THE RYLAND GROUP, INC. & SUBSIDIARIES

Management's Discussion and Analysis of Results of
Operations and Financial Condition

THE COMPANY

Operations of The Ryland Group, Inc. and subsidiaries (the "Company") consist of two business segments: homebuilding and financial services. The Company's homebuilding segment constructs and sells single-family attached and detached homes in 21 markets in 14 states. The financial services segment provides mortgage-related products and services for retail customers and conducts investment activities.