Consolidated Financial Statements

6 Months Ended

Jun. 30, 2013

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 interests in land and lot option purchase contracts. (See Note 10, “Variable Interest Entities (‘VIE’).”) Intercompany transactions have been eliminated in consolidation. Information is presented on a continuing operations basis unless otherwise noted. The results from continuing and discontinued operations are presented separately in the consolidated financial statements. (See Note 20, “Discontinued Operations.”) Effective July 1, 2012, the Company’s selling, general and administrative expense included corporate expense. All prior period amounts have been reclassified to conform to the 2013 presentation. For a description of the Company’s accounting policies, see Note A, “Summary of Significant Accounting Policies,” in its 2012 Annual Report on Form 10-K.

The Consolidated Balance Sheet at June 30, 2013, the Consolidated Statements of Earnings and Other Comprehensive Income for the three- and six-month periods ended June 30, 2013 and 2012, the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2013 and 2012, and the Consolidated Statement of Stockholders’ Equity as of and for the six-month period ended June 30, 2013, 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, 2013, 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 2012 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, 2013, are not necessarily indicative of the operating results expected for the year ending December 31, 2013.