Taylor Morrison Home

homes inspired by you®

ANNUAL 
REPORT 

2014

2013

2014

AVERAGE ACTIVE 
SELLING COMMUNITIES

173

219

27% 
INCREASE

5,614

6,393

14% 
INCREASE

NET NEW ORDERS

HOME CLOSINGS

5,829

6,796

$389,000

$443,000

$2.3 BILLION

$3.0 BILLION

17% 
INCREASE

AVERAGE SALES PRICE OF HOMES

$

$

14% 
INCREASE

HOME CLOSINGS REVENUE

$

$

33% 
INCREASE

Consolidated company results inclusive of discontinued Canadian operations

Dear Fellow
SHAREHOLDER,

2014 was a year of 
significant progress for 
Taylor Morrison. It marked 
a major milestone, the sale 
of our Canadian business, 
and record company 
results. 

Through the deliberate and consistent use of our four-pillar 
strategy, anchored on prime locations, consumer-centricity, 
cost efficiency and a balanced pricing strategy, we 
delivered strong financial and operating results for the year. 

I am so proud of our team, who remained singularly 
focused on executing our strategy. It is due to their hard 
work and dedication that 2014 was a record year for 
Taylor Morrison across many metrics.  It is an honor to be 
able to share the following highlights from our results:

•  Total annual revenue of $3.1 billion, up 34% 

•  Net income of $266 million, up 180%

•  Earnings before tax of $364 million, up 271%

•  Net home sales of 6,393 homes, up 14% 

•  6,796 homes closed, up 17%

• 

Increased community count to 219 communities,  
up 27%

•  Average selling price up 18% in U.S.

•  SG&A down 150 bps to 9.5% of home closings 

revenue

The success of our long-term strategy contributed  
significantly to our positive results. As part of our long-term 
strategy, we are committed to doing what is right for the 
business and what is needed to maximize shareholder value. 
Our decision to exit our Canadian operations in December 
2014 demonstrates our ability to make strategic, deliberate 
decisions in the best interest of our shareholders.  We are 
extremely pleased with the outcome of this significant 
transaction and are ready to focus exclusively on enhancing 
and expanding our U.S. footprint.  The timely sale of 
Monarch Corporation reflects an attractive valuation for the 
business, at a time when the dynamics of the market were 
beginning to show signs of change, and strengthens our 
balance sheet for future growth.   

The transaction sets up 2015 to be a pivotal year for 
Taylor Morrison; one with a renewed focus on the U.S. 
operations, a strengthened balance sheet and enhanced 
agility for future growth.

The following tenets of our Four Pillar 
approach have led to increased profitability 
and success across our business:

LAND ACQUISITION

We have a healthy land bank of highly desirable strategic assets in core 
locations.  In the past few years, we have continued to shift our focus towards 
shorter, less capital-intensive opportunities that are accretive to the portfolio. 
We have not taken any land impairments over the last several years due to our 
disciplined underwriting and diligence process.  Our total U.S. land bank at year-
end was nearly 39,000 lots owned and controlled.  On average, our land bank had 
6.9 years of supply at year-end, which allows us to be disciplined and selective in 
land acquisitions, a key element to the success of our strategy. Our attractive land 
portfolio should position us well to generate favorable returns and enable us to be 
opportunistic in acquiring new land. 

CUSTOMER-CENTRICITY

Taylor Morrison is passionate about creating and designing superior communities and 
building quality homes that our customers aspire to live in.  During the downturn, we 
made a conscious strategy shift towards capturing the more financially secure, move-
up customer segments. The majority of our consumer and community positioning 
attracts move-up  and 55+ buyers, although we have communities that appeal to all 
buyer types. Our consumer and community positioning continues to evolve with changing 
consumer preferences and qualifications. We strategically assess our consumer segments’ 
preferences through detailed research. This allows us to understand the changing needs of 
homeowners and proactively adjust our communities and home designs.

EFFICIENT COST STRUCTURE

We remain committed to protecting our culture of cost-efficiency, where Taylor Morrison 
team members are challenged to approach cost as if the business were their own.  This 
level of dedication has enabled us to continue to drive leverage throughout the organization. 
We monitor our costs closely, looking for opportunities to improve efficiency.  We have a 
history of operational efficiency and we plan to continue this into 2015 and beyond.  

BALANCED PRICING STRATEGY

Our philosophy of optimizing price and pace continues to be our operational priority. We 
evaluate our product releases, pricing and sales strategies at a submarket level in order to 
take full advantage of detailed competitive supply-and-demand dynamics. This allows us to 
optimize our profitability while achieving desired sales pace and return metrics, consistent with 
our project underwriting.

LOOKING AHEAD – 2015 AND BEYOND

I believe that 2015 has the unique opportunity of being 
an inflection point for Taylor Morrison. The fundamentals 
are in place for a continued, but stabilized, U.S. housing 
recovery, and by adhering to our four pillar strategy, we 
are well-positioned to benefit in the years ahead. 

Moving forward, we are going to maintain our focus on 
looking for opportunities with a strong emphasis on action 
as a means to put capital to use, so that we can drive  
long-term returns. With the support of the over-arching 
macroeconomic conditions, we feel confident about 
upcoming opportunities and our ability to execute through 
any ebbs and flows in the market.   

With 2015 well underway, I am extremely pleased with 
what I see on the horizon. The Company remains focused 
on serving each of our consumer groups, with a keen 
eye on enhancing our footprint into new and existing 
markets with consistent community execution and 
customer service.  We have an excellent plan in place 
to create long-term value for you, our shareholder, while 
at the same time continuing to surpass the needs of our 
discerning client base.  

Thank you so much for your time, attention and interest in 
Taylor Morrison Home Corporation.

Sincerely, 

Sheryl D. Palmer 
PRESIDENT AND CHIEF EXECUTIVE OFFICER

CORPORATE SOCIAL RESPONSIBILITY

COMMITMENT TO CORPORATE 
RESPONSIBILITY 

Taylor Morrison is dedicated to creating world-class 
communities, building quality homes inspired by 
our homeowners and making a difference in each 
neighborhood we create. We want to maximize returns 
for each of our stakeholders and create value for our 
customers. We believe that is achieved, in part, through 
our commitment to corporate social responsibility. Taylor 
Morrison operates in 16 markets across the United States 
and with our scale comes economic, environmental and 
social responsibilities. Taylor Morrison team members 
recognize and take their responsibilities seriously by 
participating in local efforts to give back to the community 
through philanthropy, sustainability, and a focus on health 
and safety.

PHILANTHROPY 

As a leading, national homebuilder we recognize that we 
have a responsibility to the communities in which we build. 
That is why we make it a priority not only to preserve and 
protect a significant portion of the land we build on but 
also to make substantial contributions to our communities 
in other meaningful ways.

SOME 2014 HIGHLIGHTS INCLUDE:

• 

In association with Homes for Our Troops, Taylor 
Morrison custom-built and donated a mortgage-
free home to a war hero who lost both of his 
legs during combat in Afghanistan as a Marine 
Sergeant. More than 2,000 volunteer hours were 
donated by Taylor Morrison and other suppliers to 
create the 100% wheelchair accessible home. 

NOTABLE FACT
Taylor Morrison was selected 
2014 Builder of the Year by Green 
Builder Magazine, an industry 
publication focused on sustainable 
and eco-friendly development.

SUSTAINABILITY 

Whether it’s designing and building homes that use 
sustainable materials, increasing the energy efficiency 
of our homes, or simply recycling the building material 
waste on our jobsites, we are committed to improving 
the environment through lessening our impacts.  These 
are some of the sustainable initiatives that are part of our 
communities and homes:

STORMWATER MANAGEMENT 

Increases the quality and reduces the quantity of storm 
water run-off to streams, rivers and lakes. Increased 
quality of storm water run-off allows local aquatic 
life to thrive and allows for additional recreational 
opportunities in the surrounding neighborhoods.

WATER EFFICIENT LANDSCAPE DESIGN 

Reduces potable water consumption by incorporating 
native, indigenous plants throughout our landscapes.

HIGH EFFICIENCY BUILDING SYSTEMS 

HVAC, plumbing, electrical and lighting systems are 
selected for their efficiency.

REFRIGERANT MANAGEMENT 

Heating and cooling equipment is often selected to 
minimize use of ozone depleting refrigerants.

REFLECTIVE ROOFING 

Reflective roofing tiles reflect radiant heat energy 
instead of absorbing it, making it easier and 
substantially less expensive for homeowners to keep 
their homes cool, while simultaneously decreasing 
the amount of energy needed to power their in-home 
cooling systems. 

OPEN SPACES

In 2014 Taylor Morrison dedicated or developed over 
685 acres of perpetual open space.  This would be the 
equivalent of approximately 519 football fields, 6,165 
basketball courts, or 10,626 tennis courts.

HEALTH & SAFETY 

Health and Safety across our entire business is a top 
priority.  We are committed to maintaining the safest 
working environment possible. 

During 2014, 100% of our team members completed their 
prescribed Health and Safety Training totaling nearly 6,300 
hours of training.  We also conduct semi-annual third 
party health and safety audits in all markets to ensure 
adherence to safety protocols. 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

For the fiscal year ended December 31, 2014
or

EXCHANGE ACT OF 1934

For the transition period from

to
Commission File No. 001-35873

.

TAYLOR MORRISON HOME CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

90-0907433
(I.R.S. Employer
Identification No.)

4900 N. Scottsdale Road, Suite 2000, Scottsdale, Arizona 85251
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (480) 840-8100
Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Class A Common Stock, $0.00001 par value

New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ‘ No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No È
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 È 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 during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files). Yes È No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. È
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 È
Non-accelerated filer ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of voting stock held by non-affiliates of the registrant on June 30, 2014 was $737,350,395, based on the
closing sales price per share as reported by the New York Stock Exchange on such date.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of February 27, 2015:

‘
Accelerated filer
Smaller reporting company ‘

Class

Class A Common Stock, $0.00001 par value . . . . . . . . . . . . . . . . . . . . . . .
Class B Common Stock, $0.00001 par value . . . . . . . . . . . . . . . . . . . . . . . .

Documents Incorporated by Reference

Outstanding

33,071,755
89,200,063

Portions of Part III of this Form 10-K are incorporated by reference from the Registrant’s definitive proxy statement for its 2015
annual meeting of shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the
Registrant’s fiscal year.

TAYLOR MORRISON HOME CORPORATION
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . .
Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page
Number

2
15
34
35
35
35

36
38
39
63
64
106
106
107

108
108

108
109
109

Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109
113

PART IV

i

TAYLOR MORRISON HOME CORPORATION

Page
Number

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2014 and 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013 and 2012 . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and

2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012 . . . .
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012 . . . . . . . . . . .
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64
65
66

67
68
69
70

Separate combined financial statements of our unconsolidated joint venture activities have been omitted because, if
considered in the aggregate, they would not constitute a significant subsidiary as defined by Rule 3-09 of Regulation S-X.

ii

Available Information

Information about our company and communities is provided on our Internet websites at www.taylormorrison.com and
www.darlinghomes.com (collectively, the “Taylor Morrison website”). The information contained on the Taylor
Morrison websites is not considered part of this Annual Report on Form 10-K (“Annual Report”). Our periodic and
current reports, including any amendments, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) are available, free of charge, on our Taylor Morrison website
as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange
Commission (“SEC”). These filings are also available on the SEC’s website at www.sec.gov. In addition to our SEC
filings, our corporate governance documents, including our Code of Conduct and Ethics and Corporate Governance
Guidelines are available on the “Investor Relations” page of our Taylor Morrison website under “Corporate
Governance.” Our stockholders may also obtain these documents in paper format free of charge upon request made to
our Investor Relations department.

In this Annual Report, unless the context requires otherwise, references to “the Company,” “we,” “us,” or “our” are to
Taylor Morrison Home Corporation (“TMHC”) and its subsidiaries.

The July 2007 merger between Taylor Woodrow plc and George Wimpey plc, two UK-based, publicly listed
homebuilders, resulted in the formation of Taylor Wimpey plc (the “Predecessor Parent Company”), and the subsequent
integration of Taylor Woodrow Holdings (USA), Inc. and Morrison Homes, Inc. in the U.S. resulting in Taylor Morrison
Communities, Inc. (“Taylor Morrison Communities”, “Taylor Morrison” or “TMC”), and Monarch Corporation
(“Monarch”) in Canada. Monarch was sold to a third party on January 28, 2015.

TMHC was incorporated in Delaware in November 2012. Our principal executive offices are located at 4900 N.
Scottsdale Road, Suite 2000, Scottsdale, Arizona 85251 and the telephone number is (480) 840-8100.

Forward-Looking Statements

Certain information included in this Annual Report or in other materials we have filed or will file with the SEC (as well
as information included in oral statements or other written statements made or to be made by us) contains or may contain
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Exchange Act. You can identify these statements by the fact that they do not
relate to matters of strictly historical or factual nature and generally discuss or relate to estimates or other expectations
regarding future events. They contain words such as, but not limited to, “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “believe,” “may,” “can,” “could,” “might,” “should” and other words or phrases of similar meaning in
connection with any discussion of our strategy or future operating or financial performance. As you read this Annual
Report and other reports or public statements, you should understand that these statements are not guarantees of
performance or results. They involve known and unknown risks, uncertainties and assumptions, including those
described under the heading “Risk Factors” in Part I, Item 1A. and elsewhere in this Annual Report. Although we
believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many
factors, including those described under the heading “Risk Factors” in Part I, Item 1A. and elsewhere in this Annual
Report, could affect our actual financial results or results of operations and could cause actual results to differ materially
from those in the forward-looking statements.

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information, future events or otherwise. This discussion is
provided as permitted by the Private Securities Litigation Reform Act of 1995, and all of our forward-looking statements
are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

1

ITEM 1. BUSINESS

General Overview

PART I

During 2014 we were one of the largest public homebuilders in North America, with communities located in the
United States and Canada. In December 2014, we announced the strategic decision to sell our Canadian business and
fully focus on our U.S. operations. We are now, and will continue to be, a leading public homebuilder in the United
States. We are a real estate developer, with a portfolio of lifestyle and master-planned communities. We provide a
diverse assortment of homes across a wide range of price points in order to appeal to a broad spectrum of customers. Our
primary focus is on move-up buyers in traditionally high growth markets, where we design, build and sell single-family
detached and attached homes. Our legacy of over 100 years of homebuilding experience drives our commitment to
quality in every community we develop and every home we build. We operate under the Taylor Morrison and Darling
Homes brand names in the United States. We also provide financial services to customers through our wholly owned
mortgage subsidiary, Taylor Morrison Home Funding, LLC (“TMHF”).

Our long-term strategy is built on four pillars:

•

•

•

•

opportunistic land acquisition in core locations;

distinctive communities driven by consumer preferences;

culture of strong cost efficiency; and

optimizing profitability while achieving desired sales pace.

We are committed to creating and designing superior communities and building quality homes. Delivering on this
commitment involves thoughtful design to accommodate the living environment needs of our customers and the
surrounding community. We have developed elem3nts™ by Taylor Morrison, our eco-sensitive building program, which
seeks to build energy-efficient homes by drawing on technology and building methods to lessen the carbon footprint of
our homes. In recognition of our achievements in this area, we were awarded the 2014 Green Builder of the Year award
by Green Builder Magazine.

Including our Canadian business, for the five years ended December 31, 2014 we delivered 24,413 homes and generated
$9.3 billion of home closings revenue. We have delivered five consecutive years of operating profit and were one of the
first builders to return to profitability in 2010. We believe that our balance sheet has both the liquidity and asset strength
required to execute our growth strategy. We have raised over $900 million in corporate and joint venture financing since
the beginning of 2013, and had a net debt to total book capitalization of 40.6% at December 31, 2014. As of and for the
year ended December 31, 2014, we had cash and liquidity of approximately $800 million and total company revenue
growth of over 33.6% year over year. Our home closings revenue for the U.S. and Canada for the year ended
December 31, 2014 was $3.0 billion on 6,796 homes closed, excluding unconsolidated joint ventures.

During the year ended December 31, 2014 our U.S. operations were located in five states and generated home closings
revenue of $2.6 billion and adjusted home closings gross margin of 23.0%. In the United States, we grew our average
community count by 30.4% to 206, and ended 2014 with $1.1 billion in sales order backlog. We believe we benefit from
a well-located land portfolio, primarily in homebuilding markets that have been leading the U.S. housing recovery. At
December 31, 2014, we had approximately 425 current and future communities containing approximately 38,854 lots
that we owned or controlled. Of these, we were offering homes in 224 communities at base prices generally ranging
from $170,000 to $1,700,000. During the year ended December 31, 2014, we closed 5,642 homes in the United States,
an increase of 19.6% over the prior year. The average sales price of homes closed during the year ended December 31,
2014 increased 17.8% to approximately $464,000.

2

We are well positioned in our markets with a top-10 market share (based on 2014 home closings as reported by
Metrostudy) in 13 of our 16 metropolitan markets. At December 31, 2014, we were operating in the following
metropolitan areas:

East

• Austin, Texas

• Dallas, Texas

• Houston, Texas

•

•

Fort Myers, Florida

Jacksonville, Florida

• Naples, Florida

• Orlando, Florida

•

Sarasota, Florida

• Tampa Bay, Florida

West

Phoenix, Arizona

Sacramento, California

San Francisco Bay Area, California

San Jose, California

•

•

•

•

• Orange County, California

•

San Diego, California

• Denver, Colorado

We service these markets through ten operating divisions aggregated in two geographic reporting segments. See Item 7
— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Overview in
this Annual Report.

IPO and Summary of Reorganization Transactions

On April 12, 2013 we completed our initial public offering (“IPO”) of 32,857,800 shares of our Class A Common Stock,
par value $0.00001 per share (the “Class A Common Stock”) on the New York Stock Exchange (“NYSE”). With an
initial price to the public of $22.00 per share, it was the largest homebuilding IPO in the history of the NYSE. As a result
of the completion of the IPO and a series of transactions pursuant to a Reorganization Agreement dated as of April 9,
2013, TMHC became the indirect parent of TMM Holdings Limited Partnership (“TMM Holdings”) through the
formation of TMM Holdings II Limited Partnership, a Cayman Islands limited partnership (“New TMM”). TMM
Holdings is a British Columbia limited partnership that acquired our operations in July 2011 and is currently the holding
company for all of our operations. It was formed in 2011 by a consortium comprised of affiliates of TPG Global, LLC
(the “TPG Entities” or “TPG”), investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”) or their
respective subsidiaries (the “Oaktree Entities”), and affiliates of JH Investments, Inc. (“JH” and together with the TPG
Entities and Oaktree Entities, the “Principal Equityholders”).

In addition to our Class A Common Stock, we have shares of Class B Common Stock, par value $0.00001 per share (the
“Class B Common Stock”) outstanding. Holders of the Class A Common Stock and Class B Common Stock are entitled
to one vote for each share held on all matters submitted to stockholders for their vote or approval. The holders of
Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to
stockholders for their vote or approval, except with respect to the amendment of certain provisions of the amended and
restated Certificate of Incorporation that would alter or change the powers, preferences or special rights of the Class B
Common Stock so as to affect them adversely. Such amendments must be approved by a majority of the votes entitled to
be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise required by
applicable law.

For each share of TMHC Class A Common Stock outstanding, TMHC holds one limited partnership interest in New
TMM (each, a “New TMM Unit”). The Principal Equityholders (through holding vehicles) hold New TMM Units and

3

one corresponding share of Class B Common Stock for each New TMM Unit they hold. As a result, the Class A
Common Stock and Class B Common Stock percentages at December 31, 2014 are as follows:

Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares
Outstanding

33,060,540
89,227,416

Percentage

27.0%
73.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

122,287,956

100.0%

The Class A Common Stock is held by the public. The Class B Common Stock is beneficially owned by the TPG
Entities and the Oaktree Entities, so together, they have voting power over more than a majority of our outstanding
voting stock. See Risk Factors — The Principal Equityholders have substantial influence over our business, and their
interests may differ from our interests or those of our other stockholders.

For more information on the reorganization transactions and the 2011 acquisition by the Principal Equityholders, please
refer to — 2011 Acquisition by our Principal Equityholders and — Reorganization and Initial Public Offering.

Recent Developments

On January 28, 2015 we closed the sale of Monarch Corporation, which held our Canadian operations, to an affiliate of
Mattamy Homes Limited (“Mattamy”). Mattamy delivered a cash purchase price of CAD $335 million at closing, which
is subject to certain customary post-closing adjustments and ordinary and customary indemnifications. Immediately
prior to the closing, approximately CAD $235 million of cash at Monarch was distributed to a subsidiary of TMM
Holdings, resulting in total proceeds to us of CAD $570 million. The net proceeds of the transaction will be used for
general corporate purposes, resulting in increased flexibility for us to invest further in U.S. markets.

Business Strategy

We deliver on our strategy by opportunistically acquiring prime land assets in core locations, focusing on the preferences
of our buyers, constantly evaluating and analyzing overhead efficiency and optimizing profit by managing volume. We
constantly assess our capital allocation strategy to drive long-term shareholder return. We also take advantage of
opportunities to partner in joint ventures as they arise in order to secure land, share risk and maximize returns.

During the most recent economic downturn, we adhered to our core business strategy of focusing on move-up buyers.
We believe our experience in the move-up market allows us to significantly expand our new home offerings at higher
price points. We believe that move-up homebuyers are more insulated from market volatility, and more likely to value
the quality of lifestyle and construction that we offer.

We believe our extensive land position and pipeline, located in highly desirable submarkets, have positioned us for
strategic growth and increased profitability in an improving housing market. We expect to execute this strategy by:

• Driving revenue by strategically opening new communities from existing land supply;

• Combining land acquisition and development expertise with homebuilding operations;

•

Focusing offerings on specific customer groups;

• Building aspirational homes for our customers and delivering superior customer service;

• Maintaining a strong capital structure;

•

Selectively pursuing acquisitions; and

• Employing and retaining a highly experienced management team with a strong operating track record.

4

Homebuilding Operations

Homebuilding Overview

We focus on developing “lifestyle” communities in core locations, which have many distinguishing attributes, including
proximity to job centers, strong school systems and a variety of local amenities in well-regarded submarkets. We offer a
range of designs, some of them award-winning, through our single-family detached and attached product lines. We
engineer our homes for energy-efficiency and cost savings to reduce the impact on the environment. Although the
majority of the communities we build primarily attract move-up buyers, our portfolio also includes quality entry-level,
luxury and 55+ products. We serve all generational groups through our products and focus on the needs of homebuyers.
During 2014, the allocation of sales in our portfolio, based on price point, was 16% entry-level, 36% first move up, 31%
second move-up, 15% 55+ and 2% urban infill.

We strive to maintain consumer product and price level diversification. We target the largest and most profitable
consumer groups while attempting to balance our regional market portfolios across a variety of demographics. Our
ability to build at multiple price points enables us to respond to changing consumer preferences and address shifts in
affordability. We also use measures of market specific supply and demand characteristics to determine which consumer
groups are ultimately targeted and will be the most profitable in a specific land position.

We generally operate as community developers. Community development includes the acquisition and development of
large-scale communities that may include significant planning and entitlement approvals and construction of off-site and
on-site utilities and infrastructure. In some communities we operate solely as merchant builders, in which case, we
acquire fully planned and entitled lots and may construct on-site improvements but normally do not construct significant
off-site utility or infrastructure improvements.

We develop, own and operate golf courses as well as amenity rich community centers associated with a number of our
master planned communities. In 2014, our Esplanade Golf & Country Clubs in Naples and Lakewood Ranch, Florida
were voted two of the top ten new courses in the United States by Golf Digest. We also have investments in, and are
participants in, a number of joint ventures with related and unrelated parties to develop land and master-planned
communities.

We have developed a number of home designs with features such as single-story living, split bedroom plans and first
floor master bedroom suites to appeal to universal design needs. We have integrated these designs and features in many
of our homes and communities. We engage unaffiliated architectural firms and internal architectural resources to
develop new designs and augment existing plans in order to ensure that our homes reflect current and local consumer
tastes. During the past year, we introduced 143 new single-family detached and attached floor plans.

The life cycle of a community generally ranges from three to five years, commencing with the acquisition of land,
continuing through the land development phase, and concluding with the sale, construction, and delivery of homes.
Actual community lives will vary based on the size of the community, the sales absorption rate, and whether we
purchased the property as raw land or as developed lots.

A summary of our U.S. homebuilding activity by segment as of and for the year ended December 31, 2014 is as follows:

(Dollars in thousands)

Year Ended December 31, 2014

At December 31, 2014

East
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Homes
Closed

3,578
2,064

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,642

Average
Selling Price
of Closed
Homes

$420
540

$464

Homes
Sold

3,743
1,985

5,728

Average
Active Selling
Communities

151
55

206

Homes in
Backlog

$ Value of
Backlog

1,709
543

2,252

$ 806,848
292,919

$1,099,767

For financial information about our segments, see Note 18 — Operating and Reporting Segments to our consolidated
financial statements for the year ended December 31, 2014.

5

Land Acquisition Policies and Development

Locating and acquiring suitable land positions is a core part of our strategy as a developer and homebuilder. In order to
maximize our expected risk-adjusted return, the allocation of capital for land investment is performed at the corporate
level with a disciplined approach to overall portfolio management. Our investment committee meets on a regular basis,
and consists of four of our senior executives. Annually, our operating divisions prepare a strategic plan for their specific
geographies. Macro and micro indices, such as employment, housing starts, new home sales, re-sales and foreclosures,
along with market related shifts in competition, land availability and consumer preferences, are carefully analyzed to
determine the land and homebuilding strategy. Supply and demand are analyzed on a consumer segment and submarket
basis to ensure land investment is targeted appropriately. The long-term plan is compared on an ongoing basis to current
conditions in the marketplace as they evolve and is adjusted to the extent necessary. Major development strategy
decisions regarding community positioning are included in the underwriting process and are made in consultation with
senior members of our management team. Our existing land portfolio as of December 31, 2014 and 2013 is detailed
below:

Owned Lots December 31, 2014

Controlled Lots December 31, 2014

Raw

Partially
Developed Finished

Long-
Term
Strategic
Assets

Total

Raw

Partially
Developed Finished Total

Total
Owned and
Controlled

East
. . . . . . . . . . . . . . . . . . . . . . . . 7,090
West . . . . . . . . . . . . . . . . . . . . . . . . 2,735

6,112
2,568

5,220
3,507

1,952 20,374 5,508
246
1,612 10,422

1,510
122

Total

. . . . . . . . . . . . . . . . . . . . . . . 9,825

8,680

8,727

3,564 30,796 5,754

1,632

605
67

672

7,623
435

27,997
10,857

8,058

38,854

Owned Lots December 31, 2013

Controlled Lots December 31, 2013

Raw

Partially
Developed Finished

Long-
Term
Strategic
Assets

Total

Raw

Partially
Developed Finished Total

Total
Owned and
Controlled

East
. . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . .

8,768
2,818

6,110
2,721

4,368
2,849

1,922 21,168 7,028
1,807 10,195 1,897

Total

. . . . . . . . . . . . . . . . . . . . . 11,586

8,831

7,217

3,729 31,363 8,925

876
121

997

901
45

946

8,805
2,063

29,973
12,258

10,868

42,231

In the land purchasing process, specific projects of interest are detailed by the local divisional team, including proposed
ownership structure, environmental concerns, anticipated product segmentation, competitive environment and financial
returns. We also determine whether further spending on currently owned and controlled land is a well-timed and
appropriate use of capital. Our investment strategy emphasizes expected profitability to reflect the risk and timing of
returns, and the level of sales volume in new and existing markets.

Lot Development Status

(Dollars in thousands)

Development Status

As of December 31, 2014

As of December 31, 2013

Owned Lots

Book Value of Land
and Development

Owned Lots

Book Value of Land
and Development

Raw land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partially developed . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term strategic assets . . . . . . . . . . . . . . . . . . . . . . . .

9,825
8,680
8,727
3,564

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,796

$ 464,882
654,759
787,033
27,993

$1,934,667

11,586
8,831
7,217
3,729

31,363

$ 381,836
474,756
666,753
27,988

$1,551,333

Raw land represents property that has not been developed and remains in its natural state. Partially developed represents
land where the grading and development process has begun. Finished lots represent those lots where the horizontal
development is complete and are ready for the vertical development. Long-term strategic assets are those lots where we
are currently not doing any development.

6

At December 31, 2014, the allocation of lots held in our land portfolio, by year acquired, was 16% in 2014, 22% in
2013, 22% in 2012, and 40% in 2011 and earlier.

Homes in Inventory

We manage our inventory of homes under construction by selectively commencing construction to capture new home
demand, while monitoring the number and aging of unsold homes. As of December 31, 2014, we had a total of 3,606
homes in inventory, which included 2,252 homes under contract but not yet closed.

The following is a summary of our homes in inventory by segment as of December 31, 2014:

(Dollars in thousands)

Homes in
Backlog Models

Inventory
to be Sold

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,709
543

2,252

199
119

318

572
464

1,036

3,606

$482,077

Inventory
Value
without
Land

$288,423
193,654

Total

2,480
1,126

We expect that during 2015 we will deliver substantially all homes in backlog at December 31, 2014.

Community Development

We create a complete concept for each community, beginning with an overall community layout and then determine the
size, style and price range of the homes, the layout of the streets and positioning of the individual home sites. After
necessary governmental and other approvals have been obtained, we improve the land by clearing and grading, installing
roads, underground utility lines, staking out individual home sites and, in certain communities, erecting distinctive
entrance structures and recreational amenities.

Each community has personnel that perform superintendent, sales and customer service functions, in conjunction with a
local management team to manage the general project.

Although the construction time for our homes varies from project to project depending on geographic region, the time of
year, the size and complexity of the homes, local labor situations, the governmental approval processes, availability of
materials and supplies, and other factors, we complete the construction of a typical home in approximately six months.

Procurement and Construction

We have a comprehensive procurement program that leverages our size and national presence to achieve efficiencies and
cost savings. Our objective in procurement is to maximize efficiencies on local, regional and national levels and to
ensure consistent utilization of established contractual arrangements.

The program currently involves over 40 vendors and includes highly reputable and well-established companies who
supply us with lumber, appliances, HVAC systems, insulation, roofing, paint and lighting, among other materials.
Through these relationships, we are able to realize savings on the costs of essential materials. Contracts are typically
structured to include a blend of attractive upfront pricing and rebates and, in some cases, advantageous retroactive
pricing in instances of contract renewals. The program arrangements are typically not designed to be completely
exclusive in nature; for example, in many instances, divisions may choose to use local or alternate suppliers if they find
cost savings by doing so. However, our divisions have historically made use of over 80% of our national procurement
contracts, largely as a result of the advantageous pricing available under such contracts.

In addition to cost advantages, these arrangements also help minimize the risk of construction delays during supply
shortages, as we are often able to leverage our size to obtain our full allocation of required materials. Furthermore, these
arrangements sometimes include provisions for cooperative marketing, which allow us to extend the reach and
effectiveness of our advertising efforts.

7

Trades and Labor

Our construction, land and purchasing managers coordinate subcontracting services and supervise all aspects of
construction work and quality control. We are a general contractor for all of our homebuilding projects in the U.S.
Subcontractors perform all home construction and land development work, generally under fixed-price contracts. The
availability of labor, specifically as it relates to qualified tradespeople, at reasonable prices is a challenge in some
markets as the supply chain responds to uneven industry growth and other economic factors that affect the number of
people in the workforce.

Sources and Availability of Raw Materials

Based on local market practices, we either directly, or indirectly through our subcontractors, purchase drywall, cement,
steel, lumber, insulation and the other building materials necessary to construct a home. While these materials are
generally widely available from a variety of sources, from time to time we experience material shortages on a localized
basis, particularly during periods where the regions in which we operate experience natural disasters that have a
significant impact on existing residential and commercial structures and during periods of robust construction activity
when there is high demand for newly built homes. During these periods, the prices for these materials can substantially
increase and our construction process can be slowed. We generally have multiple sources for the materials we purchase
and have not experienced significant delays due to unavailability of necessary materials.

Sales and Marketing

Our marketing program calls for a balanced approach of corporate support and local expertise to attract potential
homebuyers in a focused, efficient and cost-effective manner. Our sales and marketing team provides a generalized
marketing framework across our regional operations as well as sales training to our local teams. Our divisional sales and
marketing teams utilize local media and marketing streams to deliver a unique message that is relevant to our consumer
groups in each market.

Our goal is to identify the preferences of our customer and demographic groups and offer them innovative, high-quality
products that are efficient and profitable to build. To achieve this goal, we conduct extensive market research to
determine preferences of our customer groups and are able to focus on particular lifestyle preferences in determining the
product to build.

We have gathered data regarding specific consumer preferences for various customer groups. Our approach to customer
group identification guides all of our operations from the initial land acquisition through to our design, building,
marketing and delivery of homes and our ongoing after-sales customer service. Among our peers, we believe we are at
the forefront of directed marketing strategies, as evidenced by our highly-trafficked Internet site and strategic
partnerships with nationally recognized retailers.

The central element of our marketing platform is our web presence at www.taylormorrison.com and
www.darlinghomes.com (none of which is a part of this Annual Report). The main purpose of these websites is to direct
potential customers to one of our sales teams. The website also offers the ability of customers to evaluate floor plans,
elevations, square footage, community amenities and geographic location. Customers are also able to use the websites to
make inquiries and to receive a prompt response from one of our “Internet Home Consultants.” The websites are fully
integrated with our customer relationship management (“CRM”) system. By analyzing the content of the CRM, we are
able to focus our lead generation programs to deliver high-quality sales leads. With these leads we are better able to
increase sale conversion rates and lower marketing costs. We have significant web search optimization on our sites,
including specific key words, meta data and tags on the site to help crawlers from search engines to find content.

In addition to our website, we utilize print, radio and television for advertising purposes, including directional marketing,
newspapers and billboards. We also directly notify local real estate agents and firms of any new community openings in
order to use the existing real estate agent/broker channels in each market. Pricing for our homes is evaluated weekly
based on an analysis of market conditions, competitive environment and supply and demand characteristics.

8

We use furnished model homes as a marketing tool to demonstrate the advantages of the designs, features and
functionality of our homes. We generally employ or contract with interior and landscape designers who create attractive
model homes that highlight the features and options available for the product line within a project. Depending upon the
number of homes to be built in the project and the product lines to be offered, we generally build between one and three
model homes for each active selling community. At December 31, 2014, we owned 318 model homes in 192 different
communities.

Generally, our homes are sold by our commissioned employees who work from sales offices located within our model
homes. We also employ a team of Internet sales associates who offer assistance to potential buyers viewing our homes
over the Internet. At December 31, 2014, we had approximately 390 full-time sales and marketing personnel. Our goal is
to ensure our sales force has extensive knowledge of our homes, energy efficient features, sales strategies, mortgage
options and community dynamics. To achieve this goal, we have on-going training for our sales associates and conduct
regular meetings to keep them abreast of the latest promotions, options and sales techniques and discuss geographic
competition. Our sales associates are licensed real estate agents where required by law and assist our customers in
adding design features to their homes, which we believe appeal to local consumer preferences. Third-party brokers who
sell our homes are generally paid a sales commission based on the price of the home. In some of our businesses, we
contract with third-party design studios that specialize in assisting our homebuyers with options and upgrades to
personalize their homes. Utilizing these third-party design studios allows us to manage our overhead and costs more
efficiently. We may also offer various sales incentives, including price concessions, assistance with closing costs, and
landscaping or interior upgrades. The use, types and amount of incentives depends largely on existing economic and
local competitive market conditions.

Warranty Program

We offer warranties on homes that generally provide for limited one-year warranty to cover various defects in
workmanship or materials or to cover structural construction defects. We may also facilitate a ten year warranty in
certain markets or to comply with regulatory requirements. The structural warranty is carried by Beneva Indemnity
Company (“Beneva”), one of our wholly owned subsidiaries. We also provide third-party warranty coverage on homes
where required by Federal Housing Administration or Veterans Administration lenders.

Competition

The homebuilding business is highly competitive and fragmented. We compete with numerous homebuilders of varying
sizes, ranging from local to national in scope, some of which have greater sales and financial resources than us. Sales of
existing homes, whether by a homeowner or by a financial institution that has acquired a home through a foreclosure,
also provide competition. We compete primarily on the basis of price, location, design, quality, service and reputation.

Competition among residential homebuilders of all sizes is based on a number of interrelated factors, including location,
reputation, amenities, floor plans, design, quality and price. We believe that we compare favorably to other
homebuilders in the markets in which we operate.

In order to maximize our sales volumes, profitability and product strategy, we strive to understand our competition and
their pricing, product and sales volume strategies and results. During the most recent economic downturn, market
conditions also led to a large number of foreclosed and short sale homes being offered for sale, which increased
competition and affected pricing. However, we took a proactive approach to distancing ourselves from highly affected
submarkets, enabling us to drive sales in our markets without competing as directly with foreclosures.

Mortgage Operations

TMHF provides a number of mortgage-related services to our customers through our mortgage lending operations. The
strategic purpose of TMHF is:

•

•

to utilize mortgage finance as a sales tool in the purchase process to ensure a consistent customer experience and
assist in maintaining production efficiency; and

to control and assist in determining our backlog quality and to better manage projected closing and delivery dates
for our customers.

9

TMHF operates as an independent mortgage banker and conducts its business as a Federal Housing Authority (“FHA”)
Full Eagle lender. TMHF funds mortgage loans utilizing warehouse credit line facilities. Revenue is earned through
origination and processing fees combined with service release premiums earned in the secondary market once the loans
are sold to investors. Loans are sold servicing released, typically within 20 business days.

TMHF competes with other mortgage lenders, including national, regional and local mortgage bankers and other
financial institutions. TMHF utilizes a multi-investor correspondent platform which gives us increased flexibility when
placing loans to meet our customers’ needs. TMHF has continued to expand and strengthen our investor partnerships.
This has created stability and consistency in our origination process and delivery. In 2014 we experienced increased
competition in our mortgage operations business as the industry focused on growing originations from purchases. Our
focus and expertise has always been and remains dedicated to the financing of new home construction.

Seasonality

Our business is seasonal. We have historically experienced, and expect to continue to experience, variability in our
results on a quarterly basis. We generally have more homes under construction, close more homes and have greater
revenues and operating income in the third and fourth quarters of the year. Therefore, although new home contracts are
obtained throughout the year, a significant portion of our home closings occur during the third and fourth calendar
quarters. Our revenue therefore may fluctuate significantly on a quarterly basis and we must maintain sufficient liquidity
to meet short-term operating requirements. Factors expected to contribute to these fluctuations include:

•

•

•

•

•

•

the timing of the introduction and start of construction of new projects;

the timing of project sales;

the timing of closings of homes, lots and parcels;

our ability to continue to acquire land and options on acceptable terms;

the timing of receipt of regulatory approvals for development and construction;

the condition of the real estate market and general economic conditions in the areas in which we operate;

• mix of homes closed;

•

•

•

construction timetables;

the prevailing interest rates and the availability of financing, both for us and for the purchasers of our homes;

the cost and availability of materials and labor; and

• weather conditions in the markets in which we build.

As a result of seasonal activity, our quarterly results of operations and financial position are not necessarily
representative of a full fiscal year. To illustrate the seasonality in net homes sold, homes closed and home closings
revenue, a summary of the quarterly financial data follows:

Net homes sold . . . . . . . . . . . . . . .
Homes closed . . . . . . . . . . . . . . . .
Home closings revenue . . . . . . . . .
Net income from continuing

March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31

2014

2013(1)

26.4% 26.8% 24.2%
18.7% 22.8% 23.6%
17.4% 22.2% 23.5%

22.6%
34.9%
36.9%

30.9% 28.0%
19.2% 24.4%
17.3% 23.5%

20.3%
25.4%
25.8%

20.8%
31.0%
33.4%

operations . . . . . . . . . . . . . . . . .

16.4% 20.1% 21.9%

41.6%

57.2% (307.8)% 108.1%

242.5%

(1)

The IPO occurred in April 2013, and as such, certain one-time charges affected net income from continuing
operations.

10

Regulation, Environmental, Health and Safety Matters

Regulatory

We are subject to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building
design, construction and similar matters, including local regulations that impose restrictive zoning and density
requirements in order to limit the number of homes that can eventually be built within the boundaries of a particular
property or locality. In a number of our markets, there has been an increase in state and local legislation authorizing the
acquisition of land as dedicated open space, mainly by governmental, quasi-public and non-profit entities. In addition,
we are subject to various licensing, registration and filing requirements in connection with the construction,
advertisement and sale of homes in our communities. The impact of these laws has been to increase our overall costs,
and may have delayed the opening of communities or caused us to conclude that development of particular communities
would not be economically feasible, even if any or all necessary governmental approvals were obtained. We also may be
subject to periodic delays or may be precluded entirely from developing communities due to building moratoriums in
one or more of the areas in which we operate. Generally, such moratoriums relate to insufficient water, power, drainage
or sewage facilities or inadequate road capacity.

In order to secure certain approvals in some areas, we may be required to provide affordable housing at below market
rental or sales prices. The impact on us depends on how the various state and local governments in the areas in which we
engage, or intend to engage, in development implement their programs for affordable housing. To date, these restrictions
have not had a material impact on us.

TMHF is subject to various state and federal statutes, rules and regulations, including those that relate to licensing,
lending operations and other areas of mortgage origination and financing. The impact of those statutes, rules and
regulations can increase our homebuyers’ cost of financing, increase our cost of doing business, as well as restrict our
homebuyers’ access to some types of loans. Certain requirements provided for by the Dodd-Frank Act have not yet been
finalized or fully implemented. The effect of such provisions on our financial services business will depend on the rules
that are ultimately enacted.

In order for our homebuyers to finance their home purchases with FHA-insured, Veterans Administration-guaranteed or
U.S. Department of Agriculture-guaranteed mortgages, we are required to build such homes in accordance with the
regulatory requirements of those agencies.

Some states have statutory disclosure requirements or other pre-approval requirements or limitations governing the
marketing and sale of new homes. These requirements vary widely from state to state.

Some states require us to be registered as a licensed contractor, a licensed real estate broker and in some markets our
sales agents are additionally required to be registered as licensed real estate agents.

Environmental

We also are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning
protection of public health and the environment (collectively, “environmental laws”). The particular environmental laws
that apply to any given community vary greatly according to the location and environmental condition of the site and the
present and former uses of the site. Complying with these environmental laws may result in delays, may cause us to
incur substantial compliance and other costs, and/or may prohibit or severely restrict development in certain
environmentally sensitive regions or areas.

As part of the land acquisition due diligence process, we utilize environmental assessments to identify environmental
conditions that may exist on potential acquisition properties. To date, environmental site assessments conducted at our
properties have not revealed any environmental liability or compliance concerns that we believe would have a material
adverse effect on our business, liquidity or results of operations, nor are we aware of any material environmental liability
or concerns.

We manage compliance with federal, state and local environmental requirements at the division level with assistance
from the corporate and regional legal departments, including environmental regulations related to U.S. Storm Water

11

Pollution Prevention, U.S. Endangered Species Act, U.S. Wetlands Permitting, NPDES Permitting, Cultural Resources,
dust control measures and state and local preservation ordinances.

Health and Safety

We are committed to maintaining high standards in health and safety at all of our sites, to ensure the safety of our team
members, our trade partners, our customers and prospects and the general public. That commitment is tested through our
health and safety audit system that includes comprehensive twice-yearly independent third-party inspections of selected
sites covering all aspects of health and safety. A key area of focus is ensuring that site conditions meet exacting health and
safety standards and that subcontractor performance throughout our operating areas meets or exceeds expectations. All of
our team members must complete an assigned curriculum of online safety courses each year. These courses vary according
to job responsibility. In addition, groups such as construction and field personnel are required to attend additional training
programs such as the Occupational Safety and Health Administration 10-hour course, First-Aid and CPR.

Information Technology

We have a centralized information technology organization with its core team located at our corporate headquarters in
Scottsdale, augmented with field support technicians in key locations across the U.S. Our approach to information
technology is to continuously simplify our information technology platform and consolidate and standardize
applications. We believe a common application platform enables the sharing of ideas and rapid implementation of
process improvements and best practices across the entire company. Our back-office operations use a fully integrated,
industry recognized enterprise resource planning package. Marketing and field sales utilize a leading CRM solution that
tracks leads and prospects from all sources and manages the customer communication process from lead creation
through the buying process and beyond the post-warranty period. Field operations teams collaborate with the supply
chain to schedule and manage development and construction projects with a set of standard and widely used
homebuilding industry solutions.

Intellectual Property

We own certain logos and trademarks that are important to our overall branding and sales strategy. Our consumer logos
are designed to draw on a recognized homebuilding heritage while emphasizing a customer-centric focus.

Employees, Subcontractors and Consultants

As of December 31, 2014, we employed 1,498 full-time equivalent persons, which includes 195 employees in our
discontinued Canadian business. Of these, 1,348 were engaged in corporate and homebuilding operations, and the
remaining 150 were engaged in mortgage services. As of December 31, 2014, we were not subject to collective
bargaining agreements. We consider our employee relations to be good.

We act solely as a general contractor, and all construction operations are supervised by our project managers and field
superintendents who manage third party subcontractors. We use independent consultants and contractors for some
architectural, engineering, advertising and legal services, and we strive to maintain good relationships with our
subcontractors and independent consultants and contractors.

2011 Acquisition by our Principal Equityholders

In July 2011, TPG, Oaktree and JH formed TMM Holdings to acquire TMC and Monarch from U.K. based Taylor
Wimpey plc for aggregate cash consideration of approximately $1.2 billion (the “Acquisition”). In the acquisition,
Class A Units of TMM Holdings were issued to TPG and Oaktree, Class J Units of TMM Holdings were issued to JH,
and Class A and Class M Units of TMM Holdings were issued to were issued to various members of our Board of
Directors and management.

The Acquisition was financed in part by a $620.3 million cash equity contribution by the Principal Equityholders and a
$625 million senior unsecured credit facility with affiliates of TPG and Oaktree, consisting of a $500 million bridge loan

12

facility and a $125 million incremental bridge loan facility (collectively, the “Sponsor Loan”). We repaid the
$125 million bridge facility in August 2011 and repaid $350 million of the Sponsor Loan in April 2012 with a portion of
the proceeds of the issuance of $550 million of 7.75% Senior Notes due 2020 (the “2020 Senior Notes”). The affiliates
of TPG and Oaktree who were lenders under the Sponsor Loan caused the then remaining $150.0 million of the Sponsor
Loan to be acquired by a subsidiary of TMM Holdings, and affiliates of TPG and Oaktree acquired an additional
$150.0 million of limited partnership interests in TMM Holdings.

Reorganization and Initial Public Offering

In connection with the completion of the IPO, we completed a series of transactions (the “Reorganization Transactions”)
in which TMHC became the indirect parent of TMM Holdings through the formation of a new Cayman Islands limited
partnership, New TMM. New TMM has only a single class of partnership units, New TMM Units, which are held (as
described below) by TMHC and by entities affiliated with the Principal Equityholders.

In the Reorganization Transactions:

• TPG and Oaktree each formed new holding vehicles to hold interests in New TMM (the “TPG Holding
Vehicle” and the “Oaktree Holding Vehicle,” respectively and, together, the “TPG and Oaktree Holding
Vehicles”);

• The Principal Equityholders and members of TMHC’s management and Board directly or indirectly

exchanged all of their respective Class A Units, Class J Units and performance-vesting Class M Units in TMM
Holdings on a one-for-one basis for new equity interests of the TPG and Oaktree Holding Vehicles with terms
that are substantially the same as the Class A Units (other than certain Class A Units exchanged by JH as
described below), Class J Units (other than with respect to certain vesting conditions) and performance-vesting
Class M Units in TMM Holdings surrendered for exchange;

•

JH exchanged a portion of its Class A Units in TMM Holdings for New TMM Units to be held by JH;

• Members of TMHC’s management and Board exchanged all of their time-vesting Class M Units in TMM

Holdings for New TMM Units with vesting terms that are substantially the same as those of the Class M Units
surrendered for exchange;

• New TMM directly or indirectly acquired all of the Class A Units, Class J Units and Class M Units in TMM

Holdings outstanding prior to the Reorganization Transactions; and

• The TPG and Oaktree Holding Vehicles directly or indirectly acquired New TMM Units.

The number of New TMM Units issued to each of the TPG and Oaktree Holding Vehicles, JH and members of TMHC’s
management and Board, as described above, was determined based on a hypothetical cash distribution by TMM
Holdings of TMHC’s pre-IPO value to the holders of Class A Units, Class J Units and Class M Units of TMM Holdings,
the IPO price and the price per share paid by the underwriters for shares of Class A Common Stock in the IPO.

In connection with the Reorganization Transactions, the TPG and Oaktree Holding Vehicles, JH and members of
TMHC’s management and Board were also issued a number of shares of TMHC’s Class B Common Stock equal to the
number of New TMM Units that each received. One share of Class B Common Stock, together with one New TMM Unit
is exchangeable into one share of Class A Common Stock. We granted the Principal Equityholders registration rights
with respect to the resale of any such shares of Class A Common Stock that they receive in any such exchange. See Risk
Factors — The Principal Equityholders have substantial influence over our business, and their interests may differ from
our interests or those of our other stockholders.

In connection with the Reorganization Transactions, TMHC recorded a one-time, non-cash charge of $80.2 million
(based on the IPO price of $22.00 and other factors) in respect of the modification of the Class J Units in TMM resulting
from the termination of a management services agreement that was entered into in connection with the Acquisition
between JH and TMM Holdings (the “JHI Services Agreement”) and the direct or indirect exchange (on a one-for-one
basis) of the Class J Units for units having substantially equivalent performance vesting and distribution terms in the
TPG and Oaktree Holding Vehicles.

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In connection with the Acquisition in July 2011, affiliates of the Principal Equityholders entered into management
services agreements with TMM Holdings, Taylor Morrison Holdings, Inc. (“Taylor Morrison Holdings”) and Monarch
Communities Inc. (“Monarch Communities”) relating to the provision of certain management, advisory and consulting
services. In consideration of financial and structural advice and analysis made in connection with the Acquisition, Taylor
Morrison Holdings and Monarch Communities paid a one-time transaction fee of $13.7 million to the Principal
Equityholders and also reimbursed the Principal Equityholders for third-party, out-of-pocket expenses incurred in
connection with the Acquisition, including fees, expenses and disbursements of attorneys, accountants, consultants and
other advisors. In addition, as compensation for ongoing services provided by affiliates of the Principal Equityholders
under the management services agreements, Taylor Morrison Holdings and Monarch Communities agreed to pay to
affiliates of the Principal Equityholders an annual aggregate management fee of $5.0 million. Immediately prior to the
IPO, the management services agreements were terminated in exchange for an aggregate payment pursuant to the terms
of such agreements of $29.8 million split equally between TPG and Oaktree.

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ITEM 1A. RISK FACTORS

Risks related to our industry and our business

Our business is cyclical and is significantly affected by changes in general and local economic conditions.

Our business can be substantially affected by adverse changes in general economic or business conditions that are
outside of our control, including changes in:

•

•

•

•

•

short- and long-term interest rates;

the availability and cost of financing for homebuyers;

employment levels, job and personal income growth and household debt-to-income levels;

consumer confidence generally and the confidence of potential homebuyers in particular;

the ability of existing homeowners to sell their existing homes at prices that are acceptable to them;

• U.S. and global financial system and credit markets, including stock market and credit market volatility;

•

•

•

•

•

•

•

private and federal mortgage financing programs and federal and state regulation of lending practices;

federal and state income tax provisions, including provisions for the deduction of mortgage interest payments;

housing demand from population growth and demographic changes (including immigration levels and trends
in urban and suburban migration);

demand from foreign buyers for our homes, which may fluctuate according to economic circumstances in
foreign markets;

the supply of available new or existing homes and other housing alternatives, such as apartments and other
residential rental property;

real estate taxes; and

the supply of developable land in our markets and in the United States generally.

Adverse changes in these conditions may affect our business nationally or may be more prevalent or concentrated in
particular regions or localities in which we operate. During the most recent economic downturn, unfavorable changes in
many of the above factors negatively affected all of the markets we serve. Economic conditions in all our markets
continue to be characterized by levels of uncertainty, which has impacted business or consumer confidence in those
markets. For example, fluctuations in oil and gas prices may create economic uncertainty, particularly in regions of
Texas where we have significant operations. Any deterioration in economic conditions or continuation of uncertain
economic conditions would have a material adverse effect on our business.

In addition, a public health issue such as a major epidemic or pandemic could adversely affect economic conditions. The
U.S. and other countries have experienced, and may experience in the future, outbreaks of contagious diseases that affect
public perception of health risk. In the event of a widespread, prolonged, actual or perceived outbreak of a contagious
disease, our operations could be negatively impacted by a reduction in customer traffic or other factors that could reduce
demand for new homes.

Inclement weather, natural disasters (such as earthquakes, hurricanes, tornadoes, floods, droughts and fires), and other
environmental conditions may delay the delivery of our homes and/or increase our costs. Civil unrest or acts of
terrorism, or other acts of violence or threats to national security, may also have a negative effect on our business.

Adverse changes in economic conditions can cause demand and prices for our homes to diminish or cause us to take
longer to build our homes and make it more costly for us to do so. We may not be able to recover these increased costs
by raising prices because of weak market conditions and because the price of each home we sell is usually set several
months before the home is delivered, as many customers sign their home purchase contracts before construction begins.
The potential difficulties described above could impact our customers’ ability to obtain suitable financing and cause
some homebuyers to cancel or refuse to honor their home purchase contracts altogether.

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The recent improvement in housing market conditions follows a significant downturn, and the likelihood of a full
recovery is uncertain in the current state of the economy. A slowdown in our business could have additional adverse
effects on our operating results and financial condition.

In connection with the most recent downturn in the U.S. housing market, we incurred substantial losses, after
impairments, in our U.S. operations during 2008 and 2009. Although the U.S. housing market continues to recover, we
cannot predict the extent of further recovery or its timing. Some markets and submarkets have been stronger than others.
We expect that such unevenness will continue, whether or not the present housing recovery progresses and prevailing
conditions in various housing markets and submarkets will continue to fluctuate. These fluctuations may be significant
and unfavorable. In addition, while some of the many negative factors that contributed to the housing downturn may
have moderated, several remain, and they could return and/or intensify to inhibit any future improvement in housing
market conditions in 2015.

In addition, as a result of the recent disposition of our Canadian business, we are more exposed to economic conditions
in the United States and are therefore less diversified than we were prior to the disposition. Consequently, our results of
operations may be more volatile in the future than they have been historically.

Though we have taken steps to alleviate the impact of these conditions on our business, given the most recent downturn in
the homebuilding industry and global economic uncertainty, there can be no guarantee that steps taken by us will continue
to be effective, and to the extent the current economic environment does not improve or any improvement takes place over
an extended period of time, our business, financial condition and results of operations may be adversely affected.

If homebuyers are not able to obtain suitable financing, our results of operations may decline.

A substantial majority of our homebuyers finance their home purchases through lenders that provide mortgage financing.
The availability of mortgage credit remains constrained, due to various regulatory changes and lower risk appetite by
lenders, with many lenders requiring increased levels of financial qualification, including lenders adhering to the new
“Qualified Mortgage” requirements and ability to repay standard, and lending lower multiples of income. Investors and
first-time homebuyers are generally more affected by the availability of financing than other potential homebuyers.
These buyers are a key source of our demand. A limited availability of home mortgage financing may adversely affect
the volume of our home sales and the sales prices we achieve.

During the last several years, the mortgage lending industry has experienced significant instability, beginning with
increased defaults on subprime loans and other nonconforming loans and compounded by expectations of increasing
interest payments requirements and further defaults. Lending requirements and standards remain tightened and as a
result, investor demand for mortgage loans and mortgage-backed securities has declined. The liquidity provided by
government sponsored entities, such as Fannie Mae, Freddie Mac, Ginnie Mae, the FHA and Veterans Administration, to
the mortgage industry has been very important to the housing market. Several federal government officials have
proposed changing the nature of the relationship between Fannie Mae and Freddie Mac and the federal government and
even nationalizing or eliminating these entities entirely. If Fannie Mae and Freddie Mac were dissolved or if the federal
government determined to stop providing liquidity support to the mortgage market, there would be a reduction in the
availability of the financing provided by these institutions. Any such reduction would likely have an adverse effect on
interest rates, mortgage availability and our sales of new homes. For instance, in March 2014, a proposal was introduced
in the U.S. Senate to overhaul the mortgage market by replacing Fannie Mae and Freddie Mac with a new system of
federally insured mortgage securities. The proposal may not be enacted, and its effects on the residential mortgage
market are not predictable at this time. Such an overhaul may reduce the availability of residential mortgage loans or
increase the cost of such loans to borrowers, which could materially and adversely affect both our homebuilding and
Mortgage Operations businesses.

The FHA insures mortgage loans that generally have lower loan payment requirements and qualification standards
compared to conventional guidelines, and as a result, continue to be a particularly important source for financing the sale
of our homes. In recent years, lenders have taken a more conservative view of FHA guidelines causing significant
tightening of borrower eligibility for approval. Further restrictions are expected on FHA-insured loans, including
limitations on seller-paid closing costs and concessions. This or any other restriction may negatively affect the

16

availability or affordability of FHA financing, which could adversely affect our ability to sell homes in the U.S. In
addition, changes in federal regulatory and fiscal policies relating to currently available benefits for homeowners
(including a repeal of the currently available home mortgage interest tax deduction) may also negatively affect potential
homebuyers’ ability to purchase homes.

In each of our markets, decreases in the availability of credit and increases in the cost of credit adversely affect the
ability of homebuyers to obtain or service mortgage debt. Even if potential homebuyers do not themselves need
mortgage financing, where potential homebuyers must sell their existing homes in order to buy a new home, increases in
mortgage costs, lack of availability of mortgages and/or regulatory changes could prevent the buyers of potential
homebuyers’ existing homes from obtaining a mortgage, which would result in our potential customers’ inability to buy
a new home. Similar risks apply to those buyers who are awaiting delivery of their homes and are currently in backlog.
The success of homebuilders depends on the ability of potential homebuyers to obtain mortgages for the purchase of
homes. If our customers (or potential buyers of our customers’ existing homes) cannot obtain suitable financing our sales
and results of operations could be adversely affected.

An inability to obtain additional performance, payment and completion surety bonds and letters of credit could limit
our future growth.

We are often required to provide performance, payment and completion and warranty/maintenance surety bonds or
letters of credit to secure the completion of our construction contracts, development agreements and other arrangements.
We have obtained credit facilities to provide the required volume of performance, payment and completion and warranty
maintenance surety bonds and letters of credit for our expected growth in the medium term; however, unexpected growth
may require additional facilities. We may also be required to renew or amend our existing facilities. Our ability to obtain
additional performance, payment and completion and warranty/maintenance surety bonds and letters of credit primarily
depends on our credit rating, capitalization, working capital, past performance, management expertise and certain
external factors, including the capacity of the markets for such bonds. Performance, payment and completion and
warranty/maintenance surety bond and letter of credit providers consider these factors in addition to our performance
and claims record and provider-specific underwriting standards, which may change from time to time.

If our performance record or our providers’ requirements or policies change, if we cannot obtain the necessary consent
from our lenders, or if the market’s capacity to provide performance, payment and completion or warranty/maintenance
bonds or letters of credit is not sufficient for any unexpected growth and we are unable to renew or amend our existing
facilities on favorable terms or at all, we could be unable to obtain additional performance, payment and completion and
warranty/maintenance surety bonds or letters of credit from other sources when required, which could have a material
adverse effect on our business, financial condition and results of operations.

Higher cancellation rates of existing agreements of sale may have an adverse effect on our business.

Our backlog reflects sales contracts with our homebuyers for homes that have not yet been delivered. We have received a
deposit from a homebuyer for each home reflected in our backlog, and generally we have the right, subject to certain
exceptions, to retain the deposit if the homebuyer fails to comply with his or her obligations under the sales contract,
including as a result of state and local law, the homebuyer’s inability to sell his or her current home or the homebuyer’s
inability to make additional deposits required prior to the closing date. If prices for new homes decline, if competitors
increase their use of sales incentives, if interest rates increase, if the availability of mortgage financing diminishes or if there
is a downturn in local or regional economies or in the national economy, U.S. homebuyers may terminate their existing
home purchase contracts with us in order to negotiate for a lower price or because they cannot, or will not, complete the
purchase and our remedies generally do not extend beyond the retention of deposits as our liquidated damages.

Cancellation rates may rise in the future. If uncertain economic conditions in the U.S. continue, if mortgage financing
becomes less available or if current homeowners find it difficult to sell their current homes, more homebuyers may
cancel their sales contracts with us. As a result, our financial condition may deteriorate and you may lose a portion of
your investment.

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In cases of cancellation, we remarket the home and usually retain any deposits we are permitted to retain. Nevertheless,
the deposits may not cover the additional costs involved in remarketing the home, replacing installed options, reducing
the sales price or increasing incentives on the completed home for greater marketability and carrying higher inventory.
Further, depending on the stage of cancellation, a contract that is cancelled at the end of a phase may cause additional
construction costs, roadway repairs or added nuisances to existing homeowners for the out of sequence construction or
modification of the one home. Significant numbers of cancellations could adversely affect our business, financial
condition and results of operations.

The homebuilding and mortgage services industries are highly competitive and, if our competitors are more
successful or offer better value to our customers, our business could decline.

We operate in a very competitive environment which is characterized by competition from a number of other
homebuilders in each market in which we operate. We compete with large national and regional homebuilding
companies and with smaller local homebuilders for land, financing, affiliated or in-house services, raw materials and
skilled management, volume discounts, local REALTOR® and labor resources. We also compete with the resale, or
“previously owned,” home market. Increased competition could cause us to increase our selling incentives and reduce
our prices. An oversupply of homes available for sale and the heavy discounting of home prices by some of our
competitors have adversely affected demand for our homes and the results of our operations in the past and could do so
again in the future. Our Mortgage Operations business competes with other mortgage lenders and title companies,
including national, regional and local mortgage banks and other financial institutions, some of which are subject to fewer
government regulations. Mortgage lenders who are subject to fewer regulations or have greater access to capital or
different lending criteria may be able to offer more attractive financing to potential customers. If we are unable to
compete effectively in our homebuilding and mortgage services markets, our business could decline disproportionately
to our competitors, and our results of operations and financial condition could be adversely affected.

Any increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies
and property repossessions and have an adverse impact on us.

In the U.S., the unemployment rate was 5.7% as of January 2015, according to the U.S. Bureau of Labor Statistics
(“BLS”). In addition, the labor force participation rate reported by the BLS has been declining, from 66.2% in
January 2008 to 62.9% in January 2015, potentially reflecting an increased number of “discouraged workers” who have
left the labor force. In addition, a substantial portion of new jobs created have been relatively low-wage jobs or part-time
jobs. People who are not employed, are underemployed, who have left the labor force or are concerned about low wages
or the loss of their jobs are less likely to purchase new homes, may be forced to try to sell the homes they own and may
face difficulties in making required mortgage payments. Therefore, any increase in unemployment or underemployment
may lead to an increase in the number of loan delinquencies and property repossessions and have an adverse impact on
us both by reducing demand for the homes we build and by increasing the supply of homes for sale.

Increases in taxes, government fees or interest rates could prevent potential customers from buying our homes and
adversely affect our business or financial results.

Significant expenses of owning a home, including mortgage interest and real estate taxes, generally are deductible
expenses for an individual’s U.S. federal, and in some cases, state income taxes, subject to various limitations under
current tax law and policy. If the U.S. federal government or a state government changes its income tax laws, as has been
discussed from time to time, to eliminate, limit or substantially modify these income tax deductions, the after-tax cost of
owning a new home would increase for many of our potential customers. The resulting loss or reduction of homeowner
tax deductions, if such tax law changes were enacted without offsetting provisions, or any other increase in any taxes
affecting homeowners, would adversely impact demand for and sales prices of new homes.

Increases in property tax rates by local governmental authorities, as experienced in response to reduced federal and state
funding, can adversely affect the ability of potential customers to obtain financing or their desire to purchase new homes.
Fees imposed on developers to fund schools, open spaces, road improvements, and/or provide low and moderate income
housing, could increase our costs and have an adverse effect on our operations. In addition, increases in sales taxes could

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adversely affect our potential customers who may consider those costs in determining whether to make a new home
purchase and decide, as a result, not to purchase one of our homes.

In addition, increases in interest rates as a result of changes to monetary policy could significantly increase the costs of
owning a home, which in turn would adversely impact demand for and sales prices of homes and the ability of potential
customers to obtain financing and adversely affect our business, financial condition and operating results.

Inflation or deflation could adversely affect our business and financial results.

Inflation can adversely affect us by increasing costs of land, materials and labor. In the event of an increase in inflation, we
may seek to increase the sales prices of homes in order to maintain satisfactory margins. However, an oversupply of homes
relative to demand and home prices being set several months before homes are delivered may make any such increase
difficult or impossible. In addition, inflation is often accompanied by higher interest rates, which historically had a negative
impact on housing demand. In such an environment, we may not be able to raise home prices sufficiently to keep up with
the rate of inflation and our margins could decrease. Moreover, the cost of capital increases as a result of inflation and the
purchasing power of our cash resources declines. Current or future efforts by the government to stimulate the economy may
increase the risk of significant inflation and its adverse impact on our business or financial results.

Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels. This
could lead to a further deterioration in economic conditions, including an increase in the rate of unemployment.
Deflation could also cause the value of our inventories to decline or reduce the value of existing homes below the related
mortgage loan balance, which could potentially increase the supply of existing homes and have a negative impact on our
results of operations. Declining oil and gas prices may increase the risk of significant deflation and its adverse impact on
our business or financial results.

Our quarterly operating results may fluctuate because of the seasonal nature of our business and other factors.

Our quarterly operating results generally fluctuate by season and also because of the uneven delivery schedule of certain
of our products and communities.

Historically, a larger percentage of our agreements of sale have been entered into in the winter and spring. Weather-
related problems, typically in the fall, late winter and early spring, may delay starts or closings and increase costs and
thus reduce profitability. Seasonal natural disasters such as hurricanes, tornadoes, floods and fires could cause delays in
the completion of, or increase the cost of, developing one or more of our communities, causing an adverse effect on our
sales and revenues.

In many cases, we may not be able to recapture increased costs by raising prices because we set our prices up to
12 months in advance of delivery upon signing the home sales contract. In addition, deliveries may be staggered over
different periods of the year and may be concentrated in particular quarters. Our quarterly operating results may fluctuate
because of these factors.

Negative publicity may affect our business performance and could affect our stock price.

Unfavorable media related to our industry, company, brands, marketing, personnel, operations, business performance, or
prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy. Our
success in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing
media environment. Adverse publicity or negative commentary on social media outlets, such as blogs, websites or
newsletters, could hurt operating results, as consumers might avoid brands that receive bad press or negative reviews.
Negative publicity may result in a decrease in our operating results.

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Homebuilding is subject to home warranty and construction defect claims in the ordinary course of business that can
be significant.

As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of
business. There can be no assurance that any developments we undertake will be free from defects once completed.
Construction defects may occur on projects and developments and may arise during a significant period of time after
completion. Defects arising on a development attributable to us may lead to significant contractual or other liabilities.

As a consequence, we maintain products and completed operations excess liability insurance, obtain indemnities and
certificates of insurance from subcontractors generally covering claims related to damages resulting from faulty
workmanship and materials, and create warranty and other reserves for the homes we sell based on historical experience
in our markets and our judgment of the risks associated with the types of homes built. Although we actively monitor our
insurance reserves and coverage, because of the uncertainties inherent to these matters, we cannot provide assurance that
our insurance coverage, our subcontractor arrangements and our reserves will be adequate to address all of our warranty
and construction defect claims in the future. In addition, contractual indemnities can be difficult to enforce. We may also
be responsible for applicable self-insured retentions and some types of claims may not be covered by insurance or may
exceed applicable coverage limits. Additionally, the coverage offered by and the availability of products and completed
operations excess liability insurance for construction defects is currently limited and costly. This coverage may be
further restricted or become more costly in the future.

In 2005 and 2006, we discontinued requiring insurance policies from most of our contractors in California and instead
adopted an Owner Controlled Insurance Plan (“OCIP”) for general liability exposures of most subcontractors (excluding
consultants), as a result of the inability of subcontractors to procure acceptable insurance coverage to meet our
requirements. Under the OCIP, subcontractors are effectively insured by us. We have assigned risk retentions and bid
deductions to our subcontractors based on their risk category. These deductions are used to fund future liabilities.

Unexpected expenditures attributable to defects or previously unknown sub-surface conditions arising on a development
project may have a material adverse effect on our business, financial condition and operating results. In addition, severe
or widespread incidents of defects giving rise to unexpected levels of expenditure, to the extent not covered by insurance
or redress against sub-contractors, may adversely affect our business, financial condition and operating results.

Our reliance on contractors can expose us to various liability risks.

We rely on contractors in order to perform the construction of our homes, and in many cases, to select and obtain raw
materials. We are exposed to various risks as a result of our reliance on these contractors and their respective
subcontractors and suppliers, including, as described above, the possibility of defects in our homes due to improper
practices or materials used by contractors, which may require us to comply with our warranty obligations and/or bring a
claim under an insurance policy. Several other homebuilders have received inquiries from regulatory agencies
concerning whether homebuilders using contractors are deemed to be employers of the employees of such contractors
under certain circumstances. Although contractors are independent of the homebuilders that contract with them under
normal management practices and the terms of trade contracts and subcontracts within the homebuilding industry, if
regulatory agencies reclassify the employees of contractors as employees of homebuilders, homebuilders using
contractors could be responsible for wage, hour and other employment-related liabilities of their contractors. In the event
that a regulatory agency reclassified the employees of our contractors as our own employees, we could be responsible
for wage, hour and other employment-related liabilities of our contractors.

Failure to manage land acquisitions, inventory and development and construction processes could result in
significant cost overruns or errors in valuing sites.

We own and purchase a large number of sites each year and are therefore dependent on our ability to process a very
large number of transactions (which include, among other things, evaluating the site purchase, designing the layout of
the development, sourcing materials and sub-contractors and managing contractual commitments) efficiently and
accurately. Errors by employees, failure to comply with regulatory requirements and conduct of business rules, failings
or inadequacies in internal control processes, equipment failures, natural disasters or the failure of external systems,

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including those of our suppliers or counterparties, could result in operational losses that could adversely affect our
business, financial condition and operating results and our relationships with our customers.

In certain circumstances, a grant of entitlements or development agreement with respect to a particular parcel of land
may include restrictions on the transfer of such entitlements to a buyer of such land, which may increase our exposure to
decreases in the price of such entitled land by restricting our ability to sell it for its full entitled value. In addition,
inventory carrying costs can be significant and can result in reduced margins or losses in a poorly performing
community or market. In recent periods of market weakness, we have sold homes and land for lower margins or at a loss
and we have recorded significant inventory impairment charges, and such conditions may recur. The recording of a
significant inventory impairment could negatively affect our reported earnings per share and negatively impact the
market perception of our business.

If land and lots are not available at competitive prices, our sales and results of operations could be adversely affected.

Our long-term profitability depends in large part on the price at which we are able to obtain suitable land and lots for the
development of our communities. Increases in the price (or decreases in the availability) of suitable land and lots could
adversely affect our profitability. Moreover, changes in the general availability of desirable land, competition for
available land and lots, limited availability of financing to acquire land and lots, zoning regulations that limit housing
density, environmental requirements and other market conditions may hurt our ability to obtain land and lots for new
communities at prices that will allow us to be profitable. If the supply of land and lots that are appropriate for
development of our communities becomes more limited because of these factors, or for any other reason, the cost of land
and lots could increase and the number of homes that we are able to build and sell could be reduced, which could
adversely affect our results of operations and financial condition.

If the market value of our land inventory decreases, our results of operations could be adversely affected by
impairments and write-downs.

The market value of our land and housing inventories depends on market conditions. We acquire land for expansion into
new markets and for replacement of land inventory and expansion within our current markets. There is an inherent risk
that the value of the land owned by us may decline after purchase. The valuation of property is inherently subjective and
based on the individual characteristics of each property. We may have acquired options on or bought and developed land
at a cost we will not be able to recover fully or on which we cannot build and sell homes profitably. In addition, our
deposits for lots controlled under option or similar contracts may be put at risk. Factors such as changes in regulatory
requirements and applicable laws (including in relation to building regulations, taxation and planning), political
conditions, the condition of financial markets, both local and national economic conditions, the financial condition of
customers, potentially adverse tax changes, and interest and inflation rate fluctuations subject valuations to uncertainty.
Moreover, all valuations are made on the basis of assumptions that may not prove to reflect economic or demographic
reality. If housing demand decreases below what we anticipated when we acquired our inventory, our profitability may
be adversely affected and we may not be able to recover our costs when we sell and build houses.

Due to economic conditions in the U.S. in recent years, including increased amounts of home and land inventory that
entered certain U.S. markets from foreclosure sales or short sales, the market value of our land and home inventory was
negatively impacted prior to 2011. Write-downs and impairments have had an adverse effect (and any further write-
downs may also have an adverse effect) on our business, financial condition and operating results. We recorded no
inventory impairments in 2011, 2012, 2013 or the year ended December 31, 2014. In 2011, the carrying value of all of
our land was adjusted to its fair market value as of the date of the Acquisition. We regularly review the value of our land
holdings and continue to review our holdings on a periodic basis. Further material write-downs and impairments in the
value of our inventory may be required, and we may in the future sell land or homes at a loss, which could adversely
affect our results of operations and financial condition.

21

If we experience shortages in labor supply, increased labor costs or labor disruptions, there could be delays or
increased costs in developing our communities or building homes, which could adversely affect our operating results.

We require a qualified labor force to develop our communities and build our homes. Access to qualified labor may be
affected by circumstances beyond our control, including:

• work stoppages resulting from labor disputes;

•

•

•

•

shortages of qualified trades people, such as carpenters, roofers, electricians and plumbers, especially in our
key markets in the southwest U.S.;

changes in laws relating to union organizing activity;

changes in immigration laws and trends in labor force migration; and

increases in sub-contractor and professional services costs.

Any of these circumstances could give rise to delays in the start or completion of, or could increase the cost of,
developing one or more of our communities and building homes. We may not be able to recover these increased costs by
raising our home prices because the price for each home is typically set months prior to its delivery pursuant to sales
contracts with our homebuyers. In such circumstances, our operating results could be adversely affected. Additionally,
market and competitive forces may also limit our ability to raise the sales prices of our homes.

Failure to recruit, retain and develop highly skilled, competent people at all levels, including finding suitable
subcontractors, may have a material adverse effect on our standards of service.

Key employees, including management team members, are fundamental to our ability to obtain, generate and manage
opportunities. Key employees working in the homebuilding and construction industries are highly sought after. Failure
to attract and retain such personnel or to ensure that their experience and knowledge are not lost when they leave the
business through retirement, redundancy or otherwise may adversely affect the standards of our service and may have an
adverse impact on our business, financial conditions and operating results. In addition, we do not maintain key person
insurance in respect of any member of our senior management team. The loss of any of our management members or
key personnel could adversely impact our business, financial condition and operating results.

The vast majority of our work carried out on site is performed by subcontractors. The difficult operating environment
over the last six years in the U.S. has resulted in the failure of some subcontractors’ businesses and may result in further
failures. In addition, reduced levels of homebuilding in the U.S. have led to some skilled tradesmen leaving the industry
to take jobs in other sectors. If subcontractors are not able to recruit sufficient numbers of skilled employees, our
development and construction activities may suffer from delays and quality issues, which would also lead to reduced
levels of customer satisfaction.

Government regulations and legal challenges may delay the start or completion of our communities, increase our
expenses or limit our homebuilding or other activities, which could have a negative impact on our results of
operations.

The approval of numerous governmental authorities must be obtained in connection with our development activities, and
these governmental authorities often have broad discretion in exercising their approval authority. We incur substantial
costs related to compliance with legal and regulatory requirements. Any increase in legal and regulatory requirements
may cause us to incur substantial additional costs, or in some cases cause us to determine that the property is not feasible
for development. Various local, state and federal statutes, ordinances, rules and regulations concerning building, health
and safety, site and building design, environment, zoning, sales and similar matters apply to and/or affect the housing
industry. We are also subject to various fees and charges of government authorities designed to defray the cost of
providing certain governmental services and improvements.

Municipalities may restrict or place moratoriums on the availability of utilities, such as water and sewer taps. If
municipalities in which we operate take such actions, it could have an adverse effect on our business by causing delays,
increasing our costs or limiting our ability to operate in those municipalities.

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Certain states, cities and counties in which we operate have in the past approved, or approved for inclusion on their
ballot, various “slow growth” or “no growth” initiatives and other ballot measures that could negatively impact the
availability of land and building opportunities within those localities. These measures may reduce our ability to open
new home communities and to build and sell homes in the affected markets, including with respect to land we may
already own, and create additional costs and administration requirements, which in turn may harm our future sales,
margins and earnings. A further expansion of these measures or the adoption of new slow-growth, no-growth or other
similar programs could exacerbate such risks.

Environmental regulations can also have an adverse impact on the availability and price of certain raw materials, such as
lumber.

In addition, there is a variety of new legislation being enacted, or considered for enactment at the federal, state and local
level relating to energy and climate change. This legislation relates to items such as carbon dioxide emissions control
and building codes that impose energy efficiency standards. New building code requirements that impose stricter energy
efficiency standards could significantly increase our cost to construct homes. As climate change concerns continue to
grow, legislation and regulations of this nature are expected to continue and become more costly to comply with.
Similarly, energy-related initiatives affect a wide variety of companies throughout the U.S. and the world and because
our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, they
could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of
our materials are burdened with expensive cap and trade and similar energy related regulations.

Governmental regulation affects not only construction activities but also sales activities, mortgage lending activities and
other dealings with consumers. In addition, it is possible that some form of expanded energy efficiency legislation may
be passed by the U.S. Congress or federal agencies and certain state legislatures, which may, despite being phased in
over time, significantly increase our costs of building homes and the sale price to our buyers, and adversely affect our
sales volumes. We may be required to apply for additional approvals or modify our existing approvals because of
changes in local circumstances or applicable law. Further, we may experience delays and increased expenses as a result
of legal challenges to our proposed communities, whether brought by governmental authorities or private parties.

Our Mortgage Operations business may be adversely affected by changes in governmental regulation and other risks
associated with acting as a mortgage lender.

While we intend for the loans originated by TMHF, our Mortgage Operations business, to typically be held for no more
than 20 days before being sold on the secondary market, if TMHF is unable to sell loans into the secondary mortgage
market or directly to large secondary market loan purchasers such as Fannie Mae and Freddie Mac, TMHF would bear
the risk of being a long-term investor in these originated loans. Mortgage lending is subject to credit risks associated
with the borrowers to whom the loans are extended and an increase in default rates could have a material and adverse
effect on our business. Being required to hold loans on a long-term basis would also negatively affect our liquidity and
could require us to use additional capital resources to finance the loans that TMHF is extending. In addition, although
mortgage lenders under the mortgage warehouse facilities TMHF currently uses to finance our lending operations
normally purchase our mortgages within 20 days of origination, if such mortgage lenders default under these warehouse
facilities TMHF would be required to fund the mortgages then in the pipeline. In such case, amounts available under our
Restated Revolving Credit Facility (as defined below) and cash from operations may not be sufficient to allow TMHF to
provide financing required by our business during these times.

An obligation to commit our own funds to long-term investments in mortgage loans could, among other things, delay the
time when we recognize revenues from home sales on our statements of operations. If, due to higher costs, reduced
liquidity, heightened risk retention obligations and/or new operating restrictions or regulatory reforms related to or
arising from compliance with new U.S. federal laws and regulations, residential consumer loan putback demands or
internal or external reviews of its residential consumer mortgage loan foreclosure processes, or other factors or business
decisions, TMHF could be unable to make loan products available to our homebuyers, and home sales and mortgage
services results of operations may be adversely affected.

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In addition, changes in governmental regulation with respect to mortgage lenders could adversely affect the financial
results of this portion of our business. Our mortgage lending operations are subject to numerous federal, state and local
laws and regulations. There have been numerous changes and proposed changes in these regulations as a result of the
housing downturn. For example, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was
enacted. Among other things, this legislation provides for minimum standards for mortgages and lender practices in
making mortgages, limitations on certain fees, retention of credit risk, prohibition of certain tying arrangements and
remedies for borrowers in foreclosure proceedings. In January 2013, the Consumer Financial Protection Bureau
proposed a number of new rules that became effective in January 2014, including but not limited to rules regarding the
creation and definition of a “Qualified Mortgage”, rules for lender practices regarding assessing borrowers’ ability to
repay, and limitations on certain fees and incentive arrangements. The effects of these rules upon their adoption could
affect the availability and cost of mortgage credit. Other requirements provided for by the Dodd-Frank Act have not yet
been finalized or implemented. The effect of such provisions on our Mortgage Operations business will depend on the
rules that are ultimately enacted. Any such changes or new enactments could adversely affect our financial condition and
results of operations and the market perception of our business.

The prices of our mortgages could be adversely affected if we lose any of our important commercial relationships.

TMHF has longstanding relationships with members of the lender community from which its borrowers benefit. TMHF
plans to continue with these relationships and use the correspondent lender platform as a part of its operational plan. If
our relationship with any one or more of those banks deteriorates or if one or more of those banks decide to renegotiate
or terminate existing agreements or otherwise exit the market, TMHF may be required to increase the price of our
products, or modify the range of products TMHF offers, which could cause us to lose customers who may choose other
providers based solely on the price or fees, which could adversely affect our financial condition and results of
operations.

We may not be able to use certain deferred tax assets, which may result in our having to pay substantial taxes.

We have significant deferred tax assets, including net operating losses in the U.S. that could be used to offset earnings
and reduce the amount of taxes we are required to pay. Our ability to use net operating losses to offset earnings is
dependent on a number of factors, including applicable rules relating to the permitted carry back period for offsetting
certain net operating losses against prior period earnings and the timing and amount of future taxable income.

Raw materials and building supply shortages and price fluctuations could delay or increase the cost of home
construction and adversely affect our operating results.

The homebuilding industry has, from time to time, experienced raw material shortages and been adversely affected by
volatility in global commodity prices. In particular, shortages and fluctuations in the price of concrete, drywall, lumber
or other important raw materials could result in delays in the start or completion of, or increase the cost of, developing
one or more of our residential communities.

In addition, the cost of petroleum products, which are used both to deliver our materials and to transport workers to our
job sites, fluctuates and may be subject to increased volatility as a result of geopolitical events or accidents such as the
Deepwater Horizon accident in the Gulf of Mexico. Changes in such costs could also result in higher prices for any
product utilizing petrochemicals. These cost increases may have an adverse effect on our operating margin and results of
operations. Furthermore, any such cost increase may adversely affect the regional economies in which we operate and
reduce demand for our homes.

The geographic concentration of our operations subjects us to an increased risk of loss of revenue or decreases in the
market value of our land and homes in these regions from factors which may affect any of these regions.

Our operations are concentrated in California, Colorado, Arizona, Texas and Florida. Some or all of these regions could
be affected by:

•

•

severe weather;

natural disasters;

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•

•

•

shortages in the availability or increased costs in obtaining land, equipment, labor or building supplies;

changes to the population growth rates and therefore the demand for homes in these regions; and

changes in the regulatory and fiscal environment.

Due to the concentrated nature of our operations, negative factors affecting one or a number of these geographic regions
at the same time could result in a relatively greater impact on our results of operations than they might have on other
companies that have a more diversified portfolio of operations. The markets we operate in may also depend, to a degree,
on certain sectors of the economy and any declines in those sectors may impact home sales and activities in that region.
For example, to the extent the oil and gas industries, which can be very volatile, are negatively impacted by declining
commodity prices, climate change, legislation or other factors, it could result in reduced employment, or other negative
economic consequences, which in turn could adversely impact our home sales and activities, particularly in Texas.

Changes to the population growth rates in certain of the markets in which we operate could affect the demand for
homes in these regions.

Slower rates of population growth or population declines in our key markets, especially as compared to the high
population growth rates in prior years, could affect the demand for housing, causing home prices in these markets to fall,
and adversely affect our business, financial condition and operating results.

We participate in certain unconsolidated joint ventures where we may be adversely impacted by the failure of the
unconsolidated joint venture or the other partners in the unconsolidated joint venture to fulfill their obligations.

We have investments in and commitments to certain unconsolidated joint ventures with related and unrelated strategic
partners to acquire and develop land and, in some cases, build and deliver homes. To finance these activities, our
unconsolidated joint ventures often obtain loans from third-party lenders that are secured by the unconsolidated joint
venture’s assets. To the extent any of our joint ventures default on obligations secured by the assets of such joint venture,
the assets could be forfeited to third-party lenders.

We have provided non-recourse carve-out guarantees to certain third-party lenders to our unconsolidated joint ventures
(i.e. guarantees of losses suffered by the lender in the event that the borrowing entity or its equity owners engage in
certain conduct, such as fraud, misappropriation of funds, unauthorized transfers of the financed property or equity
interests in the borrowing entity, or the commencement of a voluntary bankruptcy case by the borrowing entity, or the
borrowing entity violates environmental law, or hazardous materials are located on the property, or under other
circumstances provided for in such guarantee or indemnity). In the future, we may provide other guarantees and
indemnities to such lenders, including secured guarantees, in which case we may have increased liability in the event
that a joint venture defaults on its obligations to a third party.

If the other partners in our unconsolidated joint ventures do not provide such cooperation or fulfill these obligations due
to their financial condition, strategic business interests (which may be contrary to ours), or otherwise, we may be
required to spend additional resources (including payments under the guarantees we have provided to the unconsolidated
joint ventures’ lenders) and suffer losses, each of which could be significant. Moreover, our ability to recoup such
expenditures and losses by exercising remedies against such partners may be limited due to potential legal defenses they
may have, their respective financial condition and other circumstances. Furthermore, the termination of a joint venture
may also give rise to lawsuits and legal costs.

Information technology failures and data security breaches could harm our business.

We use information technology and other computer resources to carry out important operational and marketing activities
as well as maintain our business records, including information provided by our customers. Many of these resources are
provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify
certain security and service level standards. Our ability to conduct our business may be impaired if these resources are
compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration
or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption

25

or failure or error (including a failure of security controls incorporated into or applied to such hardware or software),
telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions
(including the failure to follow our security protocols), or lost connectivity to our networked resources. A significant and
extended disruption in the functioning of these resources could damage our reputation and cause us to lose customers,
sales and revenue.

In addition, breaches of our data security systems, including by cyber-attacks, could result in the unintended public
disclosure or the misappropriation of proprietary, personal and confidential information (including confidential
information about our employees, consumers who view our homes, homebuyers, mortgage loan borrowers and business
partners), and require us to incur significant expense to address and resolve these kinds of issues. The release of
confidential information may also lead to identity theft and related fraud, litigation or other proceedings against us by
affected individuals and/or business partners and/or by regulators, and the outcome of such proceedings, which could
include penalties or fines, could have a material and adverse effect on our business, financial condition and results of
operations. In addition, the costs of maintaining adequate protection against such threats, as they develop in the future
(or as legal requirements related to data security increase) could be material.

We may incur a variety of costs to engage in future growth or expansion of our operations or acquisitions or
disposals of businesses, and the anticipated benefits may never be realized.

As a part of our business strategy, we may make acquisitions, or significant investments in, and/or disposals of
businesses. Any future acquisitions, investments and/or disposals would be accompanied by risks such as:

•

•

•

difficulties in assimilating the operations and personnel of acquired companies or businesses;

diversion of our management’s attention from ongoing business concerns;

our potential inability to maximize our financial and strategic position through the successful incorporation or
disposition of operations;

• maintenance of uniform standards, controls, procedures and policies; and

•

impairment of existing relationships with employees, contractors, suppliers and customers as a result of the
integration of new management personnel and cost-saving initiatives.

For example, our recent disposition of Monarch requires the separation of our operations and personnel from those of
Monarch, as well as our performance of the related transition services agreement. This creates additional expense and
requires the allocation of management resources. We provided a customary indemnity to Monarch under the transition
services agreement, which could create further expense. The disposition may result in decreased earnings, revenue or
cash flow and may have a material adverse effect on our liquidity, which may materially and adversely affect our
business, financial conditions and operating results. The disposition may also result in lost synergies that could
negatively impact our balance sheet, income statement and cash flows.

We cannot guarantee that we will be able to successfully integrate any company or business that we might acquire in the
future, and our failure to do so could harm our current business.

In addition, we may not realize the anticipated benefits of these transactions and there may be other unanticipated or
unidentified effects. While we would seek protection, for example, through warranties and indemnities in the case of
acquisitions, significant liabilities may not be identified in due diligence or come to light after the expiry of warranty or
indemnity periods. Additionally, while we would seek to limit our ongoing exposure, for example, through liability caps
and period limits on warranties and indemnities in the case of disposals, some warranties and indemnities may give rise
to unexpected and significant liabilities. Any claims arising in the future may adversely affect our business, financial
condition and operating results. We may not able to manage the risks associated with these transactions and the effects
of such transactions, which may materially and adversely affect our business, financial conditions and operating results.

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We have defined benefit and defined contribution pension schemes to which we may be required to increase our
contributions to fund deficits.

We provide retirement benefits for former and certain of our current employees through a number of defined benefit and
defined contribution pension schemes. Certain of these plans are no longer available to new employees. As of
December 31, 2014, we had recorded a deficit of $10.2 million in our defined benefit pension plans. This deficit may
increase, and we may be required to increase contributions to our plans in the future, which may materially and
adversely affect our liquidity and financial condition.

A major health and safety incident relating to our business could be costly in terms of potential liabilities and
reputational damage.

Building sites are inherently dangerous, and operating in the homebuilding industry poses certain inherent health and
safety risks. Due to health and safety regulatory requirements and the number of projects we work on, health and safety
performance is critical to the success of all areas of our business. Any failure in health and safety performance may
result in penalties for non-compliance with relevant regulatory requirements, and a failure that results in a major or
significant health and safety incident is likely to be costly in terms of potential liabilities incurred as a result. Such a
failure could generate significant negative publicity and have a corresponding impact on our reputation, our relationships
with relevant regulatory agencies or governmental authorities, and our ability to attract customers, which in turn could
have a material adverse effect on our business, financial condition and operating results.

Ownership, leasing or occupation of land and the use of hazardous materials carries potential environmental risks
and liabilities.

We are subject to a variety of local, state and federal statutes, rules and regulations concerning land use and the
protection of health and the environment, including those governing discharge of pollutants to water and air, storm water
run-off, the presence of and exposure to asbestos, the handling of hazardous materials and the cleanup of contaminated
sites. We may be liable for the costs of removal, investigation or remediation of hazardous or toxic substances located
on, under or in a property currently or formerly owned, leased or occupied by us, whether or not we caused or knew of
the pollution. The costs of any required removal, investigation or remediation of such substances or the costs of
defending against environmental claims may be substantial. The presence of such substances, or the failure to remediate
such substances properly, may also adversely affect our ability to sell the land or to borrow using the land as security.
Environmental impacts from historical activities have been identified at some of the projects we have developed in the
past and additional projects may be located on land that may have been contaminated by previous use. Although we are
not aware of any projects requiring material remediation activities by us as a result of historical contamination, no
assurances can be given that material claims or liabilities relating to such developments will not arise in the future.

The particular impact and requirements of environmental laws that apply to any given community vary greatly according
to the community site, the site’s environmental conditions and the present and former use of the site. We expect that
increasingly stringent requirements may be imposed on homebuilders in the future. Environmental laws may result in
delays, cause us to implement time consuming and expensive compliance programs and prohibit or severely restrict
development in certain environmentally sensitive regions or areas, such as wetlands. We also may not identify all of
these concerns during any pre-development review of project sites. Environmental regulations can also have an adverse
impact on the availability and price of certain raw materials, such as lumber. Furthermore, we could incur substantial
costs, including cleanup costs, fines, penalties and other sanctions and damages from third-party claims for property
damage or personal injury, as a result of our failure to comply with, or liabilities under, applicable environmental laws
and regulations. In addition, we are subject to third-party challenges, such as by environmental groups, under
environmental laws and regulations to the permits and other approvals required for our projects and operations. These
matters could adversely affect our business, financial condition and operating results.

We may be liable for claims for damages as a result of use of hazardous materials.

As a homebuilding business with a wide variety of historic homebuilding and construction activities, we could be liable
for future claims for damages as a result of the past or present use of hazardous materials, including building materials

27

which in the future become known or are suspected to be hazardous. Any such claims may adversely affect our business,
financial condition and operating results. Insurance coverage for such claims may be limited or non-existent.

We may suffer uninsured losses or suffer material losses in excess of insurance limits.

We could suffer physical damage to property and liabilities resulting in losses that may not be fully compensated by
insurance. In addition, certain types of risks, such as personal injury claims, may be, or may become in the future, either
uninsurable or not economically insurable, or may not be currently or in the future covered by our insurance policies.
Should an uninsured loss or a loss in excess of insured limits occur, we could sustain financial loss or lose capital
invested in the affected property as well as anticipated future income from that property. In addition, we could be liable
to repair damage or meet liabilities caused by uninsured risks. We may be liable for any debt or other financial
obligations related to affected property. Material losses or liabilities in excess of insurance proceeds may occur in the
future.

In the U.S., the coverage offered and the availability of general liability insurance for construction defects is currently
limited and is costly. As a result, an increasing number of our subcontractors in the U.S. may be unable to obtain insurance,
particularly in California where we have instituted an OCIP, under which subcontractors are effectively insured by us. If we
cannot effectively recover construction defect liabilities and costs of defense from our subcontractors or their insurers, or if
we have self-insured, we may suffer losses. Coverage may be further restricted and become even more costly. Such
circumstances could adversely affect our business, financial condition and operating results.

We may face substantial damages or be enjoined from pursuing important activities as a result of existing or future
litigation, arbitration or other claims.

We are involved in various litigation and legal claims in the normal course of our business operations, including actions
brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and
regulations related to land development activities, house construction standards, sales practices, mortgage lending
operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination
or inquiry by various governmental agencies that administer these laws and regulations.

We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any
potential loss is reasonably estimable. We accrue for such matters based on the facts and circumstances specific to each
matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of
any amounts currently accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory
matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual
loss. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution
of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.
However, to the extent the liability arising from the ultimate resolution of any matter exceeds the estimates reflected in
the recorded reserves relating to such matter, we could incur additional charges that could be significant.

Poor relations with the residents of our communities could negatively impact sales, which could cause our revenues
or results of operations to decline.

Residents of communities we develop rely on us to resolve issues or disputes that may arise in connection with the
operation or development of their communities. Efforts made by us to resolve these issues or disputes could be deemed
unsatisfactory by the affected residents and subsequent actions by these residents could adversely affect sales or our
reputation. In addition, we could be required to make material expenditures related to the settlement of such issues or
disputes or to modify our community development plans, which could adversely affect our results of operations.

We are dependent on certain members of our management and key personnel.

Our business involves complex operations and therefore demands a management team and employee workforce that is
knowledgeable and expert in many areas necessary for our operations. Our performance and success are dependent, in
part, upon key members of our management and personnel, and their loss or departure could be detrimental to our future

28

success. Further, the process of attracting and retaining suitable replacements for key personnel whose services we may
lose would result in transition costs and would divert the attention of other members of our senior management from our
existing operations. In addition, we do not maintain key person insurance in respect of any members of our senior
management team. The loss of any of our management members or key personnel could adversely impact our business,
financial condition and operating results.

Utility and resource shortages or rate fluctuations could have an adverse effect on our operations.

Several of the markets in which we operate have historically been subject to utility and resource shortages, including
significant changes to the availability of electricity and water. Shortages of natural resources in our markets, particularly
of water, may make it more difficult for us to obtain regulatory approval of new developments. We have also
experienced material fluctuations in utility and resource costs across our markets, and we may incur additional costs and
may not be able to complete construction on a timely basis if such fluctuations arise. Our lumber inventory is
particularly sensitive to these shortages. Furthermore, these shortages and rate fluctuations may adversely affect the
regional economies in which we operate, which may reduce demand for our homes and negatively affect our business
and results of operations.

Constriction of the capital markets could limit our ability to access capital and increase our costs of capital.

We fund our operations from cash from operations, capital markets financings and borrowings under our Restated
Revolving Credit Facility and other credit facilities. Volatile economic conditions and the constriction of the capital
markets could reduce the sources of liquidity available to us and increase our costs of capital. If the size or availability of
our banking facilities is reduced in the future, or if we are unable to renew existing facilities in the future on favorable
terms, it would have an adverse effect on our liquidity and operations.

As of December 31, 2014, we had $252.3 million of debt maturing in the next 12 months. We believe we can meet this
and our other capital requirements with our existing cash resources and future cash flows and, if required, other sources
of financing that we anticipate will be available to us. However, we can provide no assurance that we will continue to be
able to do so, particularly if industry or economic conditions deteriorate. The future effects on our business, liquidity and
financial results of these conditions could be adverse, both in the ways described above and in other ways that we do not
currently foresee.

Our substantial debt could adversely affect our business, financial condition or results of operations and prevent us
from fulfilling our debt-related obligations.

We have a substantial amount of debt. As of December 31, 2014, the total principal amount of our debt (including
$160.8 million of indebtedness of TMHF) was $1.7 billion. Our substantial debt could have important consequences for
the holders of our common stock, including:

• making it more difficult for us to satisfy our obligations with respect to our debt or to our trade or other

creditors;

increasing our vulnerability to adverse economic or industry conditions;

limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly
when the availability of financing in the capital markets is limited;

requiring a substantial portion of our cash flows from operations and the proceeds of any capital markets
offerings for the payment of interest on our debt and reducing our ability to use our cash flows to fund working
capital, capital expenditures, acquisitions and general corporate requirements;

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate; and

placing us at a competitive disadvantage to less leveraged competitors.

•

•

•

•

•

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We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will
be available to us through capital markets financings or under our Restated Revolving Credit Facility or otherwise in an
amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. We may need to refinance
all or a portion of our indebtedness, on or before its maturity. We cannot assure you that we will be able to refinance any
of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in
order to finance our operations or to repay existing indebtedness. If we cannot service our indebtedness, we may have to
take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures,
strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be
effected on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders or on
terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

Restrictive covenants in the indentures governing our 2020 Senior Notes, our 2021 Senior Notes and the agreements
governing our Restated Revolving Credit Facility and other indebtedness may restrict our ability to pursue our
business strategies.

The indentures governing our 2020 Senior Notes, our 2021 Senior Notes (as defined below) and the agreement
governing our Restated Revolving Credit Facility limit our ability, and the terms of any future indebtedness may limit
our ability, among other things, to:

•

incur or guarantee additional indebtedness;

• make certain investments;

•

•

•

•

•

•

•

pay dividends or make distributions on our capital stock;

sell assets, including capital stock of restricted subsidiaries;

agree to restrictions on distributions, transfers or dividends affecting our restricted subsidiaries;

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

enter into transactions with our affiliates;

incur liens; and

designate any of our subsidiaries as unrestricted subsidiaries.

The agreement governing the Restated Revolving Credit Facility contains certain “springing” financial covenants
requiring TMM Holdings and its subsidiaries to comply with a certain maximum capitalization ratio and a certain
minimum consolidated tangible net worth test. The agreement governing the Restated Revolving Credit Facility also
contains customary restrictive covenants, including limitations on incurrence of liens, the payment of dividends and
other distributions, the making of asset dispositions, investments, sale and leasebacks, and limitations on debt payments
and amendments. See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Liquidity and Capital Resources in this Annual Report.

The restrictions contained in the indentures governing all of our Senior Notes and the agreement governing our Restated
Revolving Credit Facility could also limit our ability to plan for or react to market conditions, meet capital needs or
make acquisitions or otherwise restrict our activities or business plans.

A breach of any of the restrictive covenants under the agreements governing our Restated Revolving Credit Facility or
any of our Senior Notes could allow for the acceleration of both the Restated Revolving Credit Facility and the Senior
Notes. If the indebtedness under our Restated Revolving Credit Facility or the Senior Notes were to be accelerated, we
cannot assure you that our assets would be sufficient to repay in full that indebtedness and our other indebtedness. See
Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources in this Annual Report.

30

We may require additional capital in the future and may not be able to secure adequate funds on terms acceptable to us.

The expansion and development of our business may require significant capital, which we may be unable to obtain, to
fund our capital expenditures and operating expenses, including working capital needs. During 2014, 2013 and 2012 we
made expenditures for land and development of $1.0 billion, $897.1 million and $656.9 million, respectively.

During the next 12 months, we expect to meet our cash requirements with existing cash and cash equivalents, cash flow
from operations (including sales of our homes and land), proceeds from the disposition of Monarch and borrowings
under our Restated Revolving Credit Facility. We may fail to generate sufficient cash flow from the sales of our homes
and land to meet our cash requirements. Further, our capital requirements may vary materially from those currently
planned if, for example, our revenues do not reach expected levels or we have to incur unforeseen capital expenditures
and make investments to maintain our competitive position. If this is the case, we may require additional financing
sooner than anticipated or we may have to delay or abandon some or all of our development and expansion plans or
otherwise forego market opportunities.

To a large extent, our cash flow generation ability is subject to general economic, financial, competitive, legislative and
regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate
cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. As a result, we may need to
refinance all or a portion of our indebtedness, on or before its maturity, or obtain additional equity or debt financing. We
cannot assure you that we will be able to do so on commercially reasonable terms, if at all. Any inability to generate
sufficient cash flow, refinance our indebtedness or incur additional indebtedness on commercially reasonable terms
could adversely affect our financial condition and could cause us to be unable to service our debt and may delay or
prevent the expansion of our business.

Risks related to our structure and organization

TMHC’s only asset is its interest in TMM Holdings II Limited Partnership (“New TMM”), and accordingly it is
dependent upon distributions from New TMM to pay dividends, if any, taxes and other expenses. New TMM is a
holding company with no operations of its own and, in turn, relies on distributions from TMM Holdings and its
operating subsidiaries.

TMHC is a holding company and has no assets other than its ownership, directly or indirectly, of New TMM Units.
TMHC has no independent means of generating revenue. TMHC intends to cause New TMM to make distributions to its
partners in an amount sufficient to cover all applicable taxes payable and dividends, if any, declared by TMHC. To the
extent that TMHC needs funds, and New TMM is restricted from making such distributions under applicable law or
regulation, or is otherwise unable to provide such funds, it could materially and adversely affect TMHC’s liquidity and
financial condition. In addition, New TMM has no direct operations and derives all of its cash flow from TMM Holdings
and its subsidiaries. Because the operations of TMHC’s business are conducted through subsidiaries of TMM Holdings,
New TMM is dependent on those entities for dividends and other payments to generate the funds necessary to meet the
financial obligations of New TMM. Legal and contractual restrictions in the agreements governing the Restated
Revolving Credit Facility, certain of the Senior Notes and other debt agreements governing current and future
indebtedness of New TMM’s subsidiaries, as well as the financial condition and operating requirements of New TMM’s
subsidiaries, may limit TMHC’s ability to obtain cash from New TMM’s subsidiaries. The earnings from, or other
available assets of, New TMM’s subsidiaries may not be sufficient to pay dividends or make distributions or loans to
TMHC to enable TMHC to pay any dividends on the Class A Common Stock, taxes and other expenses.

The Principal Equityholders have substantial influence over our business, and their interests may differ from our
interests or those of our other stockholders.

The Principal Equityholders, via the TPG and Oaktree Holding Vehicles, hold a majority of the combined voting power
of TMHC. Due to their ownership, our Principal Equityholders have the power to control us and our subsidiaries,
including the power to:

•

elect a majority of our directors and appoint our executive officers, set our management policies and exercise
overall control over the Company and subsidiaries;

31

•

•

agree to sell or otherwise transfer a controlling stake in the Company; and

determine the outcome of substantially all actions requiring stockholder approval, including transactions with
related parties, corporate reorganizations, acquisitions and dispositions of assets, and dividends.

The interests of our Principal Equityholders may differ from our interests or those of our other stockholders and the
concentration of control in our Principal Equityholders will limit other stockholders’ ability to influence corporate
matters. The concentration of ownership and voting power of our Principal Equityholders may also delay, defer or even
prevent an acquisition by a third party or other change of control of the Company and may make some transactions more
difficult or impossible without the support of our Principal Equityholders, even if such events are perceived by the other
stockholders as being in their best interest. The concentration of voting power among our Principal Equityholders may
have an adverse effect on the price of our Class A Common Stock. The Company may take actions that our other
stockholders do not view as beneficial, which may adversely affect our results of operations and financial condition and
cause the value of your investment to decline.

Pursuant to the stockholders agreement, to which TMHC is a party, along with the TPG and Oaktree Holding Vehicles
and JH, certain of our actions require the approval of the directors nominated by the TPG and Oaktree Holding Vehicles.
Specifically, the approval of a director nominated by the TPG Holding Vehicle, so long as it owns at least 50% of
TMHC’s common stock held by it at the closing of our IPO (and the application of net proceeds therefrom), and the
approval of a director nominated by the Oaktree Holding Vehicle, so long as it owns at least 50% of TMHC’s common
stock held by it following our IPO (and the application of net proceeds therefrom), must be obtained before we are
permitted to take any of the following actions:

•

•

•

•

•

•

any change of control of TMHC;

acquisitions or dispositions by TMHC or any of its subsidiaries of assets valued at more than $50.0 million;

incurrence by TMHC or any of its subsidiaries of any indebtedness in an aggregate amount in excess of
$50.0 million or the making of any loan in excess of $50.0 million;

issuance of any equity securities of TMHC, subject to limited exceptions (which include issuances pursuant to
approved compensation plans);

hiring and termination of our Chief Executive Officer; and

certain changes to the size of our Board of Directors.

Section 203 of the Delaware General Corporation Law may affect the ability of an “interested stockholder” to engage in
certain business combinations, including mergers, consolidations or acquisitions of additional shares, for a period of
three years following the time that the stockholder becomes an “interested stockholder.” An “interested stockholder” is
defined to include persons owning directly or indirectly 15% or more of the outstanding voting stock of a corporation.
We have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the
Delaware General Corporation Law. Nevertheless, our amended and restated certificate of incorporation contains
provisions that have the same effect as Section 203 of the Delaware General Corporation Law, except that they provide
that the TPG and Oaktree Holding Vehicles and their respective affiliates and transferees will not be deemed to be
“interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be
subject to such restrictions.

In addition, because the Principal Equityholders hold their economic interest in our business through New TMM, but not
through TMHC, the public company, these existing owners may have conflicting interests with holders of shares of our
Class A Common Stock.

32

As a “controlled company” within the meaning of the corporate governance rules of the New York Stock Exchange,
we qualify for, and rely on, exemptions from certain corporate governance requirements. As a result, holders of our
Class A Common Stock may not have the same degree of protection as that afforded to stockholders of companies
that are subject to all of the corporate governance requirements of these exchanges.

We are a “controlled company” within the meaning of the corporate governance rules of the New York Stock Exchange
as a result of the ownership position and voting rights of our Principal Equityholders. A “controlled company” is a
company of which more than 50% of the voting power is held by an individual, group or another company. More than
50% of our voting power is held by the TPG and Oaktree Holding Vehicles. As a controlled company, we are entitled to
elect, and have elected, not to comply with certain corporate governance rules of the New York Stock Exchange that
would otherwise require the Board of Directors to have a majority of independent directors and our compensation and
nominating and governance committees to be comprised entirely of independent directors, have written charters
addressing such committees’ purposes and responsibilities and perform an annual evaluation of such committees.
Accordingly, holders of our Class A Common Stock do not have the same protection afforded to stockholders of
companies that are subject to all of the corporate governance requirements of the New York Stock Exchange and the
ability of our independent directors to influence our business policies and affairs may be reduced.

TMHC’s directors who have relationships with the Principal Equityholders may have conflicts of interest with respect
to matters involving the Company.

The majority of TMHC’s directors are affiliated with the Principal Equityholders. These persons have fiduciary duties to
TMHC and in addition have duties to the Principal Equityholders. In addition, TMHC’s amended and restated certificate
of incorporation provides that no officer or director of TMHC who is also an officer, director, employee or other affiliate
of the Principal Equityholders or an officer, director or employee of an affiliate of the Principal Equityholders will be
liable to TMHC or its stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs
a corporate opportunity to the Principal Equityholders or their affiliates instead of TMHC, or does not communicate
information regarding a corporate opportunity to TMHC that such person or affiliate has directed to the Principal
Equityholders or their affiliates. As a result, such circumstances may entail real or apparent conflicts of interest with
respect to matters affecting both TMHC and the Principal Equityholders, whose interests, in some circumstances, may
be adverse to those of TMHC. In addition, as a result of the Principal Equityholders’ indirect ownership interest,
conflicts of interest could arise with respect to transactions involving business dealings between TMHC and the
Principal Equityholders or their affiliates, including potential business transactions, potential acquisitions of businesses
or properties, the issuance of additional securities, the payment of dividends by TMHC and other matters.

Failure to maintain effective internal control over financial reporting could have an adverse effect on our business,
operating results and the trading price of our securities.

As a public company we are required to document and test our internal control procedures to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act and the related rules of the SEC, which require, among other things, our
management to assess annually the effectiveness of our internal control over financial reporting and our independent
registered public accounting firm to issue a report on our internal control over financial reporting. If our management is
unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot
render an opinion on management’s assessment and on the effectiveness of our internal control over financial reporting,
or if material weaknesses in our internal controls are identified, it could lead to material misstatements in our financial
statements, we may be unable to meet our disclosure obligations and investors could lose confidence in our reported
financial information. Failure to comply with Section 404 of the Sarbanes-Oxley Act could potentially subject us to
sanctions or investigations by the SEC, the Financial Industry Regulatory Authority or other regulatory authorities.

Provisions in our charter and bylaws and provisions of Delaware law may delay or prevent our acquisition by a third
party, which might diminish the value of our Class A Common Stock. Provisions in our debt agreements may also
require an acquirer to refinance our outstanding indebtedness if a change of control occurs.

In addition to the TPG and Oaktree Holding Vehicles holding a majority of the voting power of TMHC, our amended
and restated certificate of incorporation and our bylaws contain certain provisions that may discourage, delay or prevent

33

a change in our management or control over us that stockholders may consider favorable, including the following, some
of which may only become effective when the TPG and Oaktree Holding Vehicles no longer beneficially own shares
representing 50% or more of the combined voting power of our common stock (the “Triggering Event”):

•

•

•

•

•

•

•

the division of our board of directors into three classes and the election of each class for three-year terms;

the sole ability of the board of directors to fill a vacancy created by the expansion of the board of directors;

advance notice requirements for stockholder proposals and director nominations;

after the Triggering Event, limitations on the ability of stockholders to call special meetings and to take action
by written consent;

after the Triggering Event, in certain cases, the approval of holders of at least three-fourths of the shares
entitled to vote generally on the making, alteration, amendment or repeal of our certificate of incorporation or
bylaws will be required to adopt, amend or repeal our bylaws, or amend or repeal certain provisions of our
certificate of incorporation;

after the Triggering Event, the required approval of holders of at least three-fourths of the shares entitled to
vote at an election of the directors to remove directors, which removal may only be for cause; and

the ability of our board of directors to designate the terms of and issue new series of preferred stock without
stockholder approval, which could be used, among other things, to institute a rights plan that would have the
effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing
acquisitions that have not been approved by our board of directors.

Section 203 of the Delaware General Corporation Law may affect the ability of an “interested stockholder” to engage in
certain business combinations for a period of three years following the time that the stockholder becomes an “interested
stockholder.” We have elected in our amended and restated certificate of incorporation not to be subject to Section 203
of the Delaware General Corporation Law. Nevertheless, our amended and restated certificate of incorporation contains
provisions that have the same effect as Section 203 of the Delaware General Corporation Law, except that they provide
that the TPG and Oaktree Holding Vehicles and their respective affiliates and transferees will not be deemed to be
“interested stockholders,” and accordingly will not be subject to such restrictions.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be
willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company,
thereby reducing the likelihood that you could receive a premium for your common stock in the acquisition.

Under our Restated Revolving Credit Facility, a change of control would be an event of default, which would therefore
require a third party acquirer to obtain a facility to refinance any outstanding indebtedness under the Restated Revolving
Credit Facility. Under the indentures governing our Senior Notes, if a change of control were to occur, we would be
required to make offers to repurchase the Senior Notes at prices equal to 101% of their respective principal amounts.
These change of control provisions in our existing debt agreements may also delay or diminish the value of an
acquisition by a third party.

Any of the above risks could have a material adverse effect on your investment in our Class A Common Stock and
Senior Notes.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

34

ITEM 2. PROPERTIES

We lease office facilities for our homebuilding and mortgage operations. We lease our corporate headquarters, which is
located in Scottsdale, Arizona. The lease on this facility covers a space of approximately 24,000 square feet and expires in
June 2018. We lease approximately 12 other properties for our other division offices and design centers. For information on
land owned and controlled by us for use in our homebuilding activities, please refer to Item 1 — Business — Homebuilding
Operations — Land Acquisition Policies and Development.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various litigation and legal claims in the normal course of our business operations, including actions
brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and
regulations related to land development activities, house construction standards, sales practices, mortgage lending
operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination
or inquiry by various governmental agencies that administer these laws and regulations. We establish liabilities for legal
claims and regulatory matters when such matters are both probable of occurring and any potential loss is reasonably
estimable. We accrue for such matters based on the facts and circumstances specific to each matter and revise these
estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently
accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally
cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss. While the outcome
of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have
a material adverse impact on our results of operations, financial position, or cash flows. However, to the extent the
liability arising from the ultimate resolution of any matter exceeds the estimates reflected in the recorded reserves
relating to such matter, we could incur additional charges that could be significant.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

35

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY

Market Information

The Company lists its Class A Common Stock on the New York Stock Exchange (NYSE) under the symbol “TMHC”.
On February 27, 2015 the Company had one holder of record of our Class A Common Stock. The following table sets
forth for the quarters indicated the range of high and low trading for the Company’s common stock during fiscal year
ended:

High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.09
19.67

$24.13
20.04

$22.81
16.22

$19.89
15.13

Year Ended December 31, 2014

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Year Ended December 31, 2013

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

N/A
N/A

$26.89
23.04

$25.89
19.96

$23.40
20.02

The Company’s Class B Common Stock is not listed on a securities exchange. On February 27, 2015 the Company had
38 holders of our Class B Common Stock. For details on the Class B Common Stock see Note 13 — Stockholders’
Equity — Reorganization Transactions in the Notes to the Consolidated Financial Statements included in Item 8 of this
Annual Report.

36

Stock Performance Graph

The following shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference
into any of our other filings under the Exchange Act or the Securities Act, except to the extent we specifically
incorporate it by reference into such filing.

This chart compares the cumulative total return on our common stock with that of the Standard & Poor’s 500 Composite
Stock Index (the “S&P 500”) and the Standard & Poor’s Homebuilding Index (the “S&P Homebuilding”). The chart
assumes $100.00 was invested at the close of market on April 10, 2013, the date of our IPO, in the Class A common
stock of Taylor Morrison Home Corporation, the S&P 500 Index and the S&P Homebuilding Index, and assumes the
reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future
stock price performance.

Comparison of Cumulative Total Return Among TMHC, the S&P 500 and the S&P Homebuilding from April 10,
2013 to December 31, 2014

$135

$120

$105

$90

$75

$60

04/10/13

06/30/13

09/30/13

12/31/13

03/31/14

06/30/14

09/30/14

12/31/14

TMHC

S&P 500 Index

S&P Home building

4/10/13

6/30/13

9/30/13

12/31/13

3/31/14

6/30/14

9/30/14

12/31/14

TMHC . . . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . .
S&P Homebuilding . . . . . . . . . . . .

$100.00
100.00
100.00

$105.82
101.17
99.92

$ 98.31
105.91
103.96

$ 97.44
116.42
113.15

$102.00
117.93
110.64

$ 97.31
123.46
111.36

$ 70.40
124.22
100.67

$ 81.99
129.68
116.13

Dividends

We currently anticipate that we will retain all available funds for use in the operation and expansion of our business, and do
not anticipate paying any cash dividends in the foreseeable future or to make distributions from New TMM to its limited
partners (other than to TMHC to fund its operations). See Item 7 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations. TMHC has not previously declared or paid any cash dividends on its common stock.

Any future determination as to our dividend policy will be made at the discretion of the Board of Directors of TMHC
and will depend upon many factors, including the covenants governing our Restated Revolving Credit Facility and
certain of our Senior Notes that limit our ability to pay dividends to stockholders and other factors the Board of Directors
of TMHC deem relevant. For further information, see Item 7 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources — 2020 Senior Notes, —
2021 Senior Notes and — Revolving Credit Facility.

Issuer Purchases of Equity Securities

None.

37

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected consolidated financial and operating data at and for each of the five fiscal years
ending December 31, 2014. It should be read in conjunction with the Consolidated Financial Statements and Notes
thereto, listed in Item 8 of this Annual Report and Management’s Discussion and Analysis of Financial Condition and
Results of Operations included in Item 7 of this Annual Report.

(Dollars in thousands, except per share amounts)
Statements of Operations Data:
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision (benefit)
. . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . .
Income from discontinued operations – net of tax . . . . . . . . . .
Net income before allocation to non-controlling interests . . . .
Net (income) loss attributable to non-controlling interests –

joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income before non-controlling interests – Principal

TMHC

Predecessor (1)

Year Ended December 31,

2014

2013

2012

July 13 to
December 31,
2011

January 1
to July 12,
2011

Year Ended
December 31,
2010

$2,708,432
$ 566,246
$
76,395
$ 225,599
$
41,902
$ 267,501

$1,916,081 $1,041,182
$ 415,865 $ 206,641
$ (23,810) $ (284,298)
28,355 $ 355,955
$
66,513 $
$
74,893
94,868 $ 430,848
$

$409,442
$ 76,234
$ (12,005)
707
$
$ 26,060
$ 26,767

$341,452
$ 63,923
$
4,229
7,670
$
$ 42,350
$ 50,020

$722,740
$132,009
$ (40,240)
$ 7,769
$ 82,833
$ 90,602

$

(1,648) $

131 $

(28)

$ (1,178)

$ (4,122)

$ (3,235)

Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 265,853

$

94,999 $ 430,820

$ 25,589

$ 45,898

$ 87,367

Net (income) loss from continuing operations attributable to

non-controlling interests – Principal Equityholders . . . . . . .

$ (163,790) $

1,442 $ (355,927)

$

471

$ (3,548)

$ (4,534)

Net income from discontinued operations attributable to non-

controlling interests – Principal Equityholders (2) . . . . . . . . .

$ (30,594) $ (51,021) $ (74,893)

(26,060)

$ (42,350)

$ (82,833)

Net income available to Taylor Morrison Home

Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

71,469

$

45,420 $

—

$ —

$ —

$ —

Earnings per common share:

Basic

Income from continuing operations . . . . . . . . . . . . .
Discontinued operations – net of tax (2) . . . . . . . . . . .

Net income available to Taylor Morrison Home

Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted

Income from continuing operations . . . . . . . . . . . . .
Discontinued operations – net of tax (2) . . . . . . . . . . .

Net income available to Taylor Morrison Home

Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

$

$
$

$

1.83
0.34

2.17

1.83
0.34

2.17

$
$

$

$
$

$

0.91
0.47

1.38

0.91
0.47

1.38

Weighted average number of shares of common stock:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32,937
122,313

32,840
122,319

N/A
N/A

N/A

N/A
N/A

N/A

N/A
N/A

N/A
N/A

N/A

N/A
N/A

N/A

N/A
N/A

N/A
N/A

N/A

N/A
N/A

N/A

N/A
N/A

N/A
N/A

N/A

N/A
N/A

N/A

N/A
N/A

(1) The selected financial data as of and for the year ended December 31, 2010 and for the period from January 1, 2011 to July 12, 2011 have been

derived from the financial statements of our predecessor, Taylor Woodrow Holdings (USA), Inc., now known as Taylor Morrison Communities,
Inc. The predecessor period financial statements have been prepared using the historical cost basis of accounting that existed prior to the
Acquisition in accordance with U.S. GAAP. The successor period financial statements for periods ending subsequent to July 13, 2011 (the date of
the Acquisition) are also prepared in accordance with U.S. GAAP, although they reflect adjustments made as a result of the application of purchase
accounting in connection with the Acquisition. As a result, the financial information for periods subsequent to the date of the Acquisition is not
necessarily comparable to that for the predecessor periods.

(2) See Notes 1 and 4 to Notes to the Consolidated Financial Statements for information regarding our disposition of Monarch and our treatment of that

segment as discontinued operations.

2014

2013

2012

2011

2010

As of December 31,

Balance Sheet Data (at period end):
Cash and cash equivalents, excluding restricted cash . . . . . . . . .
Real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Data (for the period ended):
Average active selling communities . . . . . . . . . . . . . . . . . . . . . . .
Net sales orders (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Home closings (units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average sales price of homes delivered . . . . . . . . . . . . . . . . . . . .
Backlog at the end of period (value) . . . . . . . . . . . . . . . . . . . . . . .
Backlog at the end of period (units) . . . . . . . . . . . . . . . . . . . . . . .

$ 234,217
2,518,321
4,133,113
1,737,106
1,777,161

206
5,728
5,642
$
464
$1,099,767
2,252

$ 193,518
2,012,580
3,438,558
1,257,730
1,544,901

158
5,018
4,716
$
394
$ 987,754
2,166

$ 111,083
1,366,902
2,738,056
969,499
1,204,575

108
3,738
2,933
$
336
$ 716,033
1,864

$ 103,367
794,881
1,671,067
568,967
628,565

120
2,564
2,327
$
306
$ 259,391
740

$

42,322
798,030
1,527,324
567,202
465,529

127
2,319
2,570
$
274
$ 170,503
503

38

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Business Overview

Our principal business is residential homebuilding and the development of lifestyle communities with operations
geographically focused in Arizona, California, Colorado, Florida, and Texas. Our homes appeal to entry-level, move-up,
55+ and luxury homebuyers, with a focus on move-up customers in high-growth markets. Our homebuilding company
operates under our Taylor Morrison and Darling Homes brand names. Our business is organized into ten homebuilding
operating divisions, and a mortgage division, which are managed as three reportable segments: East, West and Mortgage
Operations, as follows:

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

West
Mortgage Operations . . . . . . . . . . . . . . . . . . Mortgage and Financial Services (TMHF)

Houston (which includes a Taylor Morrison division and a
Darling Homes division), Austin, Dallas, North Florida and
West Florida
Phoenix, Northern California, Southern California and Denver

We offer single family attached and/or detached homes and revenue is recognized when the homes are completed and
delivered to the buyers. Our primary costs are the acquisition of land in various stages of development and the
construction costs of the homes we sell.

Our Mortgage Operations reportable segment provides financial services to customers in the United States through our
wholly owned mortgage subsidiary, TMHF. Revenues from loan origination are recognized at the time the related real
estate transactions are completed, usually upon the close of escrow.

On January 28, 2015, we completed the sale of our Monarch business for total proceeds of approximately CAD $570
million. Through this strategic sale, we were able to capture what we believe was an attractive valuation for this asset at
a time when market dynamics are changing. By exiting the Canadian business, we will focus solely on U.S. operations,
where we believe we can reinvest proceeds from the sale of Monarch in new and existing markets to generate higher
returns to maximize shareholder value.

Industry Overview and Current Market Developments

We believe that a fundamental housing recovery is still underway on a national basis, driven by consumers who are
increasingly optimistic about their economic prospects, and we believe the recovery is supported by certain positive
economic and demographic factors, including decreasing unemployment, increasing home values, improving household
balance sheets, declines in new and existing for-sale home inventory and low interest rates supporting affordability and
home ownership. While we were encouraged by certain positive and improved trends during 2014, several challenges
still exist that may impact the speed of the recovery, such as lingering unemployment concerns, stagnation in real wages
and real or perceived personal wealth, national and global economic uncertainty and a continuing restrictive mortgage
lending environment. We are additionally challenged by shortages in the labor supply, specifically as it relates to
qualified tradespeople. Nevertheless, we believe we are in an upward business cycle in most of our markets as the ability
to deliver homes to prospective buyers still lags behind demand and the availability of new and pre-owned homes
remains constrained.

Land Acquisition and Development

Because the housing market is cyclical, and home price movement between the peak and trough of the cycle can be
significant, we seek to adhere to our core operating principles through these cycles to drive consistent long-term
performance.

Based on our current land position, we expect to drive revenue by opening new communities from our existing land
supply. We believe land supply provides us with the opportunity to increase community count prospectively. We also
currently own or have an option to purchase the majority of the land on which we expect to close homes during 2015.
During the next twelve months we expect to open communities in geographic markets in line with consumer demand.

39

Our approach in allocating capital and managing our land portfolio has been to acquire assets that have attractive
characteristics, including good access to schools, shopping, recreation and transportation facilities. In connection with
our overall land inventory management process, our management team reviews these considerations, as well as other
financial metrics, in order to decide the highest and best use of our capital.

We intend to maintain a consistent approach to land positioning within our regions, markets and communities in the
foreseeable future in an effort to concentrate a greater amount of our land inventory in areas that have the attractive
characteristics referred to above. We also intend to continue to combine our land development expertise with our
homebuilding operations to increase the flexibility of our business, to enhance our margin performance and to control
the timing of delivery of lots. From time to time, we may sell land in our communities if we believe it is best for our
overall operations. We do not expect such sales to have a significant effect on our overall results, but they may impact
our overall gross margins.

We will continue to identify the preferences of our customer and demographic groups and offer them innovative, high-
quality homes that are efficient and profitable to build. To achieve this goal, we conduct market research to determine
preferences of our customer groups.

We will also seek to grow through selective acquisitions in both existing markets and new markets that exhibit positive
long-term fundamentals.

2014 Highlights

Key financial results as of and for the year ended December 31, 2014 are as follows:

• U.S. community count increased 30% to 206 average communities from 158 year-over-year

• Net sales orders in the U.S. increased 14% to 5,728

• U.S. average monthly absorption pace was 2.3 compared to 2.6 in the prior year

• U.S. cancellations as a percentage of gross sales orders was 13.2% compared to 14.3% in the prior year

• Home closings in our U.S. operations increased 20% to 5,642

• Average prices of homes closed in the U.S. increased 18% to $464,000

• Mortgage Operations reported gross profit of $16 million on revenue of $35 million

Factors Affecting Comparability of Results

You should read this Management’s Discussion and Analysis of our Financial Condition and Results of Operations in
conjunction with our historical consolidated financial statements included elsewhere in this Annual Report. The primary
factor that affects the comparability of our results operations is the disposal of our Monarch business. For all periods
presented, the results and assets and liabilities of Monarch are included in discontinued operations. In addition to the
impact of the matters discussed in the Risk Factors listed in Item 1A of this Annual Report, our future results could
differ materially from our historical results due to the disposition of our Monarch business in early 2015, our IPO in
2013 and the acquisition of Darling in 2012.

Non-GAAP Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States
(“GAAP”), we have provided information in this Annual Report relating to “adjusted home closings gross margins.”

Adjusted home closings gross margins

We calculate adjusted home closings gross margin from U.S. GAAP gross margin by adding impairment charges, if any,
attributable to the write-down of communities, and the amortization of capitalized interest through cost of home
closings. We evaluate adjusted home closings gross margin, which is calculated by adding back to home closings gross

40

margin the capitalized interest amortization related to the homes closed. Management uses adjusted home closings gross
margin to evaluate our operational and economic performance on a consolidated basis as well as the operational and
economic performance of our segments. We believe adjusted home closings gross margin is relevant and useful to
investors for evaluating our overall financial performance. This measure is considered a non-GAAP financial measure
and should be considered in addition to, rather than as a substitute for, the comparable U.S. GAAP financial measure as
a measure of our operating performance. Although other companies in the homebuilding industry report similar
information, the methods used may differ. We urge investors to understand the methods used by other companies in the
homebuilding industry to calculate gross margins and any adjustments to such amounts before comparing our measures
to those of such other companies.

Critical Accounting Policies

General

The discussion and analysis of our financial condition and results of operations are based upon our consolidated
financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial
statements requires management to make estimates and judgments that affect the reported amounts of assets and
liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities at the date of our financial
statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our
reported results of operations and financial condition.

Certain accounting policies involve significant judgments and assumptions by management, which have a material impact
on the carrying value of assets and liabilities and the recognition of income and expenses. The estimates and assumptions
used by management are based on historical experience and other factors, which are believed to be reasonable under the
circumstances. The significant accounting policies that management believes are the most critical to aid in fully
understanding and evaluating our reported financial results are critical accounting policies and are described below.

Revenue Recognition

Home Closings Revenue, net

Home closings revenue is recorded using the completed-contract method of accounting at the time each home is closed,
delivered, title and possession are transferred to the buyer, we have no significant continuing involvement with the
home, risk of loss has transferred, and the buyer has demonstrated sufficient initial and continuing investment in the
property. A home is considered closed when escrow closes and funds have transferred from the buyer or mortgage
company to us.

We typically grant our homebuyers certain sales incentives, including cash discounts, incentives on options included in
the home, option upgrades, and seller-paid financing or closing costs. Incentives and discounts are accounted for as a
reduction in the sales price of the home, and home closings revenue is shown net of discounts. We also receive rebates
from certain vendors and these rebates are accounted for as a reduction to cost of home closings.

Land Closings Revenue

Land closings revenue is recognized when title is transferred to the buyer, we have no significant continuing
involvement, and the buyer has demonstrated sufficient initial and continuing investment in the property sold. If the
buyer has not made an adequate initial or continuing investment in the property, the profit on such sale is deferred until
these conditions are met.

Mortgage Operations Revenue

Loan origination revenue (including title fees, points, closing costs) is recognized at the time the related real estate
transactions are completed, usually upon the close of escrow. All of the loans TMHF originates are sold to third party
investors within a short period of time, within than 20 business days, on a non-recourse basis. Since TMHF does not
have continuing involvement with the transferred assets, we derecognize the mortgage loans at the time of sale, based on
the difference between the selling price and carrying value of the related loans upon sale, recording a gain/loss on sale.

41

Real Estate Inventory Valuation and Costing

Inventory consists of land, land under development, homes under construction, completed homes, and model homes, which
are stated at cost. In addition to direct carrying costs, we also capitalize interest, real estate taxes, and related development
costs that benefit the entire community, such as field construction supervision and related direct overhead. Home
construction costs are accumulated and charged to cost of sales at home closing using the specific identification method.
Land acquisition, development, interest, real estate taxes and overhead are allocated to homes and units using methods that
approximate the relative sales value method. These costs are capitalized to inventory from the point development begins to
the point construction is completed. Changes in estimated costs to be incurred in a community are generally allocated to the
remaining homes on a prospective basis. For those communities that have been temporarily closed or development has been
discontinued, we do not allocate interest or other costs to the community’s inventory until activity resumes.

We assess the recoverability of our land inventory in accordance with the provisions of ASC Topic 360, “Property,
Plant, and Equipment.” We review our real estate inventory for indicators of impairment by community during each
reporting period. If indicators of impairment are present for a community, we first perform an undiscounted cash flow
analysis to determine if the carrying value of the assets in that community exceeds the undiscounted cash flows. If the
carrying value of the assets exceeds their estimated undiscounted cash flows, then the assets are deemed to be impaired
and are recorded at fair value as of the assessment date. These cash flows are significantly impacted by various estimates
of sales prices, construction costs, sales pace, and other factors. The discount rate used in determining each asset’s fair
value depends on the community’s projected life and development stage.

When an impairment charge for a community is determined, the charge is then allocated to each lot in the community in
the same manner as land and development costs are allocated to each lot. Inventory within each community is
categorized as construction in progress and finished homes, residential land and lots developed and under development,
or land held for development, based on the stage of production or plans for future development.

Our estimate of undiscounted cash flows from these communities may change with market conditions and could result in
a need to record impairment charges to adjust the carrying value of these assets to their estimated fair value. Several
factors could lead to changes in the estimates of undiscounted future cash flows for a given community. The most
significant of these include pricing and incentive levels actually realized in the community, the rate at which the homes
are sold and changes in the costs incurred to develop lots and construct homes. Pricing and incentive levels are often
interrelated with sales pace within a community, and price reductions generally lead to an increase in sales pace. Further,
both of these factors are heavily influenced by the competitive pressures facing a given community from both new
homes and existing homes, some of which may result from foreclosures. If conditions worsen in the broader economy,
the homebuilding industry or specific markets in which we operate, and as we re-evaluate specific community pricing
and incentives, construction and development plans and our overall land sale strategies, we may be required to evaluate
additional communities or re-evaluate previously impaired communities for potential impairment. For assets that are
currently “mothballed” (i.e., strategic long-term land positions not currently under development or subject to an active
selling effort), assumptions are based on current development plans and current price pace and house costs of similar
communities. These evaluations may result in additional impairment charges.

The life cycle of a community generally ranges from three to five years, commencing with the acquisition of unentitled
or entitled land, continuing through the land development phase and concluding with the sale, construction and delivery
of homes. Actual community lives will vary based on the size of the community, the sales absorption rate and whether
we purchased the property as raw land or as finished lots.

We capitalize certain interest costs to inventory during the development and construction periods. Capitalized interest is
charged to cost of sales when the related inventory is delivered or when the related inventory is charged to cost of sales.

Insurance Costs, Self-Insurance Reserves and Warranty Reserves

We have certain deductible amounts under our workers’ compensation, automobile and general liability insurance
policies, and we record expense and liabilities for the estimated costs of potential claims for construction defects. We
also generally require our sub-contractors and design professionals to indemnify us for liabilities arising from their work,
subject to certain limitations. We are the parent of Beneva, which provides insurance coverage for construction defects
discovered during a period of time up to ten years following the sale of a home, coverage for premise operations risk,

42

and property coverage. We accrue for the expected costs associated with the deductibles and self-insured amounts under
our various insurance policies based on historical claims, estimates for claims incurred but not reported, and potential for
recovery of costs from insurance and other sources. The estimates are subject to significant variability due to various
factors, such as claim settlement patterns, litigation trends and the length of time in which a construction defect claim
might be made after the closing of a home.

We offer warranties on homes that generally provide for a limited one-year warranty to cover various defects in
workmanship or materials or to cover structural construction defects. We may also facilitate a longer warranty in certain
markets or to comply with regulatory requirements. Warranty reserves are recorded as each home closes in an amount
estimated to be adequate to cover expected future costs of materials and outside labor during warranty periods. Our
warranty is not considered a separate deliverable in each sale arrangement, so it is accounted for in accordance with
ASC Topic 450, “Contingencies.” In accordance with ASC 450, warranties that are not separately priced are generally
accounted for by accruing the estimated costs to fulfill the warranty obligation. Thus, the warranty would not be
considered a separate deliverable in the arrangement since it is not priced apart from the home. As a result, we accrue the
estimated costs to fulfill the warranty obligation in accordance with ASC 450 at the time a home closes, as a component
of cost of home closings.

Our reserves are based on factors that include an actuarial study for historical and anticipated claims, trends related to
similar product types, number of home closings, and geographical areas. We also provide third-party warranty coverage
on homes where required by Federal Housing Administration or Veterans Administration lenders.

We regularly review the reasonableness and adequacy of our reserves and make adjustments to the balance of the
preexisting reserves to reflect changes in trends and historical data as information becomes available. Self-insurance and
warranty reserves are included in accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.

Investments in Unconsolidated Entities and Variable Interest Entities (VIEs)

We are involved in joint ventures with related and unrelated third parties for homebuilding activities. We use the equity
method of accounting for entities over which we exercise significant influence but do not have a controlling interest over
the operating and financial policies of the investee. For unconsolidated entities in which we function as the managing
member, we have evaluated the rights held by our joint venture partners and determined that they have substantive
participating rights that preclude the presumption of control. For joint ventures accounted for using the equity method,
our share of net earnings or losses is included in equity in income of unconsolidated entities when earned and
distributions are credited against its investment in the joint venture when received. These joint ventures are recorded in
investments in unconsolidated entities on the Consolidated Balance Sheets.

In the ordinary course of business, we enter into land and lot option purchase contracts in order to procure land or lots
for the construction of homes. Lot option contracts enable us to control significant lot positions with a minimal initial
capital investment and substantially reduce the risks associated with land ownership and development. In accordance
with ASC Topic 810, “Consolidation,” we have concluded that when we enter into an option or purchase agreement to
acquire land or lots and pay a non-refundable deposit, a VIE may be created because we are deemed to have provided
subordinated financial support that will absorb some or all of an entity’s expected losses if they occur. If we are the
primary beneficiary of the VIE, we will consolidate the VIE in our Consolidated Financial Statements and reflect such
assets and liabilities as real estate not owned under option agreements within our inventory balance in the accompanying
Consolidated Balance Sheets.

Stock Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718-10, “Compensation — Stock
Compensation.” The fair value of each option granted is estimated on the date of grant using the Black-Scholes option
pricing model. These models require the input of highly subjective assumptions. This guidance also requires us to
estimate forfeitures in calculating the expense related to stock-based compensation.

43

Valuation of Deferred Tax Assets

We account for income taxes using the asset and liability method, which requires that deferred tax assets and liabilities
be recognized based on future tax consequences of both temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period
when the changes are enacted.

In accordance with ASC Topic 740-10, “Income Taxes,” we evaluate our deferred tax assets by tax jurisdiction, including
the benefit from net operating loss (“NOL”) carryforwards by tax jurisdiction, to determine if a valuation allowance is
required. Companies must assess, using significant judgments, whether a valuation allowance should be established based
on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to
evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and
severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods,
experience with operating losses and experience of utilizing tax credit carryforwards and tax planning alternatives.

Results of Operations

The following table sets forth our results of operations:

(Dollars in thousands)

Year Ended December 31,

2014

2013

2012

Statements of Operations Data:
Home closings revenue, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land closings revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of home closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of land closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales, commissions and other marketing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense (income), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indemnification and transaction expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,619,558
53,381
35,493

$2,708,432
2,082,819
39,696
19,671

$ 566,246
168,897
81,153
(5,405)
1,160
18,447
—
—

Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . .
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 301,944
76,395

Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations – net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 225,599
41,902

Net income before allocation to non-controlling interests . . . . . . . . . . . . . . . . . . . .
Net (income) loss attributable to non-controlling interests – joint ventures . . . . . . . . . .

$ 267,501
(1,648)

Net income before non-controlling interests – Principal Equityholders . . . . . . . . .
Net (income) loss from continuing operations attributable to non-controlling

$ 265,853

$1,857,950
27,760
30,371

$1,916,081
1,457,454
26,316
16,446

$ 415,865
127,419
77,198
(2,895)
842
2,842
10,141
195,773

$ 986,198
33,123
21,861

$1,041,182
795,979
27,296
11,266

$ 206,641
70,398
41,867
(1,214)
(758)
3,704
7,953
13,034

$

$

$

$

4,545
(23,810)

$

71,657
(284,298)

28,355
66,513

94,868
131

$ 355,955
74,893

$ 430,848
(28)

94,999

$ 430,820

interests – Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(163,790)

1,442

(355,927)

Net income from discontinued operations attributable to non-controlling interests –

Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(30,594)

(51,021)

(74,893)

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . . . . . . . .

$

71,469

$

45,420

$

—

Gross margin as a % of revenue from home closings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted home closings gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales, commissions and other marketing costs as a % of revenue from home

closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses as a % of revenue from home closings . . . . . . . .
Average sales price per home closed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.6%
23.0%

22.4%
23.4%

6.4%
3.1%
464

$

6.9%
4.2%
394

$

$

21.0%
21.2%

7.1%
4.2%
336

44

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Average Active Selling Communities

East
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2014

2013

Change

151
55

206

121
37

158

24.8%
48.6

30.4%

Consolidated:

Average active selling communities increased 30.4%, primarily due to significant additions in our West Florida and
Phoenix divisions. We opened new communities and completed existing communities throughout all of our markets
during 2014. We open communities when we believe we have the greatest probability of capitalizing on favorable
market conditions in which the community is located.

East:

The number of average active selling communities in the East segment increased, primarily due to the opening of 28 new
communities in West Florida. Sales pace in the East segment decreased to 2.1 homes per month per community for the
year ended December 31, 2014 from 2.2 homes per month per community in the prior year period. Timing of community
openings and our continued efforts to increase sales prices and margins in order to maximize returns in our communities
were the main reasons for the decrease in sales pace for the year ended December 31, 2014.

West:

The number of average active selling communities in the West segment increased due to 19 new community openings in
our Phoenix division and 17 new community openings in our Northern California division.

Net Sales Orders

(Dollars in thousands )

Net Homes Sold

Sales Value

Average Selling Price

2014

2013

Change

2014

2013

Change

2014

2013

Change

East . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . .

3,743
1,985

3,255
1,763

15.0% $1,544,996
1,060,129
12.6

$1,266,461
839,764

22.0% $413
534
26.2

$389
476

6.2%
12.2

Total

. . . . . . . . . . . . . . . . . . . . . . .

5,728

5,018

14.1% $2,605,125

$2,106,225

23.7% $455

$420

8.3%

Year Ended December 31, (1)

(1) Net sales orders represent the number and dollar value of new sales contracts executed with customers.

Consolidated:

The increase in the value of sales orders, average selling prices and the number of net homes sold in 2014 compared to
2013 was driven by consumer demand, prompting an increase in active selling communities. Consumer demand
increased as a result of historically low interest rates and stabilizing macroeconomic conditions relative to the prior
comparable period.

East:

The number of net homes sold increased as a result of the timing and quality of our new community openings. Due to
continued improvement throughout the East segment markets in 2014, we increased the average selling price of net
homes sold in the East segment by 6.2% to $413,000, resulting in an increase in sales value of net homes sold of 22.0%.

45

In particular, our homebuilding divisions in Houston and West Florida have benefited from these factors, resulting in an
increase in the number of units sold and related revenue from the year ended December 31, 2014 over the prior
comparable period.

West:

Net sales orders increased both in units and in sales value in 2014 compared to 2013 due to an increase in average active
selling outlets. We increased the average selling price of net homes sold in the West segment by 12.2% to $534,000,
resulting in an increase in sales value of net homes sold of 26.2% in 2014. Sales pace in the West segment decreased to
3.0 homes per month per community for the year ended December 31, 2014 from 4.0 homes per month per community
in the 2013 period. The decrease in sales pace for the current period is primarily due to the Phoenix division, where our
pace declined year over year to 2.3 from 3.9 and the Denver division, where our pace declined to 2.2 from 2.8. We
actively manage the availability of product and timing of releases in order to help us achieve our profitability metrics
and not sacrifice profitability for volume. We continue to see strong demand in our California markets. Average selling
price increased year over year due to the introduction of higher end product in Southern California and Phoenix.

Sales Order Cancellations—Units

East
West

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total/weighted average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

Cancelled Sales Orders

Cancellation Rate (1)

2014

519
354

873

2013

533
306

839

2014

2013

12.2% 14.1%
15.1

14.8

13.2% 14.3%

(1) Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

We believe a favorable financing market, our use of prequalification criteria through TMHF and increased earnest
money deposits help us maintain a low cancellation rate. Our overall cancellation rate decreased from 2013 to 2014. The
decrease in the cancellation rate from 2013 to 2014 was most notably related to higher deposit requirements year over
year throughout our Texas divisions, primarily in new communities and/or new phases within existing communities.

Sales Order Backlog

(Dollars in thousands)

Sold Homes in Backlog (1)

Sales Value

Average Selling Price

2014

2013

Change

2014

2013

Change

2014

2013

Change

East . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
West

1,709
543

1,544
622

10.7% $ 806,848
292,919
(12.7)

$667,725
320,029

20.8% $472
539
(8.5)

$432
515

Total . . . . . . . . . . . . . . . . . . . . . . . . .

2,252

2,166

4.0% 1,099,767

987,754

11.3% $488

$456

9.3%
4.7

7.0%

As of December 31,

(1)

Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of
the period (including homes sold but not yet started). Some of the contracts in our sales order backlog are subject to
contingencies including mortgage loan approval and buyers selling their existing homes, which can result in
cancellations.

Consolidated:

Backlog value and units increased as a result of an increase in average sales price and increase in net sales orders.

East:

In the East segment, backlog value increased as a result of price appreciation, maximizing lot premiums, controlled lot
releases in certain communities and a product mix change to homes with a higher sales value. The East increase in
backlog is consistent with our increases in homes sold and new community openings year over year.

46

West:

Backlog units and dollars decreased year over year due to a decline in sales pace. Backlog in Phoenix is down year over
year due to a decline in sales pace from 2013 as a result of moderating growth. Backlog in Southern California decreased
year over year due to an increase in average selling prices which have slower selling paces than lower priced product.

Home Closings Revenue

(Dollars in thousands)

Homes Closed

Sales Value (1)

Average Selling Price

2014

2013

Change

2014

2013

Change

2014

2013

Change

East . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . .

3,578
2,064

2,913
1,803

22.8% $1,504,141
1,115,417
14.5

$1,094,578
763,372

37.4% $420
540
46.1

$376
423

11.7%
27.7

Total

. . . . . . . . . . . . . . . . . . . . . . .

5,642

4,716

19.6% $2,619,558

$1,857,950

41.0% $464

$394

17.8%

Year Ended December 31,

(1) Home closings revenue represents homes where possession has transferred to the buyer.

Consolidated:

For the year ended December 31, 2014 compared to 2013, there was an increase in the number of homes closed, the
sales value of homes closed and average selling price.

East:

The number of homes closed increased as a result of the increase in homes sold during the same period, which was
partially attributable to the volume of new community openings. Due to continued improvement throughout the East
segment markets in 2014, we were able to increase the average selling price of homes closed in the East segment by
11.7% to $420,000, resulting in an increase in sales value of homes closed of 37.4%. This increase is a result of a
combination of product mix and price appreciation. These market improvements, as well as favorable homebuyer
reception of communities opened subsequent to December 31, 2013, contributed to closing revenue increases. In
particular, homes closed in 2014 in our West Florida, Houston and Dallas markets surpassed that in the prior year period
by a significant amount, driving both units and dollars higher as consumer demand for move-up product benefited our
communities in these markets. Overall, the improvement in East segment home closings revenue and sales value has
been due primarily to our well-located land positions, an increase in active selling communities and our consumer-driven
offerings. Management in the region continues to maximize sales prices where possible through market-driven product
offerings as market conditions allow.

West:

The sales value of homes closed increased by 46.1%, driven by an increase in average selling price. Homes closed in
2014 in our Northern and Southern California markets surpassed those in the prior year period by a significant amount,
driving both units and dollars higher as consumer demand for move-up product benefited our communities in these
markets. In the segment as a whole, we were able to increase our average selling price of homes closed by 27.7%, to
$540,000 in the year ended December 31, 2014, driven primarily by a shift to more move up and higher priced product.
We continue to optimize sales prices where possible through market-driven product offerings as market conditions
allow.

Land Closings Revenue

(In thousands)

Year Ended December 31,

2014

2013

Change

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West

$52,456
925

$22,720
5,040

130.9%
(81.6)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$53,381

$27,760

92.3%

47

Since we generally do not purchase land for future sales, land and lot sales occur at various intervals and varying degrees
of profitability depending on the need for such property in our business strategy. Therefore, the revenue and gross
margin from land closings will fluctuate from period to period.

Segment Home Closings Gross Margins

The following table sets forth a reconciliation between our home closings segment gross margins and our corresponding
segment adjusted home closings gross margins. See — Non-GAAP Measures — Adjusted home closings gross margins.

East

West

Total

For the Year Ended December,

(Dollars in thousands)

2014

2013

2014

2013

2014

2013

Home Closings
Home closings revenue . . . . . . . . . . . . . . . . $1,504,141 $1,094,578
867,053
Cost of home closings . . . . . . . . . . . . . . . . . 1,176,288

$1,115,417
906,531

$763,372 $2,619,558 $1,857,950
1,457,454
2,082,819
590,401

Home closings gross margin . . . . . . . . . . . .
Capitalized interest amortization . . . . . . . .

327,853
28,495

227,525
15,310

208,886
36,603

172,971
18,837

536,739
65,098

400,496
34,147

Adjusted home closings gross margin . . . . $ 356,348 $ 242,835

$ 245,489

$191,808 $ 601,837 $ 434,643

Home closings gross margin % . . . . . . . . .
Adjusted home closings gross margin % . .

21.8%
23.7%

20.8%
22.2%

18.7%
22.0%

22.7%
25.1%

20.5%
23.0%

21.6%
23.4%

Consolidated:

Our consolidated 2014 adjusted home closings gross margin percentage, decreased slightly compared to 2013. Product
mix continues to impact margin, as an increase in sales in our California divisions generated significantly higher home
closings gross margin dollars per home but lower margin rate. We are also experiencing higher land and development
costs as we close homes related to legacy holdings. The legacy holdings have lower carrying costs and as a result home
closings gross margin percentage is decreasing as those legacy holdings are at a reduced proportion of our overall mix.

East:

We experienced increases in home closings gross margin and adjusted home closings gross margin dollars and rates in
our Dallas, Houston (Taylor Morrison and Darling), West Florida and North Florida markets. The recovery and
stabilization of the West Florida market has generated sustained customer demand in the Tampa and Ft. Myers areas,
which has allowed us to leverage a low cost basis land supply and home price increases to achieve higher margins.

West:

The home closings gross margin percentage and adjusted home closings gross margin percentage decreased in 2014
compared to 2013 primarily due to an increase in the percentage of homes closed in California versus Phoenix where the
margin rate is lower though margin dollars are significantly higher. In addition, the impact of increased land acquisition
pricing and increases in commodity and labor pricing for self-developed lots over the past few years continued to
pressure margin rates in 2014.

48

Mortgage Operations

Our Mortgage Operations segment provides mortgage lending through our subsidiary, TMHF. The following is a
summary of mortgage operations gross margin:

(In thousands)

Year Ended
December 31,

2014

2013

Mortgage operations revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$35,493
19,671

$30,371
16,446

Mortgage operations gross margin . . . . . . . . . . . . . . . . . . . . . . . .

$15,822

$13,925

Mortgage operations margin % . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44.6%

45.8%

Our Mortgage Operations segment’s revenue increased due primarily to increased closings volume and average loan
amounts, while gross margin percentage decreased period over period due to increases in underwriting costs.

The following details the number of loans closed, the aggregate value and capture rate on our loans for the last two
years:

December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TMHF
Closed
Loans

3,312
2,828

Aggregate
Loan Volume
(in millions)

$1,097.7
850.8

Capture
Rate

74%
78

Our mortgage capture rate represents the percentage of our homes sold to a home purchaser that utilized a mortgage, for
which the borrower obtained such mortgage from TMHF or one of our preferred third party lenders. Our capture rate
decreased in 2014 as a result of the lagging effects of transitioning our Darling operations to TMHF from their legacy
mortgage provider. In 2014 and 2013, the average FICO score of customers who obtained mortgages through TMHF
was 742 and 739, respectively.

Sales, Commissions and Other Marketing Costs

As a percentage of home closings revenue, sales commissions and other marketing costs decreased to 6.4% in 2014 from
6.9% in 2013. For the year ended December 31, 2014 and 2013, sales, commissions, and other marketing costs such as
advertising and sales office expenses were $168.9 million and $127.4 million, respectively, which is a 32.6% increase
year over year. This increase in dollars reflects a 19.6% increase in homes closed as well as an increase in average
selling price.

General and Administrative Expenses

General and administrative expenses decreased to 3.1% as a percentage of home closings revenue for the year ended
December 31, 2014, compared to 4.2% in 2013. For the year ended December 31, 2014, general and administrative
expenses were $81.2 million as compared to $77.2 million in the same period in 2013, which represents a 5.1% increase
in dollars. Our growth in home closings revenue during the period reduced our general and administrative percentage as
we were able to utilize our scalable platform, leveraging existing infrastructure across increased revenue.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities was $5.4 million for the year ended December 31, 2014 compared to
$2.9 million for the year ended December 31, 2013. The increase year over year is primarily attributable to two new
unconsolidated joint ventures located in our Southern California division.

49

Interest Expense (Income), net

Interest expense represents interest incurred, but not capitalized, on our long-term debt and other borrowings. Interest
expense was consistent year over year in relation to our levels of borrowings and qualifying assets.

Other Expense, net

Other expense, net for the year ended December 31, 2014 was $18.4 million compared to $2.8 million for the year ended
December 31, 2013. The primary reason for the increase is the increase in the current year accrual for contingent
payments related to the Darling acquisition in December 2012 (the “Darling Acquisition”). This expense also consists of
mothball community expense, pre-acquisition costs on unpursued land projects, captive insurance claims costs and
financing fees on our revolving credit facility.

Income Tax Provision

Our effective tax rate for the year ended December 31, 2014 and 2013 was composed of the federal statutory tax rate in
the U.S. and was affected primarily by state income taxes, the recognition of previously unrecognized tax benefits, the
establishment of uncertain tax positions, and interest relating to uncertain tax positions. In addition, the IPO and the
Reorganization Transactions resulted in a higher effective tax rate for the year ended December 31, 2013 due to certain
non-deductible charges related to modification of the Class J Units of TMM Holdings.

During the year ended December 31, 2013, we accepted a settlement offer related to Taylor Woodrow Holdings (USA)
Inc. for the 2008 and 2009 tax years. As a result, $102.0 million of our previously unrecognized indemnified tax
positions including interest and penalties were recognized during the year ended December 31, 2013.

As of December 31, 2014, our cumulative gross unrecognized tax benefits were $2.4 million in the U.S. and all
unrecognized tax benefits, if recognized, would affect the effective tax rate. As of December 31, 2013, our cumulative
gross unrecognized tax benefits were $2.1 million in the U.S. These amounts are included in income taxes payable in the
accompanying Consolidated Balance Sheets at December 31, 2014 and December 31, 2013. None of the unrecognized
tax benefits are expected to reverse in the next 12 months.

The unrecognized tax benefits for discontinued operations were $6.2 million and $7.9 million as of December 31, 2014
and 2013, respectively.

For further information, see Note 12 — Income Taxes in the Notes to the Consolidated Financial Statements in Item 8 of
this Annual Report.

Income from Discontinued Operations, net of tax

Income from discontinued operations decreased from $66.5 million at December 31, 2013 to $41.9 million at
December 31, 2014. The number of average active selling communities in the year ended December 31, 2014, including
unconsolidated joint ventures, decreased by three from the prior year due to the closing of one wholly owned and two
joint venture high-rise buildings during the latter half of 2013. The closeout of towers during 2013 caused the product
mix of our unconsolidated joint ventures to shift to our low-rise product, accounting for a 264 unit decrease in units
closed during the year ended December 31, 2014 as compared to 2013.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Average Active Selling Communities

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
East
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2013

2012

Change

121
37

158

75
33

108

61.3%
12.1

46.3%

50

Average active selling communities increased 46.3% from the year ended December 31, 2012 to the year ended
December 31, 2013 with the largest increase in the East segment, primarily due to the addition of 43 Darling Homes
communities. We opened new communities and completed existing communities throughout all of our markets during
2013, with the largest number of additions in our West Florida, Phoenix and Houston divisions, where demand and our
land positions afforded us the opportunity. We open communities when we believe we have the greatest probability of
capitalizing on favorable market conditions in which the community is located.

Net Sales Orders

(Dollars in thousands )

Net Homes Sold

Sales Value

Average Selling Price

2013

2012

Change

2013

2012

Change

2013

2012

Change

East . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . .

3,255
1,763

2,077
1,661

56.7% $1,266,461
839,764
6.1

$ 692,287
612,428

82.9% $389
476
37.1

$333
369

16.7%
29.2

Total

. . . . . . . . . . . . . . . . . . . . . . .

5,018

3,738

34.2% $2,106,225

$1,304,715

61.4% $420

$349

20.3%

Year Ended December 31, (1)

(1) Net sales orders represent the number and dollar value of new sales contracts executed with customers. Other sales

are recognized after a contract is signed and the rescission period has ended.

Both the value of net sales orders and the number of net homes sold increased in the year ended December 31, 2013,
compared to the year ended December 31, 2012. These results were driven by the continued strong demand in the spring
selling season in 2013, during which we benefited from higher selling prices as consumers in the market gained
confidence in the values present in the marketplace, historically low interest rates and improved macroeconomic
conditions. The improved homebuilding market significantly impacted areas such as Phoenix, West Florida and
Northern California resulting in an increase in the number of units sold and related revenue for the year ended
December 31, 2013 over the prior year comparable period.

Sales Order Cancellations—Units

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total/weighted average. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

Cancelled Sales Orders

Cancellation Rate(1)

2013

533
306

839

2012

363
243

606

2013

2012

14.1% 14.9%
14.8

12.8

14.3% 14.0%

(1) Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

The number of our sales order cancellations increased due to increases in sales volume in the year ended December 31,
2013 compared to the year ended December 31, 2012. Our continued scrutiny of potential buyers, consumer-friendly
lending markets, use of prequalification strategies, as well as our increased deposit amounts, help us maintain a low
cancellation rate.

51

Sales Order Backlog

(Dollars in thousands)

Sold Homes in Backlog (1)

Sales Value

Average Selling Price

2013

2012

Change

2013

2012

Change

2013

2012

Change

East . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,544
622

1,202
662

28.5% $667,725
320,029
(6.0)

$474,086
241,947

40.8% $432
515
32.3

$394
365

9.6%
40.8

Total

. . . . . . . . . . . . . . . . . . . . . . . . . .

2,166

1,864

16.2% $987,754

$716,033

37.9% $456

$384

18.7%

As of December 31,

(1)

Sales order backlog represents homes under contract for which revenue has not yet been recognized at the end of
the period including homes sold but not yet started). Some of the contracts in our sales order backlog are subject to
contingencies including mortgage loan approval and buyers selling their existing homes, which can result in
cancellations.

Our homes in backlog at December 31, 2013 increased from December 31, 2012, due to the December 2012 acquisition
of Darling Homes in our East segment, which added units to backlog.

Home Closings Revenue

(Dollars in thousands)

Homes Closed

Sales Value (1)

Average Selling Price

2013

2012

Change

2013

2012

Change

2013

2012

Change

East . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
West

2,913
1,803

1,661
1,272

75.4% $1,094,578
763,372
41.7

$529,686
456,512

106.6% $376
423
67.2

$319
359

17.8%
18.0

Total . . . . . . . . . . . . . . . . . . . . . . . . .

4,716

2,933

60.8% $1,857,950

$986,198

88.4% $394

$336

17.2%

Year Ended December 31,

(1) Home closings revenue represents homes where possession has transferred to the buyer.

Home closings revenue increased in the year ended December 31, 2013 compared to the year ended December 31, 2012.
The average selling price of homes closed during the year ended December 31, 2013 increased compared to the year
ended December 31, 2012. Sales backlog converted in our Phoenix, Houston and West Florida markets, as well as with
the Darling Acquisition, surpassed prior periods by significant amounts driving both units and revenue dollars higher.

Land Closings Revenue

(In thousands)

Year Ended December 31,

2013

2012

Change

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West

$22,720
5,040

$28,837
4,286

(21.2)%
17.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$27,760

$33,123

(16.2)%

Since we generally do not purchase land for future sale, land and lot sales occur at various intervals and varying degrees
of profitability depending on the need for such property in our business strategy. Therefore, the revenue and gross
margin from land closings will fluctuate from period to period.

52

Segment Home Closings Gross Margins

The following table sets forth a reconciliation between our home closings segment gross margins and our corresponding
segment adjusted home closings gross margins. See — Non-GAAP Measures — Adjusted home closings gross margins.

East

West

Total

For the Year Ended December,

(Dollars in thousands)

2013

2012

2013

2012

2013

2012

Home Closings
Home closings revenue . . . . . . . . . . . . . . . . . .
Cost of home closings . . . . . . . . . . . . . . . . . . .

$1,094,578
867,053

$529,686
421,204

$763,372
590,401

$456,512
374,775

$1,857,950
1,457,454

$986,198
795,979

Home closings gross margin . . . . . . . . . . . . . .
Capitalized interest amortization . . . . . . . . . . .

227,525
15,310

108,482
9,409

172,971
18,837

81,737
9,474

400,496
34,147

190,219
18,883

Adjusted home closings gross margin . . . . . . .

$ 242,835

$117,891

$191,808

$ 91,211

$ 434,643

$209,102

Home closings gross margin % . . . . . . . . . . . .
Adjusted home closings gross margin % . . . .

20.8%
22.2%

20.5%
22.3%

22.7%
25.1%

17.9%
20.0%

21.6%
23.4%

19.3%
21.2%

Consolidated:

Our home closings gross margin increased in the year ended December 31, 2013 compared to the year ended
December 31, 2012. The increase in home closings gross margin percentage in the year ended December 31, 2013 was
primarily due to a shift to higher margin product mix across our U.S. markets, particularly in the Northern California,
Austin and Phoenix markets, where our move-up and luxury homes produced higher margins in the improving markets.
Consumer demand in these areas allowed continued price increases and we were able to achieve higher margins than in
the prior year period. Our price increases generally exceed construction and land price increases in our markets in 2013.
The increase in adjusted home closings gross margin percentage was primarily due to our increased margins in the
aforementioned markets.

East:

For the year ended December 31, 2013, the acquisition of Darling Homes and its integration into our operations
accounted for a significant portion of the increases in our East segment home closings revenue, home closings gross
margin and adjusted home closings gross margin. During the year ended December 31, 2013, home closings revenue in
the East segment was $1.1 billion, an increase of 106.6% compared to the year ended December 31, 2012. The increase
was driven by an increase in home closings of 75.4% to 2,913 homes, compared to 1,661 homes in the prior year. The
continued improvement throughout the East markets, as well as favorable homebuyer demand for communities opened
in prior periods also contributed to closing revenue increases. The East segment had an average monthly sales pace of
2.2 homes per community in the year ended December 31, 2013, which is consistent with the year ended December 31,
2012. Average home closings sales price in the East segment increased 17.8% to $376,000, from $319,000 in the prior
year from a combination of price appreciation and product mix. The average sales order price also increased by $56,000,
or 16.7% as management in this segment reduced customer incentives and other promotions, and increased sales prices
as market conditions allowed. Backlog sales value in the East segment increased 40.8% in the year ended December 31,
2013 over the prior year due to a 28.5% increase in backlog units and a 9.6% increase in the average sales price of
backlog homes. The increase in backlog units was due primarily to the addition of Darling in December 2012. Overall,
the improvement in East segment home closings revenue, sales prices and sales pace has been due primarily to our well-
located land positions, an increase in active selling communities and our consumer-driven offerings.

During the year ended December 31, 2013, home closings gross margin for the East segment was 20.8%, up 30 basis
points from 20.5% for the year ended December 31, 2012. East segment adjusted home closings gross margin was
22.2% in the year ended December 31, 2013 consistent with 22.3% for the same period in 2012. We recorded purchase
accounting adjustments on the assets acquired in the Darling Acquisition that reduced home closings gross margin
percentage in earlier quarters that were offset eventually by sales price increases. Our Austin and North Florida divisions
recorded the largest increases in home closings gross margin percentage, but all divisions recorded some levels of
increase. The recovery and improved stabilization of the West Florida market in 2013, which had tended to generate

53

lower home closings margins, began when sustained consumer demand returned in the Tampa and Ft. Myers areas of
Florida, and we were able to leverage land with a low cost basis and produce homes at a higher price point than in the
prior year. The Austin and Houston markets improved from the prior year, as we were able to increase prices on our
move-up offerings and maintain stable land and construction costs.

West:

Home closings revenue in the West segment increased by $306.9 million in the year ended December 31, 2013 compared to
the prior year. The 67.2% increase in home closings revenue was due to an 18.0% increase in average home closing selling
price and a 41.7% increase in the number of homes closed. The availability of product and timing of releases within
communities provided saleable inventory that was well-received by consumers. The average sales per community per
month for the years ending December 31, 2013 and 2012 were 3.9 and 4.2, respectively. The average home closing selling
price increased 18.0%, to $423,000 in the year ended December 31, 2013 compared to $359,000 in the prior year. Overall,
during the year ended December 31, 2013, revenues improved in the West segment compared to the same period in 2012
primarily due to housing market recoveries and advances in the Phoenix and Northern California divisions. In 2013 we
continued to see strong demand in these markets and systematically released product into the marketplace to capture and
maintain increased operating margins, as evidenced by the 40.8% year-over-year increase in average sales price of our
backlog homes. Backlog units in the West segment at December 31, 2013 decreased 6% from 2012, although total backlog
sales value increased 32.3% due to the average sales price increase noted above.

During the year ended December 31, 2013, home closings gross margin for the West segment was 22.7%, up from
17.9% for the year ended December 31, 2012. Adjusted home closings gross margin in the West segment increased by
510 basis points in the year ended December 31, 2013, compared to the year ended December 31, 2012. The increase in
home closings gross margin and adjusted home closings gross margin was primarily due to our ability to control our
construction costs, while increasing our average home closing selling price by 18.0% in 2013 compared to 2012. All
divisions increased gross margin percentage during the period. The Northern California and Phoenix divisions
experienced the highest percentage of price increases during the year and also were able to contain construction costs as
the volume of construction within our communities in those markets allowed us to effectively manage cost pressures on
construction materials and labor.

Mortgage Operations

Our Mortgage Operations segment, which provides mortgage lending through TMHF, is highly dependent on our sales
and closings volumes. The following is a summary of mortgage operations gross margin:

(In thousands)
Mortgage operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations expense . . . . . . . . . . . . . . . . . . . . . . . . . . .

$30,371
16,446

Mortgage operations gross margin . . . . . . . . . . . . . . . . . . . . .

$13,925

$21,861
11,266

$10,595

Year Ended December 31,

2013

2012

Mortgage operations margin % . . . . . . . . . . . . . . . . . . . . . . . . . .

45.8%

48.5%

Our Mortgage Operations segment’s revenue increased in the year ended December 31, 2013 compared to the year
ended December 31, 2012, due primarily to increased closings volume and average loan amounts. The decrease in gross
margin percentage was due primarily to increases in mortgage underwriting costs driven by increased staffing for
compliance initiatives as well as increased costs to integrate Darling.

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TMHF
Closed
Loans

2,828
2,022

Aggregate
Loan Volume
(in millions)

$850.8
535.2

Capture
Rate

78%
84

Our capture rate decreased in 2013 as we transitioned our Darling Homes operations from a legacy provider to TMHF.
In 2013 and 2012 the average FICO score of customers who obtained mortgages through TMHF was 739 and 738,
respectively.

54

Sales, Commissions and Other Marketing Costs

For the year ended December 31, 2013 and 2012, sales, commissions, and other marketing costs such as advertising and
sales office expenses were $127.4 million and $70.4 million, respectively, which is an 81.0% increase year over year.
This increase reflects a 60.8% increase in homes closed as well as an increase in average selling price. As a percentage
of home sales revenue, sales commissions and other marketing costs decreased to 6.9% from 7.1% for the year ended
December 31, 2013 and 2012 respectively. An increase in external commissions paid and a higher selling cost structure
at Darling, added to the dollar increase year over year as consumers leveraged outside professionals more prominently
than in the prior period.

General and Administrative Expenses

For the year ended December 31, 2013, general and administrative expenses were $77.2 million as compared to
$41.9 million in the same period in 2012, which represents an 84.4% increase. General and administrative expenses were
4.0% as a percentage of total revenue in both the years ended December 31, 2013 and 2012 due to our diligent cost
containment strategy as we pursued synergies within the business. We were also able to leverage our existing
infrastructure while increasing closings by 60.8%. We recorded $2.9 million of expense for the options and restricted
stock units granted in connection with our IPO and grants under our equity compensation plan during the remainder of
2013. There were no comparable amounts in 2012.

Equity in Income of Unconsolidated Entities

Equity in income of unconsolidated entities was $2.9 million for the year ended December 31, 2013 compared to
$1.2 million for the year ended December 31, 2012. The increase was due to the addition of joint ventures in our East
segment in the year ended December 31, 2013.

Interest Expense (Income), net

Interest expense represents interest incurred, but not capitalized, on our long-term debt and other borrowings. Purchase
accounting from the Acquisition eliminated the accumulated capitalized interest on the balance sheet as of the
Acquisition date. Interest expense (income), net for the years ending December 31, 2013 and 2012, was $842 thousand
of expense and $758 thousand of income, respectively.

Other Expense, net

Other expense, net for the year ended December 31, 2013 was $2.8 million of expense compared to $3.7 million of
expense in the year ended December 31, 2012. Other expense is primarily related to mothball community expense, pre-
acquisition costs on un-pursued land projects and captive insurance claims costs.

Loss on Extinguishment of Debt

During 2012, we prepaid $350.0 million of the Sponsor Loan with proceeds from the 2020 Senior Notes issued in
April 2012. The remaining $150.0 million of the Sponsor Loan was exchanged for equity interests. The amount of the
Sponsor Loan that was retired had been borrowed at a discount of 2.5% and, consequently, the $7.9 million of
unamortized portion of the discount was written off during 2012 to expense. See Item 1 — Business — 2011 Acquisition
by our Principal Equityholders of this Annual Report.

On April 12, 2013, we used $204.3 million of the net proceeds of the IPO to redeem $189.6 million aggregate principal
amount of 2020 Senior Notes (at a purchase price equal to 103.875% of their principal amount, plus accrued and unpaid
interest of $7.3 million through the date of redemption). We wrote off $4.6 million of unamortized issuance costs,
expensed $1.8 million of original issue premium and incurred a call premium of $7.3 million related to the redemption.
These costs are included in the $10.1 million loss on extinguishment of debt in the accompanying Consolidated
Statements of Operations for the year ended December 31, 2013.

55

Indemnification and Transaction Expense

The Predecessor Parent Company indemnified TMM Holdings for specific uncertain tax positions existing as of the date
of the Acquisition. An indemnification receivable of $129.7 million was recorded at the time of the Acquisition. The
indemnification receivable included a periodic increase for accrued interest, penalties, and additional identified tax
issues covered by the indemnity, offset by periodic decreases as uncertain tax matters and related tax obligations are
resolved. The receivable due from the Predecessor Parent Company for the indemnification was valued at the same
amount as the estimated income tax liability. During the year ended December 31, 2013 and 2012, $88.5 million and
$12.3 million of the indemnification receivable was written off due to successful settlement of tax positions that were
subject to the Predecessor Parent Company indemnification. The uncertain tax position was reversed simultaneously in
our tax provision during each period.

During the year ended December 31, 2013, we also incurred $29.8 million of expense related to the termination of the
management services agreements between us and the Principal Equityholders as part of the Reorganization Transactions.
Additionally, we incurred $80.2 million of non-cash stock compensation expense for the modification of the TMM
Holdings Class J Units which were exchanged for units in the TPG and Oaktree Holding Vehicles. The change was
related to the termination of the JHI Services Agreement. See Item 1 — Business — Reorganization and Initial Public
Offering of this Annual Report.

Income Tax Provision

Our effective tax rate for the year ended December 31, 2013 and 2012 was composed of the federal statutory tax rates in
the U.S. and was affected primarily by state income taxes, the recognition of previously unrecognized tax benefits, the
establishment of uncertain tax positions, and interest relating to uncertain tax positions. In addition, the IPO and
Reorganization Transactions also resulted in an increase to our effective tax rate for the year ended December 31, 2013
due to certain non-deductible charges related to modification of the Class J Units of TMM Holdings. See Item 1 —
Business — Reorganization and Initial Public Offering of this Annual Report.

During the year ended December 31, 2013, we accepted a settlement offer related to Taylor Woodrow Holdings (USA)
Inc. for the 2008 and 2009 tax years. As a result, $102.0 million of our previously unrecognized indemnified tax
positions including interest and penalties were recognized during the year ended December 31, 2013.

As of December 31, 2013, our cumulative gross unrecognized tax benefits were $2.1 million in the U.S. and all
unrecognized tax benefits, if recognized, would affect the effective tax rate. As of December 31, 2012, our cumulative
gross unrecognized tax benefits were $85.7 million in the U.S. These amounts are included in income taxes payable in
the accompanying Consolidated Balance Sheets at December 31, 2013 and December 31, 2012.

The unrecognized tax benefits for discontinued operations were $7.9 million and $9.8 million for the years ended
December 31, 2013 and 2012, respectively.

For further information, see Note 12 — Income Taxes in the Notes to the Consolidated Financial Statements in Item 8 of
this Annual Report.

Income from Discontinued Operations, net of tax

Income from discontinued operations decreased from $74.9 million at December 31, 2012 to $66.5 million at
December 31, 2013. The activity in discontinued operations in 2013 was affected by the timing of high-rise closings. In
the year ended December 31, 2012 we began closing one joint venture tower, Nautilus, which had 382 of 389 units close
in the period, accounting for more than $8.1 million in joint venture income, while in 2013, we recognized $27.0 million
of joint venture income on 862 of 879 units from closings at the joint venture high-rise buildings Couture and Encore.
During the year ended December 31, 2013 we closed 422 of 423 units in the wholly owned tower Ultra, which produced
$104.3 million of revenue in discontinued operations. The average home closings sales price was 19.0% lower for the
year ended December 31, 2013 when compared to 2012. This decrease was due to a product mix shift into move-up
communities located in affordable areas of the greater Toronto area during 2013 and a shift in mix between single-family
and high-rise units. Overall, income from discontinued operations decreased as a result of increased costs related to
home closings activity.

56

Liquidity and Capital Resources

Liquidity

We finance our operations through the following:

• Borrowings under our Restated Revolving Credit Facility

• Our various series of Senior Notes (described below)

• Mortgage warehouse facilities

•

•

Project-level financing (including non-recourse loans)

Performance, payment and completion surety bonds, and letters of credit

We believe that we can fund our current and foreseeable liquidity needs for the next 12 months from:

• Cash generated from operations

• Borrowings under our Restated Revolving Credit Facility

• Cash generated from the sale of our Monarch business

We may access the capital markets to obtain additional liquidity through debt and equity offerings on an opportunistic
basis.

Our principal uses of capital in the year ended December 31, 2014 and 2013 were land purchases, lot development,
home construction, operating expenses, payment of debt service, income taxes, investments in joint ventures and the
payment of various liabilities. During the 2013 period we made significant payments and incurred significant expenses
in connection with our Reorganization Transactions and IPO. Cash flows for each of our communities depend on the
status of the development cycle, and can differ substantially from reported earnings. Early stages of development or
expansion require significant cash outlays for land acquisitions, plats, site development, construction of model homes,
general landscaping and other amenities. Because these costs are a component of our inventory and are not recognized in
our statement of operations until a home closes, we incur significant cash outflows prior to recognition of earnings.

We have a defined strategy for cash management, particularly with respect to cash outlays for land and inventory
development. We used $133.7 million of cash in operating activities for the year ended December 31, 2014 and
$151.9 million in the same period in 2013. Our principal cash uses in 2014 were real estate inventory acquisitions,
construction and taxes. We generated the cash used in 2014 through our operating activities, borrowings under our credit
facilities and the issuance of the 2024 Senior Notes.

Depending upon future homebuilding market conditions and our expectations for these conditions, we may use a portion
of our cash and cash equivalents to take advantage of land opportunities. We intend to maintain adequate liquidity and
balance sheet strength, and we will continue to evaluate opportunities to access the debt and equity capital markets as
they are available.

Capital Resources

Cash and Cash Equivalents

As of December 31, 2014, we had available cash and cash equivalents of $234.2 million from continuing operations.
Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term, highly
liquid investments. We consider all highly liquid investments with original maturities of 90 days or less, such as
certificates of deposit, money market funds, and commercial paper, to be cash equivalents. Cash accounts are insured up
to $250,000 in the U.S. by the Federal Deposit Insurance Corporation and up to $100,000 in Canada by the Canadian
Deposit Insurance Company.

As a result of the sale of our Canadian operations, which occurred in January 2015, our total cash and cash equivalents
as of December 31, 2014 was $463.5 million. This amount includes USD cash from the Canadian operations, which is
included in Assets of discontinued operations in the accompanying Consolidated Balance Sheet.

57

Outstanding indebtedness related to the Monarch business (including indebtedness outstanding under various revolving
facilities) is reflected as liabilities of discontinued operations in the accompanying Consolidated Balance Sheets.

Senior Notes:

The following table summarizes our outstanding senior unsecured notes (collectively, the “Senior Notes”), as of
December 31, 2014.

(Dollars in thousands)

Date Issued

Senior Notes due 2020 . . . . . . . . . . April 13, 2012
Senior Notes due 2020 . . . . . . . . . . August 21, 2012
Senior Notes due 2021 . . . . . . . . . . April 16, 2013
Senior Notes due 2024 . . . . . . . . . . March 5, 2014

Total . . . . . . . . . . . . . . . . . . . . . . . .

Principal
Amount

Initial Offering
Price

Interest
Rate

Net Proceeds

Original Debt
Issuance
Cost

$ 395,505
93,335
550,000
350,000

$1,388,840

100.0%
105.5%
100.0%
100.0%

7.750% $ 537,400
7.750% 132,500
5.250% 541,700
5.625% 345,300

$12,600
3,100
8,300
4,700

$1,556,900

$28,700

2020 Senior Notes

On April 13, 2012, we issued $550.0 million of 7.75% Senior Notes due 2020 (the “Initial Notes”) at an initial offering
price of 100% of the principal amount (the “Offering”). The net proceeds from the sale of the Initial Notes were used, in
part, to repay existing indebtedness. The remaining proceeds of approximately $187.4 million from the Offering were
used for general corporate purposes. An additional $3.0 million of issuance costs were settled outside the bond proceeds.

On August 21, 2012, we issued an additional $125.0 million of 7.75% Senior Notes due 2020 (the “Additional Notes”
together with the Initial Notes, the “2020 Senior Notes”) at an initial offering price of 105.5% of the principal amount.
The net proceeds were used for general corporate purposes. The Additional Notes issued August 21, 2012 were issued
pursuant to the existing indenture for the 2020 Senior Notes. The 2020 Senior Notes are unsecured and not subject to
registration rights.

On April 12, 2013, we used $204.3 million of the net proceeds of the IPO to acquire New TMM Units from New TMM
(at a price equal to the price paid by the underwriters for shares of Class A Common Stock in the IPO). TMM Holdings
used these proceeds to repay a portion of the 2020 Senior Notes.

Obligations to pay principal and interest on the 2020 Senior Notes are guaranteed by TMM Holdings, Taylor Morrison
Holdings, Inc., Monarch Parent Inc. and the U.S. homebuilding subsidiaries of TMC (collectively, the “Guarantors”).
The 2020 Senior Notes and the guarantees are senior unsecured obligations. The indenture for the 2020 Senior Notes
contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity
and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate
transactions, (vi) the incurrence of liens, (vii) the incurrence of prohibitions on payments and asset transfers among the
issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2020
Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within
specified deadlines, we will be required to offer to repurchase the 2020 Senior Notes at par (plus accrued and unpaid
interest) with such proceeds. We are also required to offer to repurchase the 2020 Senior Notes at a price equal to 101%
of their aggregate principal amount (plus accrued and unpaid interest) upon certain change of control events.

2021 Senior Notes

On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021
Senior Notes”). The 2021 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from
the issuance of the 2021 Senior Notes were used to repay the outstanding balance under the Restated Revolving Credit
Facility and for general corporate purposes, including the purchase of additional land inventory.

58

The 2021 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 Senior Notes. The indenture
governing the 2021 Senior Notes contains covenants, change of control and asset sale offer provisions that are similar to
those contained in the indenture governing the 2020 Senior Notes.

2024 Senior Notes

On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024
Senior Notes”). The 2024 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from
the issuance of the 2024 Senior Notes were used to repay the outstanding balance under the Restated Revolving Credit
Facility and for general corporate purposes.

The 2024 Senior Notes mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that
guarantee the 2020 and 2021 Senior Notes. The 2024 Senior Notes and the guarantees are senior unsecured obligations.
The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens
and enter into certain sale and leaseback transactions. The indenture governing the 2024 Senior Notes contains events of
default that are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes. The change
of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures
governing the 2020 and the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change
of control before the repurchase offer requirement is triggered for the 2024 Senior Notes.

Prior to December 1, 2023, the 2024 Senior Notes are redeemable at a price equal to 100% plus a “make-whole”
premium for payments through December 1, 2023 (plus accrued and unpaid interest). Beginning on December 1, 2023,
the 2024 Senior Notes are redeemable at par (plus accrued and unpaid interest).

Revolving Credit Facility

On January 15, 2014, TMC and various other subsidiaries of TMHC (collectively, the “Borrowers”), entered into
Amendment No. 1 to the senior revolving credit facility entered into with a syndicate of third party banks and financial
institutions in July 2011 and amended and restated as of April 13, 2012 and further amended and restated as of April 12,
2013 (the “Restated Revolving Credit Facility”). This Amendment No. 1 released Monarch from all of its obligations
under the Restated Revolving Credit Facility. As a result, the only borrower under the Restated Revolving Credit Facility
is TMC. The Restated Revolving Credit Facility is guaranteed by the same Guarantors that guarantee the 2020 Senior
Notes. The Restated Revolving Credit Facility matures on April 12, 2017.

The Restated Revolving Credit Facility contains certain “springing” financial covenants, requiring TMM Holdings and
its subsidiaries to comply with a certain maximum capitalization ratio and a certain minimum consolidated tangible net
worth test. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the
Restated Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five
separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued
under the Restated Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters
of credit issued under the Restated Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for
more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial
covenants for any fiscal quarter, the Restated Revolving Credit Facility provides that TMC may exercise an equity cure
by issuing certain permitted securities for cash or otherwise recording cash contributions to its capital that will, upon the
contribution of such cash to TMC, be included in the calculation of consolidated tangible net worth and consolidated
total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and
up to five times overall. The maximum debt to total capitalization ratio is 0.60 to 1.00. The ratio as calculated by the
Borrowers at December 31, 2014 was 0.41 to 1.00. The minimum consolidated tangible net worth requirement was
$1.3 billion at December 31, 2014. At December 31, 2014, the Borrowers’ tangible net worth, as defined in the Restated
Revolving Credit Facility, was $1.7 billion. At December 31, 2014, these ratio calculations were inclusive of our
Monarch business.

The Restated Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of
liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations

59

on prepayment of subordinated indebtedness and limitations on fundamental changes. The Restated Revolving Credit
Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal,
interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity
cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration,
bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of
material guarantees and change of control. As of December 31, 2014, we were in compliance with all of the covenants
under the Restated Revolving Credit Facility.

Mortgage Company Loan Facilities

Borrowings under our TMHF warehouse facilities are accounted for as secured borrowings under ASC Topic 860,
‘Transfers and Servicing.” Total capacity under the TMHF warehouse facilities available to TMHC at December 31,
2014 is $235.0 million. The following table summarizes the terms of our TMHF warehouse facilities:

Facility

Amount Drawn Facility Amount

Interest Rate

Expiration Date

Collateral (1)

At December 31, 2014

Flagstar . . . . . . . . . . . . . . . .
Comerica . . . . . . . . . . . . . .
JPMorgan . . . . . . . . . . . . . .

$ 62,894
11,430
86,426

$ 85,000
50,000
100,000(2)

Total . . . . . . . . . . . . . . . . . .

$160,750

$235,000

LIBOR + 2.5% 30 days written notice Mortgage Loans
Mortgage Loans
LIBOR + 2.75% August 19, 2015
Pledged Cash

September 28, 2015

(3)

(1)

(2)

(3)

The mortgage borrowings outstanding as of December 31, 2014 and 2013, are collateralized by $191.1 million and
$95.7 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage receivables
and $1.3 million and $2.0 million, respectively, of restricted short-term investments which are included in restricted
cash in the accompanying Consolidated Balance Sheets.
The warehouse facility with JPMorgan has a maximum credit line of $50.0 million. On December 12, 2014 the
agreement was temporarily amended to increase the capacity from $50.0 million to $100.0 million. Effective
January 23, 2015, the temporary increase expired.
Interest under the JPMorgan agreement ranges from 2.50% plus 30-day LIBOR to 2.875% plus 30-day LIBOR or
0.25% (whichever is greater).

Loans Payable and Other Borrowings

Loans payable and other borrowings as of December 31, 2014 consist of project-level debt due to various land sellers
and municipalities, and are generally secured by the land that was acquired. Principal payments generally coincide with
corresponding project lot sales or a principal reduction schedule. The weighted average interest rate on $102.0 million of
the loans as of December 31, 2014 was 6.5% per annum, and $45.5 million of the loans were non-interest bearing.

Letters of Credit, Surety Bonds and Financial Guarantees

The following table summarizes our available and issued letters of credit as of the dates indicated:

(In thousands)

Available

Issued

Available

Issued

Restated Revolving Credit Facility . . . . . . . . . . . . .

$200,000

$35,071

$200,000

$26,456

Year Ended December 31,

2014

2013

In the course of land development and acquisition, we have issued letters of credit under our Restated Revolving Credit
Facility to various land sellers and municipalities in the amount of $35.1 million outstanding as of December 31, 2014.

Operating Cash Flow Activities

Our net cash used in operating activities decreased approximately $18.2 million for the year ended December 31, 2014
compared to 2013. The decrease in cash used in operating activities was primarily attributable to an increase in net

60

income and lower cash spend on real estate inventory and land deposits year over year, offset by lower stock
compensation expense, and an increase in cash paid for prepaids during the 2014 period. Also contributing to the change
was a decrease in income taxes payable as a result of the timing of estimated income tax payments.

Investing Cash Flow Activities

Net cash used in investing activities increased $13.7 million for the year ended December 31, 2014 compared to 2013.
The increase in cash used in 2014 was primarily the result of an increase in investments in unconsolidated entities as we
continue to fund new joint venture operations.

Financing Cash Flow Activities

Net cash provided by financing activities decreased $28.6 million for the year ended December 31, 2014 compared to
2013. Net cash provided by financing activities changed as a result of net proceeds from the IPO in 2013 which was in
part used to repay a portion of the 2020 Senior Notes in 2013, the issuance of $350.0 million of 2024 Senior Notes in
March 2014, an increase in net borrowings on mortgage warehouse facilities as a result of an increase in mortgage
originations year over year, and an increase in net borrowings on the Restated Revolving Credit Facility year over year
to fund new real estate acquisitions.

Commercial Commitments and Off-Balance Sheet Arrangements as of December 31, 2014

Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . .
Topic 740 obligations including interest and penalties . . .
Land purchase contracts (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Debt outstanding (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated interest expense (3) . . . . . . . . . . . . . . . . . . . . . . .

Payments Due by Period (in thousands)

Totals

$

20,554
1,563
323,513
1,737,106
636,596

Less than
1 year

$

5,489
—

130,079
252,278
93,750

1-3 years

3-5 years

$

7,658
1,563
101,851
67,409
175,394

$

4,453
—
48,923
22,429
173,370

More than
5 years

$

2,954
—
42,660
1,394,990
194,082

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,719,332

$481,596

$353,875

$249,175

$1,634,686

(1) Represents remaining purchase price due under full-recourse land purchase contracts.
(2) As of December 31, 2014 total debt outstanding includes $485.4 million aggregate principal amount and $3.4

million of unamortized bond premium of 2020 Senior Notes, $550.0 aggregate principal amount of 2021 Senior
Notes, $350.0 million aggregate principal amount of 2024 Senior Notes, $160.8 million of mortgage borrowings by
TMHF and $147.5 million of loans and other borrowings. Scheduled maturities of certain loans and other
borrowings as of December 31, 2014 reflect estimates of anticipated lot take-downs associated with such loans.
Estimated interest expense amounts for debt outstanding at the respective contractual interest rates, the weighted
average of which is 5.7% as of December 31, 2014.

(3)

The following table summarizes our letters of credit and surety bonds as of the dates indicated:

(In thousands)

As of December 31,

2014

2013

Letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Surety bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 35,071
280,559

$ 26,457
130,459

Total outstanding letters of credit and surety bonds . . . . . . . . . . .

$315,630

$156,916

Investments in Land Development and Homebuilding Joint Ventures or Unconsolidated Entities

We participate in strategic land development and homebuilding joint ventures with related and unrelated third parties.
The use of these entities, in some instances, enables us to acquire land to which we could not otherwise obtain access, or

61

could not obtain access on terms that are favorable. Our partners in these joint ventures historically have been land
owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers
have given us access to sites owned or controlled by our partners. Joint ventures with other homebuilders have provided
us with the ability to bid jointly with our partners for large or expensive land parcels. Joint ventures with financial
partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with
strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or
infill experience) of our partners.

In certain of our unconsolidated joint ventures, we enter into loan agreements, whereby one of our subsidiaries will
provide the lenders with customary guarantees, including completion, indemnity and environmental guarantees subject
to usual non-recourse terms.

The following is a summary of investments in unconsolidated land development and homebuilding joint ventures:

(In thousands)

As of December 31,

2014

2013

East
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 57,138
51,909
1,244

$20,191
—
1,244

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$110,291

$21,435

The following is a rollforward of the investments in unconsolidated land development and homebuilding joint ventures:

(In thousands)

East

West

Corporate

Total

Investment balance, December 31, 2013 . . . . . . . . . . . . . . . .
Joint venture income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$20,191
3,609
(1,862)
35,200

$ —
386
(474)
51,997

$ 1,244
1,410
(1,410)
—

$ 21,435
5,405
(3,746)
87,197

Investment balance, December 31,2014 . . . . . . . . . . . . . . . . .

$57,138

$51,909

$ 1,244

$110,291

The summarized balance sheets of our unconsolidated land development and homebuilding joint ventures were as
follows:

Summary balance sheet

(In thousands)

As of December 31,

2014

2013

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$456,821
138,431
318,390

$75,797
31,954
43,843

Land Purchase and Land Option Contracts

We enter into land purchase and option contracts to procure land or lots for the construction of homes in the ordinary
course of business. Lot option contracts enable us to control significant lot positions with a minimal capital investment
and substantially reduce the risks associated with land ownership and development. As of December 31, 2014, we had
outstanding land purchase and lot option contracts of $323.5 million for 5,372 lots. We are obligated to close the
transaction under our land purchase contracts. However, our obligations with respect to the option contracts are
generally limited to the forfeiture of the related non-refundable cash deposits and/or letters of credit provided to obtain
the options. For additional detail, see Liquidity and Capital Resources — Commercial Commitments and Off-Balance
Sheet Arrangements as of December 31, 2014.

62

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our operations are interest rate sensitive. We monitor our exposure to changes in interest rates and incur both fixed rate
and variable rate debt. At December 31, 2014, 88.4% of our debt was fixed rate and 11.6% was variable rate. None of
our market sensitive instruments were entered into for trading purposes. For fixed rate debt, changes in interest rates
generally affect the fair value of the debt instrument, but not our earnings or cash flows. Conversely, for variable rate
debt, changes in interest rates generally do not impact the fair value of the debt instrument but may affect our future
earnings and cash flows, and may also impact our variable rate borrowing costs, which principally relate to any
borrowings under our Restated Revolving Credit Facility and to any borrowings by TMHF under its various warehouse
facilities. As of December 31, 2014, we had $40.0 million outstanding borrowings under our $400.0 million Restated
Revolving Credit Facility. We had $324.9 million of additional availability for borrowings and $164.9 million of
additional availability for letters of credit (giving effect to $35.1 million of letters of credit outstanding as of such date).
See Item 7 — Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Liquidity
and Capital Resources — Capital Resources –Revolving Credit Facility. Our fixed rate debt is subject to a requirement
that we offer to purchase the 2020 Senior Notes and the 2021 Senior Notes at par with certain proceeds of asset sales (to
the extent not applied in accordance with the indentures governing such Senior Notes). We are also required to offer to
purchase all of the outstanding Senior Notes at 101% of their aggregate principal amount upon the occurrence of
specified change of control events. Other than in those circumstances, we do not have an obligation to prepay fixed rate
debt prior to maturity and, as a result, interest rate risk and changes in fair value would not expect to have a significant
impact on our cash flows related to our fixed rate debt until such time as we are required to refinance, repurchase or
repay such debt.

We are not materially exposed to interest rate risk associated with TMHF’s mortgage loan origination business, because
at the time any loan is originated, TMHF has identified the investor who will agree to purchase the loan on the interest
rate terms that are locked in with the borrower at the time the loan is originated.

The following table sets forth principal cash flows by scheduled maturity and effective weighted average interest rates
and estimated fair value of our debt obligations as of December 31, 2014. The interest rate for our variable rate debt
represents the interest rate on our borrowings under our Restated Revolving Credit Facility and mortgage warehouse
facilities. Because the mortgage warehouse facilities are effectively secured by certain mortgage loans held for sale
which are typically sold within 20 days, its outstanding balance is included as a variable rate maturity in the most current
period presented.

(In millions, except percentage data)

2015

2016

2017

2018

2019

Thereafter

Total

Expected Maturity Date

Fair
Value

Fixed Rate Debt
. . . . . . . . . . . . . . . . . . . . . .
Average interest rate (1) . . . . . . . . . . . . . . . . . .
Variable rate debt (2) . . . . . . . . . . . . . . . . . . . $200.8 —
2.6% —
Average interest rate . . . . . . . . . . . . . . . . . . . .

$ 52.2

$55.4

$13.4

$ 9.9

$13.8

4.5% 4.5% 4.6% 4.6% 4.6%

—
—

—
—

—
—

$1,391.7

$1,536.3

$1,540.7
6.2%
—
— $ 200.8 $ 200.8
—
—

2.6%

6.1%

(1) Represents the coupon rate of interest on the full principal amount of the debt.
(2) Based upon the amount of variable rate debt at December 31, 2014, and holding the variable rate debt balance

constant, each 1% increase in interest rates would increase the interest incurred by us by approximately $2.0 million
per year.

Currency Exchange Risk

In December 2014, we entered into a derivative financial instrument in the form of a foreign currency forward. The
derivative financial instrument hedged our exposure to the Canadian dollar in conjunction with the disposition of the
Monarch business. The aggregate notional amount of the foreign exchange derivative financial instrument was
$471.2 million at December 31, 2014. At December 31, 2014 the fair value of the instrument was not material to our
consolidated financial position or results of operations. The final settlement of the derivative financial instrument
occurred on January 30, 2015 and a gain will be recorded in the first quarter of 2015.

63

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Taylor Morrison Home Corporation
Scottsdale, Arizona

We have audited the accompanying consolidated balance sheets of Taylor Morrison Home Corporation and subsidiaries
(the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
Taylor Morrison Home Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with
accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated February 27, 2015 expressed an unqualified opinion on the Company’s
internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
February 27, 2015

64

TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate inventory:

Owned inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate not owned under option agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgages receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net
Intangible assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,

2014

2013

$ 234,217
1,310

$ 193,518
3,807

2,511,623
6,698

2,518,321
34,544
191,140
89,210
85,274
110,291
258,190
5,337
5,459
23,375
576,445

1,993,985
18,595

2,012,580
38,011
95,718
79,921
50,592
21,435
242,656
4,502
9,325
23,375
663,118

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,133,113

$3,438,558

Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans payable and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit facility borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities attributable to consolidated option agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 122,466
200,556
50,096
70,465
1,388,840
147,516
40,000
160,750
6,698
168,565

$ 101,732
162,044
35,512
62,033
1,039,497
143,341
—
74,892
18,595
256,011

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,355,952

1,893,657

COMMITMENTS AND CONTINGENCIES (Note 20)

Stockholders’ Equity
Class A Common Stock, $0.00001 par value, 400,000,000 shares authorized, 33,060,540 and 32,857,800

shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively . . . . . . . . .

Class B Common Stock, $0.00001 par value, 200,000,000 shares authorized, 89,227,416 and 89,451,164

shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively . . . . . . . . .

Preferred stock, $0.00001 par value, 50,000,000 shares authorized, no shares issued and outstanding as of

December 31, 2014 and December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

1

—

1

—
374,358
114,948
(10,910)

—
372,789
43,479
(452)

Total stockholders’ equity attributable to Taylor Morrison Home Corporation . . . . . . . . . . . . . . . . . . . . . . .

478,397

415,817

Non-controlling interests — joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests — Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,528
1,292,236

7,236
1,121,848

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,777,161

1,544,901

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$4,133,113

$3,438,558

See accompanying Notes to the Consolidated Financial Statements

65

TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)

Year Ended December 31,

2014

2013

2012

Home closings revenue, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land closings revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,619,558
53,381
35,493

$1,857,950
27,760
30,371

$ 986,198
33,123
21,861

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of home closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of land closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage operations expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,708,432
2,082,819
39,696
19,671

1,916,081
1,457,454
26,316
16,446

1,041,182
795,979
27,296
11,266

Total cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,142,186

1,500,216

834,541

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

566,246

415,865

206,641

Sales, commissions and other marketing costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in income of unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense (income), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
Indemnification and transaction expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . .
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations — net of tax . . . . . . . . . . . . . . . . . . . . . . .

Net income before allocation to non-controlling interests . . . . . . . . . . . . . . . . . .
Net (income) loss attributable to non-controlling interests — joint ventures . . . .

Net income before non-controlling interests —

168,897
81,153
(5,405)
1,160
18,447
—
—

301,994
76,395

225,599
41,902

267,501
(1,648)

127,419
77,198
(2,895)
842
2,842
10,141
195,773

4,545
(23,810)

28,355
66,513

94,868
131

70,398
41,867
(1,214)
(758)
3,704
7,953
13,034

71,657
(284,298)

355,955
74,893

430,848
(28)

Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

265,853

94,999

430,820

Net (income) loss from continuing operations attributable to non-controlling

interests — Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(163,790)

1,442

(355,927)

Net income from discontinued operations attributable to non-controlling

interests — Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(30,594)

(51,021)

(74,893)

45,420

$

—

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . . . . . .

Earnings per common share — basic (1):

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations — net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . .

Earnings per common share — diluted (1):

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations — net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . .

Weighted average number of shares of common stock (1):

$

$
$

$

$
$

$

71,469

1.83
0.34

2.17

1.83
0.34

2.17

$

$
$

$

$
$

$

0.91
0.47

1.38

0.91
0.47

1.38

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32,937
122,313

32,840
122,319

N/A
N/A

N/A

N/A
N/A

N/A

N/A
N/A

(1)

Prior to the Reorganization Transactions on April 9, 2013 and the IPO no common shares were outstanding. See
Note 13 — Stockholders’ Equity — Reorganization Transactions for additional information.

See accompanying Notes to the Consolidated Financial Statements

66

TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

Income before non-controlling interests, net of tax . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . .
Post-retirement benefits adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (income) loss attributable to non-controlling interests — joint

Year Ended December 31,

2014

2013

2012

$ 267,501

$ 94,868

$430,848

(35,421)
(3,295)

(38,716)

(16,727)
7,483

(1,073)
(3,227)

(9,244) (1)

(4,300)

228,785

85,624

426,548

ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,648)

131

Comprehensive income attributable to non-controlling interests — Principal

Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(166,126)

(39,876)

28

—

Comprehensive income available to Taylor Morrison Home

Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 61,011

$ 45,879

$426,576

(1)

The difference between other comprehensive income reported on this schedule and other comprehensive income
reported in the Consolidated Statement of Stockholders’ Equity is the result of deferred tax assets on post
retirement benefits recorded in net income in the current year.

See accompanying Notes to the Consolidated Financial Statements

67

TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)

Common Stock

Class A

Class B

Additional
Paid-in
Capital

Shares Amount Shares Amount Amount

Stockholders’ equity

Net
Owners’
Equity

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Non-controlling
Interest - Joint
Venture

Non-controlling
Interest - Principal
Equityholders

Total
Stockholders’
Equity

— $—

— $— $

— $

649,209 $ —

$(30,065)

$ 9,421

$

Balance — December 31,

2011 . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . .
Other comprehensive loss . . . .
Share based compensation . . .
Distributions to non-

controlling interests . . . . . . .

Contribution of debt in

exchange for equity . . . . . . .

Non-controlling interest of

acquired entity . . . . . . . . . . .

Issuance of partnership

units . . . . . . . . . . . . . . . . . . .

Balance — December 31,

2012 . . . . . . . . . . . . . . . . . . .

Establish non-controlling
interest on April 12,
2013 . . . . . . . . . . . . . . . . . . .

Issuance of Class A Common

—
—
—

—

—

—

—

—

—

—
—
—

—

—

—

—

—

—

—
—
—

—

—

—

—

—

—

—

—
—
—

—

—

—

—

—

—

—

Stock, net of offering
costs . . . . . . . . . . . . . . . . . . 32,857,800 —

Issuance of Class B Common

Stock, net of offering
costs . . . . . . . . . . . . . . . . . .

Repurchase of New TMM
Units and corresponding
number of Class B Common
Stock . . . . . . . . . . . . . . . . . .

Offering costs capitalized to

equity . . . . . . . . . . . . . . . . . .

Allocation of dilution on IPO

Class A Common Stock . . .
Net income (loss) . . . . . . . . . .
Other comprehensive loss . . . .
Stock based compensation . . .
Distributions to non-

controlling interests - joint
ventures . . . . . . . . . . . . . . . .

Non-controlling interest of

acquired equity . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . .

Balance — December 31,

—

— 112,784,964

1

—

—

—
—
—
—

—

—
—

— (23,333,800) —

—

—
—
—
—

—

—
—

—

—
—
—
—

—

—
—

—

—
—
—
—

—

—
—

668,598

—

—

—

(297,591)

—
—
1,782

—

—
—

—
—
—

—

—

—

—

430,820
—
1,975

—

146,633

—

2,413

— 1,231,050

— (1,231,050)

—
—
—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
—
— 45,420
—
—
—
—

—

—
—

—

—
(1,941)

2013 . . . . . . . . . . . . . . . . . . . 32,857,800 —

89,451,164

1

372,789

— 43,479

Net income (loss) . . . . . . . . . .
Other comprehensive (loss)

income . . . . . . . . . . . . . . . . .
Exchange of New TMM Units
and corresponding number
of Class B Common
Stock . . . . . . . . . . . . . . . . . .

Cancellation of forfeited New

TMM Units and
corresponding number of
Class B Common Stock . . .

Issuance of restricted stock

units . . . . . . . . . . . . . . . . . . .
Stock based compensation . . .
Distributions to non-

controlling interests - joint
ventures . . . . . . . . . . . . . . . .

Balance — December 31,

—

—

—

—

—

—

—

—

196,024 —

(196,024) —

—

—

(27,724) —

6,716 —
—

—

—

—

—
—

—

—
—

—

—

—

—

—

—
1,569

—

— 71,469

—

—

—

—
—

—

—

—

—

—
—

—

—
(4,300)
—

—

—

—

—

28
—
—

(1,800)

—

241

—

(34,365)

7,890

—

—

—

—

—

—

—

—

$ 628,565

430,848
(4,300)
1,975

(1,800)

146,633

241

2,413

1,204,575

34,365

—

—

—

—

—
—
(452)
—

—

—
—

(452)

—

(10,458)

—

—

—
—

—

—

—

—

—

—

—
(131)
—
—

(417)

(106)
—

7,236

1,648

—

—

—

—
—

1,196,685

—

—

—

668,598

1

(485,782)

(485,782)

(10,775)

297,591
49,579
(8,792)
85,536

— —

—
(2,194)

(10,775)

—
94,868
(9,244)
87,318

(417)

(106)
(4,135)

1,121,848

1,544,901

194,384

(28,258)

267,501

(38,716)

—

—

—
4,262

—

—

—
5,831

(2,356)

—

(2,356)

2014 . . . . . . . . . . . . . . . . . . . 33,060,540

$—

89,227,416

$

1

$ 374,358 $

— $114,948

$(10,910)

$ 6,528

$1,292,236

$1,777,161

See accompanying Notes to the Consolidated Financial Statements

68

TAYLOR MORRISON HOME CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

For the Year ended December 31,

2014

2013

2012

$ 267,501

$ 94,868

$ 430,848

(26,735)
5,831
32,966
4,090
13,532
—
(17,703)

(37,563)
87,318
30,136
3,462
2,258
10,141
30,662

(22,964)
1,975
36,746
4,370
—
7,853
(278,880)

(331,116)
(109,970)
16,845
6,089
23,735

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash used in operating activities:
Equity in income of unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions of earnings from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:

Real estate inventory and land deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables, prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(310,550)
(136,636)
(11,378)
33,947
11,445

(450,147)
(5,183)
15,795
33,129
33,191

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(133,690)

(151,933)

(214,469)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments of capital into unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from the issuance of Class A common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of New TMM Units and corresponding number of shares of Class B Common Stock . .
Borrowings on line of credit related to mortgage borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment on line of credit related to mortgage borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from loans payable and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of loans payable and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments on revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the issuance of senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments on senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to non-controlling interests — joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intercompany borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity (distributions) contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,723)
—
1,728
10,743
(98,199)

(89,451)

—
—

658,708
(572,850)
41,990
(194,660)
253,000
(213,000)
350,000

—
(6,255)
(5,250)
(2,356)
—
—

(3,786)
—
8,840
(12,211)
(68,634)

(2,753)
(114,571)

—
(8,645)
(12,967)

(75,791)

(138,936)

668,598
(485,782)
703,536
(709,004)
45,289
(182,977)
907,000
(957,000)
550,000
(189,608)
(9,680)
—
(418)
(7)
(2,000)

—
—
525,745
(478,115)
41,598
(69,028)
50,000
—
675,000
(350,000)
(20,282)
—
(1,800)
—
2,413

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

309,327

337,947

375,531

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS . . . . . . . . . .

(13,162)

(21,644)

(881)

NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CASH AND CASH EQUIVALENTS — Beginning of period (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 73,024
389,181

$ 88,579
300,602

$ 21,245
279,322

CASH AND CASH EQUIVALENTS — End of period (2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 462,205

$ 389,181

$ 300,567

SUPPLEMENTAL CASH FLOW INFORMATION:

Income taxes paid, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (99,071) $ (24,354) $ (45,088)

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

Conversion of Sponsor loans payable to additional Class A Units . . . . . . . . . . . . . . . . . . . . . . . . . .

Conversion of joint venture loans receivable for equity in joint venture . . . . . . . . . . . . . . . . . . . . .

Loans payable and liabilities assumed related to business acquisition . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

— $

— $

— $

— $ 146,663

— $ 36,855

— $ 54,926

(Decrease) increase in loans payable issued to sellers in connection with land purchase

contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (88,893) $ 226,441

$ 134,001

Decrease in income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

22

$ 102,422

$ 15,233

(1) Cash and cash equivalents at the beginning of the period ended December 31, 2013 includes approximately $35,000 of TMHC cash that was not consolidated

with TMM and included in the cash balance at December 31, 2012.

(2) Cash and cash equivalents shown here include the cash related to Monarch. For the years ended December 31, 2014, 2013 and 2012, cash held at Monarch

was $227,988, $195,663 and $189,519, respectively.

See accompanying Notes to the Consolidated Financial Statements

69

TAYLOR MORRISON HOME CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

Organization and Description of the Business — Taylor Morrison Home Corporation (referred to herein as “TMHC,”
“we,” “our,” “the Company” and “us”), through its divisions and segments, owns and operates a residential
homebuilding business and is a developer of lifestyle communities. We currently operate in Arizona, California,
Colorado, Florida and Texas. Our homes appeal to entry-level, move-up, 55+ and luxury homebuyers. The Company
operates under our Taylor Morrison and Darling Homes brands. Our business has ten homebuilding operating divisions,
and a mortgage operations division, which are organized into three reportable segments: East, West, and Mortgage. The
communities in our East and West segment offer single family attached and/or detached homes. We are the general
contractors for all real estate projects and retain subcontractors for home construction and site development. Our
Mortgage Operations reportable segment provides financial services to customers in the United States through our
wholly owned mortgage subsidiary, operating as Taylor Morrison Home Funding, LLC (“TMHF”).

On July 13, 2011, TMM Holdings Limited Partnership (“TMM Holdings”), an entity formed by a consortium comprised of
affiliates of TPG Global, LLC (the “TPG Entities” or “TPG”), investment funds managed by Oaktree Capital Management,
L.P. (“Oaktree”) or their respective subsidiaries (the “Oaktree Entities”), and affiliates of JH Investments, Inc. (the
“JH Entities” and together with the TPG Entities and Oaktree Entities, the “Principal Equityholders”), acquired (the
“Acquisition”) our predecessors, Taylor Woodrow Holdings (USA), Inc., now known as Taylor Morrison Communities Inc.

On April 12, 2013, TMHC completed the initial public offering (the “IPO”) of its Class A common stock, par value
$0.00001 per share (the “Class A Common Stock”). The shares of Class A Common Stock began trading on the New York
Stock Exchange on April 10, 2013 under the ticker symbol “TMHC.” As a result of the completion of the IPO and a series
of transactions pursuant to a Reorganization Agreement dated as of April 9, 2013 (the “Reorganization Transactions”),
TMHC became the indirect parent of TMM Holdings through the formation of TMM Holdings II Limited Partnership
(“New TMM”). In the Reorganization Transactions, the TPG Entities and the Oaktree Entities each formed new holding
vehicles to hold interests in New TMM (the “TPG Holding Vehicle” and the “Oaktree Holding Vehicle” respectively). As
of December 31, 2014 and 2013, the Principal Equityholders owned 73.0% and 73.1%, respectively of the Company.

On December 16, 2014, we announced we entered into a definitive agreement to sell 100% of the capital stock of Monarch
Corporation (“Monarch”) a subsidiary that at the time owned the operations of our Canadian operations. The actual
purchase price paid and cash amounts were determined using Monarch’s final December 31, 2014 balance sheet.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation — The accompanying Consolidated Financial Statements have been prepared
in accordance with accounting principles generally accepted in the United States (“GAAP”), include the accounts of
TMHC and our consolidated subsidiaries, other entities where we have a controlling financial interest, and of variable
interest entities if we are deemed the primary beneficiary. Intercompany balances and transactions have been eliminated
in consolidation.

Unless otherwise stated, amounts are shown in U.S. dollars. Assets and liabilities recorded in foreign currencies are
translated at the exchange rate on the balance sheet date, and revenues and expenses are translated at average rates of
exchange prevailing during the period. Translation adjustments resulting from this process are recorded to accumulated
other comprehensive income (loss) in the accompanying Consolidated Balance Sheets and Statements of Stockholders’
Equity.

Reclassifications — Certain prior period amounts have been reclassified to conform with current period financial
statement presentation.

Discontinued Operations — As a result of our decision in December 2014 to dispose of our Canadian operating segment,
specifically Monarch Corporation, the operating results and financial position of the Monarch business are presented as
discontinued operations for all periods presented (see Note 4 — Discontinued Operations and Note 21 — Subsequent

70

Events). We determined that Monarch should be presented as a discontinued operation based on a committed plan to sell,
and our determination that the sale of the entity was probable at December 31, 2014.

Non-controlling interests — In the Reorganization Transactions, the Company became the sole owner of the general
partner of New TMM. As the general partner of New TMM, the Company exercises exclusive and complete control over
New TMM. Consequently:

•

For periods subsequent to April 9, 2013, the Company consolidates New TMM and records a non-controlling
interest in its Consolidated Balance Sheets for the economic interests in New TMM, that are directly or
indirectly held by the Principal Equityholders or by members of management and the Board of Directors; and

• The Consolidated Financial Statements as of and for the year ended December 31, 2012 reflect the

consolidated operations of TMM Holdings only as there were no operating activities or equity transactions in
TMHC during that period.

Use of Estimates — The preparation of financial statements in accordance with GAAP requires us to make estimates
and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.
Significant estimates include real estate development costs to complete, valuation of real estate, valuation of equity
awards, valuation allowance on deferred tax assets and reserves for warranty and self-insured risks. Actual results could
differ from those estimates.

Concentration of Credit Risk — Financial instruments that potentially subject us to concentrations of credit risk are
primarily cash and cash equivalents. Cash and cash equivalents include amounts on deposit with financial institutions in
the U.S. that are in excess of the Federal Deposit Insurance Corporation federally insured limits of up to $250,000 and
amounts on deposit with financial institutions in Canada that are in excess of the Canadian Deposit Insurance
Corporation federally insured limits of up to $100,000. No losses have been experienced to date.

In addition, the Company is exposed to credit risk to the extent that mortgage and loan borrowers may fail to meet their
contractual obligations. This risk is mitigated by collateralizing the mortgaged property or land that was sold to the
buyer.

Cash and Cash Equivalents — Cash and cash equivalents consist of cash on hand, demand deposits with financial
institutions, and investments with original maturities of 90 days or less. At December 31, 2014, the majority of our cash
and cash equivalents were invested in both highly liquid and high-quality money market funds or on deposit with major
financial institutions.

Restricted Cash — Restricted cash at December 31, 2014 consists of $1.3 million pledged to collateralize mortgage
credit lines and at December 31, 2013 consists of $2.0 million pledged to collateralize mortgage credit lines through
certificates of deposit known as Certificate of Deposit Account Registry Service (CDARS).

Real Estate Inventory — Inventory consists of raw land, land under development, land held for future development,
homes under construction, completed homes and model homes. Inventory is carried at cost, less impairment, if
applicable. In addition to direct carrying costs, we also capitalize interest, real estate taxes, and related development
costs that benefit the entire community, such as field construction supervision and related direct overhead. Home
construction costs are accumulated and charged to cost of sales at home closing using the specific identification method.
Land acquisition, development, interest, taxes and overhead costs are allocated to homes and units using methods that
approximate the relative sales value method. These costs are capitalized to inventory from the point development begins
to the point construction is completed. Changes in estimated costs to be incurred in a community (cost to complete) are
generally allocated to the remaining homes on a prospective basis. For those communities that have been temporarily
closed or where development has been discontinued, costs are expensed as incurred until operations resume.

We review our real estate inventory for indicators of impairment by community on a quarterly basis. In conducting our
impairment analysis, we evaluate the margins on homes that have been delivered, margins on homes under sales
contracts in backlog, projected margins with regard to future home sales over the life of the community, projected
margins with regard to future land sales and the estimated fair value of the land itself. If indicators of impairment are

71

present for a community, we perform an additional analysis to determine if the carrying value of the assets in that
community exceeds the undiscounted cash flows estimated to be generated by those assets. If the carrying value of the
assets does exceed their estimated undiscounted cash flows, the assets are deemed to be impaired and are recorded at fair
value as of the assessment date. An impairment charge is taken in the period with a charge to cost of home closings.

Critical assumptions in our cash flow model include: (i) the projected absorption pace for home sales in the community,
based on general economic conditions that will have an impact on the market in which the community is located and
competition within the market; (ii) the expected sales prices and sales incentives to be offered; (iii) costs to build and
deliver homes in the community, including, but not limited to, land and land development costs, home construction
costs, interest costs and overhead costs; and (iv) alternative uses for the property, such as the possibility of a sale of the
entire community to another builder or the sale of individual home sites. Consideration is also given to development
budgets and sales pace and price. Discount rates are determined using a base rate, which may be increased depending on
the total remaining lots in a community, the development status of the land, the market in which it is located and if the
product is higher-priced with potentially lower demand. Historically, our discount rates have been in the range of 12.0%
to 18.0%. Inventory impairment charges are recognized against all inventory costs of a community, such as land, land
improvements, cost of home construction and capitalized interest. For the years ended December 31, 2014, 2013 and
2012, no impairment charges were recorded.

In certain cases, we may elect to cease development and/or marketing of an existing community if we believe the
economic performance of the community would be maximized by deferring development for a period of time to allow
for temporary market conditions to improve. The decision may be based on financial and/or operational metrics as
determined by us. If we decide to cease developing a project, we will impair such project if necessary to its fair value as
discussed above and then cease future development and/or marketing activity until such a time when we believe that
market conditions have improved and economic performance can be maximized.

Our assessment of the carrying value of our assets typically include subjective estimates of future performance,
including the timing of when development will recommence, the type of product to be offered, and the margin to be
realized. In the future, some of these inactive communities may be re-opened while others may be sold. As of
December 31, 2014, we had 19 inactive projects with a carrying value of $28.0 million of which $6.1 million and
$21.9 million is in the East and West segments, respectively. During the year ended December 31, 2014, we placed one
community into inactive status and moved one community into active status.

As discussed in this note under Investments in Consolidated and Unconsolidated Entities — Consolidated Option
Agreements, in the ordinary course of business, we acquire various specific performance lots through existing lot option
agreements. Real estate not owned under certain of these contracts is consolidated into real estate inventory with a
corresponding liability in liabilities attributable to consolidated option agreements in the Consolidated Balance Sheets.

Land Deposits —We provide deposits related to land options and land purchase contracts, which are capitalized when
paid and classified as land deposits until the associated property is purchased. To the extent the deposits are non-
refundable, they are charged to expense if the land acquisition process is terminated or no longer determined probable.
We review the likelihood of the acquisition of contracted lots in conjunction with our periodic real estate inventory
impairment analysis. Non-refundable deposits are recorded as a component of real estate inventory in the accompanying
Consolidated Balance Sheets at the time the deposit is applied to the acquisition price of the land based on the terms of
the underlying agreements.

Mortgages Receivable — Mortgages receivable consists of mortgages due from buyers of Taylor Morrison homes that
are financed through our mortgage brokerage subsidiary, TMHF. Mortgages receivable are held for sale and are carried
at fair value, which is calculated using observable market information, including pricing from actual market transactions,
investor commitment prices, or broker quotations.

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Prepaid Expenses and Other Assets, net — Prepaid expenses and other assets consist of the following (in thousands):

Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$75,700
13,510

$62,822
17,099

Total prepaid expenses and other assets, net . . . . . . . . . . . . . . . . . . .

$89,210

$79,921

As of December 31,

2014

2013

Our prepaid expenses consist primarily of unamortized debt issuance costs, sales commissions, sales presentation centers
and model home costs, such as design fees and furniture. At December 31, 2014 and 2013, prepaid debt issuance costs
consisted of $26.9 million and $26.7 million, respectively, of aggregate unamortized costs related to the various Senior
Notes issuances and our revolving credit facility. During the year ended December 31, 2014 and 2013, we amortized
$5.9 million and $5.3 million of such debt issue costs, respectively. Prepaid sales commissions are recorded on pre-
closing sales activities, which are recognized on the ultimate closing of the units to which they relate. The model home
and sales presentation centers costs are paid in advance and amortized over the life of the project on a per-unit basis, or a
maximum of three years.

Other assets consist primarily of various operating and escrow deposits, pre-acquisition costs and other deferred costs.

Other Receivables, net — Other receivables primarily consist of amounts expected to be recovered from various
community development districts and utility deposits. Allowances of $0.3 and $0.5 million at December 31, 2014 and
2013, respectively, are maintained for potential credit losses based on historical experience, present economic
conditions, and other factors considered relevant. Allowances are generally recorded in other expense, net when it
becomes likely that some amount will not be collectible. Other receivables are written off when it is determined that
collection efforts will no longer be pursued.

Investments in Unconsolidated and Consolidated Entities

Unconsolidated Joint Ventures — We use the equity method of accounting for entities over which we exercise
significant influence but do not have a controlling interest over the operating and financial policies of the investee. For
unconsolidated entities in which we function as the managing member, we have evaluated the rights held by our joint
venture partners and determined that they have substantive participating rights that preclude the presumption of control.
For joint ventures accounted for using the equity method, our share of net earnings or losses is included in equity in
income of unconsolidated entities when earned and distributions are credited against our investment in the joint venture
when received. These joint ventures are recorded in investments in unconsolidated entities on the Consolidated Balance
Sheets.

Consolidated Joint Ventures — We are also involved in several joint ventures with independent third parties for land
development and homebuilding activities. If a joint venture is determined to be a variable interest entity (“VIE”) and we
are deemed to be the primary beneficiary, we consolidate the joint venture. For these entities, their financial statements
are consolidated in the accompanying Consolidated Financial Statements and the other partners’ equity are recorded as
non-controlling interests – joint ventures.

Consolidated Option Agreements — In the ordinary course of business, we enter into land and lot option purchase
contracts in order to procure land or lots for the construction of homes. Lot option contracts enable us to control
significant lot positions with a minimal initial capital investment and substantially reduce the risks associated with land
ownership and development. In accordance with Accounting Standards Codification (“ASC”) Topic 810,
“Consolidation,” we have concluded that when we enter into an option or purchase agreement to acquire land or lots and
pay a non-refundable deposit, a VIE may be created because we may be deemed to have provided subordinated financial
support and we will potentially absorb some or all of an entity’s expected losses if they occur. For each VIE, we assess
whether we are the primary beneficiary by first determining if we have the ability to control the activities of the VIE that
most significantly affect its economic performance. Such activities include, but are not limited to, the ability to
determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE;
the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with us; and the ability

73

to change or amend the existing option contract with the VIE. If we are not able to control such activities, it is not
considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our
analysis by determining if we are expected to absorb a potentially significant amount of the VIE’s losses or, if no party
absorbs the majority of such losses, if we will potentially benefit from a significant amount of the VIE’s expected
returns.

We evaluate our investments in unconsolidated entities for indicators of impairment during each reporting period. A
series of operating losses of an investee or other factors may indicate that a decrease in value of our investment in the
unconsolidated entity has occurred which is other-than-temporary. The amount of impairment recognized is the excess
of the investment’s carrying amount over its estimated fair value. Additionally, we consider various qualitative factors to
determine if a decrease in the value of the investment is other-than-temporary. These factors include age of the venture,
stage in its life cycle, intent and ability for us to recover our investment in the entity, financial condition and long-term
prospects of the entity, short-term liquidity needs of the unconsolidated entity, trends in the general economic
environment of the land, entitlement status of the land held by the unconsolidated entity, overall projected returns on
investment, defaults under contracts with third parties (including bank debt), recoverability of the investment through
future cash flows and relationships with the other partners. If the Company believes that the decline in the fair value of
the investment is temporary, then no impairment is recorded. We did not record any impairment charges for the years
ended December 31, 2014, 2013 or 2012.

Income Taxes — We account for income taxes in accordance with ASC Topic 740, “Income Taxes.” Deferred tax assets
and liabilities are recorded based on future tax consequences of both temporary differences between the amounts
reported for financial reporting purposes and the amounts deductible for income tax purposes, and are measured using
enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period
when the changes are enacted.

We periodically assess our deferred tax assets, including the benefit from net operating losses, to determine if a valuation
allowance is required. A valuation allowance is established when, based upon available evidence, it is more likely than
not that all or a portion of the deferred tax assets will not be realized. Realization of the deferred tax assets is dependent
upon, among other matters, taxable income in prior years available for carryback, estimates of future income, tax
planning strategies, and reversal of existing temporary differences.

Property and Equipment, net — Property and equipment are recorded at cost, less accumulated depreciation.
Depreciation is generally computed using the straight-line basis over the estimated useful lives of the assets as follows:

Buildings: 20 – 40 years

Building and leasehold improvements: 10 years or remaining life of building/lease term if less than 10 years

Information systems : over the term of the license

Furniture, fixtures and computer and equipment: 5 – 7 years

Model and sales office improvements: lesser of 3 years or the life of the community

Maintenance and repair costs are expensed as incurred.

Depreciation expense was $3.0 million for the year ending December 31, 2014, $2.1 million for the year ending
December 31, 2013 and $2.9 million for the year ended December 31, 2012. Depreciation expense is recorded in general
and administrative expenses in the accompanying Consolidated Statements of Operations.

Intangible Assets, net — Intangible assets consist of tradenames, lot options and land supplier relationships, and non-
compete covenants. We sell our homes under a number of trade names. The fair value of acquired intangible assets was
determined using the income approach, and our trade names are being amortized on a straight line basis over ten years.

Goodwill — The excess of the purchase price of a business acquisition over the net fair value of assets acquired and
liabilities assumed is capitalized as goodwill in accordance with ASC Topic 350, “Intangibles — Goodwill and Other.”

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ASC 350 requires that goodwill and intangible assets that do not have finite lives not be amortized, but instead be
assessed for impairment at least annually or more frequently if certain impairment indicators are present. We perform
our annual impairment test during the fourth quarter or whenever impairment indicators are present. For the years ended
December 31, 2014 and 2013, there have been no additions to goodwill. For the years ended December 31, 2014, 2013
and 2012, there has been no impairment of goodwill.

Insurance Costs, Self-Insurance Reserves and Warranty Reserves — We have certain deductible limits under our
workers’ compensation, automobile, and general liability insurance policies, and we record expense and liabilities for the
estimated costs of potential claims for construction defects. The excess liability limits are $50 million per occurrence in
the annual aggregate and apply in excess of automobile liability, employer’s liability under workers compensation and
general liability policies. We also generally require our sub-contractors and design professionals to indemnify us for
liabilities arising from their work, subject to certain limitations. We are the parent of Beneva Indemnity Company
(“Beneva”), which provides insurance coverage for construction defects discovered during a period of time up to
ten years following the sale of a home, coverage for premise operations risk, and property coverage. We accrue for the
expected costs associated with the deductibles and self-insured amounts under our various insurance policies based on
historical claims, estimates for claims incurred but not reported, and potential for recovery of costs from insurance and
other sources. The estimates are subject to significant variability due to factors, such as claim settlement patterns,
litigation trends, and the extended period of time in which a construction defect claim might be made after the closing of
a home.

We offer warranties on homes that generally provide for a limited one-year warranty to cover various defects in
workmanship or materials or to cover structural construction defects. We may also facilitate a ten-year warranty in
certain markets or to comply with regulatory requirements. Warranty reserves are established as homes close in an
amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. Our
warranty is not considered a separate deliverable in the arrangement, therefore, it is accounted for in accordance with
ASC Topic 450, “Contingencies.” In accordance with ASC 450, warranties that are not separately priced are generally
accounted for by accruing the estimated costs to fulfill the warranty obligation. The amount of revenue related to the
product is recognized in full upon the delivery if all other criteria for revenue recognition have been met. Thus, the
warranty would not be considered a separate deliverable in the arrangement since it is not priced apart from the home.
As a result, we accrue the estimated costs to fulfill the warranty obligation in accordance with ASC 450 at the time a
home closes, as a component of cost of home closings.

Our reserves are based on factors that include an actuarial study for structural, historical and anticipated claims, trends
related to similar product types, number of home closings, and geographical areas. We also provide third-party warranty
coverage on homes where required by Federal Housing Administration or Veterans Administration lenders. Reserves are
recorded in accrued expenses and other liabilities on our Consolidated Balance Sheets.

Non-controlling Interests — Principal Equityholders — In the Reorganization Transactions immediately prior to the
Company’s IPO, the existing holders of TMM Holdings limited partnership interests (the Principal Equityholders,
members of management and the Board of Directors), exchanged their limited partnership interests for limited
partnership interests of a newly formed limited partnership, New TMM (the “New TMM Units”). For each New TMM
Unit received in the exchange, the Principal Equityholders, members of management and the Board of Directors also
received, directly or indirectly, a corresponding number of shares of the Company’s Class B common stock, par value
$0.00001 per share (the “Class B Common Stock”). All of the Company’s Class B Common Stock is owned by the
Principal Equityholders, members of management and the Board of Directors. The Company’s Class B Common Stock
has voting rights but no economic rights. One share of Class B Common Stock, together with one New TMM Unit is
exchangeable into one share of the Company’s Class A Common Stock. The Company sold Class A Common Stock to
the investing public in its initial public offering. The proceeds received in the initial public offering were used by the
Company to purchase New TMM Units, such that the Company owns an amount of New TMM Units equal to the
amount of the Company’s outstanding shares of Class A Common Stock. The Company’s Class A Common Stock has
voting rights and economic rights. Also, in the Reorganization Transactions, the Company became the sole owner of the
general partner of New TMM. As the general partner of New TMM, the Company exercises exclusive and complete
control over New TMM. Consequently, the Company consolidates New TMM and records a non-controlling interest in
its Consolidated Balance Sheet for the economic interests in New TMM, directly or indirectly, held by the Principal
Equityholders, members of management and the Board of Directors.

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For the year-ended December 31, 2013, activity in the Non-controlling interests – Principal Equityholders and former
controlling interests net income (loss) amounts is as follows (in thousands):

Pre-IPO Non-controlling Interests – Principal

Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .

Post-IPO Controlling Interest

$123,532
(73,953)

$ 81,403
(82,845)

$42,129
8,892

Non-controlling Interests – Principal Equityholders . . . . .

$ 49,579

$ (1,442)

$51,021

Consolidated

Continuing
Operations

Discontinued
Operations

Pre-IPO activity is for the period prior to April 10, 2013 while post-IPO is activity subsequent to that date. No similar
reconciliation is needed for the year-ended December 31, 2014 as we were a publicly traded company for the entirety of
the year.

Stock Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718-10, “Compensation – Stock
Compensation.” The fair value of each option granted is estimated on the date of grant using the Black-Scholes option
pricing model. These models require the input of highly subjective assumptions. This guidance also requires us to
estimate forfeitures in calculating the expense related to stock-based compensation.

Revenue Recognition:

Home closings revenue, net — Revenue from home sales are recorded using the completed-contract method of
accounting at the time each home is closed, delivered, title and possession are transferred to the buyer, there is no
significant continuing involvement with the home, risk of loss has transferred, and the buyer has demonstrated sufficient
initial and continuing investment in the property. A home is considered closed when escrow closes and funds have
transferred from the buyer or mortgage company to us.

We typically grant our homebuyers certain sales incentives, including cash discounts, incentives on options included in
the home, option upgrades, and seller-paid financing or closing costs. Incentives and discounts are accounted for as a
reduction in the sales price of the home and home closings revenue is shown net of discounts. For the years ended
December 31, 2014, 2013 and 2012, discounts were $150.9 million, $129.0 million and $104.8 million, respectively. We
also receive rebates from certain vendors and these rebates are accounted for as a reduction to cost of home closings.

Land closings revenue — Revenue from land sales are recognized when title is transferred to the buyer, there is no
significant continuing involvement, and the buyer has demonstrated sufficient initial and continuing investment in the
property sold. If the buyer has not made an adequate initial or continuing investment in the property, the profit on such
sales is deferred until these conditions are met.

Mortgage operations revenue — Loan origination fees (including title fees, points, closing costs) are recognized at the
time the related real estate transactions are completed, usually upon the close of escrow. All of the loans TMHF
originates are sold to third party investors within a short period of time, within 20 business days, on a non-recourse
basis. Gains and losses from the sale of mortgages are recognized in accordance with ASC Topic 860-20, “Sales of
Financial Assets,” since TMHF does not have continuing involvement with the transferred assets, we derecognize the
mortgage loans at time of sale, based on the difference between the selling price and carrying value of the related loans
upon sale, recording a gain/loss on sale in the period of sale.

Advertising Costs — We expense advertising costs as incurred. Advertising costs were $26.1 million, $21.1 million and
$12.1 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Recently Issued Accounting Pronouncements — In August 2014, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update (“ASU”) No. 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
(“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there
are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one

76

year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for us for
our fiscal year ending December 31, 2017. The adoption of ASU 2014-15 is not expected to have a material effect on our
consolidated financial statements or disclosures.

In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (“ASU 2014-12”), which
provides guidance on the accounting for share-based payments when the terms of an award provide that a performance
target could be achieved after the requisite service period. ASU 2014-12 is effective beginning January 1, 2016. We do
not anticipate that the adoption of ASU 2014-12 will have a material effect on our consolidated financial statements or
disclosures.

In June 2014, the FASB issued ASU No. 2014-11, Transfers and Servicing (“ASU 2014-11”), which requires that
repurchase-to-maturity transactions be accounted for as secured borrowings consistent with the accounting for other
repurchase agreements. In addition, the amendments require separate accounting for a transfer of a financial asset
executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured
borrowing accounting for the repurchase agreement. ASU 2014-11 is effective beginning January 1, 2015. We do not
anticipate that the adoption of ASU 2014-11 will have a material effect on our consolidated financial statements or
disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which
provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with
customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the
revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This
ASU also supersedes some cost guidance included in ASC Subtopic 605-35, “Revenue Recognition-Construction-Type
and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it
transfers promised goods or services to customers in an amount that reflects the consideration to which a company
expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment
and make more estimates than under today’s guidance. These may include identifying performance obligations in the
contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction
price to each separate performance obligation. ASU 2014-09 is effective beginning January 1, 2017 and, at that time we
will adopt the new standard under either the full retrospective approach or the modified retrospective approach. Early
adoption is not permitted. We are currently evaluating the method and impact the adoption of ASU 2014-09 will have
our consolidated financial statements and disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity (“ASU 2014-08”), which changes the criteria for reporting discontinued operations while
enhancing disclosures in this area. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a
major line of business, a major geographical area or a major equity investment, should be presented as a discontinued
operation. If the disposal does qualify as a discontinued operation under ASU 2014-08, the entity will be required to
provide expanded disclosures. ASU 2014-08 is effective beginning November 1, 2015. We plan to adopt this ASU when
it becomes effective.

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3. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to TMHC by the weighted average number of
Class A Common Stock outstanding during the period. Diluted earnings per share gives effect to the potential dilution
that could occur if all shares of Class B Common Stock and their corresponding New TMM Units were exchanged for
Class A Common Stock and if equity awards to issue common stock that are dilutive were exercised (in thousands,
except per share amounts):

Numerator:
Net income available to TMHC – basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax attributable to non-controlling interest –

Year Ended
December 31,

2014

2013

$ 71,469
41,902

$ 45,420
66,513

Principal Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(30,594)

(51,021)

Net income from discontinued operations — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11,308

$ 15,492

Net income from continuing operations — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 60,161

$ 29,928

Net income from continuing operations — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations attributable to non-controlling interest – Principal

$ 60,161

$ 29,928

Equityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss fully attributable to Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

163,790
282

81,403
63

Net income from continuing operations — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$224,233

$111,394

Net income from discontinued operations — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 41,902

$ 57,620

Denominator:
Weighted average shares — basic (Class A)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares — Principal Equityholders’ non-controlling interest (Class B) . . . . . . . .
Restricted stock units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average shares — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per common share — basic:

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings per common share — diluted:

Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income available to Taylor Morrison Home Corporation . . . . . . . . . . . . . . . . . . . . . . . . .

32,937
89,328
48
—

32,840
89,469
9
1

122,313

122,319

$
$

$

$
$

$

1.83
0.34

2.17

1.83
0.34

2.17

$
$

$

$
$

$

0.91
0.47

1.38

0.91
0.47

1.38

We excluded a total weighted average of 1,281,959 and 1,439,645 stock options and time-vesting restricted stock units
(“RSUs”) from the calculation of earnings per share for the year ended December 31, 2014 and 2013, respectively, as
their inclusion is anti-dilutive.

The shares of Class B Common Stock have voting rights however, do not have economic rights, no rights to dividends or
distribution on liquidation, and therefore, are not participating securities. Accordingly, Class B Common Stock is not
included in basic earnings per share. Additionally, the income from Principal Equityholders’ non-controlling interest and
the related Class B Common Stock may produce a slight anti-dilutive effect on diluted earnings per common share.

4. DISCONTINUED OPERATIONS

In connection with the decision to sell Monarch in December 2014, the operating results associated with the Monarch
business are classified as discontinued operations – net of applicable taxes in the Consolidated Statements of Operations

78

for all periods presented, and the assets and liabilities associated with this business are classified as assets of
discontinued operations and liabilities of discontinued operations, as appropriate, in the Consolidated Balance Sheets for
all applicable periods presented.

The components of discontinued operations, net of tax are as follows (in thousands):

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$395,070

$407,156

$394,539

Pre-tax income from discontinued operations . . . . . . . . . . . . .
Provision for taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 61,786
19,884

$ 93,391
26,878

$ 98,894
24,001

Income from discontinued operations, net of tax . . . . . . . . . . .

$ 41,902

$ 66,513

$ 74,893

Year Ended December 31,

2014

2013

2012

The components of assets of discontinued operations and liabilities of discontinued operations are as follows (in
thousands):

December 31,
2014

December 31,
2013

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax indemnification receivable . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets, net . . . . . . . . . . . . . . . . . .
Other receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated entities . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net
. . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net

$227,988
11,474
149,087
7,547
40,808
5,194
11,197
1,984
111,887
3,233
2,546
3,500

Assets of discontinued operations . . . . . . . . . . . . . . . . . . . . .

$576,445

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans payable and other borrowings . . . . . . . . . . . . . . . . . . .

$ 14,438
44,554
8,076
11,166
90,331

Liabilities of discontinued operations . . . . . . . . . . . . . . . . . .

$168,565

$195,663
21,007
249,759
5,728
33,395
5,216
18,949
5,621
118,115
2,264
3,013
4,388

$663,118

$ 20,133
52,456
12,028
32,637
138,757

$256,011

The Canadian business is committed, under various letters of credit and surety bonds, to perform certain development
and construction activities and provide certain guarantees in the normal course of business. These guarantees have been
made in connection with joint venture funding. Outstanding letters of credit and surety bonds under these arrangements,
including the Canadian business’s share of responsibility for arrangements with its joint ventures, totaled $152.9 million
and $212.2 million as of December 31, 2014 and 2013, respectively. Although significant development and construction
activities have been completed related to these site improvements, the letters of credit and surety bonds are reduced as
development and construction work is completed, but not fully released until warranty periods have expired.

79

5. REAL ESTATE INVENTORY AND LAND DEPOSITS

Inventory consists of the following (in thousands):

Operating communities, including capitalized interest . . . . . .
Real estate held for development or held for sale (completed
homes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,

2014

2013

$2,217,067

$1,651,218

294,556

342,767

Total owned inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate not owned under option contracts . . . . . . . . . . . . .

2,511,623
6,698

1,993,985
18,595

Total real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,518,321

$2,012,580

Capitalized Interest — Interest capitalized, incurred, expensed and amortized is as follows (in thousands):

Year Ended December 31,

2014

2013

2012

Interest capitalized — beginning of period . . . . . . . . . . . . . . . .
Interest incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expensed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest amortized to cost of closings . . . . . . . . . . . . . . . . . . . . .

$ 71,263
88,782
—
(65,165)

$ 45,387
61,582
(812)
(34,894)

$ 19,460
46,340
—
(20,413)

Interest capitalized — end of period . . . . . . . . . . . . . . . . . . . . .

$ 94,880

$ 71,263

$ 45,387

Land Deposits — As of December 31, 2014 and 2013, we had the right to purchase approximately 5,372 and 6,570 lots
under land option purchase contracts, respectively, which represents an aggregate purchase price of $323.5 million and
$500.9 million as of December 31, 2014 and 2013, respectively. As of December 31, 2014 and 2013, our exposure to
loss related to our option contracts with third parties and unconsolidated entities consists of non-refundable option
deposits totaling $34.5 million and $38.0 million, respectively, in land deposits related to land options and land purchase
contracts. Creditors of these VIEs, if any, generally have no recourse against us.

For the years ended December 31, 2014, 2013 and 2012, no impairment of option deposits or capitalized pre-acquisition
costs were recorded. We continue to evaluate the terms of open land option and purchase contracts and may impair
option deposits and capitalized pre-acquisition costs in the future.

6. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We participate in a number of joint ventures with related and unrelated third parties, with ownership interests up to
50.0%. These entities are generally involved in real estate development, homebuilding and mortgage lending activities.

80

Summarized, unaudited financial information of unconsolidated entities that are accounted for by the equity method is as
follows (in thousands):

As of December 31,

2014

2013

Assets:

Real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$396,858
59,963

$59,357
16,440

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$456,821

$75,797

Liabilities and owners’ equity:

Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$129,561
8,870

$30,471
1,483

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$138,431

$31,954

Owners’ equity:

TMHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110,291
208,099

318,390

21,435
22,408

43,843

Total liabilities and owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . .

$456,821

$75,797

Year Ended December 31,

2014

2013

2012

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 23,020
(12,221)

$11,062
(4,002)

$ 9,769
(6,248)

Income of unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10,799

$ 7,060

$ 3,521

Company’s share in income of unconsolidated entities . . . . . . . .

$ 5,405

$ 2,895

$ 1,214

Distributions of earnings from unconsolidated entities . . . . . . . . .

$ 3,746

$ 1,800

$ 3,217

We have investments in, and advances to, a number of joint ventures with unrelated parties to develop land and to
develop housing communities, including for-sale residential homes. Some of these joint ventures develop land for the
sole use of the venture participants, including us, and others develop land for sale to the joint venture participants and to
unrelated builders. Our share of the joint venture profit relating to lots we purchases from the joint ventures is deferred
until homes are delivered by us and title passes to a homebuyer.

7. INTANGIBLE ASSETS

Intangible assets consist of tradenames, lot options and land supplier relationships, and non-compete covenants. At
December 31, 2014, the gross carrying amount and accumulated amortization was $14.0 million and $8.5 million,
respectively. At December 31, 2013, the gross carrying amount and accumulated amortization was $14.0 million and
$4.7 million, respectively.

Amortization of intangible assets is recorded on a straight-line basis over the life of the asset. Amortization expense
recorded during the years ended December 31, 2014, 2013 and 2012 was $1.1 million, $1.1 million and $0.4 million,
respectively. Additionally, during the year ended December 31, 2014, $2.7 million of lot option contracts were
reclassified to real estate inventory as the lot options were exercised, which is included in the accumulated amortization
amount noted above.

81

8. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following (in thousands):

Real estate development costs to complete . . . . . . . . . . . . . . . . . .
Compensation and employee benefits . . . . . . . . . . . . . . . . . . . . . .
Self insurance and warranty reserves . . . . . . . . . . . . . . . . . . . . . .
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and sales taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of December 31,

2014

2013

$ 24,222
51,475
44,595
22,033
12,808
45,423

$ 15,422
44,264
34,814
16,898
12,529
38,117

Total accrued expenses and other liabilities . . . . . . . . . . . . . . . . .

$200,556

$162,044

Self Insurance and Warranty Reserves — a summary of the changes in our reserves are as follows (in thousands):

Year Ended December 31,

2014

2013

2012

Reserve — beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and claims incurred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in estimates to pre-existing reserves . . . . . . . . . . . . . . . .

$34,814
16,882
(6,799)
(302)

$ 31,962
14,880
(10,788)
(1,240)

$36,235
1,117
(8,053)
2,663

Reserve — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$44,595

$ 34,814

$31,962

9. DEBT

(Dollars in thousands)

December 31,
2014

December 31,
2013

5.625% Senior Notes due 2024, unsecured, with $4.9 million of

unamortized debt issuance costs at December 31, 2014 . . . . . . . . . .

$ 350,000

$

—

5.25% Senior Notes due 2021, unsecured, with $7.5 million and $8.7
million of unamortized debt issuance costs at December 31, 2014
and 2013, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.75% Senior Notes due 2020, unsecured, with $8.9 million and $10.6
million of unamortized debt issuance costs at December 31, 2014
and 2013, respectively and $3.4 million and $4.1 million of
unamortized bond premium at December 31, 2014 and 2013,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

550,000

550,000

488,840

489,497

Senior Notes Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,388,840

$1,039,497

$400 million Restated Revolving Credit Facility with $5.6 million and
$7.4 million of unamortized debt issuance costs at December 31,
2014 and 2013 respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans payable and other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,000
160,750
147,516

—
74,892
143,341

Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,737,106

$1,257,730

2020 Senior Notes

On April 13, 2012, we issued $550.0 million of 7.75% Senior Notes due 2020 (the “Initial Notes”) at an initial offering
price of 100% of the principal amount (the “Offering”). The net proceeds from the sale of the Initial Notes were used, in
part, to repay existing indebtedness. The remaining proceeds of approximately $187.4 million from the Offering were
used for general corporate purposes. An additional $3.0 million of issuance costs were settled outside the bond proceeds.

82

On August 21, 2012, we issued an additional $125.0 million of 7.75% Senior Notes due 2020 (the “Additional Notes”
together with the Initial Notes, the “2020 Senior Notes”) at an initial offering price of 105.5% of the principal amount.
The net proceeds were used for general corporate purposes. The Additional Notes issued August 21, 2012 were issued
pursuant to the existing indenture for the 2020 Senior Notes. The 2020 Senior Notes are unsecured and not subject to
registration rights.

On April 12, 2013, we used $204.3 million of the net proceeds of the IPO to acquire New TMM Units from New TMM
(at a price equal to the price paid by the underwriters for shares of Class A Common Stock in the IPO). TMM Holdings
used these proceeds to repay a portion of the 2020 Senior Notes.

Obligations to pay principal and interest on the 2020 Senior Notes are guaranteed by TMM Holdings, Taylor Morrison
Holdings, Inc., Monarch Parent Inc. and the U.S. homebuilding subsidiaries of TMC (collectively, the “Guarantors”).
The 2020 Senior Notes and the guarantees are senior unsecured obligations. The indenture for the 2020 Senior Notes
contains covenants that limit (i) the making of investments, (ii) the payment of dividends and the redemption of equity
and junior debt, (iii) the incurrence of additional indebtedness, (iv) asset dispositions, (v) mergers and similar corporate
transactions, (vi) the incurrence of liens, (vii) the incurrence of prohibitions on payments and asset transfers among the
issuers and restricted subsidiaries and (viii) transactions with affiliates, among others. The indenture governing the 2020
Senior Notes contains customary events of default. If we do not apply the net cash proceeds of certain asset sales within
specified deadlines, we will be required to offer to repurchase the 2020 Senior Notes at par (plus accrued and unpaid
interest) with such proceeds. We are also required to offer to repurchase the 2020 Senior Notes at a price equal to 101%
of their aggregate principal amount (plus accrued and unpaid interest) upon certain change of control events.

2021 Senior Notes

On April 16, 2013, we issued $550.0 million aggregate principal amount of 5.25% Senior Notes due 2021 (the “2021
Senior Notes”). The 2021 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from
the issuance of the 2021 Senior Notes were used to repay the outstanding balance under the Restated Revolving Credit
Facility and for general corporate purposes, including the purchase of additional land inventory.

The 2021 Senior Notes are guaranteed by the same Guarantors that guarantee the 2020 Senior Notes. The indenture
governing the 2021 Senior Notes contains covenants, change of control and asset sale offer provisions that are similar to
those contained in the indenture governing the 2020 Senior Notes.

2024 Senior Notes

On March 5, 2014, we issued $350.0 million aggregate principal amount of 5.625% Senior Notes due 2024 (the “2024
Senior Notes”). The 2024 Senior Notes are unsecured and are not subject to registration rights. The net proceeds from
the issuance of the 2024 Senior Notes were used to repay the outstanding balance under the Restated Revolving Credit
Facility and for general corporate purposes.

The 2024 Senior Notes mature on March 1, 2024. The 2024 Senior Notes are guaranteed by the same Guarantors that
guarantee the 2020 and 2021 Senior Notes. The 2024 Senior Notes and the guarantees are senior unsecured obligations.
The indenture governing the 2024 Senior Notes contains covenants that limit our ability to incur debt secured by liens
and enter into certain sale and leaseback transactions. The indenture governing the 2024 Senior Notes contains events of
default that are similar to those contained in the indentures governing the 2020 and the 2021 Senior Notes. The change
of control provisions in the indenture governing the 2024 Senior Notes are similar to those contained in the indentures
governing the 2020 and the 2021 Senior Notes, but a credit rating downgrade must occur in connection with the change
of control before the repurchase offer requirement is triggered for the 2024 Senior Notes.

Prior to December 1, 2023, the 2024 Senior Notes are redeemable at a price equal to 100% plus a “make-whole”
premium for payments through December 1, 2023 (plus accrued and unpaid interest). Beginning on December 1, 2023,
the 2024 Senior Notes are redeemable at par (plus accrued and unpaid interest).

83

Revolving Credit Facility

On January 15, 2014, TMC and various other subsidiaries of TMHC (collectively, the “Borrowers”), entered into
Amendment No. 1 to the senior revolving credit facility (the “Restated Revolving Credit Facility”). This Amendment
No. 1 released Monarch from all of its obligations under the Restated Revolving Credit Facility. As a result, the only
borrower under the Restated Revolving Credit Facility is TMC. The Restated Revolving Credit Facility is guaranteed by
the same Guarantors that guarantee the 2020 Senior Notes. The Restated Revolving Credit Facility matures on April 12,
2017.

The Restated Revolving Credit Facility contains certain “springing” financial covenants, requiring TMM Holdings and
its subsidiaries to comply with a certain maximum capitalization ratio and a certain minimum consolidated tangible net
worth test. The financial covenants would be in effect for any fiscal quarter during which any (a) loans under the
Restated Revolving Credit Facility are outstanding during the last day of such fiscal quarter or on more than five
separate days during such fiscal quarter or (b) undrawn letters of credit (except to the extent cash collateralized) issued
under the Restated Revolving Credit Facility in an aggregate amount greater than $40.0 million or unreimbursed letters
of credit issued under the Restated Revolving Credit Facility are outstanding on the last day of such fiscal quarter or for
more than five consecutive days during such fiscal quarter. For purposes of determining compliance with the financial
covenants for any fiscal quarter, the Restated Revolving Credit Facility provides that TMC may exercise an equity cure
by issuing certain permitted securities for cash or otherwise recording cash contributions to its capital that will, upon the
contribution of such cash to TMC, be included in the calculation of consolidated tangible net worth and consolidated
total capitalization. The equity cure right is exercisable up to twice in any period of four consecutive fiscal quarters and
up to five times overall. The maximum debt to total capitalization ratio is 0.60 to 1.00. The ratio as calculated by the
Borrowers at December 31, 2014 was 0.41 to 1.00. The minimum consolidated tangible net worth requirement was $1.3
billion at December 31, 2014. At December 31, 2014, the Borrowers’ tangible net worth, as defined in the Restated
Revolving Credit Facility, was $1.7 billion. At December 31, 2014, these ratio calculations were inclusive of our
Monarch business.

The Restated Revolving Credit Facility contains certain restrictive covenants including limitations on incurrence of
liens, dividends and other distributions, asset dispositions and investments in entities that are not guarantors, limitations
on prepayment of subordinated indebtedness and limitations on fundamental changes. The Restated Revolving Credit
Facility contains customary events of default, subject to applicable grace periods, including for nonpayment of principal,
interest or other amounts, violation of covenants (including financial covenants, subject to the exercise of an equity
cure), incorrectness of representations and warranties in any material respect, cross default and cross acceleration,
bankruptcy, material monetary judgments, ERISA events with material adverse effect, actual or asserted invalidity of
material guarantees and change of control. As of December 31, 2014, we were in compliance with all of the covenants
under the Restated Revolving Credit Facility.

84

Mortgage Borrowings

The following is a summary of our mortgage subsidiary borrowings (in thousands):

Facility

Amount
Drawn

Facility
Amount

Interest Rate

Expiration Date

Collateral (1)

At December 31, 2014

Flagstar . . . . . . . . . . . . . . . . . . . . . .
Comerica . . . . . . . . . . . . . . . . . . . .
JPMorgan . . . . . . . . . . . . . . . . . . . .

$ 62,894 $ 85,000
50,000
100,000 (2)

11,430
86,426

Total . . . . . . . . . . . . . . . . . . . . . . . .

$160,750 $235,000

LIBOR + 2.5% 30 days written notice Mortgage Loans
Mortgage Loans
LIBOR + 2.75% August 19, 2015
Pledged Cash

September 28, 2015

(3)

Facility

Flagstar . . . . . . . . . . . . . . . . . . . . . .
Comerica . . . . . . . . . . . . . . . . . . . .

Amount
Drawn

Facility
Amount

$ 38,084 $ 30,000

36,808

At December 31, 2013

Interest Rate

Expiration Date

Collateral (1)

50,000 LIBOR + 2.875%

LIBOR + 2.5% 30 days written notice Mortgage Loans
Mortgage Loans
June 5, 2014

Total . . . . . . . . . . . . . . . . . . . . . . . .

$ 74,892 $ 80,000

(1)

(2)

(3)

The mortgage borrowings outstanding as of December 31, 2014 and 2013, are collateralized by $191.1 million and
$95.7 million, respectively, of mortgage loans held for sale, which comprise the balance of mortgage receivables
and $1.3 million and $2.0 million, respectively, of restricted short-term investments which are included in restricted
cash in the accompanying Consolidated Balance Sheets.
The warehouse facility with JPMorgan has a maximum credit line of $50.0 million. On December 12, 2014 the
agreement was temporarily amended to increase the capacity from $50.0 million to $100.0 million. Effective
January 23, 2015, the temporary increase expired.
Interest under the JPMorgan agreement ranges from 2.50% plus 30-day LIBOR to 2.875% plus 30-day LIBOR or
0.25% (whichever is greater).

Loans Payable and Other Borrowings

Loans payable and other borrowings as of December 31, 2014 and 2013 consist of amounts due to various land sellers
and a seller carryback note from a prior year acquisition. Loans payable bear interest at rates that ranged from 0% to 8%
at December 31, 2014 and 2013, and generally are secured by the land that was acquired with the loans. We impute
interest for loans with no stated interest rates.

Future Minimum Principal Payments on Total Debt

Principal maturities of total debt for the year ending December 31, 2014 are as follows (in thousands):

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$ 252,278
54,685
12,724
9,239
13,190
1,394,990

Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,737,106

10. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

In December 2014, we entered into a derivative financial instrument in the form of a foreign currency forward. The
derivative financial instrument hedged our exposure to the Canadian dollar in conjunction with the disposition of the
Monarch business.

The aggregate notional amount of the foreign exchange derivative financial instrument was $471.2 million at
December 31, 2014. At December 31, 2014 the fair value of the instrument was not material to our consolidated

85

financial position or results of operations. The final settlement of the derivative financial instrument occurred on
January 30, 2015 and a gain will be recorded in the first quarter of 2015.

11. FAIR VALUE DISCLOSURES

We have adopted ASC Topic 820, “Fair Value Measurements” for valuation of financial instruments. ASC 820 provides
a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes
a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.

Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices
for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.

Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the
measurement date, such as a pricing model, discounted cash flow, or similar technique.

The fair value of our mortgages receivable is derived from negotiated rates with partner lending institutions. The fair
value of our mortgage borrowings, loans receivable, loans payable and other borrowings and the borrowings under our
Restated Revolving Credit Facility approximate carrying value due to their short term nature and variable interest rate
terms. The fair value of our 2020 Senior Notes, 2021 Senior Notes and 2024 Senior Notes is derived from quoted market
prices by independent dealers in markets that are not active. The carrying value and fair value of our financial
instruments are as follows (in thousands):

December 31, 2014

December 31, 2013

Level in
Fair Value
Hierarchy

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value

Description:
Mortgages receivable . . . . . . . . . . . . . . . . . . .
Mortgage borrowings . . . . . . . . . . . . . . . . . . .
Loans payable and other borrowings . . . . . . .
7.75% Senior Notes due 2020 . . . . . . . . . . . .
5.25% Senior Notes due 2021 . . . . . . . . . . . .
5.625% Senior Notes due 2024 . . . . . . . . . . .
Restated Revolving Credit Facility . . . . . . . .

2
2
2
2
2
2
2

$191,140
160,750
147,516
488,840
550,000
350,000
40,000

$191,140
160,750
147,516
518,170
539,000
336,000
40,000

$ 95,718
74,892
143,341
489,497
550,000
N/A
N/A

$ 95,718
74,892
143,341
537,223
532,125
N/A
N/A

86

12. INCOME TAXES

The (benefit) provision for income taxes for the years ended December 31, 2014, 2013 and 2012 consists of the
following (in thousands):

Year Ended December 31,

2014

2013

2012

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 83,193
(6,798)

$(24,403)
593

$(284,301)
3

Total income tax provision (benefit) . . . . . . . . . . . . . . . . . . . .

$ 76,395

$(23,810)

$(284,298)

Current:
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 91,981
(1,341)
—

$(55,771)
2,259
593

$ (12,084)
890
4

$ 90,640

$(52,919)

$ (11,190)

(13,549)
6,102
(6,798)

24,179
4,930
—

(218,967)
(54,141)
—

Deferred tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . .

$(14,245)

$ 29,109

$(273,108)

Total income tax provision (benefit) . . . . . . . . . . . . . . . . . . . .

$ 76,395

$(23,810)

$(284,298)

The components of income (loss) before income taxes are as follows:

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$294,002
7,992

$(3,180)
7,725

$73,317
(1,660)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$301,994

$ 4,545

$71,657

Year Ended December 31,

2014

2013

2012

At December 31, 2014 and 2013, we had a valuation allowance of $8.9 million and $40.0 million, respectively, against
net deferred tax assets, which include the tax benefit from federal and state net operating loss (“NOL”) carryforwards.
Federal NOL carryforwards may be used to offset future taxable income for 20 years and begin to expire in 2027. State
NOL carryforwards may be used to offset future taxable income for a period of time ranging from 5 to 20 years,
depending on the state, and begin to expire in 2025. NOL carryforwards in Canada expire in 20 years. The change in the
valuation allowance from 2013 to 2014, and from 2012 to 2013, was a decrease of $31.1 million and $22.9 million,
respectively. Our future deferred tax asset realization depends on sufficient taxable income in the carryforward periods
under existing tax laws. State deferred tax assets include approximately $11.2 million and $16.1 million at December 31,
2014 and 2013, respectively, of tax benefits related to state NOL carryovers, which begin to expire in 2025. On an
ongoing basis, we will continue to review all available evidence to determine if and when we expect to realize our
deferred tax assets and federal and state NOL carryovers.

87

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the federal statutory
income tax rate of 35% to income before provision (benefit) for income taxes is as follows:

Year Ended December 31,

2014

2013

2012

Tax at federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes (net of federal benefit) . . . . . . . . . . . . . . . . . . . . . .
Foreign income taxed below U.S. Rate . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Built in loss limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interest
Deferred tax adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disallowed compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Holding company tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Manufacturing Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0%
3.6
(1.1)
(10.4)
3.1
—
—
—
(0.2)
—
0.2
(1.4)
(2.8)
(0.7)

35.0% 35.0%
97.0
14.1
(348.2)
179.2
683.7
(1,824.0)

(48.3)
(3.3)
(409.6)
56.1
6.4
(18.2)
(6.5)
—
(10.4)
—
—
—
2.0

—
—
—
650.4
93.0
—
(104.0)

Effective Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25.3% (523.8)% (396.8)%

We have substantial tax attributes available to offset the impact of future income taxes. We have a process for
determining the need for a valuation allowance with respect to these attributes. In accordance with ASC Topic 740-10,
“Income Taxes,” we assess whether a valuation allowance should be established based on the consideration of available
evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively
verified. This assessment includes an extensive review of both positive and negative evidence including our earnings
history, forecasts of future profitability, assessment of the industry, the length of statutory carry-forward periods,
experiences of utilizing NOLs and built-in losses, and tax planning alternatives.

As a result of the Acquisition on July 13, 2011, we had a “change in control” as defined by Section 382 of the Internal
Revenue Code of 1986 as amended (the “IRC”). Section 382 of the IRC imposes certain limitations on our ability to
utilize certain tax attributes and net unrealized built-in losses that existed as of July 13, 2011. The gross deferred tax
asset includes amounts that are considered to be net unrealized built-in losses. To the extent these net unrealized losses
are realized during the five-year period after July 13, 2011, they may not be deductible for federal income tax reporting
purposes to the extent they exceed our overall IRC Section 382 limitation. To the extent that the losses were anticipated
to be non-deductible, we established a valuation allowance. For the filing periods of 2005 to 2007, we reached a
settlement in 2012 with the IRS for legacy Morrison Homes which reduced our income tax expense by $15.0 million
related to the Section 382 issue. Income tax payable in the accompanying Consolidated Balance Sheets at December 31,
2012, includes reserves of $8.7 million and $74.8 million related to this issue for the tax years 2009 and 2008,
respectively. For the filing periods of 2009 and 2008, we reached a settlement in 2013 with the IRS for the legacy
Morrison Homes which reduced our income tax expense by $83.5 million.

The most significant judgments we make in our assessment of the need for a valuation allowance involve estimating the
amount of built-in losses that may be utilized to offset future taxable income from the sale of real estate inventory that it
held on the Acquisition date, and the ability to utilize NOLs as limited by Section 382 of the IRC. Making such
estimates and judgments, particularly pertaining to the future ability to utilize built-in losses, is subject to inherent
uncertainties.

We recorded a full valuation allowance against all of our U.S. deferred tax assets during 2007 due to economic
conditions and the weight of negative evidence at that time. During the fourth quarter of 2012, we reversed a large
portion of the valuation allowance because the weight of the positive evidence exceeded that of the negative evidence.
At December 31, 2014 and December 31, 2013 we retained a valuation allowance of $8.9 million and $40.0 million,
respectively, primarily related to Canadian net operating losses and deferred tax assets in the United States which are
subject to restrictions on utilization according to IRC Section 382. In evaluating the need for a valuation allowance at

88

December 31, 2014, we considered available positive and negative evidence, including that our last four years of
cumulative results became profitable during the fourth quarter of 2012 and continues to be the case as of December 31,
2014. We also took into account evidence of recovery in the housing markets where we operate and our level of pre-tax
income and growth in sales orders. The prospects of continued profitability and growth were further supported by a
strong order backlog and sufficient balance sheet liquidity to sustain and grow operations. In addition, most of our tax
jurisdictions have a 20-year NOL carryforward utilization period during which time we fully expect to be able to absorb
NOL carryovers and temporary differences as they reverse in future years.

The components of net deferred tax assets and liabilities at December 31, 2014 and 2013, consisted of timing differences
related to inventory impairment, expense accruals, provisions for liabilities, and NOL carryforwards. We have
approximately $150.2 million in available federal NOL carryforwards, which will begin to expire in 2027. We have
approximately $31.8 million in available NOL carryforwards related to the Canadian operations which will begin to
expire in 2031. A summary of these components is as follows (in thousands):

Deferred tax assets

Real estate inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities

Real estate inventory, intangibles, other . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31,

2014

2013

$157,722
18,366
21,217
72,148
—

$179,548
19,367
22,601
73,222
959

$269,453

$295,697

(2,342)
(8,921)

(13,011)
(40,030)

Total net deferred tax assets (1)

. . . . . . . . . . . . . . . . . . . . . . . . . . .

$258,190

$242,656

(1)

The amounts shown do not include deferred tax assets for discontinued operations of $3.2 million and $2.3 million
for the years ended December 31, 2014 and 2013, respectively.

We account for uncertain tax positions in accordance with ASC 740. This guidance clarifies the accounting for
uncertainty in income taxes and prescribes a recognition threshold and measurement attributes for the financial statement
recognition and measurement of a tax position taken, or expected to be taken, in a tax return. ASC 740 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
ASC 740 requires a company to recognize the financial statement effect of a tax position when it is more likely than not
(defined as a substantiated likelihood of more than 50%) based on the technical merits of the position that the position
will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured
to determine the amount of benefit to be recognized in the financial statements based upon the largest amount of benefit
that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has full knowledge
of all relevant information. Our inability to determine that a tax position meets the more-likely-than-not recognition
threshold does not mean that the Internal Revenue Service (“IRS”) or any other taxing authority will disagree with the
position that we have taken.

If a tax position does not meet the more-likely-than-not recognition threshold despite our belief that our filing position is
supportable, the benefit of that tax position is not recognized in the financial statements and we are required to accrue
potential interest and penalties until the uncertainty is resolved. Potential interest and penalties are recognized as
components of the provision for income taxes in the accompanying Consolidated Statements of Operations. Differences
between amounts taken in a tax return and amounts recognized in the Consolidated Financial Statements are considered
unrecognized tax benefits. We believes that we have a reasonable basis for each of our filing positions and intends to
defend those positions if challenged by the IRS or other taxing jurisdictions.

89

Following is a reconciliation of the total amounts of unrecognized tax benefits (in thousands):

Year Ended December 31,

2014

2013

2012

Beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases of current year items . . . . . . . . . . . . . . . . . . . . . . .
Increases of prior year items . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement with tax authorities . . . . . . . . . . . . . . . . . . . . . . .
Decreases for tax positions of prior years . . . . . . . . . . . . . . .
Decreases due to statute of limitations . . . . . . . . . . . . . . . . .

$2,035
—
318
—
—
—

$ 85,703
7,200
252
(90,442)
—
(678)

$ 98,322
1,394
390
(615)
(12,865)
(923)

End of the period (1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,353

$ 2,035

$ 85,703

(1)

The amounts shown do not include unrecognized tax benefits for discontinued operations of $6.2 million,
$7.9 million and $9.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

There were no potential penalties and interest expense recorded on our uncertain tax positions for the year ended
December 31, 2014. During the years ended December 31, 2013, and 2012, we recognized potential penalties and
interest expense on our uncertain tax positions of $$0.3 million and $3.0 million, respectively, which is included in
income tax provision (benefit) in the accompanying Consolidated Statements of Operations. There are no accrued
interest and penalties recorded at December 31, 2014, and $1.2 million are recorded at December 31, 2013, and are
included in other liabilities in the accompanying Consolidated Balance Sheets. Interest and penalties of $18.4 million
were released in the year ended December 31, 2013, and no interest and penalties were released in the year ended
December 31, 2014.

13. STOCKHOLDERS’ EQUITY

Capital Stock — The following table provides information on the number of shares outstanding and reserved by class of
stock at December 31, 2014:

Class A Common Stock issued and outstanding . . . . . . . . . . . . . . .
Class A Common Stock reserved for outstanding stock options

and restricted stock units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A Common Stock reserved for outstanding New TMM Unit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

exchanges (1)

Class A Common Stock reserved for future stock option and

Shares

33,060,540

1,510,708

1,431,721

restricted stock unit issuances . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B Common Stock issued and outstanding . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,439,532
89,227,416
—

(1) One New TMM Unit together with a corresponding share of Class B Common Stock is exchangeable for one share
of Class A Common Stock. Class A Common Stock reserved for outstanding New TMM Unit exchanges relate to
time-vesting TMM Units held by certain members of TMHC’s management and Board. See Note 14 — Stock Based
Compensation — New TMM Units for additional details.

Holders of Class A Common Stock and Class B Common Stock are entitled to one vote for each share held on all
matters submitted to stockholders for their vote or approval. The holders of Class A Common Stock and Class B
Common Stock vote together as a single class on all matters submitted to stockholders for their vote or approval, except
with respect to the amendment of certain provisions of the amended and restated Certificate of Incorporation that would
alter or change the powers, preferences or special rights of the Class B Common Stock so as to affect them adversely.
Such amendments must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by
the amendment, voting as a separate class, or as otherwise required by applicable law. The voting power of the
outstanding Class B Common Stock (expressed as a percentage of the total voting power of all common stock) is equal
to the percentage of partnership interests in New TMM not held directly or indirectly by TMHC.

90

The components and respective voting power of our outstanding Common Stock at December 31, 2014 are as follows:

Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares
Outstanding

33,060,540
89,227,416

Percentage

27.0%
73.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

122,287,956

100.0%

Initial Public Offering

On April 12, 2013, we completed our IPO of 32,857,800 shares of its Class A Common Stock, including 4,285,800
shares of Class A Common Stock sold in connection with the full exercise of the option to purchase additional shares
granted to the underwriters, at a price to the public of $22.00 per share, resulting in net proceeds of $668.6 million to the
Company. The shares began trading on the New York Stock Exchange (NYSE”) on April 10, 2013 under the ticker
symbol “TMHC.” As a result of the completion of the IPO and the Reorganization Transactions, TMHC became the
indirect parent of TMM Holdings.

Reorganization Transactions

In connection with the IPO, we completed the Reorganization Transactions, which are described in this Annual Report
on Form 10-K.

In the Reorganization Transactions, the TPG Holding Vehicle and the Oaktree Holding Vehicle acquired the existing
limited partnership interests in TMM Holdings from the holders thereof (including the Principal Equityholders and
certain members of TMHC’s management and Board) and contributed those limited partnership interests in TMM
Holdings to a new limited partnership, New TMM, such that TMM Holdings and the general partner of TMM became
wholly-owned subsidiaries of New TMM. TMHC, through a series of transactions, became the sole owner of the general
partner of New TMM.

Immediately following the consummation of the Reorganization Transactions, the limited partners of New TMM
consisted of TMHC, the TPG Holding Vehicle, the Oaktree Holding Vehicle and certain members of TMHC’s
management and Board. The number of New TMM Units issued to each of the limited partners described above was
determined based on a hypothetical cash distribution by TMM Holdings of its pre-IPO value, the IPO and the price per
share paid by the underwriters for shares of Class A Common Stock in the IPO, resulting in the issuance to those limited
partners of 112,784,964 New TMM Units and one share of Class B Common Stock for each such New TMM Unit. One
share of Class B Common Stock, together with one New TMM Unit is exchangeable into a share of Class A Common
Stock.

Use of Proceeds from the IPO

The net proceeds to TMHC from the IPO were $668.6 million after deducting underwriting discounts and commissions
and offering costs. TMHC used $204.3 million of the net proceeds from the IPO to acquire New TMM Units from New
TMM (at a price equal to the price paid by the underwriters for each share of Class A Common Stock in the IPO).
TMHC used the remaining $464.4 million of the net proceeds from the IPO, together with $18.1 million of cash on hand,
to purchase 23,333,800 New TMM Units and the corresponding shares of Class B Common Stock (at a price equal to the
price paid by the underwriters for each share of Class A Common Stock in the IPO) held by the TPG and Oaktree
Holding Vehicles, the JH Entities and certain members of the Company’s management.

Since TMHC purchased the New TMM Units at a valuation in excess of the proportion of the book value of net assets
acquired, we incurred an immediate dilution of $297.6 million, which is calculated as the net proceeds used to purchase
New TMM Units of $668.6 million less the book value of such interests of $371.0 million. This dilution is reflected
within additional paid-in capital as a reallocation from additional paid-in capital to non-controlling interests — Principal
Equityholders in the accompanying 2013 Consolidated Statement of Stockholders’ Equity.

91

Stock Repurchase Program

On November 3, 2014, our Board of Directors authorized the repurchase of up to $50.0 million of the Company’s
Class A Common Stock from time to time between now and December 31, 2015 in open market purchases, privately
negotiated transactions or other transactions. The stock repurchase program will be subject to prevailing market
conditions and other considerations, including our liquidity, the terms of our debt instruments, planned land investment
and development spending, acquisition and other investment opportunities and ongoing capital requirements. There was
no activity under this plan during the year ended December 31, 2014, or through the date of this filing.

14. STOCK BASED COMPENSATION

Equity-Based Compensation

In April 2013, we adopted the Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (the “Plan”). The
Plan provides for the grant of stock options, restricted stock units, and other awards based on our common stock. As of
December 31, 2014 the maximum number of shares of our Class A Common Stock that had been approved and may be
subject to awards under the Plan is 7,956,955, subject to adjustment in accordance with the terms of the Plan.

The following table provides information regarding the amount of Common Stock available for future grants under the
Plan:

Year Ended December 31,

2014

2013

2012

Balance, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares approved for issuance under the Plan . . . . . . . . . . . .
Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares withheld for tax withholdings . . . . . . . . . . . . . . . . . .

6,517,310
—

(103,622)
25,641
203

NA
—
7,956,955
NA
(1,581,675) NA
NA
NA

142,030
—

Balance, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,439,532

6,517,310

NA

The following table provides information regarding the amount and components of stock-based compensation expense,
which is included in general and administrative expenses in the accompanying Consolidated Statements of Operations:

(Dollars in thousands)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units (RSUs) (1)
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New TMM Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2014

2013

2012

$1,263
2,920
1,648
—

$

815
2,043
4,270
80,190

$ —
—
1,975
—

Total stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,831

$87,318

$1,975

Income tax benefit recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

53

$ —

$ —

(1)

Includes compensation expense related to restricted stock units and performance restricted stock units.

At December 31, 2014, 2013, and 2012, the aggregate unamortized value of all outstanding stock-based compensation
awards was approximately $16.0 million, $21.3 million and $6.9 million, respectively.

Information about our stock-based compensation plans noted in the table above, including information about equity-
based compensation issued prior to the IPO, is detailed below.

Stock Options — Options granted to employees vest and become exercisable ratably on the second, third, fourth and
fifth anniversary of the date of grant. Options granted to members of the Board of Directors vest and become exercisable
ratably on the first, second and third anniversary of the date of grant. Vesting of the options is subject to continued
employment with TMHC or an affiliate, or continued service on the Board of Directors, through the applicable vesting
dates and expires within ten years from the date of grant.

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The following table summarizes stock option activity for the Plan for the year ended December 31, 2014:

Year Ended December 31,

2014

2013

2012

Outstanding, beginning . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Options

1,250,829
95,700
—
(21,500)

Weighted
Average
Exercise
Price

$22.45
20.91
—
22.00

— $ —
22.41
—
22.00

1,380,829
—

(130,000)

Number of
Options

Weighted
Average
Exercise
Price

Number of
Options

Weighted
Average
Exercise
Price

Balance, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,325,029

$22.35

1,250,829

$22.45

Options exercisable, at December 31, 2014 . . . . . . .

7,963

$20.93

— $ —

NA
NA
NA
NA

NA

NA

NA
NA
NA
NA

NA

NA

(Dollars in thousands)

December 31,

2014

2013

Unamortized value of unvested stock options (net of estimated

forfeitures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,092

$12,424

Weighted-average period (in years) that expense is expected to be

recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average remaining contractual life (in years) for options
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average remaining contractual life (in years) for options
exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.4

8.3

8.5

4.3

9.3

NA

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model.
Expected volatilities and expected term are based on the historical information of five comparable publicly traded
homebuilders. Due to the limited number and homogeneous nature of option holders, the expected term was evaluated
using a single group. The risk-free rate is based on the U.S. Treasury yield curve for periods equivalent to the expected
term of the options on the grant date. The fair value of stock option awards is recognized evenly over the vesting period
of the options.

The following table summarizes the weighted-average assumptions and fair value used for stock options grants:

Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average fair value of options granted during the

Year Ended December 31,

2014

2013

2012

0.00 %
48.60 %
1.13 % – 1.34 %
4.50

0.00%
N/A
56.59 % N/A
N/A
0.54%
N/A
4.28

period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8.59

$11.57

N/A

The following table provides information pertaining to the aggregate intrinsic value of options outstanding and
exercisable at December 31, 2014, 2013, and 2012:

(Dollars in thousands)

Aggregate intrinsic value of options outstanding . . . . . . . . . . . . . . . . . . . .
Aggregate intrinsic value of options exercisable . . . . . . . . . . . . . . . . . . . .

December 31,

2014

$8,046
$ —

2013

$520
$—

2012

N/A
N/A

The aggregate intrinsic value is based on the market price of our Class A Common Stock on December 31, 2014, the last
trading day in December 2014, which was $18.89, less the applicable exercise price of the underlying option. This

93

aggregate intrinsic value represents the amount that would have been realized if all the option holders had exercised their
options on December 31, 2014.

Performance-Based Restricted Stock Units – In April 2013, awards of performance-based restricted stock units
(“PRSUs”) were granted to certain senior management and members of the Board in connection with the IPO. The
awards become vested with respect to 25% of the PRSUs on each of the first four anniversaries of the grant date;
provided, that, if the performance condition has not been met as of any such annual vesting date, then such portion of the
PRSUs shall continue to have the opportunity to become vested with respect to the performance condition on such
subsequent date on which the performance condition is first satisfied. The “performance condition” shall be satisfied
only if the weighted average price (after reduction for underwriting discount and commissions) at which the TPG and
Oaktree Holding Vehicles have actually sold their New TMM Units or related shares of Class A Common Stock,
exceeds the $22.00 price per share of the TMHC’s Class A Common Stock paid by the public in the IPO, it being
understood that (i) all sales by the Principal Equityholders through December 31, 2015 will be included. If the
performance condition has not been met as of December 31, 2015, all of the PRSUs being granted subject to the
performance condition shall be automatically forfeited without consideration and are of no further force or effect.
Vesting of the PRSUs is subject to continued employment with TMHC or an affiliate, or continued service on the Board
of Directors (as applicable), through the applicable vesting dates as specified in the award document.

The value of the PRSUs was determined to be equal to the number of shares awarded multiplied by $24.30, which was
the closing price of our Class A Common Stock on the NYSE on the date of issuance. As these awards contain both
service and market performance conditions, we have recorded the compensation expense related to these awards over the
service period as that condition is longer than the market performance condition.

The following table summarizes the activity of our PRSUs:

(Dollars in thousands):

Year Ended
December 31,

2014

2013

Balance, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179,931
—
—
(4,141)

—
191,961
—
(12,030)

Balance at, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

175,790

179,931

(Dollars in thousands):

2014

2013

PRSU expense recognized during the year ended December 31 . . . . .
Unamortized value of PRSUs at December 31 . . . . . . . . . . . . . . . . . . .
Weighted-average period expense is expected to be recognized . . . . .

$1,054
$2,438
2.3

$ 780
$3,593
3.3

Non-Performance-Based Restricted Stock Units — Our non-performance-based restricted stock units (“RSUs”) consist
of shares of our Class A Common Stock that have been awarded to our employees and members of our Board of
Directors. Vesting of RSUs is subject to continued employment with TMHC or an affiliate, or continued service on the
Board of Directors, through the applicable vesting dates. RSUs granted to employees will become vested with respect to
25% of the RSUs on each of the first four anniversaries of the grant date. RSUs granted to members of the Board of
Directors will become fully vested on the first anniversary of the grant date.

94

The following tables summarize the activity of our RSUs (dollars in thousands except per share amounts):

Year Ended December 31,

2014

2013

2012

Outstanding, beginning . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
RSUs

8,885
7,922
(6,919)
—

Balance, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,889

Weighted
Average
Grant
Date Fair
Value

$20.82
22.09
20.24
—

$22.25

Number of
RSUs

—
8,885
—
—

8,885

Weighted
Average
Grant
Date Fair
Value

$ —
20.82
—
—

$20.82

Weighted
Average
Grant
Date Fair
Value

Number of
RSUs

NA
NA
NA
NA

NA

NA
NA
NA
NA

NA

(Dollars in thousands):

2014

2013

RSU expense recognized during the year ended December 31 . . . . . . . . .
Unamortized value of RSUs at December 31 . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average period expense is expected to be recognized . . . . . . . .

$209
100
1.3

$ 36
$149
1.9

The Plan permits us to withhold from the total number of shares that would otherwise be distributed to a recipient on
vesting of an RSU, an amount equal to the number of shares having a fair value at the time of distribution equal to the
applicable income tax withholdings due and remit the remaining RSU shares to the recipient. During the year ended
December 31, 2014, a total of 203 shares were withheld on net settlement for a de minimis amount.

Equity-Based Compensation Prior to the IPO

New TMM Units — Certain members of management and certain members of the Board of Directors were issued Class
M partnership units in TMM Holdings prior to the IPO as long-term incentive compensation under the Class M Unit
Plan. Those units were subject to both time and performance vesting conditions. In addition, TMM Holdings issued
phantom Class M Units to certain employees who resided in Canada, which were treated as Class M Units for purposes
of this description and the financial statements. In connection with the sale of Monarch all of the phantom Class M Units
were settled pursuant to the change in control provision discussed below.

Pursuant to the Reorganization Transactions and IPO, the performance based Class M Units in TMM Holdings were
exchanged for new equity interests of the TPG and Oaktree Holding Vehicles with terms that are substantially the same
(“Holding Vehicle Performance Units”), as the Class M Units in TMM Holdings that were surrendered for exchange.
Concurrent with the IPO in the second quarter of 2013, we determined that it was probable that the performance
conditions for the 752,782 Holding Vehicle Performance Units outstanding would be met. Consequently, we recorded
the $2.8 million grant date fair value related to those Holding Vehicle Performance Units as general and administrative
expenses in the Consolidated Statement of Operations for the year ended December 31, 2013.

Pursuant to the Reorganization Transactions and IPO, the time-vesting Class M Units in TMM Holdings were exchanged
for New TMM Units with vesting terms substantially the same as the Class M Units surrendered for exchange. Vesting
of the time vesting New TMM Units is subject to continued employment with TMHC or an affiliate, or continued
service on the Board of Directors, through the applicable vesting dates. Time vesting New TMM Units become vested
with respect to 20% on each of the first five anniversaries of the date of grant. Compensation expense related to these
awards is recognized on a straight-line basis over the five year service term. In addition, upon termination of a
participant for any reason other than cause or upon resignation for good reason within the 24 month period following a
change in control, all the then outstanding unvested time vesting New TMM Units are to immediately vest upon such
termination.

As of December 31, 2014 and 2013, there were 639,401 and 484,185, respectively, vested and unexercised time vesting
New TMM Units outstanding and the corresponding shares of our Class B Common Stock are included in the
89,227,416 and 89,451,164 shares of Class B common stock outstanding as of December 31, 2014 and 2013,
respectively.

95

The following tables summarize the activity of our time vesting New TMM Unit awards:

Outstanding, beginning . . . . . . . . . . . . . . . . . . . .
Paid out in connection with the IPO . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchanges (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited (3)

Number of
Awards

1,655,469
—

(196,024)
(27,724)

Balance, ending . . . . . . . . . . . . . . . . . . . . . . . . . .

1,431,721

Unvested New TMM Units included in ending

Year Ended December 31,

2014

Weighted
Average Grant
Date Fair Value

$5.02
—
4.22
6.09

$5.11

2013

Number of
Awards

1,812,099(1)
(156,630)

—
—

1,655,469

Weighted
Average Grant
Date Fair Value

$4.90
3.64
—
—

$5.02

balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

792,320

$5.30

1,171,284

$5.20

(1)

(2)

Periods prior to the IPO reflect time-vesting Class M Units in TMM Holdings. As such, 2012 amounts have not
been presented. The balance at January 1, 2013 shown above reflects the New TMM Unit equivalent of time-
vesting Class M Units in TMM Holdings.
Exchanges during the period represent the exchange of a vested New TMM Unit along with the corresponding
share of Class B Common Stock for a newly issued share of Class A Common Stock.

(3) Awards forfeited during the period represent the unvested portion of New TMM Unit awards for employees who

have terminated employment with the Company and for which the New TMM Unit and the corresponding Class B
Share have been cancelled.

(Dollars in thousands):

December 31,

2014

2013

Unamortized value of New TMM Units . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average period expense is expected to be recognized . . . . .

$3,345
2.2

$5,162
3.2

There are no unissued New TMM Unit awards remaining under the Class M Unit Plan and we do not intend to grant any
future awards under the Class M Unit Plan.

Equity-Based Awards to Non-Employees-Class J Units of Holding Vehicles — In connection with the Acquisition, TMM
Holdings issued Class J Units to the JH Entities as awards to non-employees for services rendered to TMM Holdings
under the JHI Management Services Agreement (the “JHI Services Agreement”) between JH Investments, Inc. and
TMM Holdings. Class J Units issued in the Acquisition were subject to performance-based vesting conditions based on
whether the TPG Entities and the Oaktree Entities had achieved certain specified threshold rates of return on their
Class A Units in TMM and those returns had been realized in cash. Because achievement of these performance-based
vesting conditions was never probable, we determined that no expense for the value of the Class J Units was required to
be recorded in our financial statements for any period prior to the occurance of the Reorganization Transactions.

As part of the Reorganization Transactions, the JH Entities directly or indirectly exchanged all of their respective Class J
Units in TMM Holdings on a one-for-one basis for new equity interests of the TPG and Oaktree Holding Vehicles with
terms that were substantially the same (other than with respect to certain vesting conditions) as the Class J Units of
TMM Holdings surrendered for exchange.

In connection with the Reorganization Transactions, the JHI Services Agreement was terminated, resulting in a
modification of the Class J Units (the removal of a service vesting condition) under ASC Topic 718-20-35-3, requiring
the recognition of $80.2 million of indemnification and transaction expense in the accompanying Consolidated
Statement of Operations for the year ended December 31, 2013.

Fair Value of Equity Awards Granted Prior to the IPO — For grants issued by TMM Holdings prior to the IPO,
principles of option pricing theory were used to calculate the fair value of the subject grants. Under this methodology,
the various classes of TMM Holdings Units were modeled as call options with distinct claims on the assets of TMM
Holdings. The characteristics of the Unit classes, as determined by the unit agreements and the TMM Holdings limited

96

partnership agreement, determined the uniqueness of each Unit’s claim on TMM Holdings’ assets relative to each other
and the other components of TMM Holdings’ capital structure. Periodic valuations were performed in order to properly
recognize equity-based compensation expense in the accompanying Consolidated Statements of Operations as general
and administrative expenses.

15. RELATED-PARTY TRANSACTIONS

From time to time, we may engage in transactions with entities or persons that are affiliated with us or one or more of
the Principal Equityholders. There were $40.5 million and $16.0 million in real estate inventory acquisitions from such
affiliates in the years ended December 31, 2014 and 2013, respectively. We believe such real estate transactions with
related parties are in the normal course of operations and are executed at arm’s length as they are entered into at terms
comparable to those with unrelated third parties.

In April 2014, one of our subsidiaries formed a joint venture, Marblehead Development Partners LLC (“MDP”), with
affiliates of Oaktree and TPG to acquire and develop Marblehead, a coastal residential development in San Clemente,
California consisting of 195.5 acres. The acquisition of the Marblehead site from LV Marblehead, a subsidiary owned by
Lehman Brothers Holdings Inc., occurred on April 8, 2014. Our subsidiary has made an initial capital investment of
approximately $46.8 million in MDP and is a minority capital partner and also the operating partner responsible for land
development and homebuilding on the Marblehead site, for which we will be entitled to receive an incrementally greater
return on our capital investment if the Marblehead project achieves certain economic performance thresholds. In July
2014, MDP entered into an approximately $264.2 million non-recourse construction and development loan with
affiliates of Starwood Property Trust as initial lender and administrative agent to finance development and home
construction at the Marblehead site. In connection with entering into the loan agreement, one of our subsidiaries
provided the lenders with customary guarantees, including completion, indemnity and environmental guarantees subject
to usual non-recourse terms. Home construction at the Marblehead site is expected to begin in 2015.

In December 2014, one of our subsidiaries formed a joint venture, Tramonto Development Partners, LLC, with an
affiliate of Oaktree. Our subsidiary has made an initial capital investment of $16.5 million and is the administrative
member and therefore designated to manage the administrative affairs of the joint venture. In connection with the
formation of the joint venture, our subsidiary entered into a $54.5 million non-recourse construction and development
loan to finance development and home construction within the Tramonto joint venture. In connection with entering into
the loan agreement, one of our subsidiaries provided the lenders with customary guarantees, including completion,
indemnity and environmental guarantees subject to usual non-recourse terms. An affiliate of TPG subsequently acquired
a majority participation in the Tramonto loan.

Management and Advisory Fees — In connection with the Acquisition, affiliates of the Principal Equityholders entered
into services agreements with TMC and Monarch relating to the provision of financial and strategic advisory services and
consulting services. Subsidiaries of the Company paid affiliates of the Principal Equityholders a one-time transaction fee of
$13.7 million for structuring the Acquisition. In addition, the Company paid a monitoring fee for management services and
advice. The management services agreement with affiliates of TPG and Oaktree was terminated immediately prior to the
IPO in exchange for an aggregate payment of $29.8 million split equally between affiliates of TPG and Oaktree, which was
recorded as a transaction expense for the year ended December 31, 2013. Management fees for the year ended
December 31, 2013 were $1.4 million, and such fees are included in general and administrative expenses in the
accompanying Consolidated Statements of Operations. There were no similar fees in 2014.

In addition, in conjunction with the formation of TMM Holdings and in connection with the Acquisition, an affiliate of
JH entered into the JHI Services Agreement relating to the provision of certain services to TMM Holdings. In
consideration of these services, TMM Holdings granted to the JH affiliate an amount of Class J Units, subject to certain
terms, conditions and restrictions contained in a unit award agreement and the TMM Holdings limited partnership
agreement. Prior to the IPO, in connection with the Reorganization Transactions, the Company recorded a one-time,
non-cash indemnification and transaction expense of $80.2 million for the year ended December 31, 2013 in respect of
the modification of the Class J Units in TMM Holdings, resulting from the termination of the JHI Services Agreement,
and the direct or indirect exchange (on a one-for-one basis) of the Class J Units in TMM Holdings for units having
substantially equivalent performance vesting and distribution terms in the TPG and Oaktree Holding Vehicles.

97

16. EMPLOYEE BENEFIT, RETIREMENT, AND DEFERRED COMPENSATION PLANS

We maintain a defined contribution plan pursuant to Section 401(k) of the IRC (“401(k) Plan”). Each eligible employee
may elect to make before-tax contributions up to the current tax limits. We match 100.0% of employees’ voluntary
contributions up to 1% of eligible compensation, and 50.0% for each dollar contributed between 1% and 6% of eligible
compensation. We contributed $2.4 million, $1.8 million, and $1.1 million to the 401(k) Plan for the year ended
December 31, 2014, 2013 and 2012, respectively.

The Taylor Woodrow (USA) U.K. Supplementary Pension Plan is an unfunded, nonqualified pension plan for several
individuals who transferred from the Company’s U.K. related companies to the employment of Taylor Woodrow on or
before October 1, 1995. The recorded obligations represent benefits accrued by these individuals for service with Taylor
Woodrow prior to the employees’ participation in the U.S. pension plan minus any benefit accrued in any other pension-
type benefit plans sponsored by or contributed to a Taylor Woodrow Group-related company for the period of service
prior to participation in the U.S. plan. In accordance with the plan document, the participants are entitled to a fixed
monthly pension and a fixed survivor benefit after the age of 65. At December 31, 2014 and 2013, we accrued $1.6
million and $1.8 million, respectively, for obligations under this plan. These obligations are recorded in accrued
expenses and other liabilities on the accompanying Consolidated Balance Sheets.

We also maintain the Taylor Morrison Cash Balance Pension Plan (the “U.S. Cash Balance Plan”). This is a consolidated
defined benefit plan arising from the 2007 merger of the parent companies of Taylor Woodrow Holdings (USA), Inc.
and Morrison Homes, Inc. All full-time employees were eligible to participate in this plan. The contribution percentage
is based on participant’s age and ranges from 2% to 4% of eligible compensation, plus 1% of eligible compensation over
the social security wage base. We contributed to the plan $1.4 million, $0.7 million and $1.0 million for the years ended
December 31, 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, the unfunded status of the plan was
$10.2 million and 5.9 million, respectively. These obligations are recorded in accrued expenses and other liabilities on
the accompanying Consolidated Balance Sheets. Effective December 31, 2010, the U.S. Cash Balance Plan was
amended to freeze participation so that no new or reemployed employees may become participants and to freeze all
future benefit accruals to existing participants.

The changes in the total benefit obligation and in the fair value of assets and the funded status of the U.S. Cash Balance
Plan are as follows (in thousands):

Year Ended
December 31,

2014

2013

Change in benefit obligations:

Benefit obligation — beginning of period . . . . . . . . . . . . . . . .
Interest on liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain)

$29,848
1,345
(570)
(3,229)
6,535

$33,592
1,294
(1,025)
—
(4,013)

Benefit obligation — end of period . . . . . . . . . . . . . . . . .

$33,929

$29,848

Change in fair value of plan assets:

Fair value of plan assets — beginning of period . . . . . . . . . . . .
Return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,931
2,203
1,357
(3,800)

21,738
2,548
670
(1,025)

Fair value of plan assets — end of period . . . . . . . . . . . . .

$23,691

$23,931

Unfunded status — end of period . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,238

$ 5,917

98

The significant weighted-average assumptions adopted in measuring the benefit obligations and net periodic pension
costs are as follows:

Year Ended
December 31,

2014

2013

2012

Discount rate:
Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.49% 3.90% 4.31%
4.80
3.98
7.00
7.00

3.81
7.00

The overall expected long-term rate of return on plan assets assumption is determined based on the plan’s targeted
allocation among asset classes and the weighted-average expected return of each class. The expected return of each class
is determined based on the current yields on inflation-indexed bonds, current forecasts of inflation, and long-term
historical real returns.

Components of net periodic pension cost of the U.S. Cash Balance Plan are as follows (in thousands):

Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net settlement loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,345
34
(1,621)
609

$ 1,294
133
(1,499)
—

$ 1,326
108
(1,358)
—

Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

367

$

(72)

$

76

Year Ended December 31,

2014

2013

2012

Accumulated other comprehensive loss of $7.9 million and $2.6 million as of December 31, 2014 and 2013,
respectively, consists of the net actuarial loss in the current year partially offset by the net settlement loss realized in the
current year and the net actuarial gain that arose during the year ended December 31, 2013, combined with the net
actuarial loss that arose during the year ended December 31, 2012, and has not yet been recognized as a component of
net periodic pension cost. Net settlement losses are included in general and administrative expenses in the accompanying
Consolidated Statements of Operations. We expect approximately $0.1 million of the amounts in accumulated other
comprehensive loss will be recognized into net periodic pension cost during the year ending December 31, 2015.

The estimated future benefit payments in the next five years and the five years thereafter in aggregate are as follows
(dollars in thousands):

Years Ending December 31,
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020–2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 989
984
1,135
1,423
1,181
7,189

We expect to contribute $0.9 million to the U.S. Cash Balance Plan in the year ending December 31, 2015.

99

The fair value of the U.S. Cash Balance Plan’s assets by asset categories is as follows (in thousands):

Asset Category

Fair Value Measurements at December 31, 2014

Level 1

Level 2

Level 3

Total

U.S. equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equity securities . . . . . . . . . . . . . . . . . . . . . .
Fixed-income securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,820
2,937
10,391
1,090
453

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$23,691

$—
—
—
—
—

$—

$—
—
—
—
—

$—

$ 8,820
2,937
10,391
1,090
453

$23,691

Asset Category

Fair Value Measurements at December 31, 2013

Level 1

Level 2

Level 3

Total

U.S. equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equity securities . . . . . . . . . . . . . . . . . . . . . .
Fixed-income securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,677
2,917
10,757
1,089
491

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$23,931

$—
—
—
—
—

$—

$—
—
—
—
—

$—

$ 8,677
2,917
10,757
1,089
491

$23,931

We believe the U.S. Cash Balance Plan’s assets are invested in a manner consistent with generally accepted standards of
fiduciary responsibility. Taylor Morrison’s primary investment objective is to build and maintain the plan’s assets
through employer contributions and investment returns to satisfy legal requirements and benefit payment requirements
when due. Because of the long-term nature of the plan’s obligations, Taylor Morrison has the following goals in
managing the plan: long-term (i.e., five years and more) performance objectives, maintenance of cash reserves sufficient
to pay benefits, and achievement of the highest long-term rate of return practicable without taking excessive risk that
could jeopardize the plan’s funding policy or subject us to undue funding volatility. The investment portfolio contains a
diversified blend of equity, fixed-income securities, and cash, though allocation will favor equity investments in order to
reach the U.S. Cash Balance Plan’s stated objectives. One of the U.S. Cash Balance Plan’s investment criteria is that
over a complete market cycle, each of the investment funds should typically rank in the upper half of the universe of all
active investment funds in the same asset class with similar investment objectives. Investments in commodities, private
placements, or letter stock are not permitted. The equity securities are diversified across U.S. and international stocks, as
well as growth and value. Investment performance is measured and monitored on an ongoing basis through quarterly
portfolio reviews and annual reviews relative to the objectives and guidelines of the plan.

The range of target allocation percentages of plan assets of the U.S. Cash Balance Plan is as follows:

U.S. equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-income securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37%
8
35
—

47%
18
45
10

42%
13
40
5

100%

Minimum Maximum

Target

100

17. ACCUMULATED OTHER COMPREHENSIVE INCOME

The table below provides the components of accumulated other comprehensive income (loss) (dollars in thousands):

Year Ended December 31, 2014

Total Post-
Retirement
Benefits
Adjustments

Foreign
Currency
Translation
Adjustments

Non-controlling
Interest in
Principal
Equityholders

Total

Balance, beginning of period . . . . . . . . . . . . . . . . . .

$ 3,987

$(16,727)

$12,288

$

(452)

Other comprehensive income (loss) before

reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross amounts reclassified from accumulated other
comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . .
Net settlement loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss) net of tax . . . . .
Gross amounts reclassified within accumulated

(6,303)

(35,421)

43
609
(55)
2,411

—
—
—
—

—

—
—
—
—

(41,724)

43
609
(55)
2,411

$(3,295)

$(35,421)

$ —

$(38,716)

other comprehensive income (loss) . . . . . . . . . . .

—

—

Balance, end of period . . . . . . . . . . . . . . . . . . . . . . .

$

692

$(52,148)

28,258

$40,546

28,258

$(10,910)

Year Ended December 31, 2013

Total Post-
Retirement
Benefits
Adjustments

Foreign
Currency
Translation
Adjustments

Non-controlling
Interest in
Principal
Equityholders

Total

Balance, beginning of period . . . . . . . . . . . . . . . . . .

$(12,088)

$(22,277)

$ —

$(34,365)

Other comprehensive income (loss) before

reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross amounts reclassified from accumulated other
comprehensive income . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . .
Income tax (expense) benefit . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss) net of tax . . . . .
Gross amounts reclassified within accumulated

6,107

(17,686)

—

(11,578)

177
199
(2,496)

—
—
959

3,496
—
—

3,673
199
(1,537)

$ 3,987

$(16,727)

$ 3,496

$ (9,244)

other comprehensive income (loss) . . . . . . . . . . .

12,088

22,277

8,792

43,157

Balance, end of period . . . . . . . . . . . . . . . . . . . . . . .

$ 3,987

$(16,727)

$12,288

$

(452)

Reclassifications for the amortization of the employee retirement plans are included in selling, general and
administrative expense in the accompanying Consolidated Statements of Operations.

101

18. OPERATING AND REPORTING SEGMENTS

The Company has ten homebuilding operating divisions which are aggregated into two reportable homebuilding
segments. Prior to the disposal of our Monarch business, we had three reportable homebuilding segments. These
segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those
homes, and providing warranty and customer service. We aggregate our homebuilding operating segments into reporting
segments based on similar long-term economic characteristics. We also have a mortgage and financial services segment.
We have no inter-segment sales as all sales are to external customers. Our reporting segments are as follows:

East . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

West
Mortgage Operations . . . . . . . . . . . . . . . . Mortgage and Financial Services (TMHF)

Houston (which includes a Taylor Morrison division and a
Darling Homes division), Austin, Dallas, North Florida and
West Florida
Phoenix, Northern California, Southern California and Denver

Management primarily evaluates segment performance based on GAAP gross margin, defined as homebuilding and land
revenue less cost of home construction, commissions and other sales costs, land development and other land sales costs
and other costs incurred by, or allocated to each segment, including impairments. Operating results for each segment
may not be indicative of the results for such segment had it been an independent, stand-alone entity.

Segment information, excluding discontinued operations, is as follows:

Year Ended December 31, 2014

(In thousands)

East

West

Mortgage
Operations

Corporate
and
Unallocated

Total

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . .
Equity in income of unconsolidated entities . . . . . . . . .
Interest and other (expense) income . . . . . . . . . . . . . . .

$1,556,598
341,481
(131,048)
3,609
(16,690)

$1,116,341
208,943
(66,880)
386
1,604

$35,493
15,822
—
1,410
1

$ — $2,708,432
566,246
(250,050)
5,405
(19,607)

—
(52,122)
—
(4,522)

Income before income taxes . . . . . . . . . . . . . . . . . . . . .

$ 197,352

$ 144,053

$17,233

$(56,644) $ 301,994

(In thousands)

Year Ended December 31, 2013

East

West

Mortgage
Operations

Corporate
and
Unallocated

Total

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . . . .
Equity in income of unconsolidated entities . . . . . . . . . . .
Indemnification and transaction expenses . . . . . . . . . . . .
Loss on extinguishment of debt
. . . . . . . . . . . . . . . . . . . .
Interest and other (expense) income . . . . . . . . . . . . . . . . .

$1,117,298
227,695
(102,582)
1,788
—
—
(4,506)

$768,412
174,245
(52,521)
(23)
—
—
(714)

$30,371
13,925
—
1,130
—
—

3

$

— $1,916,081
415,865
—
(204,617)
(49,514)
2,895
—
(195,773)
(10,141)
(3,684)

(195,773)
(10,141)
1,533

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . .

$ 122,395

$120,987

$15,058

$(253,895) $

4,545

102

(In thousands)

Year Ended December 31, 2012

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expense . . . . . . . . . . . .
Equity in income of unconsolidated entities . . . . . . . . . . . .
Indemnification and transaction expenses . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . .
Interest and other (expense) income . . . . . . . . . . . . . . . . . .

East

West

$558,523
111,424
(50,272)
291
—
—
561

$460,798
84,622
(37,240)
237
—
—
168

Mortgage
Operations

Corporate
and
Unallocated

Total

$21,861
10,595
—
686
—
—

5

$ — $1,041,182
206,641
(112,265)
1,214
(13,034)
(7,953)
(2,946)

—
(24,753)
—
(13,034)
(7,953)
(3,680)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . .

$ 62,004

$ 47,787

$11,286

$(49,420) $

71,657

(In thousands)

December 31, 2014

East

West

Mortgage
Operations

Corporate
and
Unallocated

Assets of
Discontinued
Operations

Total

Real estate inventory and land deposits . . . . . . $1,275,192 $1,277,673 $ — $ — $ — $2,552,865
110,291
Investments in unconsolidated entities . . . . . . .
1,469,957
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57,138
166,854

1,244
204,685

—
576,445

—
483,984

51,909
37,989

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,499,184 $1,367,571 $205,929 $483,984

$576,445 $4,133,113

(In thousands)

December 31, 2013

East

West

Mortgage
Operations

Corporate
and
Unallocated

Assets of
Discontinued
Operations

Total

Real estate inventory and land deposits . . . . . . $1,048,091 $1,002,500 $ — $ — $ — $2,050,591
Investments in unconsolidated entities . . . . . . .
21,435
1,366,532
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,191
103,107

—
663,118

1,244
110,004

—
462,461

—
27,842

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,171,389 $1,030,342 $111,248 $462,461

$663,118 $3,438,558

(In thousands)

December 31, 2012

East

West

Mortgage
Operations

Corporate
and
Unallocated

Assets of
Discontinued
Operations

Total

Real estate inventory and land deposits . . . . . . $ 741,911 $ 647,877 $ — $ — $ — $1,389,788
Investments in unconsolidated entities . . . . . . .
1,255
1,347,013
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

723
109,611

532
100,200

—
636,769

—
478,364

—
22,069

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 852,245 $ 669,946 $100,732 $462,461

$636,769 $2,738,056

103

19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The selected quarterly financial data does not agree to our previously issued quarterly reports as a result of the
reclassification of our Canadian business to discontinued operations during the fourth quarter of 2014.

Quarterly results are as follows (in thousands, except per share data):

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations before

income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income before allocation to non-controlling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income available to Taylor Morrison Home
. . . . . . . . . . . . . . . . . . . . . . . . .
Basic and diluted earnings per share . . . . . . . . . .

Corporation (1)

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) before allocation to non-

controlling interests . . . . . . . . . . . . . . . . . . . . .
Net income available to Taylor Morrison Home
. . . . . . . . . . . . . . . . . . . . . . . . .
Basic and diluted earnings per share . . . . . . . . . .

Corporation (1)

(1) Continuing and discontinued operations

20. COMMITMENTS AND CONTINGENCIES

First
Quarter 2014

Second
Quarter 2014

Third
Quarter 2014

Fourth
Quarter 2014

$470,475
103,381

$597,008
127,352

$629,196
131,951

$1,011,753
203,562

47,956

65,508

69,050

119,480

41,296

55,499

66,175

104,531

10,932
0.33

$

14,816
0.45

$

17,846
0.54

$

27,875
0.84

$

First
Quarter 2013

Second
Quarter 2013

Third
Quarter 2013

Fourth
Quarter 2013

$335,697
67,895

$ 450,366
90,958

$491,018
104,804

$639,000
152,208

28,129

(160,601)

52,820

84,197

24,337

(78,287)

52,632

96,186

—
N/A

5,327
0.16

$

14,263
0.43

$

25,830
0.79

$

Letters of Credit and Surety Bonds — We are committed, under various letters of credit and surety bonds, to perform
certain development and construction activities and provide certain guarantees in the normal course of business.
Outstanding letters of credit and surety bonds under these arrangements totaled $315.6 million and $156.9 million as of
December 31, 2014 and 2013, respectively. Although significant development and construction activities have been
completed related to these site improvements, the bonds are generally not released until all development and
construction activities are completed. We do not believe that it is probable that any outstanding bonds as of
December 31, 2014 will be drawn upon.

Purchase Commitments — We are subject to the usual obligations associated with entering into contracts (including
option contracts) for the purchase, development, and sale of real estate in the routine conduct of its business. We have a
number of land purchase option contracts, generally through cash deposits, for the right to purchase land or lots at a
future point in time with predetermined terms. We do not have title to the property and the creditors generally have no
recourse. Our obligations with respect to the option contracts are generally limited to the forfeiture of the related non-
refundable cash deposits. At December 31, 2014 and 2013, we had the right to purchase approximately 5,372 and 6,570
lots under land option and land purchase contracts, respectively, which represents an aggregate purchase price of
$323.5 million and $500.9 million at December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, we
had $34.5 million and $38.0 million in land deposits related to land options and land purchase contracts, respectively.

Legal Proceedings — We are involved in various litigation and legal claims in the normal course of business, including
actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws
and regulations related to land development activities, house construction standards, sales practices, mortgage lending

104

operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination
or inquiry by various governmental agencies that administer these laws and regulations.

We establish liabilities for legal claims and regulatory matters when such matters are both probable of occurring and any
potential loss can be reasonably estimated. At December 31, 2014 and December 31, 2013, our legal accruals were $0.9
million and $1.9 million, respectively. We accrue for such matters based on the facts and circumstances specific to each
matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of
any amounts currently accrued. Predicting the ultimate resolution of the pending matters, the related timing, or the
eventual loss associated with these matters is inherently difficult. While the outcome of such contingencies cannot be
predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our
results of operations, financial position, or cash flows. Accordingly, the liability arising from the ultimate resolution of
any matter may exceed the estimate reflected in the recorded reserves relating to such matter.

Operating Leases — We lease office facilities and certain equipment under operating lease agreements. In most cases,
we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases.
Approximate future minimum payments under the non-cancelable leases in effect at December 31, 2014, are as follows
(in thousands):

Years Ending December 31,

2015……………………………………………………………………….
2016……………………………………………………………………….
2017……………………………………………………………………….
2018……………………………………………………………………….
2019……………………………………………………………………….
Thereafter…………………………………………………………………

Lease
Payments

$ 5,489
4,138
3,520
2,743
1,710
2,954

Total……………………………………………………………………….

$20,554

Rent expense under non-cancelable operating leases for the year ended December 31, 2014, 2013 and 2012, was
$4.2 million, $3.7 million and $2.6, respectively, and is included in general and administrative expenses in the
accompanying Consolidated Statements of Operations.

21. SUBSEQUENT EVENTS

On January 28, 2015 we closed on the sale of Monarch Corporation, our Canadian operating segment, to an affiliate of
Mattamy Homes Limited (“Mattamy”). Mattamy delivered a cash purchase price of CAD $335 million at closing, which
is subject to customary post-closing adjustments, and ordinary and customary indemnifications. Immediately prior to the
closing, CAD $235 million of cash at Monarch was distributed to Monarch Parent, for total proceeds of CAD $570
million. The purchase premium of Monarch was approximately CAD $102 million, which will result in a net gain to be
recorded in the first quarter of 2015 (net of related costs and tax). As a result of the sale, we do not have significant
continuing involvement with Monarch.

105

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this 2014 Form 10-K, we carried out an evaluation, under the supervision and with
the participation of our principal executive officer, principal financial officer and principal accounting officer, of the
effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-
15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer, principal financial
officer and principal accounting officer concluded that our disclosure controls and procedures were effective in alerting
them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC.

Internal Control Over Financial Reporting

(a) Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for the preparation and fair presentation of the consolidated financial statements included in
this annual report. The consolidated financial statements have been prepared in conformity with U.S. generally accepted
accounting principles and reflect management’s judgments and estimates concerning events and transactions that are
accounted for or disclosed.

Management is also responsible for establishing and maintaining effective internal control over financial reporting, as
such term is defined in Exchange Act Rule 13a-15(f). Management recognizes that there are inherent limitations in the
effectiveness of any internal control and effective internal control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation. Additionally, because of changes in conditions, the
effectiveness of internal control over financial reporting may vary over time.

In order to ensure that the Company’s internal control over financial reporting is effective, management regularly
assesses such controls and did so most recently for its financial reporting as of December 31, 2014. Management’s
assessment was based on criteria for effective internal control over financial reporting described in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
Framework). Based on this assessment, management asserts that the Company has maintained effective internal control
over financial reporting as of December 31, 2014.

Deloitte & Touche LLP, the independent registered public accounting firm that audited the Company’s consolidated
financial statements included in this annual report, has issued its report on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2014.

(b) Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Taylor Morrison Home Corporation
Scottsdale, Arizona

We have audited the internal control over financial reporting of Taylor Morrison Home Corporation and subsidiaries (the
“Company”) as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s
management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit.

106

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers, or persons performing similar functions, and effected by
the company’s board of directors, management, and other personnel 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. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial
reporting to future periods are subject to the risk that the controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements as of and for the year ended December 31, 2014 of the Company and our
report dated February 27, 2015 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Phoenix, Arizona
February 27, 2015

Changes in Internal Controls

In the quarter ended December 31, 2014, we updated our internal controls over income taxes to remediate a material
weakness in controls over accounting for income taxes. The material weakness related to the manner in which we
calculate our net deferred tax assets and liabilities. The internal control updates included enhancement in our resources
used to calculate our tax provision and deferred income, improvement in controls over internal calculations and
spreadsheets preparation and enhanced review of income tax calculations and the spreadsheets used in such
calculations. Other than these changes, no change in our internal control over financial reporting occurred during the
quarter ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

107

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Items 401, 405, 406 and 407(c)(3), (d)(4) and (d)(5) of Regulation S-K will be set forth in
our 2015 Annual Meeting Proxy Statement, which will be filed with the Securities and Exchange Commission not later
than 120 days after December 31, 2014 (the “Proxy Statement”). For the limited purpose of providing the information
necessary to comply with this Item 10, the Proxy Statement is incorporated herein by this reference. All references to the
Proxy Statement in this Part III are exclusive of the information set forth under the captions “Compensation Committee
Report” and “Audit Committee Report.”

ITEM 11. EXECUTIVE COMPENSATION

The information required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K will be set forth in the Proxy
Statement. For the limited purpose of providing the information necessary to comply with this Item 11, the Proxy
Statement is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information

The following table provides information with respect to the Taylor Morrison Home Corporation 2013 Omnibus Equity
Award Plan (the “2013 Equity Plan”) under which our equity securities are authorized for issuance as of December 31,
2014.

Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
(a)

Weighted-
average exercise
price of
outstanding
options,
warrants and
rights
(b)

Number of
securities
remaining
available for
future issuance
under equity
compensation
plans excluding
securities
reflected in
column (a))
(c)

Plan Category

Equity compensation plans approved by

security holders(1) . . . . . . . . . . . . . . . . . . . .

1,510,708

$22.35(2)

6,439,532(3)

Equity compensation plans not approved by

security holders . . . . . . . . . . . . . . . . . . . . .

—

—

—

(1)

Equity compensation plans approved by security holders covers the 2013 Equity Plan. The 2013 Equity Plan is
currently our only compensation plan pursuant to which our equity is awarded. This figure does not include the
1,431,721 New TMM Units (and the corresponding shares of our Class B Common Stock) that can be exchanged
on a one-for-one basis for shares of our Class A Common Stock. The New TMM Units were issued pursuant to the
TMM Holdings II Limited Partnership 2013 Common Unit Plan and were not made pursuant to any equity
compensation plan.

(2) Column (a) includes 185,679 shares of our Class A Common Stock underlying outstanding restricted stock units.
Because there is no exercise price associated with restricted stock units, such equity awards are not include in the
weighted-average exercise price calculation in column (b).

(3) A total of 7,956,955 shares of our Class A Common Stock have been authorized for issuance pursuant to the terms

of the 2013 Equity Plan.

The information required by Item 403 of Regulation S-K will be set forth in the Proxy Statement. For the limited
purpose of providing the information necessary to comply with this Item 12, the Proxy Statement is incorporated herein
by this reference.

108

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by Items 404 and 407(a) of Regulation S-K will be set forth in the Proxy Statement. For the
limited purpose of providing the information necessary to comply with this Item 13, the Proxy Statement is incorporated
herein by this reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

This information required by Item 9(e) of Schedule 14A will be set forth in the Proxy Statement. For the limited purpose
of providing the information necessary to comply with this Item 14, the Proxy Statement is incorporated herein by this
reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit
No.

2.1

3.1

3.2

4.1

4.2

4.3

4.4

10.1

10.2

Description

Share Purchase Agreement, dated December 11, 2014, by and among Monarch Parent Inc., TMM
Holdings Limited Partnership, 2444991 Ontario Inc. and Mattamy Group Corporation (included as
Exhibit 2.1 to Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on December
16, 2014, and incorporated herein by reference).

Amended and Restated Certificate of Incorporation (included as Exhibit 3.1 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by
reference).

Amended and Restated By-laws (included as Exhibit 3.2 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Indenture, dated as of March 5, 2014, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 5.625% Senior Notes due 2024, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Taylor Morrison Home Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, filed on May 7, 2014, and incorporated herein by reference).

Indenture, dated as of April 16, 2013, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 5.25% Senior Notes due 2021, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Taylor Morrison Home Corporation’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2013, filed on August 14, 2013, and in incorporated herein by reference).

Indenture, dated as of April 13, 2012, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 7.750% Senior Notes due 2020, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Amendment No. 1 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on January 16, 2013, and incorporated herein by reference).

Specimen Class A Common Stock Certificate of Taylor Morrison Home Corporation (included as
Exhibit 4.2 to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration Statement on
Form S-1, filed on April 4, 2013, and incorporated herein by reference).

Registration Rights Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home
Corporation and the other parties named therein (included as Exhibit 10.1 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by
reference).

Amended and Restated Agreement of Exempted Limited Partnership of TMM Holdings II Limited
Partnership, dated as of April 9, 2013 (included as Exhibit 10.2 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

109

Exhibit
No.

10.3

10.4

10.4(a)

10.5

10.6

10.7

10.8

10.9

10.9(a)

10.9(b)

Description

Exchange Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and
the other parties named therein (included as Exhibit 10.3 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Stockholders Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation
and the other parties named therein (included as Exhibit 10.4 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Amendment No. 1, dated as of March 6, 2014, to the Stockholders Agreement, dated as of April 9, 2013,
by and among Taylor Morrison Home Corporation, TPG TMM Holdings II, L.P, OCM TMM Holdings
II, L.P and JHI Holding Limited Partnership (included as Exhibit 10.1 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on March 7, 2014, and incorporated herein by
reference).

Put/Call Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and
TPG TMM Holdings II, L.P. and OCM TMM Holdings II, L.P (included as Exhibit 10.5 to Taylor
Morrison Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated
herein by reference).

Reorganization Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home
Corporation and the other parties named therein (included as Exhibit 10.6 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by
reference).

U.S. Parent Governance Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home
Corporation, Taylor Morrison Holdings, Inc. and the other parties named therein (included as Exhibit
10.7 to Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and
incorporated herein by reference).

Canadian Parent Governance Agreement, dated as of April 9, 2013, by and among Taylor Morrison
Home Corporation, Monarch Communities Inc. and the other parties named therein (included as Exhibit
10.8 to Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and
incorporated herein by reference).

Credit Agreement, dated as of July 13, 2011, among Taylor Morrison Communities, Inc., Monarch
Corporation, TMM Holdings Limited Partnership, Monarch Communities Inc., Monarch Parent Inc.,
Taylor Morrison Holdings, Inc., Taylor Morrison Finance, Inc., the lenders party thereto and Credit
Suisse AG, as administrative agent (included as Exhibit 10.1 to Amendment No. 2 to Taylor Morrison
Home Corporation’s Registration Statement on Form S-1, filed on February 13, 2013, and incorporated
herein by reference).

Amendment Agreement, dated as of April 12, 2013, to the Credit Agreement dated as of July 13, 2011
(as amended and restated as of April 13, 2012 and as thereafter amended as of August 15, 2012 and
December 27, 2012), among Taylor Morrison Communities Inc., Monarch Corporation, TMM Holdings
Limited Partnership and the other parties named therein (included as Exhibit 10.9 to Taylor Morrison
Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by
reference).

Amendment No. 1, dated as of January 15, 2014, to the Second Amended and Restated Credit
Agreement, dated as of July 13, 2011 (as amended and restated as of April 13, 2012, thereafter amended
as of August 15, 2012 and December 27, 2012 and as further amended and restated as of April 12,
2013), by and among Taylor Morrison Communities, Inc., Monarch Corporation, TMM Holdings
Limited Partnership, Monarch Communities Inc., Monarch Parent Inc., Taylor Morrison Holdings, Inc.,
Taylor Morrison Finance, Inc., the lenders party thereto and Credit Suisse AG, as administrative agent
for the lenders (included as Exhibit 10.1 to Taylor Morrison Home Corporation’s Current Report on
Form 8-K, filed on January 17, 2014, and incorporated herein by reference).

110

Exhibit
No.

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

Description

Form of Indemnification Agreement (included as Exhibit 10.4 to Amendment No. 5 to Taylor Morrison
Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated
herein by reference).

Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (included as Exhibit 10.14 to
Amendment No. 5 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed
on April 4, 2013, and incorporated herein by reference).

Form of Employee Nonqualified Option Award Agreement for use with the Taylor Morrison Home
Corporation 2013 Omnibus Equity Award Plan (included as Exhibit 10.15 to Amendment No. 5 to
Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and
incorporated herein by reference).

Taylor Morrison Long-Term Cash Incentive Plan (included as Exhibit 10.18 to Amendment No. 5 to
Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and
incorporated herein by reference).

Form of Restricted Stock Unit Agreement for use with the Taylor Morrison Home Corporation 2013
Omnibus Equity Award Plan (included as Exhibit 10.16 to Amendment No. 5 to Taylor Morrison Home
Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated herein by
reference).

Form of Class B Common Stock Subscription Agreement with Taylor Morrison Home Corporation
(included as Exhibit 10.17 to Amendment No. 5 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on April 4, 2013, and incorporated herein by reference).

TMM Holdings II Limited Partnership 2013 Common Unit Plan (included as Exhibit 10.23 to
Amendment No. 5 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed
on April 4, 2013, and incorporated herein by reference).

Employment Agreement, dated as of July 13, 2011, between Taylor Morrison, Inc. and Sheryl D. Palmer
(included as Exhibit 10.7 to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on March 6, 2013, and incorporated herein by reference).

10.17(a)

First Amendment to Employment Agreement, dated May 17, 2012, between Taylor Morrison, Inc. and
Sheryl D. Palmer (included as Exhibit 10.8 to Amendment No. 3 to Taylor Morrison Home
Corporation’s Registration Statement on Form S-1, filed on March 6, 2013, and incorporated herein by
reference).

10.18

10.19

21.1*

23.1*

24.1*

31.1*

31.2*

32.1*

Employment Agreement, dated as of January 1, 2013, between Taylor Morrison, Inc. and C. David Cone
(included as Exhibit 10.9 to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on March 6, 2013, and incorporated herein by reference).

Form of Restrictive Covenants Agreement with Taylor Morrison, Inc. (included as Exhibit 10.12 to
Amendment No. 3 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed
on March 6, 2013, and incorporated herein by reference).

Subsidiaries of Taylor Morrison Home Corporation

Consent of Deloitte & Touche LLP

Power of Attorney (included on signature page)

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–
Oxley Act of 2002.

Certification of C. David Cone, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley
Act of 2002.

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–
Oxley Act of 2002.

111

Exhibit
No.

32.2*

Certification of C. David Cone, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley
Act of 2002.

Description

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

112

SIGNATURES

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

TAYLOR MORRISON HOME CORPORATION
Registrant

DATE: February 27, 2015

/s/ Sheryl D. Palmer

Sheryl D. Palmer
President, Chief Executive Officer and Director
(Principal Executive Officer)

/s/ C. David Cone

C. David Cone
Vice President and Chief Financial Officer
(Principal Financial Officer)

/s/ Joseph Terracciano

Joseph Terracciano
Chief Accounting Officer
(Principal Accounting Officer)

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Sheryl D. Palmer, C. David Cone and Darrell C. Sherman, and each of them, his or her true and lawful attorneys-in-fact
and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all
exhibits thereto and other documents in connection therewith the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he or she
might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities and Exchange Act of 1934, the report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Timothy R. Eller

Signature

Title
Director and Chairman of the
Board of Directors

Date

February 27, 2015

Timothy R. Eller

/s/ John Brady

John Brady

/s/ Kelvin Davis

Kelvin Davis

/s/ James Henry
James Henry

/s/ Joe S. Houssian
Joe S. Houssian

Director

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

113

Signature

/s/ Jason Keller

Jason Keller

/s/ James Sholem

James Sholem

/s/ Peter Lane

Peter Lane

/s/ David Merritt

David Merritt

/s/ Rajath Shourie

Rajath Shourie

/s/ Anne L. Mariucci

Anne L. Mariucci

Title

Director

Date

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

Director

February 27, 2015

114

Exhibit
No.

2.1

3.1

3.2

4.1

4.2

4.3

4.4

10.1

10.2

10.3

10.4

EXHIBIT INDEX

Description

Share Purchase Agreement, dated December 11, 2014, by and among Monarch Parent Inc., TMM Holdings
Limited Partnership, 2444991 Ontario Inc. and Mattamy Group Corporation (included as Exhibit 2.1 to
Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on December 16, 2014, and
incorporated herein by reference).

Amended and Restated Certificate of Incorporation (included as Exhibit 3.1 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Amended and Restated By-laws (included as Exhibit 3.2 to Taylor Morrison Home Corporation’s Current
Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Indenture, dated as of March 5, 2014, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 5.625% Senior Notes due 2024, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Taylor Morrison Home Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, filed on May 7, 2014, and incorporated herein by reference).

Indenture, dated as of April 16, 2013, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 5.25% Senior Notes due 2021, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Taylor Morrison Home Corporation’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2013, filed on August 14, 2013, and in incorporated herein by reference).

Indenture, dated as of April 13, 2012, relating to Taylor Morrison Communities, Inc.’s and Monarch
Communities Inc.’s 7.750% Senior Notes due 2020, by and among Taylor Morrison Communities, Inc.,
Monarch Communities Inc., the guarantors party thereto and Wells Fargo Bank, National Association
(included as Exhibit 4.1 to Amendment No. 1 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on January 16, 2013, and incorporated herein by reference).

Specimen Class A Common Stock Certificate of Taylor Morrison Home Corporation (included as Exhibit 4.2
to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on
April 4, 2013, and incorporated herein by reference).

Registration Rights Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation
and the other parties named therein (included as Exhibit 10.1 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Amended and Restated Agreement of Exempted Limited Partnership of TMM Holdings II Limited
Partnership, dated as of April 9, 2013 (included as Exhibit 10.2 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Exchange Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and the
other parties named therein (included as Exhibit 10.3 to Taylor Morrison Home Corporation’s Current Report
on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

Stockholders Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and
the other parties named therein (included as Exhibit 10.4 to Taylor Morrison Home Corporation’s Current
Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

10.4(a) Amendment No. 1, dated as of March 6, 2014, to the Stockholders Agreement, dated as of April 9, 2013, by
and among Taylor Morrison Home Corporation, TPG TMM Holdings II, L.P, OCM TMM Holdings II, L.P
and JHI Holding Limited Partnership (included as Exhibit 10.1 to Taylor Morrison Home Corporation’s
Current Report on Form 8-K, filed on March 7, 2014, and incorporated herein by reference).

115

Exhibit
No.

10.5

10.6

10.7

10.8

10.9

Description

Put/Call Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and TPG
TMM Holdings II, L.P. and OCM TMM Holdings II, L.P (included as Exhibit 10.5 to Taylor Morrison
Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by
reference).

Reorganization Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home Corporation and
the other parties named therein (included as Exhibit 10.6 to Taylor Morrison Home Corporation’s Current
Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

U.S. Parent Governance Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home
Corporation, Taylor Morrison Holdings, Inc. and the other parties named therein (included as Exhibit 10.7 to
Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and
incorporated herein by reference).

Canadian Parent Governance Agreement, dated as of April 9, 2013, by and among Taylor Morrison Home
Corporation, Monarch Communities Inc. and the other parties named therein (included as Exhibit 10.8 to
Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and
incorporated herein by reference).

Credit Agreement, dated as of July 13, 2011, among Taylor Morrison Communities, Inc., Monarch
Corporation, TMM Holdings Limited Partnership, Monarch Communities Inc., Monarch Parent Inc., Taylor
Morrison Holdings, Inc., Taylor Morrison Finance, Inc., the lenders party thereto and Credit Suisse AG, as
administrative agent (included as Exhibit 10.1 to Amendment No. 2 to Taylor Morrison Home Corporation’s
Registration Statement on Form S-1, filed on February 13, 2013, and incorporated herein by reference).

10.9(a) Amendment Agreement, dated as of April 12, 2013, to the Credit Agreement dated as of July 13, 2011 (as
amended and restated as of April 13, 2012 and as thereafter amended as of August 15, 2012 and December
27, 2012), among Taylor Morrison Communities Inc., Monarch Corporation, TMM Holdings Limited
Partnership and the other parties named therein (included as Exhibit 10.9 to Taylor Morrison Home
Corporation’s Current Report on Form 8-K, filed on April 15, 2013, and incorporated herein by reference).

10.9(b) Amendment No. 1, dated as of January 15, 2014, to the Second Amended and Restated Credit Agreement,

dated as of July 13, 2011 (as amended and restated as of April 13, 2012, thereafter amended as of August 15,
2012 and December 27, 2012 and as further amended and restated as of April 12, 2013), by and among
Taylor Morrison Communities, Inc., Monarch Corporation, TMM Holdings Limited Partnership, Monarch
Communities Inc., Monarch Parent Inc., Taylor Morrison Holdings, Inc., Taylor Morrison Finance, Inc., the
lenders party thereto and Credit Suisse AG, as administrative agent for the lenders (included as Exhibit 10.1
to Taylor Morrison Home Corporation’s Current Report on Form 8-K, filed on January 17, 2014, and
incorporated herein by reference).

Form of Indemnification Agreement (included as Exhibit 10.4 to Amendment No. 5 to Taylor Morrison
Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated herein by
reference).

Taylor Morrison Home Corporation 2013 Omnibus Equity Award Plan (included as Exhibit 10.14 to
Amendment No. 5 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on
April 4, 2013, and incorporated herein by reference).

Form of Employee Nonqualified Option Award Agreement for use with the Taylor Morrison Home
Corporation 2013 Omnibus Equity Award Plan (included as Exhibit 10.15 to Amendment No. 5 to Taylor
Morrison Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated
herein by reference).

Taylor Morrison Long-Term Cash Incentive Plan (included as Exhibit 10.18 to Amendment No. 5 to Taylor
Morrison Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated
herein by reference).

10.10

10.11

10.12

10.13

116

Exhibit
No.

10.14

10.15

10.16

10.17

Description

Form of Restricted Stock Unit Agreement for use with the Taylor Morrison Home Corporation 2013
Omnibus Equity Award Plan (included as Exhibit 10.16 to Amendment No. 5 to Taylor Morrison Home
Corporation’s Registration Statement on Form S-1, filed on April 4, 2013, and incorporated herein by
reference).

Form of Class B Common Stock Subscription Agreement with Taylor Morrison Home Corporation
(included as Exhibit 10.17 to Amendment No. 5 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on April 4, 2013, and incorporated herein by reference).

TMM Holdings II Limited Partnership 2013 Common Unit Plan (included as Exhibit 10.23 to Amendment
No. 5 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on April 4, 2013,
and incorporated herein by reference).

Employment Agreement, dated as of July 13, 2011, between Taylor Morrison, Inc. and Sheryl D. Palmer
(included as Exhibit 10.7 to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on March 6, 2013, and incorporated herein by reference).

10.17(a)

First Amendment to Employment Agreement, dated May 17, 2012, between Taylor Morrison, Inc. and
Sheryl D. Palmer (included as Exhibit 10.8 to Amendment No. 3 to Taylor Morrison Home Corporation’s
Registration Statement on Form S-1, filed on March 6, 2013, and incorporated herein by reference).

10.18

10.19

21.1*

23.1*

24.1*

31.1*

31.2*

32.1*

32.2*

Employment Agreement, dated as of January 1, 2013, between Taylor Morrison, Inc. and C. David Cone
(included as Exhibit 10.9 to Amendment No. 3 to Taylor Morrison Home Corporation’s Registration
Statement on Form S-1, filed on March 6, 2013, and incorporated herein by reference).

Form of Restrictive Covenants Agreement with Taylor Morrison, Inc. (included as Exhibit 10.12 to
Amendment No. 3 to Taylor Morrison Home Corporation’s Registration Statement on Form S-1, filed on
March 6, 2013, and incorporated herein by reference).

Subsidiaries of Taylor Morrison Home Corporation

Consent of Deloitte & Touche LLP

Power of Attorney (included on signature page)

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes–Oxley
Act of 2002.

Certification of C. David Cone, Chief Financial Officer, pursuant to Section 302 of the Sarbanes–Oxley
Act of 2002.

Certification of Sheryl D. Palmer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes–Oxley
Act of 2002.

Certification of C. David Cone, Chief Financial Officer, pursuant to Section 906 of the Sarbanes–Oxley
Act of 2002.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

*

Filed herewith.

117

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CORPORATE PROFILE

Taylor Morrison has over 100 years of homebuilding 
expertise and we are proud to instill this deep heritage 
into every new home we build, helping to make us one of 
the leading homebuilders in the United States.

We are passionate about building the kinds of homes and 
communities that our customers aspire to live in while 
simultaneously delivering outstanding financial results. 
Our commitment to our customers and shareholders 
goes beyond simply building great homes – it extends to 
maintaining an organization that is disciplined and keenly 
focused on remaining well-positioned for future growth. 

Taylor Morrison Home Corporation operates under two 
well-established homebuilding brands in many of the higher-
growth markets within the United States.  Currently we are 
building Taylor Morrison master planned communities and 
homes in Arizona, California, Colorado, Florida and Texas.  Our 
Darling Homes business builds and operates in the Houston 
and Dallas markets. 

BOARD OF DIRECTORS

TIMOTHY R. ELLER 
CHAIRMAN OF BOARD OF DIRECTORS

SHERYL D. PALMER 
PRESIDENT, CHIEF EXECUTIVE OFFICER

JOHN BRADY 
DIRECTOR

KELVIN DAVIS 
DIRECTOR

JAMES HENRY 
DIRECTOR

JOE S. HOUSSIAN 
DIRECTOR

JASON KELLER 
DIRECTOR

PETER LANE
DIRECTOR

ANNE L. MARIUCCI 
DIRECTOR

DAVID MERRITT 
DIRECTOR

JAMES SHOLEM 
DIRECTOR

RAJATH SHOURIE
DIRECTOR

INVESTOR RELATIONS CONTACT 
Investor@taylormorrison.com 
480.734.2060

AUDITOR OF RECORD 
Deloitte & Touche LLP

RIVERSTONE | HOUSTON, TX

®