SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

~~/x/~~ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~December 31~~June 30, ~~2000~~ 2001

/o / TRANSITION REPORT PURSUANT TO SECTION 13 OROF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~transition~~Transition ~~period~~Period ~~from to~~ From __________ To __________

Commission file number 0-20614

THE ROTTLUND COMPANY, INC. (Exact name of ~~registrant~~registrants as specified in its charter)

MINNESOTA (State of other jurisdiction of incorporation or organization)		41-1228259 (IRS Employer Identification No.)
MINNESOTA	41-1228259
3065 Centre Pointe Drive, Roseville, MN (Address of principal executive offices)		55113 (zip code)
(State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)
3065 Centre Pointe Drive, Roseville, MN	55113
(Address of principal executive offices)	(Zip Code)
(651) 638-0500
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (~~651~~1) ~~638-0500~~ has filed all reports required to be filed by Section 13 or 15(~~Registrant's~~d) ~~telephone~~of ~~number,~~the ~~including~~Securities ~~area~~Exchange ~~code~~Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Not Applicable (Former name, former address and former fiscal year, if changed since last report)~~ Yes ý No o

~~Indicate by~~The ~~check~~number ~~mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)~~ of ~~the~~shares ~~Securities~~outstanding ~~Exchange Act~~ of ~~1934 during~~ the ~~preceding~~Registrant’s ~~12 months~~common ~~(or~~stock, ~~for~~par ~~such~~value ~~shorter~~$.10 ~~period~~per ~~that~~share, ~~the~~at ~~registrant~~July ~~was required to file such reports)~~31, ~~and~~2001 ~~(2) has been subject to such filing requirements for the past~~was ~~90 days. Yes /x/ No / /~~5,852,572 shares.

The number of shares outstanding of the Registrant's common stock, par value $.10 per share, at January 26, 2001, was 5,851,572 shares.

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

INDEX

			PAGE
PART I.	FINANCIAL INFORMATION
PART I.		FINANCIAL INFORMATION	3
Item 1.	Financial Statements
Item 1.		Financial Statements
	Consolidated balance sheets – June 30, 2001 and March 31, 2001
		Consolidated Balance Sheets—December 31, 2000 and March 31, 2000	3
	Consolidated statements of operations – Three months ended June 30, 2001 and 2000
		Consolidated Statements of Operations—Three and nine months ended December 31, 2000 and 1999	4
	Consolidated statements of cash flows – Three months ended June 30, 2001 and 2000
		Consolidated Statements of Cash Flows—Nine months ended December 31, 2000 and 1999	5
	Notes to consolidated financial statements
		Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	8
PART II.	OTHER INFORMATION
PART II.		OTHER INFORMATION	13
SIGNATURES
SIGNATURES			14

2Part I. Financial Information Item 1. Financial Statements

~~Part~~Consolidated Balance I.Sheets ~~Financial~~– ~~Information~~ Unaudited As of (In thousands, except per share data)

Item 1. Financial Statements

			June 30, 2001			March 31, 2001



	ASSETS

Cash and cash equivalents			$	792		$	7,079
Escrow and other receivables			2,073			2,444
Land, development costs and finished lots			65,699			55,254
Residential housing completed and under construction			37,132			29,421
Property and equipment, net			628			634
Deferred taxes			3,499			3,499
Other assets			5,397			5,416

			$	115,220		$	103,747



	LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
	Revolving credit facility		$	41,000		$	29,950
	Mortgage notes payable		4,395			–
	Accounts payable		14,239			15,823
	Accrued expenses		8,103			9,535
	Income taxes payable		1,250			3,493

		Total liabilities	68,987			58,801


Shareholders' equity:
	Preferred stock, $.10 par value, 10,000 shares authorized; none issued		–			–
	Common stock, $.10 par value, 40,000 shares authorized; issued and outstanding 5,852 and 5,852 respectively		585			585
	Paid-in capital		11,512			11,512
	Other comprehensive income		(275		)	–
	Retained earnings		34,411			32,849

		Total shareholders' equity	46,233			44,946

			$	115,220		$	103,747

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Consolidated Balance Sheets—Unaudited

As of

			December 31, 2000		March 31, 2000
ASSETS
Cash and cash equivalents			$	558,258	$	8,086,761
Escrow and other receivables				1,688,481		2,446,961
Land, development costs and finished lots				48,280,428		47,223,857
Residential housing completed and under construction				30,110,675		30,230,694
Property and equipment, net				751,426		867,459
Deferred income taxes				1,796,055		1,796,055
Deferred financing costs and other assets				8,563,897		8,114,036
			$	91,749,220	$	98,765,823
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
	Revolving credit facility		$	30,225,000	$	21,135,000
	Senior notes payable			—		21,845,474
	Notes payable			130,000		1,224,200
	Accounts payable			9,629,712		10,784,634
	Accrued liabilities			8,491,113		6,458,688
	Income taxes payable			654,190		158,008
		Total liabilities		49,130,015		61,606,004
Shareholders' equity:
	Preferred stock, $.10 par value, 10,000,000 shares authorized; none issued			—		—
	Common stock, $.10 par value, 40,000,000 shares authorized; issued and outstanding 5,851,572 and 5,804,444 respectively			585,157		580,444
	Paid-in capital			11,512,115		11,516,828
	Retained earnings			30,521,933		25,062,547
		Total shareholders' equity		42,619,205		37,159,819
			$	91,749,220	$	98,765,823

See accompanying notes to consolidated financial statements

3Consolidated Statements of Operations – Unaudited (in thousands, except per share data)

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

		For the Three Months Ended June 30,

		2001			2000


Net sales		$	48,439		$	49,605
Cost of sales		39,955			42,093

		8,484			7,512


Selling, general and administrative expense		6,063			5,720

Operating income		2,421			1,792

Other income (expense):
	Interest expense	(1		)	(506		)
	Other income	184			156


Income before provision for income taxes and extraordinary charge		2,604			1,442
Extraordinary charge, net of tax		–			612

Provision for income taxes		1,042			577

Net income		$	1,562		$	253


Basic and diluted earnings per share:
	Income before extraordinary charge	$	0.27		$	0.14
	Extraordinary charge	–			(0.10		)

	Net earnings per share	$	0.27		$	0.04


	Weighted average shares outstanding	5,853			5,852

Consolidated Statements of Operations—Unaudited

		For the Three Months Ended December 31,						For the Nine Months Ended December 31,
		2000			1999			2000			1999
Net sales—home sales		$	59,641,816		$	55,711,366		$	181,602,342		$	166,602,649
Net sales—land/lot sales			4,657,559			775,467			8,067,866			2,283,627
			64,299,375			56,486,833			189,670,208			168,886,276
Cost of sales—home sales			48,559,368			47,798,527			150,502,044			142,333,963
Cost of sales—land/lot sales			4,657,559			40,822			7,901,284			1,548,982
			53,216,927			47,839,349			158,403,328			143,882,945
Gross profit—home sales			11,082,448			7,912,839			31,100,298			24,268,686
Gross profit—land/lot sales			—			734,645			166,582			734,645
			11,082,448			8,647,484			31,266,880			25,003,331
Selling, general and Administrative expense			7,400,780			6,199,092			20,443,837			19,320,176
Operating income			3,681,668			2,448,392			10,823,043			5,683,155
Other (income) expense:
	Interest expense		154,982			718,179			1,046,480			1,887,414
	Other income		(89,128	)		(95,060	)		(343,908	)		(511,594	)
Income before income taxes & extraordinary charge			3,615,814			1,825,273			10,120,471			4,307,335
Provision for income taxes			1,447,000			748,000			4,049,000			1,766,000
Net income before Extraordinary charge			2,168,814			1,077,273			6,071,471			2,541,335
Extraordinary charge, net of income taxes			—			—			612,085			—
Net income		$	2,168,814		$	1,077,273		$	5,459,386		$	2,541,335
Net income per share before Extraordinary charge		$	0.37		$	0.19		$	1.04		$	.44
Net loss per share—Extraordinary charge			—			—			(0.11	)		—
Net income per basic and Diluted share		$	0.37		$	0.19		$	0.93		$	0.44
Weighted average shares outstanding			5,851,572			5,804,444			5,851,572			5,804,444

See accompanying notes to consolidated financial statements

4Consolidated Statements of Cash Flows – Unaudited (In thousands)

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

					For the Three Months Ended June 30,

					2001			2000


OPERATING ACTIVITIES:

	Net income before extraordinary charge				$	1,562		$	865
	Extraordinary charge				–			(612		)
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation			97			127
		Changes in operating items:
			Escrow and other receivables		371			(97		)
			Land, development costs and finished lots		(10,445		)	1,600
			Residential housing completed and under construction		(7,711		)	(10,344		)
			Deferred financing costs and other assets		19			(2,307		)
			Accounts payable		(2,042		)	922
			Accrued liabilities		(1,432		)	(1,048		)
			Income taxes payable		(2,060		)	(31		)

				Net cash (used for) operating activities	(21,641		)	(10,925		)


INVESTING ACTIVITIES:
	Purchase of property and equipment, net				(91		)	(75		)


FINANCING ACTIVITIES:
	Proceeds (Repayments) from mortgage notes payable				4,395			(259		)
	Proceeds from revolving credit facility, net				11,050			26,325
	Repayment of Senior Notes Payable				–			(21,846		)

		Net cash provided by financing activities			15,445			4,220


NET DECREASE IN CASH AND CASH EQUIVALENTS					(6,287		)	(6,780		)

CASH AND CASH EQUIVALENTS:
	Beginning of period				7,079			8,087


	End of period				$	792		$	1,307


SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
	Cash paid for interest, net of $713 and $600 capitalized, respectively				$	1		$	506

	Cash paid for income taxes				$	3,100		$	193

Consolidated Statements of Cash Flows—Unaudited

				For the Nine Months Ended December 31,
				2000			1999
OPERATING ACTIVITIES:
Net income				$	5,459,386		$	2,541,335
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
	Depreciation and amortization				309,059			309,895
	Changes in operating items:
		Escrow and other receivables			758,480			54,432
		Land, development costs and finished lots			(1,056,571	)		(9,820,989	)
		Residential housing completed and under construction			120,019			(14,537,014	)
		Other			(449,861	)		676,713
		Accounts payable			(1,154,922	)		2,359,894
		Accrued liabilities			2,032,425			344,947
		Income taxes payable			496,182			(2,724,655	)
			Net cash provided by (used for) operating activities		6,514,197			(20,795,441	)
INVESTING ACTIVITIES:
	Purchase of property and equipment, net				(193,026	)		(202,851	)
FINANCING ACTIVITIES:
	Repayments of notes payable, net				(1,094,200	)		(559,246	)
	Proceeds from revolving credit facility, net				9,090,000			18,625,000
	Repayment of senior notes payable				(21,845,474	)		(3,625,035	)
		Net cash provided by (used for) financing activities			(13,849,674	)		14,440,719
NET DECREASE IN CASH AND CASH EQUIVALENTS					(7,528,503	)		(6,557,573	)
CASH AND CASH EQUIVALENTS:
	Beginning of period				8,086,761			6,557,573
	End of period			$	558,258		$	—
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
	Cash paid for interest, net of $1,947,474 and $1,800,000 capitalized, respectively			$	1,046,480		$	1,887,414
	Cash paid for income taxes			$	3,143,818		$	4,495,298

See accompanying notes to consolidated financial statements

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Note~~ 1. General

The consolidated financial statements included herein have been prepared by ~~The~~the ~~Rottlund~~ Company~~, Inc.~~ ~~("Company")~~ without audit, in accordance with generally accepted accounting principles, and pursuant to the rules and regulations of the Securities and Exchange Commission. These interim financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's annual report on form 10-K for the year ended March 31, ~~2000~~2001 as filed with the Securities and Exchange Commission. In the opinion of management of the Company, these financial statements contain all adjustments of a normal recurring nature necessary to present fairly the financial position, results of operations and cash flows of the ~~Company~~ Company for the interim periods presented. ~~For further information refer to our audited consolidated financial statements incorporated by reference in our Annual Report on Form 10-K for the year ended March 31, 2000.~~

The Company has experienced, and expects to continue to experience, significant variability in quarterly net sales and net income. Operating results for the three ~~and~~month ~~nine~~period ~~months~~ ending ~~December 31~~June 30, ~~2000~~2001 are not necessarily indicative of the results that may be expected for the year ending March 31, ~~2001~~2002.

~~Note~~ 2. Revolving Credit Facility to Bank

As of ~~December 31~~June 30, ~~2000~~2001, the Company had a ~~revolving~~ line-of-credit arrangement with a bank totaling $50,000,000, with interest at the bank'’s prime rate (~~9.50% at~~as ~~December 31~~of June 30, ~~2000~~2001 that rate was 6.75%). Borrowings outstanding at ~~December 31~~June 30, ~~2000~~2001 were $3041,~~225~~000,000 under this arrangement. In addition, ~~letters~~there ofwere ~~credit totaling approximately~~ $1,~~950~~794,000 ~~were~~ letters of credit outstanding under this arrangement at ~~December 31,~~June ~~2000. On December 19~~30, ~~2000, the Company and its lenders entered into an agreement basically extending the terms of the existing loan agreement through December 31, 2000~~2001. As of June ~~December 31~~30, ~~2000,~~2001 the Company was in compliance ofwith ordebt ~~had received a waiver for all~~ covenants ofunder ~~the revolving~~this ~~credit~~revolving ~~agreement~~facility.

~~Note~~ 3~~. Sale/leaseback of Model Homes~~ Derivatives

OnThe ~~July 14,~~company ~~2000~~adopted ~~the~~SFAS ~~Company~~No. ~~sold~~133, “Accounting 38for ~~model~~Derivative ~~homes~~Instruments ~~with~~and aHedging ~~sales~~Activities,” ~~value~~as of $7April 1, 2001.~~9 million~~ SFAS ~~and~~No. ~~leased~~133 ~~them~~establishes accounting ~~back~~and ~~under~~reporting astandards ~~month~~requiring tothat ~~month~~every ~~lease.~~derivative ~~Lease~~instrument ~~payments~~be ~~are~~recorded ~~calculated~~in at the ~~prime~~balance ~~rate~~sheet ~~plus~~as ~~225~~either toan ~~275~~asset ~~basis~~or ~~points~~liability ofmeasured ~~the~~at its ~~sales~~fair value. SFAS ~~of homes remaining at the start of each month~~No. ~~This~~133 ~~transaction resulted in a gain of approximately~~requires ~~$1.5 million~~ that ischanges ~~being~~in ~~recognized over eighteen months,~~ the ~~estimated~~derivative’s ~~lease~~fair ~~period.~~value ~~Revenues~~be ~~of $6.4 million were~~ recognized ~~which~~currently ~~were~~in ~~equal to costs of the homes sold. As the gain~~earnings isunless ~~recognized,~~specific ithedge ~~will~~criteria beare ~~treated~~met ~~as additional revenue~~ and ~~gross~~requires ~~profit~~that ~~with~~a nocompany ~~associated~~must formally ~~costs~~document, ~~thereby~~designate ~~increasing~~and ~~the~~assess ~~gross profit percentage over~~ the ~~deferral~~effectiveness ~~period.~~of ~~During~~transactions ~~the nine and three~~that ~~month~~receive ~~periods~~hedge ~~ending December 31, 2000, $411,000 and $247,000, respectively, of the gain was recognized~~accounting.

~~Note~~The 4Company’s revolving credit agreement has variable rate borrowings based on the prime rate. ~~New~~ ~~Accounting~~To ~~Pronouncements~~ minimize the Company’s exposure to the risk of changes in its interest payments attributable to changes in interest rates, the Company entered into an interest rate swap in July 2000. Company has designated this interest rate swap as a hedge.

InAs ~~June 1998,~~a ~~the~~result ~~Financial~~of ~~Accounting~~the ~~Standards~~adoption ~~Board (FASB) issued Statement~~ of ~~Financial~~SFAS ~~Accounting Standards~~ No. 133, ~~"Accounting~~the ~~for Derivative~~Company ~~Instruments~~recorded ~~and~~in ~~Hedging~~the ~~Activities"~~first ~~(SFAS~~quarter ~~No. 133).~~of ~~SFAS~~fiscal ~~No. 133~~2002, ~~establishes~~the ~~accounting and reporting standards requiring that every derivative instrument (including certain~~cumulative ~~derivative~~effect ~~instruments~~of ~~embedded~~a inchange ~~other contracts) be recorded~~ in ~~the~~accounting ~~balance~~principle ~~sheet~~to asother ~~either~~comprehensive anincome ~~asset~~(loss) of or$(458,000), ~~liability~~net ~~measured~~of at$(183,000) ~~its~~tax ~~fair~~benefit, ~~value.~~which ~~SFAS~~will ~~No. 133~~be ~~requires~~reclassified ~~that~~to earnings ~~changes~~through in the ~~derivative's~~ ~~fair~~expiration ~~value~~of bethe ~~recognized~~interest ~~currently~~rate swap in ~~earnings~~July, ~~unless specific hedge~~ 2002.

accounting criteria are met. The Company will adopt SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, on April 1, 2001. The Company believes the effect of adopting SFAS No. 133, as amended, will have no significant effect on the Company's financial position or results of operations.

As of December 31, 2000, Rottlund had one interest rate swap agreement with notional amounts totaling approximately $15 million. Rottlund believes that its exposure to credit risk due to nonperformance by the counter-party to the hedging contract is insignificant. Rottlund entered into the swap agreement effectively converting $15 million of the revolving credit facility with a variable rate based on prime to a fixed rate of 9.96%. The swap expires on July 7, 2002.

Note 5. Reclassifications

Certain 1999 amounts in the financial statements have been reclassified to conform to the 2000 presentation. These reclassifications did not have an effect on the Company's shareholder's equity or net income.

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Nature of business

The Rottlund Company, Inc. (a Minnesota corporation) and its subsidiaries, collectively referred to as the Company, are engaged in the design, construction, marketing and sale of residential real estate. The Company's primary developments are in Minnesota, with additional development sites in Iowa, Florida, and New Jersey; accordingly, the Company's operations can be impacted significantly by the residential real estate market conditions in each of these geographic areas.

During fiscal year 2000 the Company substantially exited the Indianapolis market. The Company sold land, finished lots, residential housing under construction and various models with a carrying value of approximately $4.9 million for a sales price of $4.9 million. This sale was made to a former vice president of the Company. In management's opinion, such transactions were negotiated at terms equivalent to those used in transacting business with unrelated parties.

As a cautionary note to investors, certain matters discussed in this management's discussion and analysis are forward looking statements within the meaning of the Private Securities Litigation Act of 1995. Such matters involve risks and uncertainties, including changes in economic conditions and interest rates, increases in raw material and labor costs, weather conditions, and general competitive factors that may cause actual results to differ materially.

The following table sets forth certain information regarding the Company's operations for the periods indicated.

		Percentage of Net Sales
		For The Three Months Ended December 31,				For The Nine Months Ended December 31,
		For The Three Months Ended June 30
		2000		1999		2000		1999
		2001		2000
Net sales—home sales		92.7	%	96.1	%	95.7	%	98.6	%
Net sales		100.0	%	100.0	%
Net sales—lot/land sales		7.3		3.9		4.3		1.4
Cost of sales		82.5		84.9
		100.0		100.0		100.0		100.0
	Gross profit	17.5		15.1
Cost of sales—home sales		75.5		82.4		79.3		84.3
	Selling, general and administrative expense	12.5		11.5
Cost of sales—lot/land sales		7.3		2.7		4.2		0.9
Operating income		5.0		3.6
		82.8		85.1		83.4		85.2
Other income (expense):
Gross profit—home sales		17.2		13.6		16.4		14.4
	Interest expense	–		(1.0	)
Gross profit—lot/land sales		—		1.3		0.1		.4
	Other income	0.4		0.3
		17.2		14.9		16.5		14.8
	Income before provision for income taxes and extraordinary charge	5.4		2.9
Selling, general and Administrative expense		11.5		10.7		10.8		11.4
	Extraordinary loss, net of tax	–		1.2
Operating income		5.7		4.2		5.7		3.4
	Provision for income taxes	2.2		1.2
Other (income) expense:
	Net income	3.2	%	0.5	%
Interest		.2		1.2		0.6		1.1
	Number of homes closed	228		297
Other		(.1	)	(.2	)	(.2	)	(.3	)
Income before income taxes & extraordinary charge		5.6		3.2		5.3		2.6
Provision for income taxes		2.2		1.3		2.1		1.1
Net income before extraordinary charge		3.4		1.9		3.2		1.5
Extraordinary charge, net of tax		—		—		.3		—
Net income		3.4	%	1.9	%	2.9	%	1.5	%
Number of homes closed		312		339		1001		1017

Backlog

The following table sets forth the Company's ~~sales~~ backlog as of the dates indicated:

December 31,	Homes Number of	Sales Value
June 30,	Number of Homes	Sales Value
2000	534	$	116 Million
2001	648	$135,500,000
1999	666	$	119 Million
2000	616	$123,318,000

~~Three~~As ~~Months~~a ~~Ended~~cautionary ~~December 31~~note to investors, certain ~~2000~~matters ~~Compared~~discussed toin ~~Three~~this ~~Months~~management ~~Ended~~discussion ~~December 31~~and analysis are forward looking statements within the meaning of the Private Securities Litigation Act of 1995. Such matters involve risks and uncertainties, ~~1999~~ including changes in economic conditions and interest rates, increases in raw material and labor costs, weather conditions, and general competitive factors that may cause actual results to differ materially.

~~Net sales for the three months ended December 31, 2000, increased by 13.8%, to $64.3 million, from $56.5 million for the comparable period~~Results of 1999. Included in the current quarter was revenue from land sales of $4.7 million versus $0.8 million for the comparable period of 1999. The number of homes closed by the Company decreased by 8.0% to 312 homes for the three months ended December 31, 2000, from 339 homes during the same period in 1999. The average selling price of a home increased 16.4% to $191,200, during the three months ended December 31, 2000 from $164,300 for the comparable period in 1999. This increase was due to an overall increase in sales prices and a change in the product and geographic mix for homes sold by the Company. Operations

9Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Net ~~Gross~~sales ~~profit~~were ~~increased by 29.1%, to~~ $1148.1 4 million for the three months ended ~~December 31,~~June ~~2000~~30, ~~from~~2001 as compared to $849.6 million, ~~for~~a ~~the~~decrease ~~comparable~~of ~~period~~$1.2 ofmillion ~~1999~~or 2.4%. ~~Gross~~The ~~profit~~decrease was the asresult of a ~~percentage~~23.2% decline in the number of ~~net~~homes ~~sales~~closed ~~increased~~by the Company to 228 ~~17.2%~~units ~~from~~for ~~14.9%~~the ~~primarily~~three asmonths aended ~~result~~June of30, ~~the~~2001, ~~higher~~from ~~selling~~297 ~~prices~~units ~~relative~~during tothe ~~costs.~~same period Inin ~~addition,~~2000. The decrease in ~~July~~the number of ~~2000~~homes sold is directly related to the Company's ~~sold~~exiting the Orlando, Ft Myers and ~~leased~~Indianapolis ~~back~~markets ~~model~~and ~~homes,~~weather ~~which~~delays ~~resulted~~experienced in spring 2001 construction. On a ~~gain~~remaining ofmarket ~~approximately~~basis, $1primarily due to the weather delays, homes closed decreased 10.~~5 million~~6%. ~~This~~The backlog ~~gain~~at June 30, 2001 is ~~being~~648 ~~amortized~~homes ~~over~~representing ~~eighteen~~$135.5 ~~months~~million ~~and~~in ~~will~~revenue compared beto ~~treated~~616 ashomes ~~additional~~and $123.3 million in revenue ~~and~~last ~~gross~~year. The ~~profit~~average ~~with~~selling noprice ~~associated~~of ~~costs~~a home increased 27.2% ~~During~~to $212,500, during the three months ended June 30, 2001 from ~~December 31~~$167,000 for the comparable period in 2000,. This increase was the ~~Company~~result ~~recognized~~of ~~$247,000~~higher selling prices as well as a higher percentage of ~~this~~single ~~income~~family homes, which ~~represents~~have 2higher selling prices than multi-family homes, closing in the current year compared to last year.2 Single family homes represented 43% of the ~~gross~~homes ~~profit.~~closed in the quarter compared to 26% last year.

~~Selling,~~Gross ~~general~~profit ~~and administrative expenses~~ increased by 1913.43%, to $78.4 5 million infor the three months ended ~~December 31,~~June ~~2000~~30, 2001, from $67.2 5 million for the comparable period of ~~1999~~2000. The ~~increase~~gross isprofit ~~primarily~~margin ~~due~~increased to a17.5% for ~~one-time~~the ~~workers~~three ~~compensation~~months ~~expense~~ended ~~adjustment~~June ~~of $600~~30,~~000,~~ ~~which~~2001 ~~has~~from ~~been~~15.1% ~~recorded~~for in the comparable period of ~~ending December 31,~~ 2000. The Asincreased agross profit ~~percentage~~margin ofwas ~~net~~primarily ~~sales,~~due ~~selling, general and administrative expense increased~~ to ~~11.5%~~higher ~~for~~average ~~the~~selling ~~three~~prices ~~month~~and ~~period~~decreased ~~ended~~direct costs ~~December 31,~~as ~~2000,~~a ~~from~~percentage ~~10.7%~~of ~~for the same period in 1999~~sales.

~~Interest~~Selling, ~~expense~~general ~~decreased~~and administrative expenses increased by 7.0% to $~~155,000~~6.1 ~~for~~million ~~the~~in the three months ended ~~December 31~~June 30, ~~2000~~2001, from $~~718,000~~5.7 million for the comparable period of ~~in 1999~~2000. As ~~The~~a ~~decrease~~percentage inof ~~interest~~net ~~expense is~~sales, ~~primarily~~selling, ~~due~~general toand ~~the~~administrative ~~Company's~~expense ~~lower~~increased ~~borrowing~~to ~~needs~~12.5% for the three month ~~months~~period ended ~~December 31,~~June ~~2000 compared to the three months ended December 31~~30, ~~1999. The Company capitalized $715~~2001,~~000 of~~ ~~interest~~from ~~costs~~11.5% for the ~~three~~same ~~months~~period ~~ended~~in ~~December 31,~~ 2000 ~~and $600~~. Insurance,~~000~~ ~~for~~real ~~the~~estate ~~comparable~~taxes ~~period~~and ofmodel ~~1999~~home lease ~~for~~costs ~~land~~were ~~development,~~the ~~and~~items ~~includes~~with ~~such~~significant ~~capitalized~~increases ~~interest~~ in ~~cost of home sales when~~ the ~~related~~quarter ~~homes are delivered~~ compared to ~~purchasers.~~last year.

~~The~~Interest ~~Company's~~expense ~~effective~~before ~~tax~~capitalization, ~~rate~~decreased to $714,000 for the ~~period~~three ~~ending~~months ~~December 31~~ended June 30, 2001, from $1,106,000 for the comparable period in 2000. The ~~was~~decrease ~~approximately~~in ~~40%~~interest ~~compared~~expense is primarily due to ~~41%~~the Company’s lower borrowing needs and lower interest rates for the ~~same~~three ~~period~~months ~~ending~~ended ~~December 31~~June 30, ~~1999~~2001 ~~which~~compared to the three months ended ~~reflects~~June 30, 2000. The Company capitalizes certain interest costs for land development and includes such capitalized interest in cost of home sales when the ~~federal~~related ~~statutory~~homes ~~rate~~are ~~plus~~delivered ~~state~~to purchasers. Interest ~~taxes~~expense, net ~~federal~~of interest ~~income~~capitalization, ~~tax~~was ~~benefit.~~$1,000 in the quarter ended June 30, 2001, as compared to $506,000 in the same period in 2000.

~~Net income~~ The ~~increased~~Company byhad ~~100.0%~~$23,069,000 toin ~~$2.2 million~~senior ~~($.37~~notes, which ~~per~~were ~~share)~~retired ~~for~~in ~~the~~April ~~three~~2000 ~~months~~and ~~ended~~replaced ~~December 31,~~with ~~2000,~~the ~~from~~revolving $1credit line.~~1 million~~ In ~~($.19~~connection ~~per~~with ~~share)~~the ~~for~~retirement of the senior debt, the Company incurred an extraordinary charge of $612,000, ~~comparable~~net ~~period~~of tax of ~~1999.~~$410,000 in the three months ending June 30, 2000.

~~Nine~~The Company’s ~~Months~~effective ~~Ended~~tax ~~December 31~~rate for both periods was approximately 40%, ~~2000~~which reflects ~~Compared~~the tofederal ~~Nine~~statutory ~~Months~~rate ~~Ended~~plus ~~December 31~~state taxes, ~~1999~~ net of federal income tax benefit.

~~Net~~As a ~~sales~~result ~~for~~of the ~~nine month period ended December 31~~above, ~~2000,~~net income increased ~~by 12.3%,~~ to $~~189.7 million~~1,562,000 ~~from~~ ($~~168~~0.~~9 million~~27 ~~for~~per ~~the comparable~~share ~~period~~basic ofand ~~1999.~~diluted) ~~Included~~ in ~~the~~fiscal ~~current~~2001 ~~period was revenue~~ from ~~land sales of~~ $~~8.1 million~~253,000 ~~versus~~ ($20.~~3 million~~04 ~~for~~per ~~the~~share ~~comparable~~basic ~~period of 1999. Also included in the current nine months~~and ~~were~~diluted) nonrecurring sales of model homes of approximately $6.4 million. The number of homes closed by the Company decreased by 1.6%, to 1001 homes for the nine months ended December 31, 2000, from 1017 homes during the same period in ~~1999.~~fiscal ~~The average selling price of a home increased 10.7% to $181,400, in~~ 2000 ~~from $163,800 for the same period in 1999~~. ~~This increase was due to an overall increase in prices for homes sold by the Company.~~

Gross profit increased by 25.2%, to $31.3 million for the nine month period ended December 31, 2000, from $25.0 million for the comparable period of 1999. Gross profit as a percentage of revenue increased to 16.5% from 14.8%, primarily as a result of higher selling prices relative to costs. In addition, in July of 2000 the Company sold and leased back model homes, which resulted in a gain of approximately $1.5 million. This gain is being amortized over eighteen months and will be treated as additional revenue and gross profit with no associated costs. During the nine month period ended December 31, 2000, the Company recognized $411,000, which represents 1.3% of the gross profit.

Selling, general and administrative expenses increased by 5.7%, to $20.4 million in the nine month period ended December 31, 2000, from $19.3 million for the comparable period of 1999. The increase is primarily due to a one time workers compensation expense adjustment of $600,000, which has been recorded in the period ending December 31, 2000. As a percentage of net sales, selling, general and

administrative expenses decreased to 10.8% for the nine months ended December 31, 2000, from 11.4% for the same period in 1999.

Interest expense decreased to $1,046,000 for the nine months ended December 31, 2000, from $1,887,000 for the same period in 1999. The decrease in interest expense is primarily due to the Company's lower borrowing needs for the nine months ended December 31, 2000 compared to the nine months ended December 31, 1999. The Company capitalized $1,947,000 of interest costs for the nine months ended December 31, 2000 and $1,800,000 for the comparable period of 1999 for land development, and includes such capitalized interest in cost of home sales when the related homes are delivered to purchasers.

The Company's effective tax rate for the period ending December 31, 2000 was approximately 40%, compared to 41% for the same period ending December 31, 1999 which reflects the federal statutory rate plus taxes, net of federal income tax benefit.

In May, 2000 the Company authorized the redemption of all of its outstanding Senior Notes Payable. The redemption resulted in the recognition of an extraordinary loss in the first quarter of fiscal 2001 of $612,000, net of the income tax effect of $408,000. The loss represents the redemption premium and the write off of unamortized deferred issuance costs.

Net income increased by 120%, to $5.5 million ($.93 per share) for the nine months ended December 31, 2000, from $2.5 million ($.44 per share) for the comparable period of 1999. The Company repaid it's Senior Notes on April 21, 2000 in full, resulting in a $0.6 million after tax extraordinary charge ($.11 per share) on early extinguishment, which is reflected in the year to date net income.

Liquidity and Capital Resources

Funding for the Company'’s operations has been principally provided by cash flows from operations, sale and leaseback of model homes, seller financing of land and bank borrowings. In addition wethe Company ~~have~~has utilized and will continue to utilize land options as a method of controlling and subsequently acquiring land. The Company'’s financing needs depend primarily upon sales volume, asset turnover, land acquisition and inventory balances.

At ~~December 31~~June 30, ~~2000~~2001, the Company had available cash and cash equivalents of approximately $~~558,000~~0.8 million compared to $7.1 million at March 31, 2001.

~~The~~For ~~Company~~the ~~has~~three anmonths ~~unsecured~~ended ~~revolving~~June ~~credit arrangement~~30, ~~which expires December 31~~2001, ~~2003 that provides borrowings of up to~~ $50 21.6 million, ofin ~~which~~cash ~~$5 million~~was ~~may be~~ used ~~for letters of credit~~by operations. Financing ~~Borrowings~~activities included ~~under this agreement are subject to~~ a ~~borrowing~~$11.0 ~~base~~million ~~calculation~~increase ~~based~~in ~~on a defined percentage of land, development costs, finished lots and~~ the ~~working capital~~amounts ofborrowed ~~the Company. As of December 31, 2000, borrowings~~ under the ~~facility's~~ revolving line of credit ~~totaled approximately $30.2 million,~~ and ~~approximately~~ $114.~~9 million~~4 ~~was available for borrowings under the calculations described above. On July 7, 2000 the Company entered into an interest rate swap on $15~~ million ofin ~~the~~mortgages ~~above credit arrangement which fixes the interest rate at 9~~assumed.96% for a period of two years. To date, the impact of this transaction on the income statement is immaterial. The Company believes the amounts available under its existing borrowing arrangements and amounts generated from operations will provide funds adequate for its home building activities and debt service for the foreseeable future.

AsThe ofCompany has an unsecured revolving credit agreement, which expires December 31, 2003 ~~2000~~and provides borrowings of up to $50 million, of which $5 million may be used for letters of credit. Borrowings under this agreement are subject to a borrowing base calculation based on a defined percentage of land, development costs, finished lots and the working capital of the Company. As isof inJune ~~compliance~~30, ~~with~~2001, ~~covenants~~borrowings under ~~its~~this facility’s ~~revolving~~line of credit ~~facility~~totaled $41.0 million, and $7.2 million was available for borrowing under the calculation described above. On July 7, 2000, the Company entered into an interest swap on $15 million of the above credit arrangement which fixes the interest rate at 9.96% for a period of two years. The Company believes the amounts available under its existing borrowing arrangements and amounts generated from operations will provide funds adequate for its home building activities and debt service for the foreseeable future.

The revolving credit facility contains various restrictive covenants including, among others, certain financial covenants relating to minimum consolidated tangible net worth and earnings levels, as well as funding, borrowing base requirements, payment of dividends and maximum land and construction limitations. The Company was in compliance with all financial covenants as of June 30, 2001.

The Company’s land purchase agreements are typically subject to numerous conditions including, but not limited to, the Company’s ability to obtain necessary zoning and other governmental approvals for the proposed developments. The Company believes it has been successful in obtaining local governmental approvals through proactive interaction with neighborhood and citizen groups. The Company maintains a policy of holding neighborhood meetings to gain support for its development activities. During the initial municipal approval process, the Company confirms the availability of utilities, conducts environmental reviews, arranges acquisition development and financing, and completes its marketing construction feasibility studies. As a result, the Company is generally able to begin marketing immediately after closing the land purchase. This results in reduced carrying costs and increased liquidity for future development opportunities.

To minimize the business risk associated with developing land and to maximize the use of the Company’s available capital, the Company has been able to acquire a substantial amount of its developments and lots by means of option contracts. Option contracts generally require the payment of cash deposit or issuance of a letter of credit for the right to acquire lots during a specified period of time at a certain price. Our option contracts have expiration periods ranging from 30 to 60 months.

The Company has generally been able to secure financing for its acquisition, development and construction activities, and management believes such arrangements will continue to be available on terms satisfactory to the Company. There can be no assurance, however, that continued financing for land acquisitions will be available or, if available, will be on terms satisfactory to the Company.

11Inflationary Factors

~~Inflation~~ The Company, as well as the home building industry in general, may be adversely affected during periods of high inflation, primarily because of higher land, material and labor costs. In addition, higher mortgage interest rates may significantly affect the affordability of permanent mortgage financing to prospective purchasers. The Company attempts to pass through to its customers any increase in its costs through increased selling prices, and to date, inflation has not had a material adverse effect on the Company's results of operations. However, there is no assurance that inflation will not have a material adverse impact on the Company's future results of operations.

~~The~~Part ~~Company,~~II as– ~~well~~Other as the homebuilding industry in general, may be adversely affected during periods of high inflation, primarily because of higher land, material and labor costs. In addition, higher mortgage interest rates may significantly affect the affordability of permanent mortgage financing to prospective purchasers. The Company attempts to pass through to its customers any increase in its costs through increased selling prices, and to date, inflation has not had a material adverse effect on the Company's results of operations. However, there is no assurance that inflation will not have a material adverse impact on the Company's future results of operations. Information

Items 1 through 5. Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

	(a)	Exhibits. Not applicable.

	(b)	Reports on Form 8-K.

		The registrant filed no reports on Form 8-K during the three months ended June 30, 2001

Part II—Other Information

Items 1 through 5. Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

Third Modification of Second Amended and Restated Credit agreement and loan documents.

The registrant filed no reports on Form 8-K during the three months ended December 31, 2000.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE ROTTLUND COMPANY, INC.
Date: February 5, 2001		By:	/s/ DAVID H. ROTTER
Date:	August 3, 2001	By: /s/ David H. Rotter
			David H. Rotter President and Chief Executive Officer
		David H. Rotter
Date: February 5, 2001		By:	/s/ STEVEN A. KAHN
		President and
			Steven A. Kahn Chief Financial Officer
		Chief Executive Officer
Date:	August 3, 2001	By: /s/ Steven A. Kahn
		Steven A Kahn
		Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

QuickLinks

Filing Compare · ROTTLUND CO INC