Regulation G Required Disclosure

The ratio of the Company’s net homebuilding debt to last twelve months Adjusted EBITDA, as of a specific date, is defined as (1) the Company’s total homebuilding borrowings minus its unrestricted cash, as of a specific date, divided by (2) the Company’s EBITDA for the twelve months ended as of such date plus the aggregate amount of restructuring charges, which include merger and severance charges and any losses from the early retirement of debt, incurred by the Company for that same period. The Company’s interest incurred coverage ratio, as of a specific date, is defined as (1) the interest incurred by the Company for the twelve months ended as of such date, divided by (2) the Company’s EBITDA for the twelve months ended as of such date plus the aggregate amount of restructuring charges, which include merger and severance charges and any losses from the early retirement of debt, incurred by the Company for that same period. The Company has included information concerning the ratio of its net homebuilding debt to last twelve months Adjusted EBITDA and its interest incurred coverage ratio because the Company believes these two ratios provide investors an indication of the adequacy of earnings to meet interest charges and its ability to repay its outstanding debt. In addition, the interest incurred coverage ratio is used by the Company’s lenders to determine compliance with the covenants in its credit facility. The Company does not use the ratio of its net homebuilding debt to last twelve months Adjusted EBITDA nor its interest incurred coverage ratio as a measure of its liquidity because the Company does not believe it is a meaningful indication of the Company’s cash flow. These ratios should not be considered as an alternative to operating income or to cash flows from operating activities (as determined in accordance with GAAP) and should not be construed as an indication of the Company’s operating performance or a measure of the Company’s liquidity. A reconciliation of both ratios to net income, the most directly comparable GAAP measure, is provided below (dollars in thousands):