Homes, Inc.	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	67,329	 	 	$	54,578	 	 	$	—	 	 	$	121,907	 	
Receivables	 	 	12,721	 	 	 	21,468	 	 	 	—	 	 	 	34,189	 	
Intercompany receivables	 	 	851,310	 	 	 	—	 	 	 	(851,310	)	 	 	—	 	
Real estate inventories	 	 	696,810	 	 	 	1,838,943	 	 	 	—	 	 	 	2,535,753	 	
Investments in unconsolidated entities	 	 	—	 	 	 	17,325	 	 	 	 	 	 	 	17,325	 	
Goodwill and other intangible assets, net	 	 	162,296	 	 	 	—	 	 	 	—	 	 	 	162,296	 	
Investments in subsidiaries	 	 	1,007,550	 	 	 	—	 	 	 	(1,007,550	)	 	 	—	 	
Deferred tax assets	 	 	23,630	 	 	 	124,737	 	 	 	—	 	 	 	148,367	 	
Other assets	 	 	38,948	 	 	 	48,402	 	 	 	—	 	 	 	87,350	 	
Total Assets	 	$	2,860,594	 	 	$	2,105,453	 	 	$	(1,858,860	)	 	$	3,107,187	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts payable	 	$	4,449	 	 	$	46,560	 	 	$	—	 	 	$	51,009	 	
Intercompany payables	 	 	—	 	 	 	851,310	 	 	 	(851,310	)	 	 	—	 	
Accrued expenses and other liabilities	 	 	27,725	 	 	 	177,697	 	 	 	—	 	 	 	205,422	 	
Unsecured revolving credit facility	 	 	399,392	 	 	 	—	 	 	 	—	 	 	 	399,392	 	
Seller financed loans	 	 	11,990	 	 	 	400	 	 	 	—	 	 	 	12,390	 	
Senior notes	 	 	888,267	 	 	 	—	 	 	 	—	 	 	 	888,267	 	
Total Liabilities	 	 	1,331,823	 	 	 	1,075,967	 	 	 	(851,310	)	 	 	1,556,480	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders' equity	 	 	1,528,771	 	 	 	1,007,550	 	 	 	(1,007,550	)	 	 	1,528,771	 	
Noncontrolling interests	 	 	—	 	 	 	21,936	 	 	 	—	 	 	 	21,936	 	
Total Equity	 	 	1,528,771	 	 	 	1,029,486	 	 	 	(1,007,550	)	 	 	1,550,707	 	
Total Liabilities and Equity	 	$	2,860,594	 	 	$	2,105,453	 	 	$	(1,858,860	)	 	$	3,107,187	 	

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20.	Supplemental Guarantor Information (continued)	
Condensed Consolidating Balance Sheet (in thousands):
 
 	 	December 31, 2014	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Consolidated	 	
 	 	TRI Pointe	 	 	Guarantor	 	 	Consolidating	 	 	TRI Pointe	 	
 	 	Homes, Inc.	 	 	Subsidiaries	 	 	Adjustments	 	 	Homes, Inc.	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	105,888	 	 	$	64,741	 	 	$	—	 	 	$	170,629	 	
Receivables	 	 	5,050	 	 	 	15,068	 	 	 	—	 	 	 	20,118	 	
Intercompany receivables	 	 	797,480	 	 	 	—	 	 	 	(797,480	)	 	 	—	 	
Real estate inventories	 	 	613,665	 	 	 	1,666,518	 	 	 	—	 	 	 	2,280,183	 	
Investments in unconsolidated entities	 	 	—	 	 	 	16,805	 	 	 	—	 	 	 	16,805	 	
Goodwill and other intangible assets, net	 	 	156,603	 	 	 	5,960	 	 	 	—	 	 	 	162,563	 	
Investments in subsidiaries	 	 	941,397	 	 	 	—	 	 	 	(941,397	)	 	 	—	 	
Deferred tax assets	 	 	23,630	 	 	 	134,191	 	 	 	—	 	 	 	157,821	 	
Other assets	 	 	55,199	 	 	 	50,206	 	 	 	—	 	 	 	105,405	 	
Total Assets	 	$	2,698,912	 	 	$	1,953,489	 	 	$	(1,738,877	)	 	$	2,913,524	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts payable	 	$	25,800	 	 	$	43,060	 	 	$	—	 	 	$	68,860	 	
Intercompany payables	 	 	—	 	 	 	797,480	 	 	 	(797,480	)	 	 	—	 	
Accrued expenses and other liabilities	 	 	57,353	 	 	 	152,656	 	 	 	—	 	 	 	210,009	 	
Unsecured revolving credit facility	 	 	260,000	 	 	 	—	 	 	 	—	 	 	 	260,000	 	
Seller financed loans	 	 	14,077	 	 	 	600	 	 	 	—	 	 	 	14,677	 	
Senior notes	 	 	887,502	 	 	 	—	 	 	 	—	 	 	 	887,502	 	
Total Liabilities	 	 	1,244,732	 	 	 	993,796	 	 	 	(797,480	)	 	 	1,441,048	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total stockholders' equity	 	 	1,454,180	 	 	 	941,397	 	 	 	(941,397	)	 	 	1,454,180	 	
Noncontrolling interests	 	 	—	 	 	 	18,296	 	 	 	—	 	 	 	18,296	 	
Total Equity	 	 	1,454,180	 	 	 	959,693	 	 	 	(941,397	)	 	 	1,472,476	 	
Total Liabilities and Equity	 	$	2,698,912	 	 	$	1,953,489	 	 	$	(1,738,877	)	 	$	2,913,524	 	

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20.	Supplemental Guarantor Information (continued)	
Condensed Consolidating Statement of Operations (in thousands - unaudited):
 
 	 	Three Months Ended June 30, 2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Consolidated	 	
 	 	TRI Pointe	 	 	Guarantor	 	 	Consolidating	 	 	TRI Pointe	 	
 	 	Homes, Inc.	 	 	Subsidiaries	 	 	Adjustments	 	 	Homes, Inc.	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Home sales	 	$	130,552	 	 	$	296,686	 	 	$	—	 	 	$	427,238	 	
Land and lot sales	 	 	—	 	 	 	67,490	 	 	 	—	 	 	 	67,490	 	
Other operations	 	 	—	 	 	 	789	 	 	 	—	 	 	 	789	 	
Total revenues	 	 	130,552	 	 	 	364,965	 	 	 	—	 	 	 	495,517	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of home sales	 	 	106,365	 	 	 	235,377	 	 	 	—	 	 	 	341,742	 	
Cost of land and lot sales	 	 	—	 	 	 	11,564	 	 	 	—	 	 	 	11,564	 	
Other operations	 	 	—	 	 	 	592	 	 	 	—	 	 	 	592	 	
Sales and marketing	 	 	5,447	 	 	 	20,187	 	 	 	—	 	 	 	25,634	 	
General and administrative	 	 	13,260	 	 	 	15,039	 	 	 	—	 	 	 	28,299	 	
Restructuring charges	 	 	(86	)	 	 	584	 	 	 	—	 	 	 	498	 	
Total expenses	 	 	124,986	 	 	 	283,343	 	 	 	—	 	 	 	408,329	 	
Income from operations	 	 	5,566	 	 	 	81,622	 	 	 	—	 	 	 	87,188	 	
Equity in loss of unconsolidated entities	 	 	—	 	 	 	(155	)	 	 	—	 	 	 	(155	)	
Other income, net	 	 	(151	)	 	 	120	 	 	 	—	 	 	 	(31	)	
Income before taxes	 	 	5,415	 	 	 	81,587	 	 	 	—	 	 	 	87,002	 	
Provision for income taxes	 	 	(2,388	)	 	 	(27,852	)	 	 	—	 	 	 	(30,240	)	
Equity of net income of subsidiaries	 	 	51,903	 	 	 	—	 	 	 	(51,903	)	 	 	—	 	
Net income	 	 	54,930	 	 	 	53,735	 	 	 	(51,903	)	 	 	56,762	 	
Less: net income attributable to noncontrolling interests	 	 	—	 	 	 	(1,832	)	 	 	—	 	 	 	(1,832	)	
Net income available to common stockholders	 	$	54,930	 	 	$	51,903	 	 	$	(51,903	)	 	$	54,930	 	

- 27 -

20.	Supplemental Guarantor Information (continued)	
Condensed Consolidating Statement of Operations (in thousands - unaudited):
 
 	 	Six Months Ended June 30, 2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Consolidated	 	
 	 	TRI Pointe	 	 	Guarantor	 	 	Consolidating	 	 	TRI Pointe	 	
 	 	Homes, Inc.	 	 	Subsidiaries	 	 	Adjustments	 	 	Homes, Inc.	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Home sales	 	$	237,410	 	 	$	564,093	 	 	$	—	 	 	$	801,503	 	
Land and lot sales	 	 	—	 	 	 	69,490	 	 	 	—	 	 	 	69,490	 	
Other operations	 	 	—	 	 	 	1,782	 	 	 	—	 	 	 	1,782	 	
Total revenues	 	 	237,410	 	 	 	635,365	 	 	 	—	 	 	 	872,775	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of home sales	 	 	193,346	 	 	 	448,302	 	 	 	—	 	 	 	641,648	 	
Cost of land and lot sales	 	 	—	 	 	 	13,873	 	 	 	—	 	 	 	13,873	 	
Other operations	 	 	—	 	 	 	1,154	 	 	 	—	 	 	 	1,154	 	
Sales and marketing	 	 	10,428	 	 	 	38,492	 	 	 	—	 	 	 	48,920	 	
General and administrative	 	 	25,932	 	 	 	30,546	 	 	 	—	 	 	 	56,478	 	
Restructuring charges	 	 	(86	)	 	 	806	 	 	 	—	 	 	 	720	 	
Total expenses	 	 	229,620	 	 	 	533,173	 	 	 	—	 	 	 	762,793	 	
Income from operations	 	 	7,790	 	 	 	102,192	 	 	 	—	 	 	 	109,982	 	
Equity in loss of unconsolidated entities	 	 	—	 	 	 	(81	)	 	 	—	 	 	 	(81	)	
Other income, net	 	 	(112	)	 	 	337	 	 	 	—	 	 	 	225	 	
Income before taxes	 	 	7,678	 	 	 	102,448	 	 	 	—	 	 	 	110,126	 	
Provision for income taxes	 	 	(3,215	)	 	 	(34,852	)	 	 	—	 	 	 	(38,067	)	
Equity of net income of subsidiaries	 	 	65,764	 	 	 	—	 	 	 	(65,764	)	 	 	—	 	
Net income	 	 	70,227	 	 	 	67,596	 	 	 	(65,764	)	 	 	72,059	 	
Less: net income attributable to noncontrolling interests	 	 	—	 	 	 	(1,832	)	 	 	—	 	 	 	(1,832	)	
Net income available to common stockholders	 	$	70,227	 	 	$	65,764	 	 	$	(65,764	)	 	$	70,227	 	

- 28 -

20.	Supplemental Guarantor Information (continued)	
Condensed Consolidating Statement of Cash Flows (in thousands - unaudited):
 
 	 	Six Months Ended June 30, 2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Consolidated	 	
 	 	TRI Pointe	 	 	Guarantor	 	 	Consolidating	 	 	TRI Pointe	 	
 	 	Homes, Inc.	 	 	Subsidiaries	 	 	Adjustments	 	 	Homes, Inc.	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in operating activities	 	$	(113,102	)	 	$	(63,993	)	 	$	—	 	 	$	(177,095	)	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	 	(427	)	 	 	(186	)	 	 	—	 	 	 	(613	)	
Investments in unconsolidated entities	 	 	—	 	 	 	(1,257	)	 	 	—	 	 	 	(1,257	)	
Intercompany	 	 	(58,117	)	 	 	—	 	 	 	58,117	 	 	 	—	 	
Net cash used in investing activities	 	 	(58,544	)	 	 	(1,443	)	 	 	58,117	 	 	 	(1,870	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Borrowings from debt	 	 	140,000	 	 	 	—	 	 	 	—	 	 	 	140,000	 	
Repayment of debt	 	 	(2,695	)	 	 	(200	)	 	 	—	 	 	 	(2,895	)	
Debt issuance costs	 	 	(2,688	)	 	 	—	 	 	 	—	 	 	 	(2,688	)	
Net repayments of debt held by variable interest entities	 	 	—	 	 	 	(875	)	 	 	—	 	 	 	(875	)	
Contributions from noncontrolling interests	 	 	—	 	 	 	2,034	 	 	 	—	 	 	 	2,034	 	
Distributions to noncontrolling interests	 	 	—	 	 	 	(4,155	)	 	 	—	 	 	 	(4,155	)	
Proceeds from issuance of common stock under share-based awards	 	 	660	 	 	 	—	 	 	 	—	 	 	 	660	 	
Excess tax benefits of share-based awards	 	 	—	 	 	 	352	 	 	 	—	 	 	 	352	 	
Minimum tax withholding paid on behalf of employees for restricted stock units	 	 	(2,190	)	 	 	—	 	 	 	—	 	 	 	(2,190	)	
Intercompany	 	 	—	 	 	 	58,117	 	 	 	(58,117	)	 	 	—	 	
Net cash provided by financing activities	 	 	133,087	 	 	 	55,273	 	 	 	(58,117	)	 	 	130,243	 	
Net decrease in cash and cash equivalents	 	 	(38,559	)	 	 	(10,163	)	 	 	—	 	 	 	(48,722	)	
Cash and cash equivalents - beginning of period	 	 	105,888	 	 	 	64,741	 	 	 	—	 	 	 	170,629	 	
Cash and cash equivalents - end of period	 	$	67,329	 	 	$	54,578	 	 	$	—	 	 	$	121,907	 	

 
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 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain statements relating to future events of our intentions, beliefs, expectations, predictions for the future and other matters that are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements:
·	use forward-looking terminology;	
·	are based on various assumptions made by TRI Pointe; and	
·	may not prove to be accurate because of risks and uncertainties surrounding the assumptions that are made.	
Factors listed in this section – as well as other factors not included – may cause actual results to differ significantly from the forward-looking statements included in this Quarterly Report on Form 10-Q. 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 occurs, there is no guarantee of what effect it will have on our operations or financial condition.
We will not update the forward-looking statements contained in this Quarterly Report on Form 10-Q, unless otherwise required by law.
Forward-Looking Statements
These forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “will,” “would,” or other words that convey the uncertainty of future events or outcomes, including, without limitation, our transaction with Weyerhaeuser Real Estate Company (WRECO). These forward-looking statements include, but are not limited to, statements regarding expected benefits of the WRECO transaction, integration plans and expected synergies therefrom, and our anticipated future financial and operating performance and results, including our estimates for growth.
Forward-looking statements are based on a number of factors, including the expected effect of:
·	the economy;	
·	laws and regulations;	
·	adverse litigation outcome and the adequacy of reserves;	
·	changes in accounting principles;	
·	projected benefit payments; and	
·	projected tax rates and credits.	
Risks, Uncertainties and Assumptions
The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
·	the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar;	
·	market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;	
·	levels of competition;	
·	the successful execution of our internal performance plans, including restructuring and cost reduction initiatives;	
·	global economic conditions;	
·	raw material prices;	
 
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·	energy prices;	
·	the effect of weather, including the continuing drought in California;	
·	the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters;	
·	transportation costs;	
·	federal and state tax policies;	
·	the effect of land use, environment and other governmental regulations;	
·	legal proceedings;	
·	risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects;	
·	the risk that disruptions from the transaction with WRECO will harm our business;	
·	our ability to achieve the benefits of the transaction with WRECO in the estimated amount and the anticipated timeframe, if at all;	
·	our ability to integrate WRECO successfully and to achieve the anticipated synergies therefrom;	
·	change in accounting principles;	
·	risks related to unauthorized access to our computer systems, theft of our customer’s confidential information or other forms of cyber-attack; and	
·	other factors described in “Risk Factors.”	
The following discussion and analysis should be read in conjunction with our  consolidated financial statements and related condensed notes thereto contained elsewhere in this report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our securities. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2014, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, and subsequent reports on Form 8-K, which discuss our business in greater detail. The section entitled “Risk Factors” set forth in Item 1A of our Annual Report on Form 10-K, and similar disclosures in our other SEC filings, discuss some of the important risk factors that may affect our business, results of operations and financial condition. You should carefully consider those risks, in addition to the information in this report and in our other filings with the SEC, before deciding to invest in, or maintain your investment in, our common stock.
Reverse Acquisition and Formation of TRI Pointe Group, Inc.
On July 7, 2014 (the “Closing Date”), TRI Pointe Homes, Inc. consummated the previously announced merger (the “Merger”) of our wholly owned subsidiary, Topaz Acquisition, Inc. (“Merger Sub”), with and into Weyerhaeuser Real Estate Company (“WRECO”), with WRECO surviving the Merger and becoming our wholly owned subsidiary, as contemplated by the Transaction Agreement, dated as of November 3, 2013 (the “Transaction Agreement”), by and among us, Weyerhaeuser Company (“Weyerhaeuser”), the Company, WRECO and Merger Sub. The Merger is accounted for in accordance with ASC Topic 805, Business Combinations (“ASC 805”). For accounting purposes, the Merger is treated as a “reverse acquisition” and WRECO is considered the accounting acquirer. Accordingly, WRECO is reflected as the predecessor and acquirer and therefore the accompanying consolidated financial statements reflect the historical consolidated financial statements of WRECO for all periods presented and do not include the historical financial statements of TRI Pointe prior to the Closing Date. Subsequent to the Closing Date, the consolidated financial statements reflect the results of the combined company.
For further information on the Merger, see Note 2, Merger with Weyerhaeuser Real Estate Company , of the condensed notes to the unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.  In the Merger, each issued and outstanding WRECO common share was converted into 1.297 shares of TRI Pointe common stock. The historical issued and outstanding WRECO common shares (100,000,000 common shares for all periods presented prior to the Merger) have been recast as 129,700,000 common shares of the Company for all periods prior to the Merger) in all periods presented to reflect this conversion.
On July 7, 2015, TRI Pointe Homes, Inc., a Delaware corporation (“TRI Pointe Homes”), reorganized its corporate structure (the “Reorganization”) whereby TRI Pointe Homes became a direct, wholly owned subsidiary of TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”).  Please see "Note Regarding this Quarterly Report" above regarding the reorganization of our corporate structure on July 7, 2015.
 
- 31 -

Consolidated Financial Data (in thousands, except per share amounts):
 
 	 	Three Months Ended	 	 	Six Months Ended	 	
 	 	June 30,	 	 	June 30,	 	
 	 	 	2015	 	 	 	2014	 	 	 	2015	 	 	 	2014	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Home sales	 	$	427,238	 	 	$	309,609	 	 	$	801,503	 	 	$	551,511	 	
Land and lot sales	 	 	67,490	 	 	 	27,512	 	 	 	69,490	 	 	 	30,899	 	
Other operations	 	 	789	 	 	 	5,442	 	 	 	1,782	 	 	 	8,285	 	
Total revenues	 	 	495,517	 	 	 	342,563	 	 	 	872,775	 	 	 	590,695	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of home sales	 	 	341,742	 	 	 	242,709	 	 	 	641,648	 	 	 	433,977	 	
Cost of land and lot sales	 	 	11,564	 	 	 	24,765	 	 	 	13,873	 	 	 	27,928	 	
Other operations	 	 	592	 	 	 	567	 	 	 	1,154	 	 	 	2,199	 	
Sales and marketing	 	 	25,634	 	 	 	23,798	 	 	 	48,920	 	 	 	44,703	 	
General and administrative	 	 	28,299	 	 	 	18,184	 	 	 	56,478	 	 	 	36,189	 	
Restructuring charges	 	 	498	 	 	 	520	 	 	 	720	 	 	 	2,178	 	
Total expenses	 	 	408,329	 	 	 	310,543	 	 	 	762,793	 	 	 	547,174	 	
Income from operations	 	 	87,188	 	 	 	32,020	 	 	 	109,982	 	 	 	43,521	 	
Equity in loss of unconsolidated entities	 	 	(155	)	 	 	(69	)	 	 	(81	)	 	 	(137	)	
Transaction expenses	 	 	—	 	 	 	(448	)	 	 	—	 	 	 	(506	)	
Other income (expense), net	 	 	(31	)	 	 	(1,476	)	 	 	225	 	 	 	(741	)	
Income before taxes	 	 	87,002	 	 	 	30,027	 	 	 	110,126	 	 	 	42,137	 	
Provision for income taxes	 	 	(30,240	)	 	 	(5,802	)	 	 	(38,067	)	 	 	(10,331	)	
Net income	 	 	56,762	 	 	 	24,225	 	 	 	72,059	 	 	 	31,806	 	
Less: net income attributable to
     noncontrolling interests	 	 	(1,832	)	 	 	—	 	 	 	(1,832	)	 	 	—	 	
Net income available to common stockholders	 	$	54,930	 	 	$	24,225	 	 	$	70,227	 	 	$	31,806	 	
Earnings per share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
Diluted	 	$	0.34	 	 	$	0.19	 	 	$	0.43	 	 	$	0.25	 	
 
Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
 
 	 	Three Months Ended June 30, 2015	 	 	Three Months Ended June 30, 2014	 	 	Percentage Change	 	
 	 	Net   New	 	 	Average	 	 	Monthly	 	 	Net New	 	 	Average	 	 	Monthly	 	 	Net New	 	 	Average	 	 	Monthly	 	
 	 	Home	 	 	Selling	 	 	Absorption	 	 	Home	 	 	Selling	 	 	Absorption	 	 	Home	 	 	Selling	 	 	Absorption	 	
 	 	Orders	 	 	Communities	 	 	Rates	 	 	Orders	 	 	Communities	 	 	Rates	 	 	Orders	 	 	Communities	 	 	Rates	 	
Maracay	 	 	184	 	 	 	18.0	 	 	 	3.4	 	 	 	120	 	 	 	17.0	 	 	 	2.4	 	 	 	53	%	 	 	6	%	 	 	45	%	
Pardee	 	 	355	 	 	 	23.5	 	 	 	5.0	 	 	 	284	 	 	 	20.0	 	 	 	4.7	 	 	 	25	%	 	 	18	%	 	 	6	%	
Quadrant	 	 	116	 	 	 	10.8	 	 	 	3.6	 	 	 	106	 	 	 	14.0	 	 	 	2.5	 	 	 	9	%	 	 	(23	)%	 	 	43	%	
Trendmaker	 	 	124	 	 	 	26.5	 	 	 	1.6	 	 	 	166	 	 	 	24.5	 	 	 	2.3	 	 	 	(25	)%	 	 	8	%	 	 	(31	)%	
TRI Pointe	 	 	365	 	 	 	26.5	 	 	 	4.6	 	 	 	—	 	 	 	—	 	 	 	—	 	 	N/A	 	 	N/A	 	 	N/A	 	
Winchester	 	 	94	 	 	 	14.3	 	 	 	2.2	 	 	 	87	 	 	 	22.0	 	 	 	1.3	 	 	 	8	%	 	 	(35	)%	 	 	67	%	
Total	 	 	1,238	 	 	 	119.5	 	 	 	3.5	 	 	 	763	 	 	 	97.5	 	 	 	2.6	 	 	 	62	%	 	 	23	%	 	 	32	%	
 
Net new home orders for the three months ended June 30, 2015 increased 62% to 1,238, compared to 763 during the prior year period.  Our overall absorption rate for the three months ended June 30, 2015 was 10.4 per average selling community (3.5 monthly), compared to 7.8 per average selling community (2.6 monthly) during the prior year period.  The increase in net new home orders, average selling communities and monthly absorption rate was primarily the result of the addition of TRI Pointe, which had 365 orders, 26.5 average selling communities and a monthly absorption rate of 4.6 per average selling community in the three months ended June 30, 2015 with no comparable amounts in the prior year period.  In addition, the increase in net new home orders was positively impacted by an increase in our monthly absorption rate in all of our segments compared to the prior year period except for Trendmaker, which experienced a decrease as a result of a slowdown in the premium housing market in Houston driven by inclement weather during the period and by the uncertainty around oil prices.  
 
- 32 -

Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands)
 
 	 	As of June 30, 2015	 	 	As of June 30, 2014	 	 	Percentage Change	 	
 	 	 	 	 	 	Backlog	 	 	Average	 	 	 	 	 	 	Backlog	 	 	Average	 	 	 	 	 	 	Backlog	 	 	Average	 	
 	 	Backlog	 	 	Dollar	 	 	Sales	 	 	Backlog	 	 	Dollar	 	 	Sales	 	 	Backlog	 	 	Dollar	 	 	Sales	 	
 	 	Units	 	 	Value	 	 	Price	 	 	Units	 	 	Value	 	 	Price	 	 	Units	 	 	Value	 	 	Price	 	
Maracay	 	 	274	 	 	$	106,347	 	 	$	388	 	 	 	149	 	 	$	61,255	 	 	$	411	 	 	 	84	%	 	 	74	%	 	 	(6	)%	
Pardee	 	 	471	 	 	 	296,298	 	 	 	629	 	 	 	428	 	 	 	238,276	 	 	 	557	 	 	 	10	%	 	 	24	%	 	 	13	%	
Quadrant	 	 	199	 	 	 	87,233	 	 	 	438	 	 	 	155	 	 	 	77,671	 	 	 	501	 	 	 	28	%	 	 	12	%	 	 	(13	)%	
Trendmaker	 	 	243	 	 	 	128,645	 	 	 	529	 	 	 	262	 	 	 	136,115	 	 	 	520	 	 	 	(7	)%	 	 	(5	)%	 	 	2	%	
TRI Pointe	 	 	631	 	 	 	449,080	 	 	 	712	 	 	 	—	 	 	 	—	 	 	 	—	 	 	N/A	 	 	N/A	 	 	N/A	 	
Winchester	 	 	180	 	 	 	132,244	 	 	 	735	 	 	 	197	 	 	 	156,908	 	 	 	796	 	 	 	(9	)%	 	 	(16	)%	 	 	(8	)%	
Total	 	 	1,998	 	 	$	1,199,847	 	 	$	601	 	 	 	1,191	 	 	$	670,225	 	 	$	563	 	 	 	68	%	 	 	79	%	 	 	7	%	
 
Backlog units reflects the number of homes, net of actual cancellations experienced during the period, for which we have entered into sales contracts with customers but for which we have not yet delivered the homes. Homes in backlog are generally delivered within three to nine months, although we may experience cancellations of sales contracts prior to delivery. Our cancellation rate of buyers who contracted to buy a home but did not close escrow (as a percentage of overall orders) was 16% for the three months ended June 30, 2015 and June 30, 2014, respectively. The dollar value of backlog was $1.2 billion as of June 30, 2015, an increase of $529.6 million, or 79%, compared to $670.2 million as of June 30, 2014.  This increase is due to an increase in the number of homes in backlog of 807, or 68%, to 1,998 homes as of June 30, 2015 from 1,191 homes as of June 30, 2014, in addition to an increase in the average sales price of homes in backlog of $38,000, or 7%, to $601,000 as of June 30, 2015 compared to $563,000 as of June 30, 2014.  The increase in the number of homes in backlog and the average sales price of homes in backlog was mainly the result of the addition of TRI Pointe, which had 631 homes in backlog and an average sales price in backlog of $712,000 as of June 30, 2015.  In addition to the increases associated with TRI Pointe in the current year period, backlog units and backlog dollar value increased at three of our reporting segments existing in the prior year period, with the exception of Trendmaker and Winchester.  
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
 
 	 	Three Months Ended June 30, 2015	 	 	Three Months Ended June 30, 2014	 	 	Percentage Change	 	
 	 	New	 	 	Home	 	 	Average	 	 	New	 	 	Home	 	 	Average	 	 	New	 	 	Home	 	 	Average	 	
 	 	Homes	 	 	Sales	 	 	Sales	 	 	Homes	 	 	Sales	 	 	Sales	 	 	Homes	 	 	Sales	 	 	Sales	 	
 	 	Delivered	 	 	Revenue	 	 	Price	 	 	Delivered	 	 	Revenue	 	 	Price	 	 	Delivered	 	 	Revenue	 	 	Price	 	
Maracay	 	 	91	 	 	$	33,574	 	 	$	369	 	 	 	93	 	 	$	35,045	 	 	$	377	 	 	 	(2	)%	 	 	(4	)%	 	 	(2	)%	
Pardee	 	 	242	 	 	 	110,231	 	 	 	456	 	 	 	246	 	 	 	118,905	 	 	 	483	 	 	 	(2	)%	 	 	(7	)%	 	 	(6	)%	
Quadrant	 	 	87	 	 	 	35,689	 	 	 	410	 	 	 	67	 	 	 	25,180	 	 	 	376	 	 	 	30	%	 	 	42	%	 	 	9	%	
Trendmaker	 	 	123	 	 	 	64,652	 	 	 	526	 	 	 	139	 	 	 	67,756	 	 	 	487	 	 	 	(12	)%	 	 	(5	)%	 	 	8	%	
TRI Pointe	 	 	174	 	 	 	130,553	 	 	 	750	 	 	 	—	 	 	 	—	 	 	 	—	 	 	N/A	 	 	N/A	 	 	N/A	 	
Winchester	 	 	81	 	 	 	52,539	 	 	 	649	 	 	 	83	 	 	 	62,723	 	 	 	756	 	 	 	(2	)%	 	 	(16	)%	 	 	(14	)%	
Total	 	 	798	 	 	$	427,238	 	 	$	535	 	 	 	628	 	 	$	309,609	 	 	$	493	 	 	 	27	%	 	 	38	%	 	 	9	%	
 
Home sales revenue increased $117.6 million, or 38%, to $427.2 million for the three months ended June 30, 2015 from $309.6 million for the prior year period. The increase was comprised of: (i) $91.0 million related to an increase in average sales price of $42,000 per home to $535,000 for the three months ended June 30, 2015 from $493,000 in the prior year period; and (ii) $26.6 million due to a 27% increase in homes delivered to 798 for the three months ended June 30, 2015 from 628 in the prior year period. The increase in the average sales price and new home deliveries was primarily attributable to the addition of TRI Pointe, which had an average selling price of homes delivered of $750,000 and 174 deliveries with no comparable amounts in the prior year period.
 
- 33 -

Homebuilding Gross Margins (dollars in thousands)
 
 	 	Three Months Ended June 30,	 	
 	 	2015	 	 	%	 	 	2014	 	 	%	 	
Home sales	 	$	427,238	 	 	 	100.0	%	 	$	309,609	 	 	 	100.0	%	
Cost of home sales	 	 	341,742	 	 	 	80.0	%	 	 	242,709	 	 	 	78.4	%	
Homebuilding gross margin	 	 	85,496	 	 	 	20.0	%	 	 	66,900	 	 	 	21.6	%	
Add:  interest in cost of home sales	 	 	7,640	 	 	 	1.8	%	 	 	5,340	 	 	 	1.7	%	
Add:  impairments and lot option abandonments	 	 	882	 	 	 	0.2	%	 	 	(22	)	 	 	0.0	%	
Adjusted homebuilding gross margin (1)	 	$	94,018	 	 	 	22.0	%	 	$	72,218	 	 	 	23.3	%	
Homebuilding gross margin percentage	 	 	20.0	%	 	 	 	 	 	 	21.6	%	 	 	 	 	
Adjusted homebuilding gross margin percentage (1)	 	 	22.0	%	 	 	 	 	 	 	23.3	%	 	 	 	 	
(1)	Non-GAAP financial measure (as discussed below).	
Our homebuilding gross margin percentage decreased to 20.0% for the three months ended June 30, 2015 as compared to 21.6% for the prior year period. The decrease was primarily due to increases in land, labor and material costs outpacing home price appreciation. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 22.0% for the three months ended June 30, 2015, compared to 23.3% for the prior year period. The decrease in the adjusted homebuilding gross margin was consistent with the change in non-adjusted homebuilding gross margin.
Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the nearest GAAP equivalent.
Land and Lot Gross Margins (dollars in thousands)
 
 	 	Three Months Ended June 30,	 	
 	 	2015	 	 	%	 	 	2014	 	 	%	 	
Land and lot sales	 	$	67,490	 	 	 	100.0	%	 	$	27,512	 	 	 	100.0	%	
Cost of land and lot sales	 	 	11,564	 	 	 	17.1	%	 	 	24,765	 	 	 	90.0	%	
Land and lot gross margin	 	$	55,926	 	 	 	82.9	%	 	$	2,747	 	 	 	10.0	%	
Our land and lot gross margin percentage increased to 82.9% for the three months ended June 30, 2015 as compared to 10.0% for the prior year period. The increases in land and lot sales revenue and gross margin percentage were mainly due to the sale of a 15.72 acre employment center located in the Pacific Highlands Ranch community in the San Diego, California division of our Pardee Homes reporting segment.  The sale was completed in June of 2015 for $53 million in cash.  The transaction included significant gross margins due to the low land basis of the Pacific Highlands Ranch community which was acquired in 1981.  
Sales and Marketing, General and Administrative Expense (dollars in thousands)
 
 	 	Three Months Ended	 	 	As a Percentage of	 	
 	 	June 30,	 	 	Home Sales Revenue	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Sales and marketing	 	$	25,634	 	 	$	23,798	 	 	 	6.0	%	 	 	7.7	%	
General and administrative (G&A)	 	 	28,299	 	 	 	18,184	 	 	 	6.6	%	 	 	5.9	%	
Total sales and marketing and G&A	 	$	53,933	 	 	$	41,982	 	 	 	12.6	%	 	 	13.6	%	
Sales and marketing expense as a percentage of home sales revenue decreased to 6.0% for the three months ended June 30, 2015 from 7.7% for the three months ended June 30, 2014 mainly due to the addition of TRI Pointe Homes which has a lower sales and marketing expense as a percentage of home sales revenue due to a strong sales absorption pace driving higher deliveries and higher average sales prices for homes delivered during the period.  The 7.6% increase in sales and marketing expense was related primarily to the addition of TRI Pointe Homes for the three month period ended June 30, 2015, representing $5.2 million of sales and marketing expenses, with no comparable amounts in the prior year period.  This amount was offset by decreases in all but one of the existing segments for the three months ending June 30, 2015 compared to the same prior year period.
 
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General and administrative expense increased by $10.1 million to $28.3 million for the three month period ended June 30, 2015 from $18.2 million for the three month period ended June 30, 2014.   General and administrative expenses were 6.6% of home sales revenue for the three months ended June 30, 2015 compared to 5.9% of home sales revenue for the same period in the prior year.  The increase in general and administrative expenses as a percentage of home sales revenue is due primarily to employee related costs with the addition of TRI Pointe Homes and the cost of being a standalone public company with no comparable amounts in the prior year period.
Total sales and marketing and G&A (“SG&A”) expense increased $11.9 million, or 28.3%, to $53.9 million for the three months ended June 30, 2015 from $42.0 million in the prior year period due primarily to the addition of TRI Pointe Homes in the current year, but improved to 12.6% of home sales revenue from 13.6% for the three months ended June 30, 2015 and 2014, respectively.
Restructuring Charges
Restructuring charges decreased to $498,000 for the three months ended June 30, 2015 compared to $520,000 in the same period in the prior year.  The decrease was mainly due to higher employee-related restructuring costs in 2014, largely related to retention, severance and related costs in connection with the Merger.  
Interest
Interest, which was incurred principally to finance land acquisitions, land development and home construction, totaled $15.1 million and $6.6 million for the three months ended June 30, 2015 and 2014, respectively.  The capitalized portion of interest incurred was $15.1 million and $4.3 million for the three months ended June 30, 2015 and 2014, respectively.  The increase in interest incurred during the three months ended June 30, 2015 as compared to the prior year period was primarily attributable to an increase in our outstanding debt and higher interest rates as a result of the issuance of the Senior Notes in connection with the Merger as well as funding the overall growth of the Company.
Income Tax
For the three months ended June 30, 2015, we recorded a tax provision of $30.2 million based on an effective tax rate of 34.8%.  For the three months ended June 30, 2014, we recorded a tax provision of $5.8 million based on an effective tax rate of 19.3%. The increase in our effective rate was due to a non-recurring tax benefit recorded during the second quarter 2014 related the establishment of a $5.8 million deferred tax asset for our tax over book basis in our shares of WRI stock.  This non-recurring tax benefit reduced our effective rate for the three months ended June 30, 2014 by 19.3%.  Without the non-recurring tax benefit our effective rate for the three months ended June 30, 2014 would have been 38.6%, which is comparable to our effective rate for the three months ended June 30, 2015.
 
Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment
 
 	 	Six Months Ended June 30, 2015	 	 	Six Months Ended June 30, 2014	 	 	Percentage Change	 	
 	 	Net   New	 	 	Average	 	 	Monthly	 	 	Net New	 	 	Average	 	 	Monthly	 	 	Net New	 	 	Average	 	 	Monthly	 	
 	 	Home	 	 	Selling	 	 	Absorption	 	 	Home	 	 	Selling	 	 	Absorption	 	 	Home	 	 	Selling	 	 	Absorption	 	
 	 	Orders	 	 	Communities	 	 	Rates	 	 	Orders	 	 	Communities	 	 	Rates	 	 	Orders	 	 	Communities	 	 	Rates	 	
Maracay	 	 	345	 	 	 	17.4	 	 	 	3.3	 	 	 	225	 	 	 	16.0	 	 	 	2.3	 	 	 	53	%	 	 	9	%	 	 	41	%	
Pardee	 	 	663	 	 	 	22.0	 	 	 	5.0	 	 	 	529	 	 	 	19.7	 	 	 	4.5	 	 	 	25	%	 	 	12	%	 	 	12	%	
Quadrant	 	 	266	 	 	 	10.4	 	 	 	4.3	 	 	 	204	 	 	 	13.3	 	 	 	2.6	 	 	 	30	%	 	 	(22	)%	 	 	67	%	
Trendmaker	 	 	256	 	 	 	26.4	 	 	 	1.6	 	 	 	309	 	 	 	23.1	 	 	 	2.2	 	 	 	(17	)%	 	 	14	%	 	 	(28	)%	
TRI Pointe	 	 	701	 	 	 	26.3	 	 	 	4.4	 	 	 	—	 	 	 	—	 	 	 	—	 	 	N/A	 	 	N/A	 	 	N/A	 	
Winchester	 	 	201	 	 	 	13.6	 	 	 	2.5	 	 	 	163	 	 	 	21.9	 	 	 	1.2	 	 	 	23	%	 	 	(38	)%	 	 	99	%	
Total	 	 	2,432	 	 	 	116.1	 	 	 	3.5	 	 	 	1,430	 	 	 	94.0	 	 	 	2.5	 	 	 	70	%	 	 	24	%	 	 	38	%	

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Net new home orders for the six months ended June 30, 2015 increased 70% to 2,432, compared to 1,430 during the prior year period.  Our overall absorption rate for t he six months ended June 30, 2015 was 20.9 per average selling community (3.5 monthly), compared to 15.2 per average selling community (2.5 monthly) during the prior year period.  The increase in net new home orders, average selling communities and monthly absorption rate was primarily due to the addition of TRI Pointe, which had 701 orders, 26.3 average selling communities and a monthly absorption rate of 4.4 per average selling community in the six month period ended June 30, 2015 with no comparable amoun ts in the prior year period.   In addition, the increase in net new home orders was due to an increase in our monthly absorption rate in all of our reporting segments, except for Trendmaker which experienced a decrease as a result of a slowdown in the prem ium housing market in Houston driven by inclement weather during the period and by the uncertainty around oil prices.  
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)
 
 	 	Six Months Ended June 30, 2015	 	 	Six Months Ended June 30, 2014	 	 	Percentage Change	 	
 	 	New	 	 	Home	 	 	Average	 	 	New	 	 	Home	 	 	Average	 	 	New	 	 	Home	 	 	Average	 	
 	 	Homes	 	 	Sales	 	 	Sales	 	 	Homes	 	 	Sales	 	 	Sales	 	 	Homes	 	 	Sales	 	 	Sales	 	
 	 	Delivered	 	 	Revenue	 	 	Price	 	 	Delivered	 	 	Revenue	 	 	Price	 	 	Delivered	 	 	Revenue	 	 	Price	 	
Maracay	 	 	176	 	 	$	66,051	 	 	$	375	 	 	 	192	 	 	$	70,275	 	 	$	366	 	 	 	(8	)%	 	 	(6	)%	 	 	3	%	
Pardee	 	 	410	 	 	 	195,889	 	 	 	478	 	 	 	381	 	 	 	186,302	 	 	 	489	 	 	 	8	%	 	 	5	%	 	 	(2	)%	
Quadrant	 	 	180	 	 	 	79,025	 	 	 	439	 	 	 	145	 	 	 	56,269	 	 	 	388	 	 	 	24	%	 	 	40	%	 	 	13	%	
Trendmaker	 	 	231	 	 	 	120,860	 	 	 	523	 	 	 	269	 	 	 	129,156	 	 	 	480	 	 	 	(14	)%	 	 	(6	)%	 	 	9	%	
TRI Pointe	 	 	313	 	 	 	237,411	 	 	 	759	 	 	 	—	 	 	 	—	 	 	 	—	 	 	N/A	 	 	N/A	 	 	N/A	 	
Winchester	 	 	156	 	 	 	102,267	 	 	 	656	 	 	 	149	 	 	 	109,509	 	 	 	735	 	 	 	5	%	 	 	(7	)%	 	 	(11	)%	
Total	 	 	1,466	 	 	$	801,503	 	 	$	547	 	 	 	1,136	 	 	$	551,511	 	 	$	485	 	 	 	29	%	 	 	45	%	 	 	13	%	
 
Home sales revenue increased $250.0 million, or 45%, to $801.5 million for the six months ended June 30, 2015 from $551.5 million for the prior year period. The increase was comprised of: (i) $180.4 million related to an increase in average sales price of $62,000 per home to $547,000 for the six months ended June 30, 2015 from $485,000 in the prior year period; and (ii) $69.6 million due to a 29% increase in homes delivered to 1,466 for the six months ended June 30, 2015 from 1,136 in the prior year period. The increase in the average sales price and new home deliveries was primarily attributable to the addition of TRI Pointe with no comparable amounts in the prior year period. In addition, the average sales price of homes delivered increased at all but two of our reporting segments due to a change in product mix with a shift to a more move-up product in certain markets and price increases in certain markets.  The average sales price at Winchester and Pardee declined for the six months ended June 30, 2015 compared to the same prior year period primarily due to a change in product mix.  
Homebuilding Gross Margins (dollars in thousands)
 
 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	%	 	 	2014	 	 	%	 	
Home sales	 	$	801,503	 	 	 	100.0	%	 	$	551,511	 	 	 	100.0	%	
Cost of home sales	 	 	641,648	 	 	 	80.1	%	 	 	433,977	 	 	 	78.7	%	
Homebuilding gross margin	 	 	159,855	 	 	 	19.9	%	 	 	117,534	 	 	 	21.3	%	
Add:  interest in cost of home sales	 	 	14,351	 	 	 	1.8	%	 	 	8,640	 	 	 	1.6	%	
Add:  impairments and lot option abandonments	 	 	1,227	 	 	 	0.2	%	 	 	407	 	 	 	0.1	%	
Adjusted homebuilding gross margin (1)	 	$	175,433	 	 	 	21.9	%	 	$	126,581	 	 	 	23.0	%	
Homebuilding gross margin percentage	 	 	19.9	%	 	 	 	 	 	 	21.3	%	 	 	 	 	
Adjusted homebuilding gross margin percentage (1)	 	 	21.9	%	 	 	 	 	 	 	23.0	%	 	 	 	 	
(1)	Non-GAAP financial measure (as discussed below).	
Our homebuilding gross margin percentage decreased to 19.9% for the six months ended June 30, 2015 as compared to 21.3% for the prior year period. The decrease was primarily due to increases in land, labor and material costs outpacing home price appreciation. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 21.9% for the six months ended June 30, 2015, compared to 23.0% for the prior year period. The decrease in the adjusted homebuilding gross margin was consistent with the change in non-adjusted homebuilding gross margin.
 
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Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. See the tabl e above reconciling this non-GAAP financial measure to homebuilding gross margin, the nearest GAAP equivalent.
Land and Lot Gross Margins (dollars in thousands)
 
 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	%	 	 	2014	 	 	%	 	
Land and lot sales	 	$	69,490	 	 	 	100.0	%	 	$	30,899	 	 	 	100.0	%	
Cost of land and lot sales	 	 	13,873	 	 	 	20.0	%	 	 	27,928	 	 	 	90.4	%	
Land and lot gross margin	 	$	55,617	 	 	 	80.0	%	 	$	2,971	 	 	 	9.6	%	
Our land and lot gross margin percentage increased to 80.0% for the six months ended June 30, 2015 as compared to 9.6% for the prior year period. The increases in land and lot sales revenue and gross margin percentage were mainly due to the sale of a 15.72 acre employment center located in the Pacific Highlands Ranch community in the San Diego, California division of our Pardee Homes reporting segment.  The sale was completed in June of 2015 for $53 million in cash.  The transaction included significant gross margins due to the low land basis of the Pacific Highlands Ranch community which was acquired in 1981.  
Sales and Marketing, General and Administrative Expense (dollars in thousands)
 
 	 	Six Months Ended	 	 	As a Percentage of	 	
 	 	June 30,	 	 	Home Sales Revenue	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Sales and marketing	 	$	48,920	 	 	$	44,703	 	 	 	6.1	%	 	 	8.1	%	
General and administrative (G&A)	 	 	56,478	 	 	 	36,189	 	 	 	7.0	%	 	 	6.6	%	
Total sales and marketing and G&A	 	$	105,398	 	 	$	80,892	 	 	 	13.2	%	 	 	14.7	%	
 
Sales and marketing expense decreased to 6.1% of home sales revenue for the six months ended June 30, 2015 from 8.1% for the six months ended June 30, 2014 mainly due to the addition of TRI Pointe Homes which has a lower sales and marketing expense as a percentage of home sales revenue due to a strong sales absorption pace driving higher deliveries and higher average sales prices for homes delivered during the period.  The 9.4% increase in sales and marketing expense was related primarily to the addition of TRI Pointe Homes for the six month period ended June 30, 2015, representing $10.0 million of sales and marketing expenses, with no comparable amounts in the prior year period.  This amount was offset by decreases in each of the existing segments for the six months ending June 30, 2015 compared to the same prior year period.
General and administrative expense increased by $20.3 million to $56.5 million for the six month period ended June 30, 2015 from $36.2 million for the six month period ended June 30, 2014.   General and administrative expenses were 7.0% of home sales revenue for the six months ended June 30, 2015 compared to 6.6% of home sales revenue for the same period in the prior year.  The slight increase in general and administrative expenses as a percentage of home sales revenue is due primarily to employee related costs with the addition of TRI Pointe Homes and the cost of being a standalone public company with no comparable amounts in the prior year period.
Total sales and marketing and G&A (“SG&A”) expense increased $24.5 million, or 30.3%, to $105.4 million for the six months ended June 30, 2015 from $80.9 million in the prior year period due primarily to the addition of TRI Pointe Homes in the current year, but improved to 13.2% of home sales revenue from 14.7% for the six months ended June 30, 2015 and 2014, respectively.
Restructuring Charges
Restructuring charges decreased to $720,000 for the six months ended June 30, 2015 compared to $2.2 million in the same period in the prior year.  The decrease was mainly due to higher employee-related restructuring costs in 2014 related to retention, severance and related costs in connection with the Merger.  
 
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Interest
Interest, which was incurred principally to finance land acquisitions, land development and home construction, totaled $30.3 million and $10.6 million for the six months ended June 30, 2015 and 2014, respectively.  The capitalized portion of interest incurred was $30.3 million and $8.1 million for the six months ended June 30, 2015 and 2014, respectively.  The increase in interest incurred during the six months ended June 30, 2015 as compared to the prior year period was primarily attributable to an increase in our outstanding debt and higher interest rates as a result of the issuance of the Senior Notes in connection with the Merger.
Income Tax
For the six months ended June 30, 2015, we recorded a tax provision of $38.1 million based on an effective tax rate of 34.6%.  For the six months ended June 30, 2014, we recorded a tax provision of $10.3 million based on an effective tax rate of 24.5%. The increase in our effective rate was due to a non-recurring tax benefit recorded during the second quarter 2014 related the establishment of a $5.8 million deferred tax asset for our tax over book basis in our shares of WRI stock.  This non-recurring tax benefit reduced our effective rate for the six months ended June 30, 2014 by 13.7%.  Without the non-recurring tax benefit our effective rate for the six months ended June 30, 2014 would have been 38.2% which is comparable to our effective rate for the six months ended June 30, 2015.
Lots Owned or Controlled by Segment
Excluded from owned and controlled lots are those related to Note 8, Investments in Unconsolidated Entities .  The table below summarizes our lots owned or controlled by segment as of the dates presented:
 
 	 	 	 	 	 	 	 	 	 	Increase	 	
 	 	June 30,	 	 	(Decrease)	 	
 	 	 	2015	 	 	 	2014	 	 	Amount	 	 	%	 	
Lots Owned	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	 	 	1,485	 	 	 	1,289	 	 	 	196	 	 	 	15	%	
Pardee	 	 	17,022	 	 	 	17,633	 	 	 	(611	)	 	 	(3	)%	
Quadrant	 	 	995	 	 	 	1,025	 	 	 	(30	)	 	 	(3	)%	
Trendmaker	 	 	837	 	 	 	673	 	 	 	164	 	 	 	24	%	
TRI Pointe	 	 	2,920	 	 	 	—	 	 	 	2,920	 	 	N/A	 	
Winchester	 	 	2,284	 	 	 	2,066	 	 	 	218	 	 	 	11	%	
Total	 	 	25,543	 	 	 	22,686	 	 	 	2,857	 	 	 	13	%	
Lots Controlled (1)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Maracay	 	 	327	 	 	 	783	 	 	 	(456	)	 	 	(58	)%	
Pardee	 	 	173	 	 	 	680	 	 	 	(507	)	 	 	(75	)%	
Quadrant	 	 	421	 	 	 	485	 	 	 	(64	)	 	 	(13	)%	
Trendmaker	 	 	1,274	 	 	 	1,371	 	 	 	(97	)	 	 	(7	)%	
TRI Pointe	 	 	735	 	 	 	—	 	 	 	735	 	 	N/A	 	
Winchester	 	 	448	 	 	 	977	 	 	 	(529	)	 	 	(54	)%	
Total	 	 	3,378	 	 	 	4,296	 	 	 	(918	)	 	 	(21	)%	
Total Lots Owned or Controlled (1)	 	 	28,921	 	 	 	26,982	 	 	 	1,939	 	 	 	7	%	
 
(1)	As of June 30, 2015 and 2014, lots controlled included lots that were under land option contracts or purchase contracts.	
 
Liquidity and Capital Resources
Overview
Our principal uses of capital for the three and six months ended June 30, 2015 were operating expenses, land purchases, land development and home construction. We used funds generated by our operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and keep us poised for growth. As of June 30, 2015, we had $121.9 million of cash and cash equivalents. We believe we have sufficient cash and sources of financing for at least the next twelve months.
 
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Our board of directors will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, i ncluding the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the ability of particular assets, and our company as a whole, to generate cash flow to cover the expected debt service. Our charter does not contain a limitation on the amount of debt we may incur and our board of directors may change our target debt levels at any time without the approval of our stockholders.
Assumption of Senior Notes
On the Closing Date, TRI Pointe assumed WRECO’s obligations as issuer of $450 million aggregate principal amount of its 4.375% Senior Notes due 2019 (“2019 Notes”) and $450 million aggregate principal amount of its 5.875% Senior Notes due 2024 (“2024 Notes” and together with the 2019 Notes, the “Senior Notes”). The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds of $861.3 million, after debt issuance costs and discounts, from the offering were deposited into two separate escrow accounts following the closing of the offering on June 13, 2014. Upon release of the escrowed funds on the Closing Date, and prior to the consummation of the Merger, WRECO paid $743.7 million in cash to the former direct parent entity of WRECO, which cash was retained by Weyerhaeuser and its subsidiaries (other than WRECO and its subsidiaries). The payment consisted of the $739 million Payment Amount (as defined in the Transaction Agreement) as well as $4.7 million in payment of all unpaid interest on the debt payable to Weyerhaeuser that accrued from November 3, 2013 to the Closing Date. The remaining $117.6 million of proceeds was retained by TRI Pointe and used for general corporate purposes.
The 2019 Notes and 2024 Notes mature on June 15, 2019 and June 15, 2024, respectively. Interest is payable semiannually in arrears on June 15 and December 15.  As of June 30, 2015, no principal has been paid on the Senior Notes, and there was $22.1 million of capitalized debt financing costs related to the Senior Notes, included in other assets on our consolidated balance sheet. These costs will amortize over the respective lives of the Senior Notes.
Unsecured Revolving Credit Facility
In May 2015, the Company amended its unsecured revolving credit facility (the “Credit Facility”) from $425 million to $550 million.  The Credit Facility matures on July 1, 2018, and contains a sublimit of $75 million for letters of credit. The Company may borrow under the Credit Facility in the ordinary course of business to fund its operations, including its land development and homebuilding activities. Borrowings under the Credit Facility will be governed by, among other things, a borrowing base. The Credit Facility contains customary affirmative and negative covenants, including financial covenants relating to consolidated tangible net worth, leverage, and liquidity or interest coverage. Interest rates on borrowings will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.45% to 2.20% depending on the Company’s leverage ratio.
As of June 30, 2015 the outstanding balance under the Credit Facility was $399.4 million with an interest rate 2.14% per annum and $141.1 million of availability after considering the borrowing base provisions and outstanding letters of credit.  At June 30, 2015 we had outstanding letters of credit of $9.5 million.  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
Seller Financed Loan
As of June 30, 2015, the Company had $12.4 million outstanding related to seller financed loans to acquire lots for the construction of homes.  Principal and interest payments on these loans are due at various maturity dates, including at the time individual homes associated with the acquired land are delivered.  As of June 30, 2015, the seller financed loans will accrue interest at a weighted average rate of 6.97% per annum, with interest calculated on a daily basis. Any remaining unpaid balance on these loans is due in May 2016.
 
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Covenant Compliance
Under our Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands):
 
 	 	 	 	 	 	Covenant	 	
 	 	Actual at	 	 	Requirement at	 	
 	 	June 30,	 	 	June 30,	 	
Financial Covenants	 	2015	 	 	2015	 	
Consolidated Tangible Net Worth	 	$	1,366,475	 	 	$	903,350	 	
(Not less than $875.9 million plus 50% of net income and
   50% of the net proceeds from equity offerings after
   March 31, 2015)	 	 	 	 	 	 	 	 	
Leverage Test	 	 	47	%	 	<55%	 	
(Not to exceed 55%)	 	 	 	 	 	 	 	 	
Interest Coverage Test	 	 	4.72	 	 	>1.5	 	
(Not less than 1.5:1.0)	 	 	 	 	 	 	 	 	
 
As of June 30, 2015 we were in compliance with all of these financial covenants.
Leverage Ratios
We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-capital are calculated as follows (dollars in thousands):  
 
 	 	June 30,	 	 	December 31,	 	
 	 	2015	 	 	2014	 	
Unsecured revolving credit facility	 	$	399,392	 	 	$	260,000	 	
Seller financed loans	 	 	12,390	 	 	 	14,677	 	
Senior Notes	 	 	888,267	 	 	 	887,502	 	
Total debt	 	 	1,300,049	 	 	 	1,162,179	 	
Stockholders' equity	 	 	1,528,771	 	 	 	1,454,180	 	
Total capital	 	$	2,828,820	 	 	$	2,616,359	 	
Ratio of debt-to-capital (1)	 	 	46.0	%	 	 	44.4	%	
 	 	 	 	 	 	 	 	 	
Total debt	 	$	1,300,049	 	 	$	1,162,179	 	
Less: Cash and cash equivalents	 	 	(121,907	)	 	 	(170,629	)	
Net debt	 	 	1,178,142	 	 	 	991,550	 	
Stockholders' equity	 	 	1,528,771	 	 	 	1,454,180	 	
Total capital	 	$	2,706,913	 	 	$	2,445,730	 	
Ratio of net debt-to-capital (2)	 	 	43.5	%	 	 	40.5	%	
 
(1)	The ratio of debt-to-capital is computed as the quotient obtained by dividing debt by the sum of total debt plus equity.	
(2)	The ratio of net debt-to-capital is a non-GAAP measure and is computed as the quotient obtained by dividing net debt (which is debt less cash and cash equivalents) by the sum of net debt plus equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. See the table above reconciling this non-GAAP financial measure to the ratio of debt-to-capital.	
 
- 40 -

Cash Flows—Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014
For the six months ended June 30, 2015 as compared to the six months ended June 30, 2014, the comparison of cash flows is as follows:
·	Net cash used in operating activities increased by $281.7 million to $177.1 million for the six months ended June 30, 2015 from $104.6 million provided from operating activities for the six months ended June 30, 2014. The change was primarily comprised of (i) an increase in real estate inventories of $255.4 million in 2015 compared to an increase of $88.4 million in 2014 and (ii) a decrease in deferred income taxes of $9.5 million in 2015 compared to $120.8 million in 2014.  Other offsetting activity included changes in accounts payable and accrued expenses, receivables and net income.	
·	Net cash used in investing activities was $1.9 million for the six months ended June 30, 2015 compared to $4.0 million of cash used for the same prior year period. Cash used by investing activities for the six months ended June 30, 2015 was primarily related to investments in unconsolidated entities, while the same prior year period was primarily due to purchases of property and equipment.	
·	Net cash provided by financing activities decreased to $130.2 million for the six months ending June 30, 2015 from $843.8 million for the same period in the prior year. The change was primarily a result of the Senior Notes issued in the second quarter of 2014.	
As of June 30, 2015, our cash and cash equivalents balance was $121.9 million.
Off-Balance Sheet Arrangements and Contractual Obligations
In the ordinary course of business, we enter into land option contracts in order to procure lots for the construction of our homes.  We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots.  These purchase contracts typically require a cash deposit and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements.  We also utilize option contracts with land sellers as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources.  Option contracts generally require a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices.  We generally have the right, at our discretion, to terminate our obligations under both purchase contracts and option contracts by forfeiting our cash deposit with no further financial responsibility to the land seller.  As of June 30, 2015, we had $44.3 million of cash deposits, the majority of which are non-refundable, pertaining to land option contracts and purchase contracts with an aggregate remaining purchase price of $392.3 million (net of deposits).
Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to finance the development of optioned lots, general housing market conditions, and local market dynamics.  Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.
As of June 30, 2015, we had $141.1 million of availability under our Credit Facility after considering the borrowing base provisions and outstanding letters of credit.
Inflation
Our operations can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs.  In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers.  While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we are often unable to offset cost increases with higher selling prices.
Seasonality
Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements.  We typically experience the highest new home order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors.  Since it typically takes four to six months to construct a new home, we deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries.  Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and the majority of cash receipts from home deliveries occur during the second half of the year.  We expect this seasonal pattern to continue over the long-term, although it may be affected by volatility in the homebuilding industry.
 
- 41 -

 
 
Description of Projects and Communities under Development
The following table presents project information relating to each of our markets as of June 30, 2015 and includes information on current projects under development where we are building and selling homes.
Maracay
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project, City	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
Phoenix, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Town of Buckeye:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Verrado Tilden	 	2012	 	 	102	 	 	 	85	 	 	 	17	 	 	 	5	 	 	 	12	 	 	$239 - $304	 	
Verrado Palisades	 	2015	 	 	63	 	 	 	7	 	 	 	56	 	 	 	7	 	 	 	7	 	 	$305 - $378	 	
Verrado Victory	 	2015	 	 	98	 	 	 	2	 	 	 	96	 	 	 	15	 	 	 	2	 	 	$368 - $375	 	
City of Chandler:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Artesian Ranch	 	2013	 	 	90	 	 	 	42	 	 	 	48	 	 	 	19	 	 	 	12	 	 	$331 - $387	 	
Vaquero Ranch	 	2013	 	 	74	 	 	 	45	 	 	 	29	 	 	 	19	 	 	 	7	 	 	$298 - $373	 	
Maracay at Layton Lakes	 	2015	 	 	47	 	 	 	—	 	 	 	47	 	 	 	11	 	 	 	—	 	 	$469 - $509	 	
Sendera Place	 	2015	 	 	22	 	 	 	2	 	 	 	20	 	 	 	10	 	 	 	2	 	 	$260 - $307	 	
Town of Gilbert:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Arch Crossing at Bridges of Gilbert	 	2014	 	 	67	 	 	 	34	 	 	 	33	 	 	 	18	 	 	 	13	 	 	$278 - $336	 	
Trestle Place at Bridges of Gilbert	 	2014	 	 	73	 	 	 	44	 	 	 	29	 	 	 	13	 	 	 	16	 	 	$334 - $413	 	
Artisan at Morrison Ranch	 	2016	 	 	105	 	 	 	—	 	 	 	105	 	 	 	—	 	 	 	—	 	 	$278 - $338	 	
Marquis at Morrison Ranch	 	2016	 	 	66	 	 	 	—	 	 	 	66	 	 	 	—	 	 	 	—	 	 	$355 - $424	 	
City of Goodyear:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Calderra at Palm Valley	 	2013	 	 	81	 	 	 	64	 	 	 	17	 	 	 	14	 	 	 	8	 	 	$275 - $352	 	
Los Vientos at Palm Valley	 	2013	 	 	57	 	 	 	57	 	 	 	—	 	 	 	—	 	 	 	5	 	 	Closed	 	
City of Mesa:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Kinetic Point at Eastmark	 	2013	 	 	80	 	 	 	43	 	 	 	37	 	 	 	16	 	 	 	14	 	 	$260 - $340	 	
Lumiere Garden at Eastmark	 	2013	 	 	85	 	 	 	43	 	 	 	42	 	 	 	16	 	 	 	8	 	 	$313 - $383	 	
Town of Peoria:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Reserve at Plaza del Rio	 	2013	 	 	162	 	 	 	66	 	 	 	96	 	 	 	21	 	 	 	16	 	 	$211 - $253	 	
Maracay at Northlands	 	2014	 	 	36	 	 	 	18	 	 	 	18	 	 	 	16	 	 	 	10	 	 	$314 - $395	 	
Meadows - 5500's	 	2016	 	 	81	 	 	 	—	 	 	 	81	 	 	 	—	 	 	 	—	 	 	$355 - $437	 	
Meadows - 6500's	 	2016	 	 	56	 	 	 	—	 	 	 	56	 	 	 	—	 	 	 	—	 	 	$417 - $486	 	
Meadows - Oversized	 	2016	 	 	37	 	 	 	—	 	 	 	37	 	 	 	—	 	 	 	—	 	 	$417 - $486	 	
Town of Queen Creek:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Montelena	 	2012	 	 	59	 	 	 	57	 	 	 	2	 	 	 	1	 	 	 	5	 	 	$375 - $447	 	
The Preserve at Hastings Farms	 	2014	 	 	89	 	 	 	24	 	 	 	65	 	 	 	19	 	 	 	9	 	 	$280 - $364	 	
Villagio	 	2013	 	 	135	 	 	 	72	 	 	 	63	 	 	 	21	 	 	 	12	 	 	$279 - $337	 	
Phoenix, Arizona Total	 	 	 	 	1,765	 	 	 	705	 	 	 	1,060	 	 	 	241	 	 	 	158	 	 	 	 	
Tucson, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Marana:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tortolita Vistas	 	2014	 	 	37	 	 	 	14	 	 	 	23	 	 	 	10	 	 	 	5	 	 	$449 - $506	 	
Oro Valley:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Pinnacle - Center Pointe Vistoso	 	2016	 	 	70	 	 	 	—	 	 	 	70	 	 	 	—	 	 	 	—	 	 	$395 - $439	 	
Summit (South) - Center Pointe Vistoso	 	2016	 	 	87	 	 	 	—	 	 	 	87	 	 	 	—	 	 	 	—	 	 	$349 - $382	 	
The Cove - Center Pointe Vistoso	 	2016	 	 	83	 	 	 	—	 	 	 	83	 	 	 	—	 	 	 	—	 	 	$295 - $359	 	
Desert Crest - Center Pointe Vistoso	 	2016	 	 	103	 	 	 	—	 	 	 	103	 	 	 	—	 	 	 	—	 	 	$232 - $285	 	
Tucson:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deseo at Sabino Canyon	 	2014	 	 	39	 	 	 	27	 	 	 	12	 	 	 	5	 	 	 	5	 	 	$419 - $505	 	
Rancho del Cobre	 	2014	 	 	68	 	 	 	21	 	 	 	47	 	 	 	18	 	 	 	8	 	 	$399 - $470	 	
Tucson, Arizona Total	 	 	 	 	487	 	 	 	62	 	 	 	425	 	 	 	33	 	 	 	18	 	 	 	 	
Maracay Total	 	 	 	 	2,252	 	 	 	767	 	 	 	1,485	 	 	 	274	 	 	 	176	 	 	 	 	

 

- 42 -

Pardee
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
California	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Alta Del Mar Homes	 	2013	 	 	117	 	 	 	49	 	 	 	68	 	 	 	31	 	 	 	11	 	 	$1,800 - $2,300	 	
Sorrento Heights Prestige Collection	 	2014	 	 	20	 	 	 	20	 	 	 	—	 	 	 	—	 	 	 	2	 	 	$890 - $950	 	
Watermark	 	2013	 	 	160	 	 	 	90	 	 	 	70	 	 	 	42	 	 	 	27	 	 	$1,155 - $1,300	 	
Canterra	 	2015	 	 	89	 	 	 	—	 	 	 	89	 	 	 	7	 	 	 	—	 	 	$720 - $740	 	
Casabella	 	2015	 	 	122	 	 	 	—	 	 	 	122	 	 	 	13	 	 	 	—	 	 	$825 - $855	 	
Verana	 	2015	 	 	78	 	 	 	—	 	 	 	78	 	 	 	21	 	 	 	—	 	 	$975 - $1,040	 	
Pacific Highlands Ranch Future	 	TBD	 	 	963	 	 	 	—	 	 	 	963	 	 	 	—	 	 	 	—	 	 	TBD	 	
Olive Hill Estate	 	2015	 	 	37	 	 	 	—	 	 	 	37	 	 	 	—	 	 	 	—	 	 	$638 - $750	 	
Castlerock	 	TBD	 	 	415	 	 	 	—	 	 	 	415	 	 	 	—	 	 	 	—	 	 	$473 - $708	 	
Meadowood	 	TBD	 	 	844	 	 	 	—	 	 	 	844	 	 	 	—	 	 	 	—	 	 	$290 - $590	 	
Sea View Terrace	 	2015	 	 	40	 	 	 	24	 	 	 	16	 	 	 	15	 	 	 	23	 	 	$308 - $340	 	
Parkview Condos	 	2016	 	 	73	 	 	 	—	 	 	 	73	 	 	 	—	 	 	 	—	 	 	$345 - $370	 	
Ocean View HillsFuture	 	TBD	 	 	1,020	 	 	 	—	 	 	 	1,020	 	 	 	—	 	 	 	—	 	 	TBD	 	
South Otay Mesa	 	TBD	 	 	893	 	 	 	—	 	 	 	893	 	 	 	—	 	 	 	—	 	 	$185 - $530	 	
Alta Del Mar Custom Lots	 	2013	 	 	29	 	 	 	26	 	 	 	3	 	 	 	—	 	 	 	—	 	 	$895 - $1,950	 	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LivingSmart at Fair Oaks Ranch	 	2011	 	 	124	 	 	 	124	 	 	 	—	 	 	 	—	 	 	 	1	 	 	$483 - $509	 	
Golden Valley	 	TBD	 	 	498	 	 	 	—	 	 	 	498	 	 	 	—	 	 	 	—	 	 	$499 - $807	 	
Skyline Ranch	 	TBD	 	 	1,260	 	 	 	—	 	 	 	1,260	 	 	 	—	 	 	 	—	 	 	$510 - $640	 	
Ventura County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LivingSmart at Moorpark Highlands, Moorpark	 	2013	 	 	133	 	 	 	117	 	 	 	16	 	 	 	12	 	 	 	33	 	 	$587 - $616	 	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hillside	 	2012	 	 	182	 	 	 	182	 	 	 	—	 	 	 	—	 	 	 	2	 	 	$284 - $301	 	
Meadow Ridge	 	2013	 	 	142	 	 	 	79	 	 	 	63	 	 	 	21	 	 	 	23	 	 	$340 - $440	 	
Amberleaf	 	2014	 	 	131	 	 	 	45	 	 	 	86	 	 	 	29	 	 	 	24	 	 	$295 - $338	 	
Meadow Glen	 	2014	 	 	140	 	 	 	63	 	 	 	77	 	 	 	21	 	 	 	21	 	 	$321 - $380	 	
Summerfield	 	2015	 	 	85	 	 	 	5	 	 	 	80	 	 	 	37	 	 	 	5	 	 	$283 - $304	 	
Canyon Hills Future	 	TBD	 	 	581	 	 	 	—	 	 	 	581	 	 	 	—	 	 	 	—	 	 	TBD	 	
Christensen	 	2016	 	 	74	 	 	 	—	 	 	 	74	 	 	 	—	 	 	 	—	 	 	$338 - $437	 	
LivingSmart Tournament Hills	 	2010	 	 	235	 	 	 	235	 	 	 	—	 	 	 	—	 	 	 	2	 	 	$261 - $334	 	
Lakeside	 	2012	 	 	167	 	 	 	167	 	 	 	—	 	 	 	—	 	 	 	19	 	 	$260 - $282	 	
Tournament Hills Future	 	TBD	 	 	268	 	 	 	—	 	 	 	268	 	 	 	—	 	 	 	—	 	 	TBD	 	
LivingSmart Sundance	 	2013	 	 	152	 	 	 	136	 	 	 	16	 	 	 	6	 	 	 	26	 	 	$280 - $332	 	
LivingSmart Estrella	 	2013	 	 	127	 	 	 	127	 	 	 	—	 	 	 	—	 	 	 	6	 	 	$214 - $237	 	
Woodmont	 	2014	 	 	84	 	 	 	36	 	 	 	48	 	 	 	23	 	 	 	25	 	 	$307 - $371	 	
Cielo	 	2015	 	 	92	 	 	 	21	 	 	 	71	 	 	 	43	 	 	 	21	 	 	$220 - $242	 	
Northstar	 	2015	 	 	80	 	 	 	—	 	 	 	80	 	 	 	10	 	 	 	—	 	 	$270 - $310	 	
Skycrest	 	2015	 	 	82	 	 	 	—	 	 	 	82	 	 	 	19	 	 	 	—	 	 	$311 - $350	 	
Sundance Future	 	TBD	 	 	1,689	 	 	 	—	 	 	 	1,689	 	 	 	—	 	 	 	—	 	 	TBD	 	
Banning	 	TBD	 	 	4,318	 	 	 	—	 	 	 	4,318	 	 	 	—	 	 	 	—	 	 	TBD	 	
Sacramento County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Natomas	 	TBD	 	 	120	 	 	 	—	 	 	 	120	 	 	 	—	 	 	 	—	 	 	TBD	 	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bear Creek	 	TBD	 	 	1,252	 	 	 	—	 	 	 	1,252	 	 	 	—	 	 	 	—	 	 	TBD	 	
California Total	 	 	 	 	16,916	 	 	 	1,546	 	 	 	15,370	 	 	 	350	 	 	 	271	 	 	 	 	
Nevada	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Clark County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LivingSmart at Eldorado Ridge	 	2012	 	 	179	 	 	 	136	 	 	 	43	 	 	 	17	 	 	 	13	 	 	$255 - $306	 	
LivingSmart at Eldorado Heights	 	2013	 	 	133	 	 	 	101	 	 	 	32	 	 	 	16	 	 	 	15	 	 	$302 - $392	 	
LivingSmart Sandstone	 	2013	 	 	145	 	 	 	60	 	 	 	85	 	 	 	11	 	 	 	17	 	 	$216 - $246	 	
Ridgeview	 	2015	 	 	4	 	 	 	—	 	 	 	4	 	 	 	—	 	 	 	—	 	 	$227 - $283	 	
North Peak	 	2015	 	 	150	 	 	 	—	 	 	 	150	 	 	 	2	 	 	 	—	 	 	$284 - $337	 	
Castle Rock	 	2015	 	 	150	 	 	 	—	 	 	 	150	 	 	 	1	 	 	 	—	 	 	$354 - $420	 	
Eldorado Future	 	TBD	 	 	145	 	 	 	—	 	 	 	145	 	 	 	—	 	 	 	—	 	 	TBD	 	
Horizon Terrace	 	2014	 	 	165	 	 	 	40	 	 	 	125	 	 	 	9	 	 	 	12	 	 	$400 - $455	 	
Solano	 	2014	 	 	132	 	 	 	29	 	 	 	103	 	 	 	15	 	 	 	24	 	 	$289 - $312	 	
Alterra	 	2014	 	 	106	 	 	 	15	 	 	 	91	 	 	 	5	 	 	 	15	 	 	$438 - $505	 	
Bella Verdi	 	2015	 	 	106	 	 	 	—	 	 	 	106	 	 	 	9	 	 	 	—	 	 	$375 - $420	 	
Milennial	 	TBD	 	 	2	 	 	 	—	 	 	 	2	 	 	 	—	 	 	 	—	 	 	TBD	 	
Escala	 	2016	 	 	78	 	 	 	—	 	 	 	78	 	 	 	—	 	 	 	—	 	 	$545 - $591	 	
POD 5-1 Future	 	TBD	 	 	215	 	 	 	—	 	 	 	215	 	 	 	—	 	 	 	—	 	 	TBD	 	
Durango Ranch	 	2012	 	 	153	 	 	 	125	 	 	 	28	 	 	 	14	 	 	 	16	 	 	$460 - $536	 	
Durango Trail	 	2014	 	 	77	 	 	 	52	 	 	 	25	 	 	 	15	 	 	 	11	 	 	$373 - $399	 	
Meridian	 	2016	 	 	78	 	 	 	—	 	 	 	48	 	 	 	—	 	 	 	—	 	 	$455 - $530	 	
LivingSmart at Providence	 	2012	 	 	106	 	 	 	106	 	 	 	—	 	 	 	—	 	 	 	1	 	 	$260 - $323	 	
Encanto	 	2015	 	 	129	 	 	 	—	 	 	 	129	 	 	 	—	 	 	 	—	 	 	$406 - $468	 	
Summerglen	 	2014	 	 	140	 	 	 	47	 	 	 	93	 	 	 	7	 	 	 	15	 	 	$292 - $298	 	
Nevada Total	 	 	 	 	2,393	 	 	 	711	 	 	 	1,652	 	 	 	121	 	 	 	139	 	 	 	 	
Pardee Total	 	 	 	 	19,309	 	 	 	2,257	 	 	 	17,022	 	 	 	471	 	 	 	410	 	 	 	 	

- 43 -

Quadrant
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project, City	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
Washington	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Skagit County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Skagit Highlands, Mt Vernon	 	2005	 	 	423	 	 	 	376	 	 	 	47	 	 	 	27	 	 	 	16	 	 	$229 - $322	 	
Skagit Clearwater Court, Mt Vernon	 	2016	 	 	11	 	 	 	—	 	 	 	11	 	 	 	—	 	 	 	—	 	 	$287 - $307	 	
Skagit Surplus Pod E, Mt Vernon	 	TBD	 	 	4	 	 	 	 	 	 	 	4	 	 	 	—	 	 	 	—	 	 	TBD	 	
Snohomish County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Kings Corner 1&2, Mill Creek	 	2014	 	 	116	 	 	 	64	 	 	 	52	 	 	 	29	 	 	 	20	 	 	$441 - $503	 	
Filbert Glen, Bothell	 	2015	 	 	16	 	 	 	4	 	 	 	12	 	 	 	10	 	 	 	4	 	 	$650	 	
King's Corner 3, Mill Creek	 	2016	 	 	29	 	 	 	—	 	 	 	29	 	 	 	—	 	 	 	—	 	 	$306 - $370	 	
Evergreen Heights, Monroe	 	2016	 	 	71	 	 	 	—	 	 	 	71	 	 	 	—	 	 	 	—	 	 	$360 - $407	 	
King County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Woodland, Woodinville	 	2014	 	 	23	 	 	 	21	 	 	 	2	 	 	 	2	 	 	 	12	 	 	$571 - $576	 	
Garrison Glen, Kent	 	2014	 	 	30	 	 	 	16	 	 	 	14	 	 	 	11	 	 	 	11	 	 	$430	 	
Sonata Hill, Auburn	 	2014	 	 	71	 	 	 	17	 	 	 	54	 	 	 	19	 	 	 	10	 	 	$346 - $394	 	
The Gardens at Eastlake, Sammamish	 	2015	 	 	8	 	 	 	—	 	 	 	8	 	 	 	—	 	 	 	—	 	 	$810 - $900	 	
Heathers Ridge, Kirkland	 	2015	 	 	41	 	 	 	—	 	 	 	41	 	 	 	17	 	 	 	—	 	 	$800 - $920	 	
Hedgewood, Redmond	 	2015	 	 	11	 	 	 	—	 	 	 	11	 	 	 	2	 	 	 	—	 	 	$800 - $980	 	
Grasslawn Estates, Redmond	 	2015	 	 	4	 	 	 	—	 	 	 	4	 	 	 	—	 	 	 	—	 	 	$930 - $985	 	
Vintner's Place, Kirkland	 	2016	 	 	35	 	 	 	—	 	 	 	35	 	 	 	—	 	 	 	—	 	 	$610 - $780	 	
Hedgewood East, Redmond	 	2016	 	 	15	 	 	 	—	 	 	 	15	 	 	 	—	 	 	 	—	 	 	$730 - $810	 	
Trailside, Redmond	 	2016	 	 	9	 	 	 	—	 	 	 	9	 	 	 	—	 	 	 	—	 	 	$686 - $735	 	
Copperwood, Renton	 	2016	 	 	46	 	 	 	—	 	 	 	46	 	 	 	—	 	 	 	—	 	 	$520 - $626	 	
Parkwood Terrace, Woodinville	 	2016	 	 	15	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	—	 	 	$629 - $694	 	
Inglewood Landing, Sammamish	 	2017	 	 	21	 	 	 	—	 	 	 	17	 	 	 	—	 	 	 	—	 	 	$880 - $962	 	
Heathers Ridge South, Redmond	 	2017	 	 	8	 	 	 	—	 	 	 	8	 	 	 	—	 	 	 	—	 	 	$590 - $890	 	
Cedar Landing, North Bend	 	2017	 	 	111	 	 	 	—	 	 	 	13	 	 	 	—	 	 	 	—	 	 	$500 - $650	 	
Palm Creek, Bothell	 	2017	 	 	41	 	 	 	—	 	 	 	36	 	 	 	—	 	 	 	—	 	 	$845 - $905	 	
42nd Avenue Townhomes, Seattle	 	TBD	 	 	40	 	 	 	—	 	 	 	40	 	 	 	—	 	 	 	—	 	 	TBD	 	
Pearl & Delores, Seattle	 	TBD	 	 	12	 	 	 	—	 	 	 	12	 	 	 	—	 	 	 	—	 	 	TBD	 	
Pierce County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Harbor Hill S-9, Gig Harbor	 	2014	 	 	40	 	 	 	24	 	 	 	16	 	 	 	11	 	 	 	13	 	 	$376 - $444	 	
Harbor Hill S-8, Gig Harbor	 	2015	 	 	33	 	 	 	—	 	 	 	33	 	 	 	6	 	 	 	—	 	 	$376 - $444	 	
Chambers Ridge, Tacoma	 	2014	 	 	24	 	 	 	9	 	 	 	15	 	 	 	7	 	 	 	8	 	 	$480 - $525	 	
Tehaleh, Bonney Lake	 	2013	 	 	85	 	 	 	73	 	 	 	12	 	 	 	7	 	 	 	18	 	 	$345 - $356	 	
The Enclave at Harbor Hill, Gig Harbor	 	2015	 	 	33	 	 	 	—	 	 	 	33	 	 	 	1	 	 	 	—	 	 	$540 - $590	 	
Thurston County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Campus Fairways, Lacey	 	2015	 	 	79	 	 	 	3	 	 	 	36	 	 	 	8	 	 	 	3	 	 	$365 - $425	 	
Kitsap County:	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
McCormick Meadows, Poulsbo	 	2012	 	 	167	 	 	 	93	 	 	 	74	 	 	 	20	 	 	 	18	 	 	$276 - $353	 	
Vinland Pointe, Poulsbo	 	2013	 	 	90	 	 	 	56	 	 	 	34	 	 	 	22	 	 	 	21	 	 	$334 - $357	 	
Mountain Aire, Poulsbo	 	2016	 	 	145	 	 	 	—	 	 	 	145	 	 	 	—	 	 	 	—	 	 	$310 - $373	 	
Closed Communities	 	N/A	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	26	 	 	N/A	 	
Washington Total	 	 	 	 	1,907	 	 	 	756	 	 	 	995	 	 	 	199	 	 	 	180	 	 	 	 	
Quadrant Total	 	 	 	 	1,907	 	 	 	756	 	 	 	995	 	 	 	199	 	 	 	180	 	 	 	 	

- 44 -

Trendmaker
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project, City	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
Texas	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazoria County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sedona Lakes, Pearland	 	2014	 	 	20	 	 	 	8	 	 	 	12	 	 	 	3	 	 	 	8	 	 	$452 - $506	 	
Southern Trails, Pearland	 	2014	 	 	36	 	 	 	23	 	 	 	13	 	 	 	8	 	 	 	11	 	 	$490 - $609	 	
Fort Bend County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cross Creek Ranch 60', Fulshear	 	2013	 	 	54	 	 	 	44	 	 	 	10	 	 	 	4	 	 	 	12	 	 	$379 - $447	 	
Cross Creek Ranch 65', Fulshear	 	2013	 	 	45	 	 	 	26	 	 	 	19	 	 	 	4	 	 	 	7	 	 	$432 - $488	 	
Cross Creek Ranch 70', Fulshear	 	2013	 	 	73	 	 	 	37	 	 	 	36	 	 	 	4	 	 	 	3	 	 	$497 - $567	 	
Cross Creek Ranch 80', Fulshear	 	2013	 	 	90	 	 	 	57	 	 	 	33	 	 	 	6	 	 	 	7	 	 	$541 - $662	 	
Cross Creek Ranch 90', Fulshear	 	2013	 	 	34	 	 	 	22	 	 	 	12	 	 	 	1	 	 	 	7	 	 	$627 - $755	 	
Villas at Cross Creek Ranch, Fulshear	 	2013	 	 	106	 	 	 	83	 	 	 	23	 	 	 	10	 	 	 	16	 	 	$454 - $555	 	
Cinco Ranch, Katy	 	2012	 	 	100	 	 	 	81	 	 	 	19	 	 	 	5	 	 	 	12	 	 	$349 - $420	 	
Harvest Green 75', Richmond	 	2015	 	 	1	 	 	 	—	 	 	 	1	 	 	 	—	 	 	 	—	 	 	$450 - $475	 	
Sienna Plantation 80', Missouri City	 	2013	 	 	57	 	 	 	41	 	 	 	16	 	 	 	6	 	 	 	13	 	 	$542 - $650	 	
Sienna Plantation 85', Missouri City	 	2015	 	 	1	 	 	 	—	 	 	 	1	 	 	 	—	 	 	 	—	 	 	$600	 	
Lakes of Bella Terra, Richmond	 	2013	 	 	108	 	 	 	73	 	 	 	35	 	 	 	5	 	 	 	11	 	 	$465 - $569	 	
Villas at Aliana, Richmond	 	2013	 	 	71	 	 	 	44	 	 	 	27	 	 	 	8	 	 	 	7	 	 	$437 - $503	 	
Riverstone 55', Sugar Land	 	2013	 	 	80	 	 	 	51	 	 	 	29	 	 	 	6	 	 	 	4	 	 	$397 - $460	 	
Riverstone 80', Sugar Land	 	2013	 	 	49	 	 	 	38	 	 	 	11	 	 	 	11	 	 	 	11	 	 	$559 - $710	 	
Riverstone 100', Sugar Land	 	2015	 	 	5	 	 	 	—	 	 	 	5	 	 	 	—	 	 	 	—	 	 	$990 - $1,051	 	
Riverstone Avanti at Avalon, Sugar Land	 	2015	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1	 	 	 	—	 	 	$1,203 - $1,232	 	
The Townhomes at Imperial Sugar, Sugar Land	 	2015	 	 	27	 	 	 	5	 	 	 	22	 	 	 	4	 	 	 	5	 	 	$384 - $530	 	
Galveston County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Harborwalk, Hitchcock	 	2014	 	 	13	 	 	 	4	 	 	 	9	 	 	 	4	 	 	 	2	 	 	$587 - $645	 	
Harris County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fairfield, Cypress	 	2010	 	 	70	 	 	 	43	 	 	 	27	 	 	 	8	 	 	 	11	 	 	$474 - $573	 	
Lakes of Fairhaven, Cypress	 	2008	 	 	263	 	 	 	235	 	 	 	28	 	 	 	20	 	 	 	16	 	 	$410 - $668	 	
Towne Lake Living Views, Cypress	 	2013	 	 	52	 	 	 	21	 	 	 	31	 	 	 	5	 	 	 	7	 	 	$445 - $540	 	
Calumet Townhomes, Houston	 	2015	 	 	4	 	 	 	1	 	 	 	3	 	 	 	2	 	 	 	1	 	 	$637	 	
The Groves, Humble	 	2015	 	 	17	 	 	 	1	 	 	 	16	 	 	 	10	 	 	 	1	 	 	$454 - $505	 	
Clear Lake, Houston	 	2015	 	 	185	 	 	 	—	 	 	 	185	 	 	 	24	 	 	 	—	 	 	$447 - $664	 	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Barton Woods, Conroe	 	2013	 	 	75	 	 	 	43	 	 	 	32	 	 	 	5	 	 	 	8	 	 	$401 - $601	 	
Villas at Oakhurst, Porter	 	2013	 	 	54	 	 	 	41	 	 	 	13	 	 	 	6	 	 	 	10	 	 	$375 - $458	 	
Woodtrace, Woodtrace	 	2015	 	 	25	 	 	 	5	 	 	 	20	 	 	 	3	 	 	 	4	 	 	$485 - $536	 	
Bender's Landing Estates, Spring	 	2014	 	 	105	 	 	 	18	 	 	 	87	 	 	 	1	 	 	 	16	 	 	$478 - $629	 	
Creekside Park, The Woodlands	 	2015	 	 	6	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	—	 	 	 	 	
Waller County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cane Island, Katy	 	2015	 	 	8	 	 	 	—	 	 	 	8	 	 	 	2	 	 	 	—	 	 	$560 - $647	 	
Other:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Avanti Custom Homes	 	2007	 	 	123	 	 	 	99	 	 	 	24	 	 	 	29	 	 	 	11	 	 	$416 - $643	 	
Texas Casual Cottages - Round Top	 	2010	 	 	85	 	 	 	68	 	 	 	17	 	 	 	27	 	 	 	7	 	 	$203 - $443	 	
Texas Casual Cottages - Hill Country	 	2012	 	 	46	 	 	 	39	 	 	 	7	 	 	 	11	 	 	 	3	 	 	$217 - $498	 	
Texas Total	 	 	 	 	2,088	 	 	 	1,251	 	 	 	837	 	 	 	243	 	 	 	231	 	 	 	 	
Trendmaker Total	 	 	 	 	2,088	 	 	 	1,251	 	 	 	837	 	 	 	243	 	 	 	231	 	 	 	 	

- 45 -

TRI Pointe
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project, City	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
Southern California	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Orange County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rancho Mission Viejo	 	2013	 	 	105	 	 	 	94	 	 	 	11	 	 	 	11	 	 	 	13	 	 	$669 - $715	 	
Truewind, Huntington Beach	 	2014	 	 	49	 	 	 	21	 	 	 	28	 	 	 	22	 	 	 	12	 	 	$1,065 - $1,180	 	
Arcadia, Irvine	 	2013	 	 	61	 	 	 	46	 	 	 	—	 	 	 	—	 	 	 	1	 	 	$1,189 - $1,420	 	
Arcadia II, Irvine	 	2014	 	 	66	 	 	 	22	 	 	 	21	 	 	 	27	 	 	 	11	 	 	$1,189 - $1,271	 	
Fairwind, Huntington Beach	 	2015	 	 	80	 	 	 	—	 	 	 	80	 	 	 	55	 	 	 	—	 	 	$822 - $1,012	 	
Cariz, Irvine	 	2014	 	 	112	 	 	 	32	 	 	 	80	 	 	 	62	 	 	 	13	 	 	$507 - $617	 	
Messina, Irvine	 	2014	 	 	59	 	 	 	25	 	 	 	11	 	 	 	9	 	 	 	17	 	 	$1,515 - $1,630	 	
Aria-Rancho Mission Viejo	 	2016	 	 	87	 	 	 	—	 	 	 	87	 	 	 	—	 	 	 	—	 	 	$630 - $667	 	
Auberine-Rancho Mission Viejo	 	2016	 	 	66	 	 	 	—	 	 	 	66	 	 	 	—	 	 	 	—	 	 	$1,005 - $1,115	 	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Altana, San Diego	 	2013	 	 	45	 	 	 	45	 	 	 	—	 	 	 	—	 	 	 	1	 	 	$630 - $728	 	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Topazridge, Riverside	 	2012	 	 	68	 	 	 	63	 	 	 	5	 	 	 	—	 	 	 	—	 	 	$464 - $530	 	
Topazridge II, Riverside	 	2014	 	 	49	 	 	 	29	 	 	 	20	 	 	 	9	 	 	 	6	 	 	$459 - $515	 	
Alegre, Temecula	 	2014	 	 	96	 	 	 	43	 	 	 	53	 	 	 	30	 	 	 	24	 	 	$287 - $323	 	
Aldea, Temecula	 	2014	 	 	90	 	 	 	41	 	 	 	49	 	 	 	22	 	 	 	18	 	 	$262 - $298	 	
Kite Ridge, Riverside	 	2014	 	 	87	 	 	 	7	 	 	 	80	 	 	 	3	 	 	 	7	 	 	$435 - $460	 	
Sycamore Creek PA 7, Riverside	 	2015	 	 	87	 	 	 	—	 	 	 	87	 	 	 	—	 	 	 	—	 	 	$369 - $400	 	
Terrassa Cluster, Corona	 	2015	 	 	94	 	 	 	—	 	 	 	94	 	 	 	—	 	 	 	—	 	 	$425 - $475	 	
Terrassa, Corona	 	2015	 	 	52	 	 	 	—	 	 	 	52	 	 	 	—	 	 	 	—	 	 	$485 - $535	 	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Avenswood, Azusa	 	2013	 	 	66	 	 	 	66	 	 	 	—	 	 	 	—	 	 	 	12	 	 	$673 - $738	 	
Woodson, Playa Vista	 	2014	 	 	66	 	 	 	62	 	 	 	4	 	 	 	4	 	 	 	22	 	 	$1,260 - $1,370	 	
Grayson, Santa Clarita	 	2015	 	 	119	 	 	 	—	 	 	 	119	 	 	 	—	 	 	 	—	 	 	$517 - $550	 	
San Bernardino County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sedona at Parkside, Ontario	 	2015	 	 	152	 	 	 	—	 	 	 	152	 	 	 	6	 	 	 	—	 	 	$355 - $390	 	
Kensington at Park Place, Ontario	 	2015	 	 	67	 	 	 	3	 	 	 	64	 	 	 	2	 	 	 	3	 	 	$521 - $544	 	
St. James at Park Place, Ontario	 	2015	 	 	57	 	 	 	6	 	 	 	51	 	 	 	7	 	 	 	6	 	 	$448 - $479	 	
Ventura County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Westerlies, Oxnard	 	2015	 	 	116	 	 	 	—	 	 	 	116	 	 	 	—	 	 	 	—	 	 	$331 - $504	 	
Southern California Total	 	 	 	 	1,996	 	 	 	605	 	 	 	1,330	 	 	 	269	 	 	 	166	 	 	 	 	
Northern California	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contra Costa County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Berkshire at Barrington, Brentwood	 	2014	 	 	89	 	 	 	32	 	 	 	57	 	 	 	27	 	 	 	15	 	 	$506 -$553	 	
Hawthorne at Barrington, Brentwood	 	2014	 	 	105	 	 	 	29	 	 	 	76	 	 	 	26	 	 	 	10	 	 	$549 - $605	 	
Marquette at Barrington, Brentwood	 	2015	 	 	90	 	 	 	—	 	 	 	90	 	 	 	14	 	 	 	—	 	 	$480 - $700	 	
Wynstone at Barrington, Brentwood	 	2016	 	 	92	 	 	 	—	 	 	 	92	 	 	 	—	 	 	 	—	 	 	$498 - $525	 	
Penrose at Barrington, Brentwood	 	2016	 	 	34	 	 	 	—	 	 	 	34	 	 	 	—	 	 	 	—	 	 	$498 - $515	 	
Santa Clara County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Avellino, Mountain View	 	2013	 	 	63	 	 	 	59	 	 	 	4	 	 	 	4	 	 	 	4	 	 	$1,205 - $1,498	 	
Cobblestone, Milpitas	 	2015	 	 	32	 	 	 	—	 	 	 	32	 	 	 	17	 	 	 	—	 	 	$960 - $1,163	 	
San Mateo County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Canterbury, San Mateo	 	2014	 	 	76	 	 	 	53	 	 	 	23	 	 	 	23	 	 	 	27	 	 	$940 - $1,230	 	
Solano County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Redstone, Vacaville	 	2015	 	 	141	 	 	 	3	 	 	 	138	 	 	 	18	 	 	 	3	 	 	$455 - $527	 	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ventana, Tracy	 	2015	 	 	93	 	 	 	6	 	 	 	87	 	 	 	10	 	 	 	6	 	 	$438 - $540	 	
Sundance, Mountain House	 	2015	 	 	113	 	 	 	—	 	 	 	113	 	 	 	8	 	 	 	—	 	 	$550 - $615	 	
Alameda County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cadence, Alameda Landing	 	2015	 	 	91	 	 	 	5	 	 	 	62	 	 	 	27	 	 	 	5	 	 	$1,057 - $1,234	 	
Linear, Alameda Landing	 	2015	 	 	106	 	 	 	—	 	 	 	73	 	 	 	47	 	 	 	—	 	 	$685 - $915	 	
Symmetry, Alameda Landing	 	2016	 	 	56	 	 	 	—	 	 	 	56	 	 	 	—	 	 	 	—	 	 	$775 - $875	 	
Commercial, Alameda Landing	 	 	 	 	2	 	 	 	—	 	 	 	1	 	 	 	—	 	 	 	—	 	 	$620	 	
Parasol, Fremont	 	2016	 	 	39	 	 	 	—	 	 	 	39	 	 	 	—	 	 	 	—	 	 	$605 - $815	 	
Blackstone at the Cannery, Hayward	 	2016	 	 	105	 	 	 	—	 	 	 	105	 	 	 	—	 	 	 	—	 	 	$515 - $585	 	
Blackstone at the Cannery, Hayward	 	2016	 	 	52	 	 	 	—	 	 	 	52	 	 	 	—	 	 	 	—	 	 	$620 - $670	 	
Northern California Total	 	 	 	 	1,379	 	 	 	187	 	 	 	1,134	 	 	 	221	 	 	 	70	 	 	 	 	
California Total	 	 	 	 	3,375	 	 	 	792	 	 	 	2,464	 	 	 	490	 	 	 	236	 	 	 	 	
Colorado	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Douglas County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Terrain 4000 Series, Castle Rock	 	2013	 	 	149	 	 	 	82	 	 	 	67	 	 	 	26	 	 	 	26	 	 	$326 - $379	 	
Terrain 3500 Series, Castle Rock	 	2015	 	 	67	 	 	 	11	 	 	 	56	 	 	 	28	 	 	 	11	 	 	$307 - $330	 	
Jefferson County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Leyden Rock 4000 Series, Arvada	 	2014	 	 	51	 	 	 	22	 	 	 	29	 	 	 	25	 	 	 	17	 	 	$385 - $441	 	
Leyden Rock 5000 Series, Arvada	 	2015	 	 	67	 	 	 	7	 	 	 	60	 	 	 	30	 	 	 	7	 	 	$444 - $499	 	
Candelas, Arvada	 	2015	 	 	76	 	 	 	3	 	 	 	73	 	 	 	5	 	 	 	3	 	 	$560 - $620	 	
Denver County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Platt Park North, Denver	 	2014	 	 	29	 	 	 	13	 	 	 	16	 	 	 	16	 	 	 	9	 	 	$611 - $615	 	
Larimer County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Centerra 5000 Series, Loveland	 	2015	 	 	150	 	 	 	4	 	 	 	40	 	 	 	11	 	 	 	4	 	 	$390 - $422	 	
Arapahoe County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Whispering Pines, Aurora	 	2015	 	 	115	 	 	 	—	 	 	 	115	 	 	 	—	 	 	 	—	 	 	$518 - $588	 	
Colorado Total	 	 	 	 	704	 	 	 	142	 	 	 	456	 	 	 	141	 	 	 	77	 	 	 	 	
TRI Pointe Total	 	 	 	 	4,079	 	 	 	934	 	 	 	2,920	 	 	 	631	 	 	 	313	 	 	 	 	

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Winchester
 
 	 	 	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	 	Homes Delivered	 	 	 	 	
 	 	 	 	 	 	 	 	Homes	 	 	Lots	 	 	 	 	 	 	for the Six	 	 	 	 	
 	 	Year of	 	Total	 	 	Delivered as of	 	 	Owned as of	 	 	Backlog as of	 	 	Months Ended	 	 	Sales Price	 	
 	 	First	 	Number of	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	June 30,	 	 	Range	 	
County, Project, City	 	Delivery (1)	 	Lots (2)	 	 	2015	 	 	2015 (3)	 	 	2015 (4)(5)	 	 	2015	 	 	(in thousands) (6)	 	
Maryland	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Anne Arundel County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hawthornes Grant, Arnold	 	2014	 	 	15	 	 	 	15	 	 	 	—	 	 	 	—	 	 	 	3	 	 	Sold Out	 	
Hawthornes Grant Lots For Sale	 	N/A	 	 	—	 	 	 	—	 	 	 	26	 	 	 	—	 	 	 	—	 	 	N/A	 	
Watson's Glen, Millersville	 	2015	 	 	103	 	 	 	—	 	 	 	103	 	 	 	1	 	 	 	—	 	 	Closed	 	
Frederick County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale, Monrovia	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale Village SFD	 	2015	 	 	222	 	 	 	—	 	 	 	222	 	 	 	13	 	 	 	—	 	 	$495 - $635	 	
Landsdale Everson Townhomes	 	2015	 	 	100	 	 	 	—	 	 	 	100	 	 	 	—	 	 	 	—	 	 	$350 - $375	 	
Landsdale TND Neo Everson SFD	 	2015	 	 	77	 	 	 	—	 	 	 	77	 	 	 	—	 	 	 	—	 	 	$465 - $595	 	
Howard County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Walnut Creek, Ellicott City	 	2014	 	 	16	 	 	 	12	 	 	 	4	 	 	 	7	 	 	 	3	 	 	$990 - $1,293	 	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cabin Branch, Clarksburg	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cabin Branch SFD	 	2014	 	 	359	 	 	 	32	 	 	 	327	 	 	 	14	 	 	 	16	 	 	$480 - $719	 	
Cabin Branch Boulevard Townhomes	 	2016	 	 	61	 	 	 	—	 	 	 	61	 	 	 	—	 	 	 	—	 	 	TBD	 	
Cabin Branch Everson Townhomes	 	2014	 	 	567	 	 	 	36	 	 	 	531	 	 	 	10	 	 	 	15	 	 	$375 - $390	 	
Preserve at Stoney Spring-Lots for Sale	 	N/A	 	 	—	 	 	 	—	 	 	 	6	 	 	 	—	 	 	 	—	 	 	N/A	 	
Preserve at Rock Creek, Rockville	 	2012	 	 	68	 	 	 	46	 	 	 	22	 	 	 	15	 	 	 	—	 	 	$685 - $964	 	
Poplar Run, Silver Spring	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Poplar Run Everson Townhomes	 	2013	 	 	136	 	 	 	71	 	 	 	65	 	 	 	10	 	 	 	2	 	 	$390 - $435	 	
Poplar Run SFD	 	2010	 	 	297	 	 	 	188	 	 	 	109	 	 	 	15	 	 	 	23	 	 	$562 - $717	 	
Poplar Run Lots for Sale	 	N/A	 	 	—	 	 	 	—	 	 	 	97	 	 	 	—	 	 	 	—	 	 	N/A	 	
Potomac Highlands, Potomac	 	2016	 	 	23	 	 	 	—	 	 	 	23	 	 	 	—	 	 	 	—	 	 	TBD	 	
Glenmont MetroCenter, Silver Spring	 	2016	 	 	89	 	 	 	—	 	 	 	89	 	 	 	—	 	 	 	—	 	 	TBD	 	
Maryland Total	 	 	 	 	2,133	 	 	 	400	 	 	 	1,862	 	 	 	85	 	 	 	62	 	 	 	 	
Virginia	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Chesterfield County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Founders Bridge, Midlothian	 	2014	 	 	3	 	 	 	2	 	 	 	1	 	 	 	1	 	 	 	2	 	 	Sold Out	 	
Fairfax County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Reserve at Waples Mill, Oakton	 	2013	 	 	28	 	 	 	20	 	 	 	8	 	 	 	3	 	 	 	3	 	 	$1,380 - $1,555	 	
Stuart Mill & Timber Lake, Oakton	 	2014	 	 	19	 	 	 	3	 	 	 	16	 	 	 	2	 	 	 	1	 	 	$1,363 - $1,675	 	
Henrico County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stable Hill, Glen Allen	 	2013	 	 	49	 	 	 	45	 	 	 	4	 	 	 	3	 	 	 	9	 	 	$517 - $620	 	
Prince William County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Villages of Piedmont, Haymarket	 	2015	 	 	168	 	 	 	3	 	 	 	165	 	 	 	5	 	 	 	3	 	 	$370 - $422	 	
Loudoun County:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brambleton, Ashburn	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
English Manor Townhomes	 	2014	 	 	28	 	 	 	14	 	 	 	14	 	 	 	7	 	 	 	7	 	 	$492 - $532	 	
Glenmere at Brambleton SFD	 	2014	 	 	63	 	 	 	34	 	 	 	29	 	 	 	28	 	 	 	12	 	 	$590 - $723	 	
Glenmere at Brambleton Townhomes	 	2014	 	 	73	 	 	 	50	 	 	 	23	 	 	 	9	 	 	 	22	 	 	$458 - $462	 	
West Park at Brambleton	 	2013	 	 	45	 	 	 	44	 	 	 	1	 	 	 	1	 	 	 	9	 	 	$720 - $811	 	
One Loudoun, Ashburn	 	2012	 	 	111	 	 	 	96	 	 	 	15	 	 	 	10	 	 	 	14	 	 	$675 - $710	 	
Vistas at Lansdowne, Lansdowne	 	2015	 	 	120	 	 	 	3	 	 	 	117	 	 	 	13	 	 	 	3	 	 	$569 - $618	 	
Willowsford Grant, Leesburg	 	2013	 	 	36	 	 	 	31	 	 	 	5	 	 	 	4	 	 	 	4	 	 	$925 - $930	 	
Willowsford Greens, Aldie	 	2014	 	 	38	 	 	 	14	 	 	 	24	 	 	 	9	 	 	 	5	 	 	$750 - $840	 	
Virginia Total	 	 	 	 	781	 	 	 	359	 	 	 	422	 	 	 	95	 	 	 	94	 	 	 	 	
Winchester Total	 	 	 	 	2,914	 	 	 	759	 	 	 	2,284	 	 	 	180	 	 	 	156	 	 	 	 	
Combined Company Total	 	 	 	 	32,549	 	 	 	6,724	 	 	 	25,543	 	 	 	1,998	 	 	 	1,466	 	 	 	 	
 
(1)	Year of first delivery for future periods is based upon management’s estimates and is subject to change.	
(2)	The number of homes to be built at completion is subject to change, and there can be no assurance that we will build these homes.	
(3)	Owned lots as of June 30, 2015 include owned lots in backlog as of June 30, 2015.	
(4)	Backlog consists of homes under sales contracts that had not yet been delivered, and there can be no assurance that delivery of sold homes will occur.	
(5)	Of the total homes subject to pending sales contracts that have not been delivered as of June 30, 2015, 1,382 homes are under construction, 233 homes have completed construction, and 383 homes have not started construction.	
(6)	Sales price range reflects base price only and excludes any lot premium, buyer incentives and buyer-selected options, which may vary from project to project. Sales prices for homes required to be sold pursuant to affordable housing requirements are excluded from sales price range. Sales prices reflect current pricing and might not be indicative of past or future pricing.	
 
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Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements contained elsewhere in this report, which have been prepared in accordance with GAAP. Our notes to the unaudited condensed consolidated financial statement contained elsewhere in this report and the audited financial statements contained in our Form 10-K for the year ended December 31, 2014 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimate, judgements and assumptions. We believe that the estimates, judgements and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgements and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material difference between these estimates, judgements and assumptions and actual facts, our financial statements may be affected.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgement in its application. There are areas in which our judgement in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the notes to the unaudited condensed consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.
Recently Issued Accounting Standards
See Note 1 to the accompanying condensed notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.
Related Party Transactions
See Note 18 to the accompanying condensed notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.
Item  3.	 Quantitative and Qualitative Disclosures about Market Risk	
We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate debt.  In addition, our operations are interest rate sensitive as higher mortgage interest rates could negatively affect housing demand.  We did not utilize swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments as of or during the three or six months ended June 30, 2015. We have not entered into and currently do not hold derivatives for trading or speculative purposes. Many of the statements contained in this section are forward looking and should be read in conjunction with our disclosures under the heading “Cautionary Note Concerning Forward-Looking Statements.”
Item 4.	 Controls and Procedures	
Our management, with the participation of our chief executive officer and chief financial officer, has reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on such evaluation, management has concluded that our disclosure controls and procedures were effective as of the Evaluation Date. In designing and evaluating the disclosure controls and procedures, 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 management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired disclosure control objectives.
During the fiscal quarter covered by this Quarterly Report on Form 10-Q, there has not been any change in our internal control over financial reporting that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

 
 
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 PART II. OTHER INFORMATION
Item 1.	 Legal Proceedings	
Various claims and actions that we consider normal to our business have been asserted and are pending against us. See Note 15, Commitments and Contingencies , of the condensed notes to the unaudited financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.  
Item 1A.	 Risk Factors	
The following supplements and updates the risk factors in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2014.  If any of the risks discussed below or in our Annual Report on Form 10-K occur, our business, prospects, liquidity, financial condition and results of operations could be materially and adversely affected, in which case the trading price of our common stock could decline significantly and you could lose all or a part of your investment.  Some statements in this Quarterly Report on Form 10-Q, including statements in the following risk factors, constitute forward-looking statements.  Please refer to Part I, Item 2 of this Quarterly Report on Form 10-Q entitled “Cautionary Note Concerning Forward-Looking Statements.”
Risks Related to Our Business
Laws and regulations governing the residential mortgage and title insurance industries could materially and adversely affect our business, prospects, liquidity, financial condition and results of operations.
We recently established a joint venture to provide mortgage related services to homebuyers and a wholly owned title agency.  The residential mortgage lending and title insurance industries are each heavily regulated.  Changes to existing laws or regulations or adoption of new laws or regulations could require us to incur significant compliance costs.  A material failure to comply with any of these laws or regulations could result in the loss or suspension of required licenses or other approvals, the imposition of monetary penalties, and restitution awards or other relief.  In addition, we could be subject to individual or class action litigation alleging violations of these laws and regulations.  Any of these could result in substantial costs and we could incur judgments or enter into settlements of claims that could have a material adverse effect on our business.  Any of these outcomes could materially and adversely affect our business, financial condition and results of operations.
Deliveries of homes may be delayed as a result of lender compliance with a new rule governing the content and timing of mortgage loan disclosures to borrowers.
The Consumer Financial Protection Bureau (CFPB) has adopted a new rule governing the content and timing of mortgage loan disclosures to borrowers.  This new rule, commonly known as TILA-RESPA Integrated Disclosures or TRID, is currently expected to take effect on October 1, 2015.  Lender compliance with TRID could result in delays in loan closings and the delivery of homes.

 

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Item 6.	Exhibits	
 
Exhibit
Number	Exhibit Description	
 	 	
    2.1	Transaction Agreement, dated as of November 3, 2013, among TRI Pointe Homes, Inc., Weyerhaeuser Company, Weyerhaeuser Real Estate Company, and Topaz Acquisition, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4 (filed Mar. 28, 2014))	
 	 	
    2.2	Agreement and Plan of Merger to Form Holding Company, dated as of July 7, 2015, by and among TRI Pointe Homes, Inc., TRI Pointe Group, Inc. and TPG Merger, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    3.1	Amended and Restated Certificate of Incorporation of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    3.2	Amended and Restated Bylaws of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    4.1	Specimen Common Stock Certificate of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (filed Dec. July 7,, 2015))	
 	 	
    4.2	Investor Rights Agreement, dated as of January 30, 2013, by and among TRI Pointe Homes, Inc., VIII/TPC Holdings, L.L.C., BMG Homes, Inc., The Bauer Revocable Trust U/D/T Dated December 31, 2003, Grubbs Family Trust Dated June 22, 2012, The Mitchell Family Trust U/D/T Dated February 8, 2000, Douglas J. Bauer, Thomas J. Mitchell and Michael D. Grubbs. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (filed Jan. 9, 2014))	
 	 	
    4.3	First Amendment to Investor Rights Agreement, dated as of November 3, 2013, by and among TRI Pointe Homes, Inc., VIII/TPC Holdings, L.L.C., BMG Homes, Inc., The Bauer Revocable Trust U/D/T Dated December 31, 2003, Grubbs Family Trust Dated June 22, 2012, The Mitchell Family Trust U/D/T Dated February 8, 2000, Douglas F. Bauer, Thomas J. Mitchell and Michael D. Grubbs (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K (filed Nov. 4, 2013))	
 	 	
    4.4	Registration Rights Agreement, dated as of January 30, 2013, among TRI Pointe Homes, Inc., VIII/TPC Holdings, L.L.C., and certain TRI Pointe Homes, Inc. stockholders (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-4 (filed Jan. 9, 2014))	
  	 	
    4.5	Indenture, dated as of June 13, 2014, by and among Weyerhaeuser Real Estate Company and U.S. Bank National Association, as trustee (including form of 4.375% Senior Note due 2019) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (filed June 19, 2014))	
 	 	
    4.6	First Supplemental Indenture, dated as of July 7, 2014, among TRI Pointe Homes, Inc., Weyerhaeuser Real Estate Company and U.S. Bank National Association, as trustee, relating to the 4.375% Senior Notes due 2019 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (filed July 7, 2014))	
 	 	
    4.7	Second Supplemental Indenture, dated as of July 7, 2014, among the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the 4.375% Senior Notes due 2019 (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K (filed July 7, 2014))	
 	 	
    4.8	Indenture, dated as of June 13, 2014, by and among Weyerhaeuser Real Estate Company and U.S. Bank National Association, as trustee (including form of 5.875% Senior Note due 2024) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (filed June 19, 2014))	
 	 	
    4.9	First Supplemental Indenture, dated as of July 7, 2014, among TRI Pointe Homes, Inc., Weyerhaeuser Real Estate Company and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (filed July 7, 2014))	
 	 	
    4.10	Second Supplemental Indenture, dated as of July 7, 2014, among the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2024 (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K (filed July 7, 2014))	

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    4. 11	Second Amendment to Investor Rights Agreement, dated as of July 7, 2015, among TRI Pointe Group, Inc., TRI Pointe Homes, Inc. VIII/TPC Holdings, L.L.C., BMG Homes, Inc., The Bauer Revocable Trust U/D/T Dated December 31, 2003, Grubbs Family Trust Dated June 22, 2012, The Mitchell Family Trust U/D/T Dated February 8, 2000, Douglas F. Bauer, Thomas J. Mitchell and Michael D. Grubbs (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    4. 12	Third Supplemental Indenture, dated as of July 7, 2015, among TRI Point Group, Inc., TRI Pointe Homes, Inc. and U.S. Bank National Association, as trustee, relating to the 4.375% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    4. 13	Third Supplemental Indenture, dated as of July 7, 2015, among TRI Point Group, Inc., TRI Pointe Homes, Inc. and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2024 (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    4.14	Amended and Restated Credit Agreement, dated as of July 7, 2015, among TRI Point Group, Inc., U.S. Bank National Association and the lenders party thereto (incorporated by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	
    31.1	Chief Executive Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002	
 	 	
    31.2	Chief Financial Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002	
 	 	
    32.1	Chief Executive Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002	
 	 	
    32.2	Chief Financial Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002	
 	 	
    101	The following materials from TRI Pointe Homes, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statement.	

 
 
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 SIGNAT URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 	 	TRI Pointe Group, Inc.	
 	 	 	 	
 	 	By:	/s/ Douglas F. Bauer	
 	 	 	Douglas F. Bauer	
 	 	 	Chief Executive Officer	
 	 	 	 	
 	 	By:	/s/ Michael D. Grubbs	
 	 	 	Michael D. Grubbs	
 	 	 	Chief Financial Officer	
Date: August 10, 2015

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Exhibit 31.1
SECTION 302 CERTIFICATION
I, Douglas F. Bauer, certify that:
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, Inc.;	
(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: August 10, 2015	 	/s/ Douglas F. Bauer	
 	 	Douglas F. Bauer	
 	 	Chief Executive Officer (Principal Executive Officer)	

Exhibit 31.2
SECTION 302 CERTIFICATION
I, Michael D. Grubbs, certify that:
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, Inc.;	
(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: August 10, 2015	 	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs	
 	 	Chief Financial Officer (Principal Financial Officer)	

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas F. Bauer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.	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.	
 
Date: August 10, 2015	 	/s/ Douglas F. Bauer	
 	 	Douglas F. Bauer	
 	 	Chief Executive Officer (Principal Executive Officer)	

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Grubbs, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.	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.	
 
Date: August 10, 2015	 	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs	
 	 	Chief Financial Officer (Principal Financial Officer)