Ryland 8-K Results of Operations and Financial Condition

EXHIBIT 99

	The Ryland Group, Inc.
News Release	www.ryland.com

FOR IMMEDIATE RELEASE	CONTACT:	Cathey Lowe, Senior Vice President, Finance
		Investor Relations	(818) 223-7530
		Marya Jones, Communications Manager
		Media Relations	(818) 223-7591

RYLAND REPORTS 38 PERCENT INCREASE IN THIRD-QUARTER EPS,
ISSUES EARNINGS GUIDANCE FOR 2005, ANNOUNCES 2-FOR-1 STOCK SPLIT
AND 20 PERCENT INCREASE IN DIVIDEND

CALABASAS, Calif. (October 20, 2004) — The Ryland Group, Inc. (NYSE: RYL), today announced record results for its third quarter ended September 30, 2004, including the highest third-quarter consolidated net earnings, revenues, new orders, closings, backlog and earnings per share in its history. Highlights include:

• Diluted earnings of $3.32 per share for the quarter ended September 30, 2004, representing an increase of 38.3 percent over the same period in the prior year

• Revenues of $1,034.3 million for the quarter ended September 30, 2004, reflecting an increase of 18.6 percent over the quarter ended September 30, 2003

• Gross profit margins from home sales of 23.1 percent for the quarter ended September 30, 2004, compared to 22.5 percent for the quarter ended September 30, 2003

• Record third-quarter new orders of 3,932, signifying a 4.9 percent increase over the quarter ended September 30, 2003

• Record third-quarter closings of 3,879, reflecting an increase of 3.9 percent over the third quarter of 2003

• Record backlog units of 9,057, up 17.5 percent at September 30, 2004, compared to September 30, 2003, and dollar backlog at $2.5 billion, up 35.2 percent from September 30, 2003, the highest quarter-end backlog in the Company’s history

• The repurchase of approximately 322,000 shares of Ryland common stock during the third quarter of 2004

• Announcement of a two-for-one stock split of the Company’s common stock, which will be effected in the form of a stock dividend

• Announcement of a 20 percent increase in the Company’s common stock dividend

• Issuance of earnings guidance for the fiscal year ending December 31, 2005. Diluted earnings per share is expected to exceed $14.00 for 2005.

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RYLAND THIRD-QUARTER RESULTS

RECORD RESULTS HIGHLIGHT THIRD QUARTER

     The Company’s consolidated net earnings for the three months ended September 30, 2004, represented a third-quarter record at $83.0 million, or $3.32 per diluted share, compared to consolidated net earnings of $63.3 million, or $2.40 per diluted share, for the third quarter of 2003.

     The homebuilding segment reported third-quarter pretax earnings of $136.5 million, which represents a 35.4 percent rise over the $100.8 million reported for the third quarter of 2003. The increase over the prior year was primarily attributable to higher volume and increased margins on homes closed.

     Homebuilding revenues rose $161.0 million, or 18.9 percent, to $1,011.2 million for the third quarter of 2004, compared to the same period in the prior year. This was primarily the result of a 14.7 percent increase in the average closing price of a home from $224,000 for the quarter ended September 30, 2003, to $257,000 for the quarter ended September 30, 2004. Homebuilding revenues for the third quarter of 2004 included $13.8 million from land sales, compared to $14.5 million for the third quarter of 2003, which contributed net gains of $3.4 million and $1.1 million to pretax earnings in 2004 and 2003, respectively.

     New orders of 3,932 for the third quarter of 2004 represented a 4.9 percent increase, compared to new orders of 3,748 for the third quarter of 2003. The Company operated in 324 active communities at September 30, 2004, compared to 325 active communities at September 30, 2003. The Company’s backlog at the end of the third quarter of 2004 increased to 9,057 outstanding contracts from 7,709 outstanding contracts at September 30, 2003, a rise of 17.5 percent. The dollar value of the Company’s backlog at September 30, 2004, was $2.5 billion, or an increase of 35.2 percent over that of September 30, 2003.

     Gross profit margins from home sales averaged 23.1 percent in the third quarter of 2004, compared to 22.5 percent in the third quarter of 2003. The improvement in gross margins was attributable to sales prices increasing at a greater rate than costs and a higher percentage of closings in higher margin markets. Selling, general and administrative expenses, as a percentage of revenue, were 9.6 percent in the third quarter of 2004 versus 9.5 percent for the same period in 2003. The Company capitalized all interest incurred during the third quarter of 2004 due to increased development activity during the period. This compares to interest expense of $1.7 million in the third quarter of 2003. The pretax homebuilding margin was 13.5 percent in the third quarter of 2004, compared to 11.9 percent in the third quarter of 2003.

     Corporate expenses were $17.3 million for the third quarter of 2004, compared to $14.7 million for the same period in the prior year. The rise in corporate expenses was primarily attributable to increased incentive compensation, which was due to improvement in the Company’s financial results.

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RYLAND THIRD-QUARTER RESULTS

     The Company’s financial services segment, which includes Ryland Mortgage Company and its title, escrow and insurance services, reported pretax earnings of $15.7 million for the third quarter of 2004, compared to $15.2 million for the same period last year. This increase was primarily attributable to a $1.1 million gain on the sale of a portion of the investment portfolio during the quarter. This increase was partially offset by reduced gains on the sale of mortgages and loan servicing rights as a result of an increase in less profitable adjustable-rate mortgage product and a more competitive marketplace. Mortgage origination dollars increased by 17.8 percent from $584.1 million for the quarter ended September 30, 2003, to $688.0 million for the quarter ended September 30, 2004, as a result of a 2.1 percent increase in units originated and a 15.4 percent rise in average loan size. The capture rate of mortgages originated for homebuilding customers was 85.1 percent in the third quarter of 2004, compared to 85.3 percent in the third quarter of 2003.

NEW RECORDS ESTABLISHED FOR THE FIRST NINE MONTHS OF 2004

     Consolidated net earnings for the nine months ended September 30, 2004, increased 36.3 percent to a record $211.9 million, or $8.40 per diluted share, from $155.5 million, or $5.85 per diluted share, for the nine months ended September 30, 2003.

     The Company’s homebuilding segment reported pretax earnings of $349.6 million for the nine months ended September 30, 2004, compared to $250.6 million for the same period in the prior year, representing an increase of 39.5 percent. Homebuilding revenues rose $341.0 million to $2,648.5 million for the nine months ended September 30, 2004, compared to $2,307.5 million for the same period in the previous year. Homebuilding revenues for the nine months ended September 30, 2004, included revenues of $36.3 million from land sales, compared to $22.5 million for the nine months ended September 30, 2003, contributing net gains of $8.9 million and $2.1 million to pretax earnings, respectively. The Company closed 10,447 homes for the nine months ended September 30, 2004, compared to 10,324 homes closed for the nine months ended September 30, 2003. New orders were 13,663 for the nine months ended September 30, 2004, representing an increase of 7.9 percent, compared to 12,665 for the same period in 2003.

     Housing gross profit margins rose to 23.4 percent for the nine months ended September 30, 2004, versus 21.7 percent for the same period in 2003. The improvement in gross margins was attributable to sales prices increasing at a greater rate than costs and a higher percentage of closings from higher margin markets. Selling, general and administrative expenses, as a percentage of revenue, were 10.2 percent for the nine months ended September 30, 2004, versus 10.3 percent for the corresponding period in 2003. Compared to the results for the nine months ended September 30, 2003, interest expense decreased $4.9 million to $0.2 million in 2004. This was primarily attributable to an increase in capitalized interest, which resulted from a heightened level of development activity; and partially offset by a reduction in interest earnings on cash investments.

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RYLAND THIRD-QUARTER RESULTS

STOCK REPURCHASE PROGRAM

     The Company repurchased approximately 322,000 shares of its common stock during the third quarter of 2004. At September 30, 2004, the Company had Board authorization to purchase approximately 654,000 additional shares.

COMMON STOCK DIVIDEND

     The Company will be increasing its quarterly common stock dividend by 20 percent from $0.10 per share to $0.12 per share effective in the fourth quarter of 2004.

STOCK SPLIT

     Ryland’s Board of Directors has approved a two-for-one stock split of the Company’s common stock, which will be effected in the form of a stock dividend. Record holders of the Company’s common stock as of the close of business on November 15, 2004, will be entitled to one additional share for each share held. The new shares will be distributed on November 30, 2004.

     All references in this press release and in the following consolidated financial statements to common shares, dividends, per share amounts and stock plans do not reflect the impact of the two-for-one stock split.

2005 EARNINGS GUIDANCE

     The Company anticipates that diluted earnings per share will exceed $14.00 for the fiscal year ending December 31, 2005.

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RYLAND THIRD-QUARTER RESULTS

     With headquarters in Southern California, Ryland is one of the nation’s largest homebuilders and a leading mortgage-finance company. The Company currently operates in 27 markets across the country and has built more than 225,000 homes and financed more than 195,000 mortgages since its founding in 1967. Ryland is a Fortune 500 company listed on the New York Stock Exchange under the symbol “RYL.” Previous news releases may be obtained at www.ryland.com.

Note: Certain statements in this press release may be regarded as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may qualify for the safe harbor provided for in Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the Company’s expectations and beliefs concerning future events, and no assurance can be given that the future results described in this press release will be achieved. These forward-looking statements can generally be identified by the use of statements that include words such as “anticipate,” “believe,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “likely,” “may,” “plan,” “project,” “should,” “target,” “will” or other similar words or phrases. All forward-looking statements contained herein are based upon information available to the Company on the date of this press release. Except as may be required under applicable law, the Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements are subject to risks and uncertainties which include, among others:

• economic changes nationally or in the Company’s local markets, including volatility in interest rates, inflation, changes in consumer confidence levels and the state of the market for homes in general;

• the availability and cost of land;

• increased land development costs on projects under development;

• shortages of skilled labor or raw materials used in the production of houses;

• increased prices for labor, land and raw materials used in the production of houses;

• increased competition;

• failure to anticipate or react to changing consumer preferences in home design;

• delays in land development or home construction resulting from adverse weather conditions;

• potential delays or increased costs in obtaining necessary permits as a result of changes to laws, regulations, or governmental policies (including those that affect zoning, density, building standards and the environment);

• delays in obtaining approvals from applicable regulatory agencies and others in connection with the Company’s communities and land activities; or

• other factors over which the Company has little or no control.

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Five financial-statement pages follow.

CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
The Ryland Group, Inc. and subsidiaries
(in thousands, except share data)

	Three months ended September 30,				Nine months ended September 30,
	2004		2003		2004		2003
REVENUES
Homebuilding	$	1,011,211	$	850,176	$	2,648,506	$	2,307,511
Financial services		23,111		22,008		58,936		64,380
TOTAL REVENUES		1,034,322		872,184		2,707,442		2,371,891
EXPENSES
Homebuilding
Cost of sales		777,243		661,468		2,027,680		1,808,473
Selling, general and administrative		97,484		81,086		271,024		238,276
Interest		—		1,708		210		5,109
Expenses related to early retirement of debt		—		5,086		—		5,086
Total homebuilding expenses		874,727		749,348		2,298,914		2,056,944
Financial services
General and administrative		7,147		6,381		19,114		17,872
Interest		234		426		815		1,230
Total financial services expenses		7,381		6,807		19,929		19,102
Corporate expenses		17,306		14,722		44,062		40,847
TOTAL EXPENSES		899,414		770,877		2,362,905		2,116,893
Earnings before taxes		134,908		101,307		344,537		254,998
Tax expense		51,939		37,973		132,647		99,449
NET EARNINGS	$	82,969	$	63,334	$	211,890	$	155,549
NET EARNINGS PER COMMON SHARE
Basic	$	3.50	$	2.56	$	8.88	$	6.23
Diluted	$	3.32	$	2.40	$	8.40	$	5.85
AVERAGE COMMON SHARES OUTSTANDING
Basic		23,684,021		24,768,351		23,872,321		24,962,634
Diluted		24,959,820		26,361,568		25,241,451		26,570,939

CONSOLIDATED BALANCE SHEETS
The Ryland Group, Inc. and subsidiaries
(in thousands, except share data)

					��
	September 30,		December 31,
	2004		2003
	(unaudited)
ASSETS
Homebuilding
Cash and cash equivalents	$	55,190	$	314,518
Housing inventories
Homes under construction		1,138,407		734,280
Land under development and improved lots		690,167		602,504
Consolidated inventory not owned		122,315		59,868
Total inventories		1,950,889		1,396,652
Property, plant and equipment		49,395		40,853
Purchase price in excess of net assets acquired		18,185		18,185
Other		46,905		59,432
		2,120,564		1,829,640
Financial Services
Cash and cash equivalents		12,610		2,186
Mortgage-backed securities and notes receivable		11,431		26,260
Other		32,046		39,824
		56,087		68,270
Other Assets
Net deferred taxes		39,547		37,443
Other		87,479		72,237
TOTAL ASSETS		2,303,677		2,007,590
LIABILITIES
Homebuilding
Accounts payable and other liabilities		455,275		366,131
Debt		583,500		540,500
		1,038,775		906,631
Financial Services
Accounts payable and other liabilities		23,461		23,376
Short-term notes payable		11,305		26,254
		34,766		49,630
Other Liabilities		180,621		170,136
TOTAL LIABILITIES		1,254,162		1,126,397
MINORITY INTEREST		89,958		56,651
STOCKHOLDERS’ EQUITY
Common stock, $1.00 par value:
Authorized - 80,000,000 shares
Issued - 23,648,325 shares (24,276,247 for 2003)		23,648		24,276
Retained earnings		935,616		799,135
Accumulated other comprehensive income		293		1,131
TOTAL STOCKHOLDERS’ EQUITY		959,557		824,542
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,303,677	$	2,007,590

SEGMENT INFORMATION (unaudited)
The Ryland Group, Inc. and subsidiaries
(in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2004			2003			2004			2003
Earnings before taxes
Homebuilding	$	136,484		$	100,828		$	349,592		$	250,567
Financial services		15,730			15,201			39,007			45,278
Corporate		(17,306	)		(14,722	)		(44,062	)		(40,847	)
Total	$	134,908		$	101,307		$	344,537		$	254,998

HOMEBUILDING OPERATIONAL DATA (unaudited)
The Ryland Group, Inc. and subsidiaries

	North		Texas		Southeast		West		Total
For the three months ended September 30,
New Orders (units)
2004		975		655		1,098		1,204		3,932
2003		1,100		770		1,124		754		3,748
Closings (units)
2004		1,154		853		1,003		869		3,879
2003		1,117		843		1,074		701		3,735
Average Closing Price (in thousands)
2004	$	301	$	165	$	228	$	323	$	257
2003	$	254	$	158	$	209	$	277	$	224
For the nine months ended September 30,
New Orders (units)
2004		3,553		2,678		4,006		3,426		13,663
2003		3,563		2,797		3,770		2,535		12,665
Closings (units)
2004		3,236		1,997		2,957		2,257		10,447
2003		3,239		2,306		2,840		1,939		10,324
Average Closing Price (in thousands)
2004	$	284	$	168	$	226	$	305	$	250
2003	$	253	$	158	$	206	$	266	$	221
Outstanding Contracts at September 30,
Units
2004		2,055		1,490		3,272		2,240		9,057
2003		2,070		1,450		2,721		1,468		7,709
Dollars (in millions)
2004	$	642	$	250	$	825	$	748	$	2,465
2003	$	575	$	239	$	594	$	415	$	1,823
Average Price (in thousands)
2004	$	313	$	168	$	252	$	334	$	272
2003	$	278	$	165	$	218	$	283	$	236

FINANCIAL SERVICES SUPPLEMENTAL INFORMATION (unaudited)
The Ryland Group, Inc. and subsidiaries
(dollars in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2004			2003			2004			2003
RESULTS OF OPERATIONS
Revenues
Net gains on sales of mortgages and mortgage servicing rights	$	11,734		$	13,074		$	32,319		$	40,032
Title/escrow/insurance		6,234			4,766			15,900			12,816
Net origination fees		3,123			2,828			6,779			7,298
Interest
Mortgage-backed securities and notes receivable		718			1,031			2,245			3,438
Other		219			297			610			779
Total interest		937			1,328			2,855			4,217
Gain on sale of investments		1,074			—			1,074			—
Other		9			12			9			17
Total revenues		23,111			22,008			58,936			64,380
Expenses
General and administrative		7,147			6,381			19,114			17,872
Interest		234			426			815			1,230
Total expenses		7,381			6,807			19,929			19,102
Pretax earnings	$	15,730		$	15,201		$	39,007		$	45,278
OPERATIONAL DATA
Retail operations:
Originations (units)		3,122			3,058			8,322			8,542
Ryland Homes closings as a percentage of total closings		99.2	%		98.6	%		99.0	%		98.5	%
Ryland Homes origination capture rate		85.1	%		85.3	%		84.8	%		86.2	%
Investment operations:
Mortgage-backed securities and notes receivable average balance	$	16,658		$	31,272		$	21,247		$	35,012