THE RYLAND GROUP, INC. & SUBSIDIARIES

Notes to Consolidated Financial Statements

(amounts in thousands, except share data, in all notes unless otherwise noted)

NOTE B: SEGMENT INFORMATION

The Company is a leading national homebuilder and mortgage-related financial services firm. As one of the largest single-family on-site homebuilders in the United States, the Company builds homes in 21 markets in 14 states. The Company's homebuilding segment specializes in the sale and construction of single-family attached and detached housing. The financial services segment provides mortgage-related products and services for retail customers, including loan origination, loan servicing, title, escrow and homeowners insurance services, and also conducts investment activities.

The Company evaluates performance and allocates resources based on a number of factors, including segment pretax earnings. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note A. Certain corporate expenses are allocated to the homebuilding and financial services segments. In addition, amounts related to the limited-purpose subsidiaries are combined with corporate expenses and corporate assets in the following table as "Other."