Consolidated Financial Statements

6 Months Ended

Jun. 30, 2011

Consolidated Financial Statements

Consolidated Financial Statements

Note 1.  Consolidated Financial Statements

The consolidated financial statements include the accounts of The Ryland Group, Inc. and its 100 percent-owned subsidiaries (the “Company”). Noncontrolling interest represents the selling entities’ ownership interest in land and lot option purchase contracts. (See Note 8, “Variable Interest Entities (‘VIE’).”) Intercompany transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the 2011 presentation. See Note A, “Summary of Significant Accounting Policies,” in the Company’s 2010 Annual Report on Form 10-K for a description of its accounting policies.

The Consolidated Balance Sheet at June 30, 2011, the Consolidated Statements of Earnings for the three- and six-month periods ended June 30, 2011 and 2010, and the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2011 and 2010, have been prepared by the Company without audit. In the opinion of management, all adjustments, including normally recurring adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows at June 30, 2011, and for all periods presented, have been made. Certain information and footnote disclosures normally included in the financial statements have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2010 Annual Report on Form 10-K.

The Company has historically experienced, and expects to continue to experience, variability in quarterly results.  Accordingly, the results of operations for the three and six months ended June 30, 2011, are not necessarily indicative of the operating results expected for the year ending December 31, 2011.