 
FORM 10-Q
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
(Mark

One)
ý                                 QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the

 Quarterly Period Ended SeptemberDecember 3031, 2001
 
                                                                                                       OR
 
o                                 TRANSITION REPORT PURSUANT

TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ To __________
 
Commission

 file number  0-20614
 
THE 

ROTTLUND COMPANY, INC.
(Exact name of registrants as specified

in its charter)
 
MINNESOTA41-1228259
(State or other jurisdiction of(I.R.S. Employer
incorporation or organizationIdentification No.)
3065 Centre Pointe Drive, Roseville, MN55113
(Address of principal executive offices)(Zip Code)
 
(651)

638-0500

  3065

  Centre Pointe Drive, Roseville, MN

  55113

  (Address of principal

  executive offices)

  (Zip

  Code)

(Registrant’s telephone number, including

area code651) 638-0500
Not(Registrant’s

telephone Applicablenumber, including area code)
 
(FormerNot name, former address and former

fiscal year, if changed since last report)Applicable
Indicate by check mark whether the

registrant (1)Former hasname, filedformer alladdress reportsand required to be filed by Section 13 orformer

15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or

forfiscal such shorter period that the registrant was required to file such reports)year,

and (2)if haschanged beensince subjectlast to such filing requirements for the past 90 days.report)
 
YesIndicate by check mark whether the

ý   No
registrant o(1) has filed all reports required to be filed by Section 13 or

15(d) of the Securities Exchange 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.
 
TheYes  ý   No number of shares outstanding of the

Registrant’s common stock, par value $.10 per share, at November 2, 2001, was

5,852,572 shares.o  
 
THEThe ROTTLUNDnumber COMPANYof shares outstanding of the

Registrant’s common stock, INCpar value $.10 ANDper share, at January 14, 2002, was

SUBSIDIARIES
5,852,572 shares.
 
INDEXTHE ROTTLUND COMPANY, INC. AND

SUBSIDIARIES
 
PART I.FINANCIAL INFORMATION
Item 1.Financial Statements
Consolidated balance sheets - September 30, 2001 and March 31, 2001
Consolidated statements of operations – Three and six months ended September 30, 2001 and 2000
Consolidated statements of cash flows – Six months ended September 30, 2001 and 2000
Notes to consolidated financial statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II.OTHER INFORMATION
SIGNATURES
INDEX
 
Part I.  Financial

Information

  PART I.

  FINANCIAL INFORMATION

  Item 1.

  Financial Statements

  Consolidated balance

  sheets – December 31, 2001 and March 31, 2001

  Consolidated

  statements of operations - Three and nine months ended December 31, 2001 and

  2000

  Consolidated

  statements of cash flows - Nine months ended December 31, 2001 and 2000

  Notes

  to consolidated financial statements

  Item 2.

  Management's

  Discussion and Analysis of Financial Condition and Results of Operations

  PART II.

  OTHER INFORMATION

  SIGNATURES

ItemPart 1I.  Financial Statements

Information
THEItem ROTTLUND COMPANY, INC1.  Financial AND SUBSIDIARIESStatements
 
ConsolidatedTHE BalanceROTTLUND

COMPANY, SheetsINC. AND SUBSIDIARIES
AsConsolidated ofBalance Sheets 
(InAs thousands, except per share

data)of
(Unaudited)
September 30, 2001March 31, 2001
ASSETS
Cash and cash equivalents$2,528$7,079
Escrow and other receivables2,2552,444
Notes receivable6,352-
Land, development costs and finished lots62,76855,254
Residential housing completed and under construction35,54029,421
Property and equipment, net628634
Deferred income taxes3,4993,499
Land deposits and other assets5,3765,416
$118,946$103,747
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Revolving credit facility$41,425$29,950
Mortgage notes payable4,395-
Accounts payable13,70415,823
Accrued expenses8,6429,535
Income taxes payable1,5103,493
Total liabilities69,67658,801
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 5,852,572 and 5,851,572 respectively585585
Paid-in capital11,51611,512
Other comprehensive income (loss)(312)-
Retained earnings37,48132,848
Total shareholders' equity49,27044,946
$118,946$103,747
(In thousands, except per share data)
 
See accompanying notes to

consolidated financial statements

  (Unaudited)

  December 31, 2001

  March 31, 2001

  ASSETS

  Cash and cash equivalents

  $

  1,465

  $

  7,079

  Escrow and other receivables

  1,547

  2,444

  Notes receivable

  6,743

  -

  Land, development costs and

  finished lots

  57,493

  55,254

  Residential housing completed and

  under construction

  34,380

  29,421

  Property and equipment, net

  632

  634

  Deferred income taxes

  3,499

  3,499

  Land deposits and other assets

  9,894

  5,416

  $

  115,653

  $

  103,747

  LIABILITIES AND SHAREHOLDERS' EQUITY

  Liabilities:

  Revolving credit facility

  $

  33,900

  $

  29,950

  Mortgage notes payable

  3,413

  -

  Accounts payable

  11,163

  15,823

  Accrued expenses

  13,979

  9,535

  Income taxes payable

  1,053

  3,493

  Total liabilities

  63,508

  58,801

  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 5,852,572 and 5,851,572

  respectively

  585

  585

  Paid-in capital

  11,516

  11,512

  Other comprehensive income (loss),

  net of tax

  (353

  )

  -

  Retained earnings

  40,397

  32,848

  Total shareholders' equity

  52,145

  44,946

  $

  115,653

  $

  103,747

THESee ROTTLUNDaccompanying COMPANY,notes INC.to ANDconsolidated SUBSIDIARIESfinancial

statements

 Consolidated

StatementsTHE ofROTTLUND OperationsCOMPANY, –INC. UnauditedAND SUBSIDIARIES
(In Consolidated thousands,Statements exceptof perOperations share

data)– Unaudited
For the Three Months Ended September 30,For the Six Months Ended September 30,
2001200020012000
Net sales – home sales$64,921$72,355$113,360$121,961
Net sales – land/lot sales13,1053,41013,3653,410
78,02675,765126,725125,371
Cost of sales – home sales52,34059,85092,295101,943
Cost of sales – land/lot sales13,2743,24413,5243,244
65,61463,094105,819105,187
Gross profit – home sales12,58112,50521,06520,018
Gross profit (loss) – land/lot sales(169)166(159)166
12,41212,67120,90620,184
Selling, general and administrative expense7,5447,32313,60613,043
Operating income4,8685,3487,3007,141
Other (income) expense:
Interest expense13852891
Other income(250)(99)(423)(255)
Income before income taxes & extraordinary charge5,1175,0627,7216,505
Provision for income taxes2,0462,0253,0882,602
Net income before extraordinary charge3,0713,0374,6333,903
Extraordinary charge, net of tax---612
Net income$3,071$3,037$4,633$3,291
Basic and diluted earnings per share:
Net income per share before extraordinary charge$0.52$0.52$0.79$.67
Extraordinary charge---(.11)
Net income per share$0.52$0.52$0.79$0.56
Weighted average shares outstanding5,8935,8525,8815,852
(In thousands, except per share

data)
 
See accompanying notes to

consolidated financial statements

  For the Three

  Months 

  Ended December 31,

  For the Nine

  Months 

  Ended December 31,

  2001

  2000

  2001

  2000

  Net sales – home sales

  $

  60,224

  $

  59,641

  $

  173,584

  $

  181,602

  Net sales – land/lot sales

  -

  4,658

  13,365

  8,068

  60,224

  64,299

  186,949

  189,670

  Cost of sales – home sales

  49,196

  48,559

  141,491

  150,502

  Cost of sales – land/lot sales

  -

  4,658

  13,524

  7,901

  49,196

  53,217

  155,015

  158,403

  Gross profit – home sales

  11,028

  11,082

  32,093

  31,100

  Gross profit (loss) – land/lot

  sales

  -

  -

  (159

  )

  167

  11,028

  11,082

  31,934

  31,267

  Selling, general and administrative

  expense

  6,522

  7,400

  20,128

  20,444

  Operating income

  4,506

  3,682

  11,806

  10,823

  Other (income) expense:

  Interest expense

  -

  155

  2

  1,046

  Other income

  (354

  )

  (89

  )

  (777

  )

  (343

  )

  Income before income taxes &

  extraordinary charge

  4,860

  3,616

  12,581

  10,120

  Provision for income taxes

  1,944

  1,447

  5,032

  4,049

  Net income before extraordinary

  charge

  2,916

  2,169

  7,549

  6,071

  Extraordinary charge, net of tax

  -

  -

  -

  612

  Net income

  $

  2,916

  $

  2,169

  $

  7,549

  $

  5,459

  Basic earnings per share:

  Net income per share before

  extraordinary charge

  $

  0.50

  $

  0.37

  $

  1.29

  $

  .1.04

  Extraordinary charge

  -

  -

  -

  (.11

  )

  Net income per share

  $

  0.50

  $

  0.37

  $

  1.29

  $

  0.93

  Weighted average shares

  outstanding

  5,853

  5,852

  5,853

  5,852

  Diluted earnings per share:

  Net income per share before

  Extraordinary charge

  $

  0.49

  $

  0.37

  $

  1.28

  $

  .1.04

  Extraordinary charge

  -

  -

  -

  (.11

  )

  Net income per share

  $

  0.49

  $

  0.37

  $

  1.28

  $

  0.93

  Weighted average shares

  outstanding

  5,903

  5,852

  5,888

  5,852

THESee ROTTLUNDaccompanying notes to

COMPANY,
consolidated INC.financial AND SUBSIDIARIESstatements
 
ConsolidatedTHE ROTTLUND

Statements
COMPANY, ofINC. CashAND Flows – UnauditedSUBSIDIARIES
(InConsolidated

thousands)
Statements of Cash Flows – Unaudited
For the Six Months Ended September 30,
20012000
OPERATING ACTIVITIES:
Net income$4,633$3,291
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation11193
Changes in operating items:
Escrow and other receivables189614
Land, development costs and finished lots(7,515)1,296
Residential housing completed and under construction(6,119)(2,950)
Other assets40(1,228)
Accounts payable(2,431)1,259
Accrued expenses(893)1,449
Income taxes payable(1,983)1,994
Net cash provided by (used for) operating activities(14,068)5,918
INVESTING ACTIVITIES:
Increase in notes receivable(6,352)-
Purchase of property and equipment, net(5)(98)
(6,357)(98)
FINANCING ACTIVITIES:
Proceeds from (repayments of) notes payable, net4,395(648)
Proceeds from revolving credit facility, net11,47513,990
Proceeds from stocks exercised4-
Repayment of senior notes payable-(21,845)
Net cash provided by (used for) financing activities15,874(8,503)
NET DECREASE IN CASH AND CASH EQUIVALENTS(4,551)(2,683)
CASH AND CASH EQUIVALENTS:
Beginning of period7,0798,087
End of period$2,528$5,404
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid for interest, net of $1,561 and $1,229 capitalized, respectively$2$891
Cash paid for income taxes$5,070$199
(In

thousands)
 
See accompanying notes to consolidated financial

statements

  For the Nine

  Months Ended December 31,

  2001

  2000

  OPERATING ACTIVITIES:

  Net income

  $

  7,549

  $

  5,459

  Adjustments to reconcile net

  income to net cash

  provided by (used for) operating activities:

  Depreciation & amortization

  257

  309

  Changes in operating items:

  Escrow and other receivables

  897

  758

  Land, development costs and

  finished lots

  1,333

  (1,057

  )

  Residential housing completed and

  under construction

  (4,960

  )

  120

  Other assets

  (4,478

  )

  (449

  )

  Accounts payable

  (5,013

  )

  (1,155

  )

  Accrued expenses

  871

  2,032

  Income taxes payable

  (2,439

  )

  496

  Net cash provided by (used for)

  operating activities

  (5,983

  )

  6,513

  INVESTING ACTIVITIES:

  Increase in notes receivable

  (6,743

  )

  -

  Purchase of property and

  equipment, net

  (255

  )

  (193

  )

  Net cash provided by (used for)

  investing activities

  (6,998

  )

  (193

  )

  FINANCING ACTIVITIES:

  Proceeds from (repayments of)

  notes payable, net

  3,413

  (1,094

  )

  Proceeds from revolving credit

  facility, net

  3,950

  9,090

  Proceeds from stock options

  exercised

  4

  -

  Repayment of senior notes payable

  -

  (21,845

  )

  Net cash provided by (used for)

  financing activities

  7,367

  (13,849

  )

  NET DECREASE IN CASH AND CASH

  EQUIVALENTS

  (5,614

  )

  (7,529

  )

  CASH AND CASH EQUIVALENTS:

  Beginning of period

  7,079

  8,087

  End of period

  $

  1,465

  $

  558

  SUPPLEMENTAL DISCLOSURES OF CASH

  FLOWS INFORMATION:

  Cash paid for interest, net of

  $2,165 and $1,941 capitalized, respectively

  $

  2

  $

  1,046

  Cash paid for income taxes

  $

  7,471

  $

  3,144

  NON CASH TRANSACTION

  Increase in land and financing

  liability

  $

  3,572

  -

THESee ROTTLUNDaccompanying COMPANY,notes INC.to ANDconsolidated SUBSIDIARIESfinancial

statements

NOTESTHE TOROTTLUND CONSOLIDATEDCOMPANY, FINANCIALINC. STATEMENTSAND (UNAUDITED)SUBSIDIARIES
 
NoteNOTES 1.       GeneralTO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
TheNote financial statements included herein

have been prepared by the Company without audit, in accordance with generally

accepted accounting principles, and pursuant to the rules and regulations of

the Securities and Exchange Commission1. 

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, 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 for the interim

periods presented.                    General
 
The financial statements included herein

have been prepared by the Company haswithout experiencedaudit, andin expectsaccordance with generally

to
accepted continueaccounting principles, and pursuant to experience,the significantrules variabilityand regulations of

the Securities and Exchange Commission. 

These interim financial statements should be read in quarterlyconjunction netwith

the salesconsolidated financial statements and notes in the Company's annual report

net
on income.  OperatingForm results10-K for the year ended March 31, 2001 as filed with the Securities and

three
Exchange andCommission.  In sixthe monthsopinion endingof

management Septemberof 30the Company, 2001these arefinancial notstatements necessarilycontain indicativeall adjustments

of a normal recurring nature necessary to present fairly the financial

position, results thatof mayoperations beand expectedcash forflows of the yearCompany endingfor Marchthe 31,interim

periods 2002presented.
 
NoteThe 2.       RevolvingCompany has experienced, and expects

Credit
to Facilitycontinue to Bankexperience, significant variability in quarterly net sales and

net income.  Operating results for the

three and nine months ending December 31, 2001 are not necessarily indicative

of the results that may be expected for the year ending March 31, 2002.
 
AsNote of September 30, 2001, the Company had a

line-of-credit arrangement with a bank totaling $60,000,000, with interest at

the bank’s prime rate (as of September 30, 2001 that rate was 62.00%).  In October, 2001, the Company amended its       Revolving

interest rate swap, which fixes the first $15 million of debt at 8.34% through

DecemberCredit 31,Facility 2003,to from the previous swap, which was at 9.96% and expired July,

2002.  Borrowings outstanding at

September 30, 2001 were $41,425,000 under this arrangement.  In addition, letters of credit totaling

approximately $­­­4,519,000 were outstanding under this arrangement at

September 30, 2001.Bank
 
NoteThe

Company 3has an unsecured revolving credit agreement, which expires December 31,

2003 and  provides borrowings of up to

$60 million, of which $8 million may be used for letters of credit.   Borrowings under this agreement are subject

Derivatives
to a borrowing base calculation based on a defined percentage of land,

development costs, finished lots and the working capital of the Company.  As of December 31, 2001, borrowings under

this facility’s line of credit totaled $33.9 million, and $­19.9 million was

available for borrowing under the calculation described above. On October 4,

2001, the Company entered into a new interest rate swap which superceded the

July  2000 interest rate swap.  The new swap is for $15 million and expires

on December 31, 2003 and has a fixed interest rate of 8.34%.  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

Company
revolving adoptedcredit SFASfacility No.contains 133,various “Accountingrestrictive forcovenants Derivative Instruments andincluding,

Hedging
among Activitiesothers,” ascertain offinancial Aprilcovenants 1,relating 2001. 

SFASto No.minimum 133 establishes accounting and reporting standards requiringconsolidated

that
tangible everynet derivativeworth instrumentand beearnings recordedlevels, inas thewell balance sheet as eitherfunding, anborrowing base

asset
requirements, orpayment liabilityof measureddividends atand itsmaximum fairland value. and construction

SFAS No
limitations.  The 133Company requireswas that changes in the derivative’s fair value becompliance

recognized currently in earnings unless specific hedge criteria are met and

requireswith thatall afinancial companycovenants mustas formally document, designate and assess the effectiveness

of transactionsDecember that31, receive hedge accounting2001.
 
The

Company’sNote revolving credit agreement has variable rate borrowings based on the

prime rate3. To 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. This interest rate swap was

amended in October 2001.  The Company

has designated this interest rate swap as a hedge.Derivatives
 
AsThe

a
Company resultadopted ofSFAS theNo. adoption133, “Accounting for Derivative Instruments and

Hedging Activities,” as of April 1, 2001. 

SFAS No. 133, theestablishes Companyaccounting and reporting standards requiring

that every derivative instrument be recorded in the firstbalance sixsheet as either an

months
asset ofor fiscalliability 2002,measured theat cumulativeits effectfair ofvalue. 

SFAS aNo. change133 requires that changes in accountingthe derivative’s fair value be

principle
recognized tocurrently otherin comprehensiveearnings lossunless ofspecific $546,000,hedge netcriteria ofare $234,000met tax benefit,and

which
requires willthat bea reclassifiedcompany tomust earningsformally throughdocument, thedesignate expirationand ofassess the interest

rate
effectiveness swapof intransactions July,that 2002receive hedge accounting.
NoteThe

4
Company’s revolving credit agreement has variable rate borrowings based on the

prime rate.  Sale To minimize the Company’s exposure to the risk of Subsidiarychanges Assetsin its

interest payments attributable to changes in interest rates, the Company

entered into an interest rate swap. The Company has designated this interest

rate swap as a hedge.
OnAs

August
a 24,result 2001,of the Companyadoption soldof substantiallySFAS allNo. of133, the assetsCompany ofrecorded itsin the first

subsidiary,
nine Rottlundmonths Homes of Newfiscal Jersey2002, Inc. 

Thethe purchasecumulative priceeffect approximated $14.7 million, of whicha $8.4change millionin wasaccounting

cash
principle andto $6.3other millioncomprehensive wasloss inof notes$590,000, duenet withinof one$237,000 year.  Intax connection with the sale and relatedbenefit,

closure
which expenses,will thebe Companyreclassified recordedto anexpense afterthrough taxthe lossexpiration of approximatelythe interest

$360,000
rate ($0.06swap peron share)December in the fiscal second quarter ending September 3031,

2001 2003.
Item 2Note

4.  Sale of Subsidiary Assets
MANAGEMENT'SOn

August DISCUSSION24, AND2001, the Company sold substantially all of the assets of its

ANALYSIS
subsidiary, OFRottlund Homes of New Jersey, Inc. 

The purchase price approximated $14.7 million, of which $8.4 million was

cash and $6.3 million was in notes, due within one year.  In connection with the sale and related

closure expenses, the Company recorded an after tax loss of approximately

$420,000 ($0.07 per share) in the nine months ending December 31, 2001.
 
FINANCIALItem

CONDITION AND RESULTS OF OPERATIONS
2.
GeneralMANAGEMENT'S DISCUSSION AND

ANALYSIS OF
The

followingFINANCIAL tableCONDITION setsAND forth certain information regarding the Company'sRESULTS

operations
OF for the periods indicated.OPERATIONS
Percentage of Net Sales
For the Three Months Ended September 30,For the Six Months Ended September 30,
2001200020012000
Net sales – home sales83.2%95.5%89.5%97.3%
Net sales – land/lot sales16.84.510.52.7
100.0100.0100.0100.0
Cost of sales – home sales67.179.072.881.3
Cost of sales – land/lot sales17.04.310.72.6
84.183.383.583.9
Gross profit – home sales16.116.516.616.0
Gross profit (loss) – land/lot sales(0.2)0.2(0.1)0.1
12,41216.716.516.1
Selling, general and administrative expense9.79.710.710.4
Operating income6.27.05.85.7
Other (income) expense:
Interest-.5-0.7
Other(.3)(.1)(.3)(.2)
Income before income taxes & extraordinary charge6.56.66.15.2
Provision for income taxes2.62.62.42.1
Net income before extraordinary charge3.94.03.73.1
Extraordinary charge, net of tax---612
Net income3.9%4.0%3.7%2.6%
Number of homes closes295392523689
General
BacklogThe

following table sets forth certain information regarding the Company's

operations for the periods indicated.
 
The

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

  Percentage of Net Sales

  For the Three

  Months 

  Ended December 31,

  For the Nine

  Months 

  Ended December 31,

  2001

  2000

  2001

  2000

  Net sales – home sales

  100.0

  %

  92.7

  %

  92.9

  %

  95.7

  %

  Net sales – land/lot sales

  -

  7.3

  7.1

  4.3

  100.0

  100.0

  100.0

  100.0

  Cost of sales – home sales

  81.7

  75.5

  75.7

  79.3

  Cost of sales – land/lot sales

  -

  7.3

  7.2

  4.2

  81.7

  82.8

  82.9

  83.5

  Gross profit – home sales

  18.3

  17.2

  17.2

  16.4

  Gross profit (loss) – land/lot

  sales

  -

  -

  (0.1

  )

  0.1

  18.3

  17.2

  17.1

  16.5

  Selling, general and

  administrative expense

  10.8

  11.5

  10.8

  10.8

  Operating income

  7.5

  5.7

  6.3

  5.7

  Other (income) expense:

  Interest

  -

  .2

  -

  0.6

  Other

  (.5

  )

  (.1

  )

  (.4

  )

  (.2

  )

  Income before income taxes  & extraordinary charge

  8.0

  5.6

  6.7

  5.3

  Provision for income taxes

  3.2

  2.2

  2.7

  2.1

  Net income before extraordinary

  charge

  4.8

  3.4

  4.0

  3.2

  Extraordinary charge, net of tax

  -

  -

  -

  .3

  Net income

  4.8

  %

  3.4

  %

  4.0

  %

  2.9

  %

  Number of homes closed

  306

  312

  829

  1001

Number of
September 30,HomesSales Value
2001602$112,000,000
2000580$120,000,000
Backlog
AsThe

a cautionary note to investors, certain matters discussed in this management’s

discussionfollowing andtable analysissets areforth forward looking statements within the meaningCompany's of

thebacklog Privateas Securities Litigation Act of 1995. 

Suchthe mattersdates 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.indicated:
 
Three

Months Ended September 30, 2001 Compared to Three Months Ended September 30,

2000

  Number of

  December 31,

  Homes

  Sales Value

  2001

  620

  $116

  million

  2000

  534

  $116

  million

NetAs

sales
a werecautionary $78.0note million for the three months ended September 30, 2001 as

compared to $75.8 million for the comparable period of 2000investors, ancertain increasematters of

$2.2discussed million or 2.9%.  Sales of homes

were $64.9 million compared to $72.4 million in thethis previous year, a decreasemanagement’s

of $7.5 million.  The prior year

includeddiscussion a $6.4 million sale and leasebackanalysis ofare modelforward homes.  Duringlooking thestatements pastwithin twelve months the Company

hasmeaning exited the Indianapolis and New Jersey markets.  Home sales comparisons for the remaining markets were $62.4

million in 2001 versus $63.4 million in 2000, a decrease of $1.0 million or

1.6% .  Included in 
the currentPrivate quarter

wasSecurities revenueLitigation fromAct land sales of $131995.1 million versus $3.4 million in the prior 

year ended.  During the current quarter

theSuch Companymatters soldinvolve substaniallyrisks alland of the assets of Rottlund Homes of New

Jerseyuncertainties, Inc.including forchanges $14.7 million, of which approximately $8.4 million was in cash

and $6.3 milllion was in notes receivable. 

Includedeconomic inconditions theand landinterest sales in the quarter are $12.6 million related to

the land sold in New Jersey.  The number

of homes closed by the Company decreased by 24.6% to 295 homes for the three

months ended September 30rates, 2001,increases from 392 homes during the same period in

2000.  During theraw quartermaterial ended

Septemberand 30,labor 2000costs, 38 of the homes closed were model home sale lease

backs.  The average selling price of

homesweather closed increased 19.2% to $220conditions,100, duringand thegeneral threecompetitive monthsfactors ended

Septemberthat 30,may 2001cause from $184,600 for the comparable period in 2000.  This increase was due to an overall increaseactual

in prices as well as a higher percentage of single family homes, which have

higherresults selling prices than multi-family homes, closing in the current quarter

compared to lastdiffer yearmaterially.
 
GrossThree

profit was $12.4 million for the three months ended September 30, 2001,

comparedMonths toEnded $12.7December million for the comparable period of 200031, a decrease of

2.4%.  Gross profit as a percentage of

net sales decreased to 15.9% from 16.7% primarily as a result of the higher

percentage of land sales in the current quarter which has a gross profit loss

of $169,000 in 2001 versusCompared a gross profit of $166,000 in 2000.  The loss relates to theThree landMonths sold in New

Jersey.  Gross profit on home sales was

$12.6 million (19.4%) in 2001 compared to $12.5 million (16.5%) in 2000.  The increase was the result of higher

selling prices and improvement in direct construction costs on homes closing in

the current quarter compared to last year.Ended
Selling,December

general and administrative expenses increased by 2.7% to $7.5 million in the

three months ended September 3031, 2001, from $7.3 million for the comparable period

of 2000. As a percentage of net sales, selling, general and administrative

expense remained at 9.7% for the three month period ended September 30, 2001,

compared to the the same period in 2000.
 
InNet

connection
sales withwere $60.2 million for the salethree andmonths relatedended closureDecember expenses31, 2001 as

compared to $64.3 million for the comparable period of Rottlund2000, Homesa decrease of New$4.1

million or 6.3%.  Sales of homes were

$60.2 million compared to $59.6 million in the previous year, an increase of

$0.6 million. During the past twelve months the Company has sold its operations

in Indianapolis and New Jersey.  Home

sales comparisons for the Company’s continuing markets were $60.0 million in

2001 versus $54.5 million in 2000, Incan increase of $5.5 million or 10.1% .  The Company occasionally has an opportunity

to sell land it owns prior to building homes. 

The current quarter included no revenue from land sales versus $4.7

million in the prior year ended.  The

number of homes closed by the Company decreased by 1.9% to 306 homes for the

three months ended December 31, 2001, from 312 homes during the same period in

2000.  The number of homes closed by

continuing operations of the Company 

increased recordedby an8.2% afterto tax305 losshomes for the three months ended December 31,

2001, from 282 for the same period in 2000. 

The average selling price of approximatelyhomes closed increased 2.9% to $360196,000800,

(
during the three months ended December 31, 2001 from $0191,200 for the

comparable period in 2000.06)  This

increase perwas sharedue to an overall increase in prices of homes closed in the current

quarter endingand Septemberthe 30,mix 2001of styles of homes compared to last year.
 
InterestGross

expense
profit beforewas capitalization, decreased to $823,00011.0 million for the three months ended

September 30December 31, 2001, fromcompared

to $11.1,007,000 million for the comparable period inof 2000, a decrease of 0.9%.  TheGross decreaseprofit inas interesta expensepercentage isof net sales

primarily
increased due to a18.3% lowerfrom interest17.2% rate,primarily comparedas toa theresult threeof monthsno ended

Septemberland 30,sales 2000.  Thein Companythe

capitalizes
current certainquarter interestin costs2001 forversus land developmentsales andof includes$4.7 such

capitalizedmillion, interestwhich resulted in theno

gross costprofit ofon homeland sales whenfor the relatedcomparable homesperiod are

deliveredin to2000.  The purchasersland andsales inrelate to land developmentsold costsin

Indiana and finishedNew lotsJersey prior

toin deliverythe ofquarter theended homeDecember 31, 2000.  Interest

expense,Gross netprofit ofon interesthome capitalization,sales was $1,00011.0 in the quarter endedmillion

September
(18.3%) 30,in 2001, as compared to $385,00011.1 inmillion the(18.6%) same period in 2000.
 
TheSelling,

Company’s
general effectiveand taxadministrative rateexpenses decreased by 12.2% to $6.5 million in the

three months ended December 31, 2001, from $7.4 million for boththe periodscomparable

period of 2000.  This decrease was

primarily approximatelydue 40%,to exiting the New Jersey market which accounted for $0.7 million

reflects
in theselling, federalgeneral statutoryand rateadministrative plusexpenses statefor taxesthe three months ended

December 31, 2000.  As a percentage of

net federalsales, incomeselling, taxgeneral and administrative expense decreased to 10.8% for

benefit
the three month period ended December 31, 2001, from 11.5% for the same period

in 2000.
 
AsInterest

a
expense resultbefore ofcapitalization, thedecreased aboveto $630,100 netfor incomethe wasthree $3months ended

December 31,071 2001,000 (from $0867,500 for the comparable period in 2000.52  The perdecrease sharein basicinterest andexpense is

diluted)
primarily indue fiscalto 2001a lower interest rate, compared to $3the three months ended

December 31,037,000 ($2000.52  The perCompany

capitalizes sharecertain basicinterest costs for land development and includes such

diluted)
capitalized interest in fiscalthe cost of home sales when the related homes are

delivered to purchasers and in land development costs and finished lots prior

to delivery of the home.  Interest

expense, net of interest capitalization, was $0 in the quarter ended December

31, 2001, as compared to $155,000 in the same period in 2000.
 
SixThe

Months
Company’s Endedeffective Septembertax 30rate for both periods was approximately 40%, 2001which

reflects Comparedthe tofederal Sixstatutory Monthsrate Endedplus Septemberstate 30taxes, 2000net federal income tax

benefit.
 
NetAs

sales were $126.7 million for the six months ended September 30, 2001 as

compared to $125.4 million for the comparable period of 2000, an increase of

$1.3 million or 1.0%.  Sales of homes

were $113.4 million compared to $122.0 million in the previous year, a decrease

ofresult $8.6 million.  The prior year

included a $6.4 million sale and leaseback of model homes.  During the past twelve months the Company

exited the Indianapolis and New Jersey markets.  Home sale comparisons for the remaining markets were $107.6

million in 2001 versus $100.9 million in 2000above, annet increaseincome of $6.7 million or

6.7%.  Included in the current quarter

was revenue from land sales of $13.4 million versus $3.4 million in the prior

year ended. During the current quarter the Company sold substantially all of

the assets of Rottlund Homes of New Jersey2, Inc. for $14.7 million916,000 of which

approximately ($80.450 millionper wasshare inbasic cash and $6.3 million was in notes

receivable.  Included in the land sales

in the quarter are $120.649 milliondiluted) related to the land sold in Newfiscal Jersey.  The number of homes closed by the Company

decreased by 24.1% to 523 homes for the six months ended September 30, 2001,

from 689compared homes during the same period in 2000. 

The average selling price of a home increased 22.4% to $2162,700169, during

the six months ended September 30, 2001 from $177,000 for the comparable period

in 2000($.  This37 increaseper wasshare duebasic to anand

overall increase in prices as well as a higher percentage of single family

homes,diluted) which have higher selling prices than multi-family homes, closing in the

currentfiscal period compared to last year2000.
 
GrossNine

profit was $20.9 million for the six months ended September 30, 2001, compared

toMonths $20.2Ended millionDecember for the comparable period of 200031, a decrease of 3.5%.  Gross profit as a percentage of net sales

increased to 16.5% from 16.1% primarily due to higher average selling prices

and decreased direct costs as a percentage of sales.  Included in the current period was a gross profit loss on land

sales of $159,000 in 2001 versusCompared a gross profit on land sales of $166,000 in

2000.  The loss relates to theNine landMonths sold

in New Jersey.  Gross profit on home

sales was $21.1 million (18.6%) in 2001 compared to $20.0 million (16.0%) in

2000.  The increase was the result of

higher selling prices and improvement in direct construction costs on homes

closing in the current period compared to last year.Ended
Selling,December

general and administrative expenses increased by 4.6% to $13.6 million in the

six months ended September 3031, 2001, from $13.0 million for the comparable

period of 2000. As a percentage of net sales, selling, general and

administrative expense increased to10.7% for the six month period ended

September 30, 2001, from 10.4% for the same period in 2000.
 
InNet

connection
sales withwere $186.9 million for the nine months ended December, 2001 as compared

to $189.7 million for the comparable period of 2000, a decrease of $2.8 million

or 1.5%.  Sales of homes were $173.6

million compared to $181.6 million in the previous year, a decrease of $8.0

million.  The prior year included a $6.4

million sale and relatedleaseback closureof expensesmodel homes. 

During the past twelve months the Company sold operations in Indianapolis

and New Jersey.  Home sale comparisons

for the Company’s continuing markets were $167.6 million in 2001 versus $155.4

million in 2000, an increase of $12.2 million or 7.9%.  The Company occassionally has an opportunity

to sell land it owns prior to building homes. 

Included in the current nine months ended December 31 was revenue from

land sales of $13.4 million versus $8.1 million in the prior year ended. During

the current nine months ended December 31 the Company sold substantially all of

the assets of Rottlund Homes of New

 Jersey, Inc. for $14.7 million, of which

approximately $8.4 million was in cash and $6.3 million was in notes

receivable.  Included in the land sales

in the nine months ended December 31 are $12.6 million related to the land sold

in New Jersey.  The number of homes

closed by the Company recordeddecreased anby after17.2% taxto loss829 homes for the nine months ended

December 31, 2001, from 1001 homes during the same period in 2000.  The number of approximatelyhomes closed by continuing

operations of the Company decreased by 6.7% to 795 homes for the nine months

ended December 31, 2001, from 852 for the same period in 2000.  The average selling price of a home

increased 15.4% to $360209,000400, during the nine months ended December 31, 2001

(
from $181,400 for the comparable period in 2000.06)  This perincrease sharewas due to an overall increase in prices of homes

closed in the period endingand Septemberthe 30,mix 2001of styles of homes compared to last year.
 
InterestGross

expense
profit beforewas capitalization, decreased to $1,537,00031.9 million for the sixnine months ended

September 30December 31, 2001, fromcompared

to $2,124,00031.3 million for the comparable period inof 2000, an increase of 1.9%.  TheGross decreaseprofit inas interesta expensepercentage isof net sales

primarily
increased due to a17.1% lowerfrom interest16.4% rate,primarily compareddue to thehigher sixaverage monthsselling endedprices

September 30, 2000.  The Company

capitalizesand certaindecreased interestdirect costs foras landa developmentpercentage andof includessales.  Included such

capitalized interest in costthe ofcurrent homeperiod saleswas whena thegross relatedprofit homesloss areon deliveredland

to
sales purchasersof and$159,000 in land2001 developmentversus costsa andgross finishedprofit lots on theland balancesales of $167,000 in

sheet
2000.  The priorloss relates to deliverythe ofland thesold

in homeNew Jersey.   Gross profit on home

Interest
sales expense,was net$32.1 ofmillion interest(18.5%) capitalization,in was2001 compared to $2,00031.1 million (17.1%) in

2000.  The increase was the result of

period
higher endedselling Septemberprices 30,and 2001,improvement asin compareddirect toconstruction $891,000costs on homes

closing in the samecurrent period in

2000compared to last year.
 
TheSelling,

Company’s
general effectiveand taxadministrative rateexpenses decreased by 1.5% to $20.1 million in the

nine months ended December 31, 2001, from $20.4 million for boththe periodscomparable

period of 2000.  This decrease was

primarily approximatelydue 40%,to exiting the New Jersey market which accounted for $1.8 million

reflects
in theselling, federalgeneral statutoryand rateadministrative plusexpenses statefor taxesthe nine months ended

December 31, 2000.  As a percentage of

net federalsales, incomeselling, taxgeneral and administrative expense remained the same at

benefit
10.8% for the nine month period ended December 31, 2001, compared to the same

period in 2000.
 
AsIn

a
connection resultwith of the above,sale netand incomerelated wasclosure $4,633,000expenses ($0.79of perRottlund shareHomes basicof andNew

diluted)
Jersey, inInc., fiscalthe 2001Company fromrecorded an after tax loss of approximately $3420,291,000 

($.5607) per share basicin andthe diluted)period in

fiscalending 2000December 31, 2001.
 
LiquidityInterest

expense before capitalization, decreased to $2,167,000 for the nine months

ended December 31, 2001, from $2,988,000 for the comparable period in

2000.  The decrease in interest expense

is primarily due to a lower interest rate, compared to the nine months ended

December 31, 2000.  The Company capitalizes

certain interest costs for land development and Capitalincludes Resourcessuch capitalized

interest in cost of home sales when the related homes are delivered to

purchasers and in land development costs and finished lots on the balance sheet

prior to delivery of the home.  Interest

expense, net of interest capitalization, was $2,000 in the period ended

December 31, 2001, as compared to $1,046,000 in the same period in 2000.
 
FundingThe

for the 
Company’s operationseffective hastax beenrate principallyfor providedboth byperiods cashwas flowsapproximately from

operations40%, sale and leaseback of model homes, seller financing of land andwhich

bank
reflects borrowings.  In addition the

Company hasfederal utilizedstatutory andrate willplus continuestate totaxes, utilizenet landfederal optionsincome as a method oftax

controlling and subsequently acquiring land. 

The Company’s financing needs depend primarily upon sales volume, asset

turnover, land acquisition and inventory balancesbenefit.
 
AtAs

September
a 30,result 2001,of the Companyabove, hadnet availableincome cashwas and$7,549,000 cash($1.29 equivalentsper ofshare basic and

approximately 
$21.528 milliondiluted) comparedin tofiscal 2001 from $75,459,000 ($.193 millionper atshare Marchbasic 31,and

diluted) 2001in fiscal 2000.
 
ForLiquidity

the six months ended September 30, 2001, $14.1 million in cash was used by

operations.  Financing activities

included a $11.5 million increase in the amounts borrowed under the revolving

line of credit and $4.4Capital million in mortgages assumed related to land

purchases.  Investing activities

included an increase of $6.4 million related to notes receivable from the sale

of the the assets in New Jersey.Resources
 
TheFunding

Company has an unsecured revolving credit agreement, which expires December 31,

2003 and  provides borrowings of up to

$60 million, of which $8 million may be used for lettersthe ofCompany’s credit.  Borrowingsoperations underhas thisbeen agreementprincipally areprovided subject

toby acash borrowingflows base calculation based on a defined percentage of land,from

development costs
operations, finishedsale lots and theleaseback working capital of themodel Company.  As of September 30homes, 2001,seller borrowingsfinancing under

this facility’s line of creditland totaled $41.4 million, and $­14 million was

available
bank for borrowing under the calculation described aboveborrowings.  OnIn Julyaddition 7, 2000, the Company entered into an

interest swap on $15 million of the above credit arrangement which fixed the

interestCompany ratehas atutilized 9.96%and forwill acontinue periodto ofutilize twoland years.   Onoptions Octoberas 4, 2001, the Company entered into a newmethod interest rateof

swap which suprerceded the July  2000

interestcontrolling rate swap.  The new swap is for

$15 million and expiressubsequently onacquiring December 31, 2003 and has a fixed interest rate of 8land.34%.   

The Company’s believesfinancing theneeds amountsdepend available

underprimarily itsupon existingsales borrowingvolume, arrangements and amounts generated from operationsasset

will
turnover, provideland fundsacquisition adequate for its home building activities and debtinventory service

for the foreseeable futurebalances.
 
TheAt

revolving credit facility contains various restrictive covenants including,

amongDecember others31, certain financial covenants relating to minimum consolidated

tangible net worth and earnings levels2001, asthe wellCompany ashad funding,available borrowingcash base

requirements, payment of dividends and maximumcash landequivalents and constructionof

limitations.  The Company was in

complianceapproximately with$1.5 allmillion financialcompared covenantsto as$7.1 ofmillion Septemberat 30March 31, 2001.
 
TheFor

Company’s
the landnine purchasemonths agreementsended areDecember typically subject to numerous conditions

including31, but not limited to2001, the$6.0 Company’smillion abilityin tocash obtainwas necessaryused zoningby

and other governmental approvals for the proposed developments
operations.  TheFinancing Companyactivities

included believesa it$4.0 hasmillion beenincrease successful

in obtainingthe localamounts governmentalborrowed approvalsunder throughthe proactive interaction withrevolving

neighborhood
line andof citizencredit groupsand $3.  The4 Company

maintainsmillion ain policymortgages ofassumed holdingrelated neighborhood meetings to gain support for itsland

development activities
purchases.  DuringInvesting theactivities

initial
included municipalan approvalincrease process, the Company confirms the availability of

utilities, conducts$6.7 environmentalmillion reviews,related arrangesto acquisitionnotes developmentreceivable and

financing,from and completes its marketing construction feasibility studies.  As a result, the Company is generally ablesale

to
of beginthe marketing immediately after closing the landassets purchase.  Thisin resultsNew inJersey reducedand carryinga costsland and

increasedsale liquidityof fora futureparcel developmentin opportunitiesMinnesota.
 
ToThe

minimize
Company thehas businessan riskunsecured associatedrevolving withcredit developingagreement, landwhich expires December 31,

2003 and  provides toborrowings maximizeof theup to

use
$60 million, of thewhich Company’s$8 availablemillion capital,may thebe Companyused hasfor beenletters ableof tocredit.  Borrowings acquireunder athis agreement are subject

substantial
to amounta ofborrowing itsbase developmentscalculation andbased lotson bya meansdefined percentage of optionland,

contracts.  Option
development contractscosts, generally

requirefinished lots and the paymentworking capital of cashthe depositCompany.  As orof issuanceDecember of31, a2001, letterborrowings under

this facility’s line of credit totaled $33.9 million, and $­19.9 million was

available for borrowing under the calculation described above. On October 4,

right
2001, tothe acquireCompany lotsentered duringinto a specifiednew periodinterest ofrate timeswap atwhich asuperceded certainthe

price
July  2000 interest rate swap.  The new swap is for $15 million and expires

on December 31, 2003 and has a fixed interest rate of 8.34%.  The Company’s optionbelieves contractsthe amounts available

have
under expirationits periodsexisting rangingborrowing arrangements and amounts generated from 30operations

will toprovide 60funds monthsadequate for its home building activities and debt service

for the foreseeable future.
 
The

Company
revolving hascredit generallyfacility beencontains ablevarious torestrictive securecovenants financing for its land acquisitionsincluding,

model
among homesothers, developmentcertain andfinancial constructioncovenants activities,relating andto managementminimum believesconsolidated

such
tangible arrangementsnet willworth continueand toearnings belevels, availableas onwell termsas satisfactoryfunding, toborrowing thebase

Company.  There can be no assurance,

howeverrequirements, thatpayment continuedof financingdividends forand maximum land acquisitionsand willconstruction

limitations.  The beCompany availablewas or,in

if
compliance available,with willall befinancial oncovenants termsas satisfactoryof toDecember the31, Company2001.
 
InflationThe

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.
 
TheTo

Company,
minimize asthe wellbusiness asrisk theassociated homebuildingwith industrydeveloping inland general,and mayto bemaximize adverselythe

affected
use duringof periodsthe ofCompany’s highavailable inflationcapital, primarilythe becauseCompany ofhas higherbeen land,

materialable andto laboracquire costs.  Whilea

mortgage
substantial ratesamount areof currentlyits favorabledevelopments forand buyers,lots higherby mortgagemeans interest

rates may significantly affect the affordability of permanent mortgage financingoption

to prospective purchasers
contracts.  TheOption Companycontracts generally

attempts
require tothe passpayment throughof tocash itsdeposit customersor anyissuance increaseof ina itsletter costsof throughcredit for the

increased
right sellingto prices,acquire andlots toduring date,a inflationspecified hasperiod notof hadtime at a material adversecertain

effect
price.  The on the Company'’s resultsoption of operations. contracts

However,
have thereexpiration isperiods noranging assurancefrom that30 inflationto will60 notmonths.  On haveDecember a31, material

adverse2001 impact on the Company's futurehas resultsoptions ofto operationspurchase 2,736

lots aggregating $71.9 million.
 
PartThe

Company IIhas -generally Otherbeen Informationable to secure financing for its land acquisitions,

model homes, 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.
 
Items

1 through 3. Not applicable.Inflation
 
ItemThe

4
Company, as well as the homebuilding industry in general, may be adversely

affected during periods of high inflation, primarily because of higher land,

material and labor costs.  SubmissionWhile

mortgage rates are currently favorable for buyers, higher mortgage interest

rates may significantly affect the affordability of matterspermanent 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 votematerial adverse effect on the Company's results of operations.  However, there is no assurance that

security
inflation holderswill not have a material adverse impact on the Company's future

results of operations.
 
ThePart CompanyII held its annual meeting of

shareholders on September 20, 2001. 

Each of the directors of the Company, Messrs. Bernard J. Rotter,  David H. Rotter, Todd M. Stutz, Dennis J.

Doyle and Scott D. Rued were elected by a

majority of the votes cast for a one-year term.  InOther addition, by a majority of the votes cast, the shareholders

ratified Arthur Andersen LLP as the Company’s independent public accountants

for the fiscal year ending March 31, 2002.Information
 
ItemItems

1 through 5.   Not applicable.
 
Item

6.  Exhibits and Reports on Form 8-K.
 
                                                                                                                (a)                        Exhibits.  Not applicable.
 
                                                                                                                (b)                       Reports on 

Form 8-K.
 
TheThere

Company
were filedno areports report on Formform 8-K datedfiled Augustduring 24, 2001 related to the salequarter of

assetsending ofDecember the company’s subsidiary31, Rottlund Homes of New Jersey, Inc2001.
 
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.

  THE ROTTLUND COMPANY,

  INC.

  Date:

  January 17, 2002

  By:  

  /s/ David H. Rotter

   David H. Rotter

   President and

   Chief Executive Officer

  Date:

  January 17, 2002

  By:  

  /s/ Steven A. Kahn

   Steven A.

  Kahn

   Chief Financial Officer

   (Principal Financial and

   Accounting Officer)

Date:	November 7, 2001	By:	/s/ David H. Rotter
		David H. Rotter
		President and
		Chief Executive Officer

Date:	November 7, 2001	By:	/s/ Steven A. Kahn
		Steven A. Kahn
		Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

MINNESOTA		41-1228259
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization		Identification No.)
3065 Centre Pointe Drive, Roseville, MN		55113
(Address of principal executive offices)		(Zip Code)

3065 Centre Pointe Drive, Roseville, MN	55113
(Address of principal executive offices)	(Zip Code)

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated balance sheets - September 30, 2001 and March 31, 2001
	Consolidated statements of operations – Three and six months ended September 30, 2001 and 2000
	Consolidated statements of cash flows – Six months ended September 30, 2001 and 2000
	Notes to consolidated financial statements
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II.	OTHER INFORMATION
SIGNATURES

	(Unaudited)
	September 30, 2001			March 31, 2001
ASSETS
Cash and cash equivalents	$	2,528		$	7,079
Escrow and other receivables	2,255			2,444
Notes receivable	6,352			-
Land, development costs and finished lots	62,768			55,254
Residential housing completed and under construction	35,540			29,421
Property and equipment, net	628			634
Deferred income taxes	3,499			3,499
Land deposits and other assets	5,376			5,416
	$	118,946		$	103,747
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Revolving credit facility	$	41,425		$	29,950
Mortgage notes payable	4,395			-
Accounts payable	13,704			15,823
Accrued expenses	8,642			9,535
Income taxes payable	1,510			3,493
Total liabilities	69,676			58,801
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 5,852,572 and 5,851,572 respectively	585			585
Paid-in capital	11,516			11,512
Other comprehensive income (loss)	(312		)	-
Retained earnings	37,481			32,848
Total shareholders' equity	49,270			44,946
	$	118,946		$	103,747

	(Unaudited)
	December 31, 2001			March 31, 2001

ASSETS

Cash and cash equivalents	$	1,465		$	7,079
Escrow and other receivables	1,547			2,444
Notes receivable	6,743			-
Land, development costs and finished lots	57,493			55,254
Residential housing completed and under construction	34,380			29,421
Property and equipment, net	632			634
Deferred income taxes	3,499			3,499
Land deposits and other assets	9,894			5,416
	$	115,653		$	103,747


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Revolving credit facility	$	33,900		$	29,950
Mortgage notes payable	3,413			-
Accounts payable	11,163			15,823
Accrued expenses	13,979			9,535
Income taxes payable	1,053			3,493
Total liabilities	63,508			58,801

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 5,852,572 and 5,851,572 respectively	585			585
Paid-in capital	11,516			11,512
Other comprehensive income (loss), net of tax	(353		)	-
Retained earnings	40,397			32,848
Total shareholders' equity	52,145			44,946
	$	115,653		$	103,747

	For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2001			2000			2001			2000
Net sales – home sales	$	64,921		$	72,355		$	113,360		$	121,961
Net sales – land/lot sales	13,105			3,410			13,365			3,410
	78,026			75,765			126,725			125,371
Cost of sales – home sales	52,340			59,850			92,295			101,943
Cost of sales – land/lot sales	13,274			3,244			13,524			3,244
	65,614			63,094			105,819			105,187
Gross profit – home sales	12,581			12,505			21,065			20,018
Gross profit (loss) – land/lot sales	(169		)	166			(159		)	166
	12,412			12,671			20,906			20,184
Selling, general and administrative expense	7,544			7,323			13,606			13,043
Operating income	4,868			5,348			7,300			7,141
Other (income) expense:
Interest expense	1			385			2			891
Other income	(250		)	(99		)	(423		)	(255		)
Income before income taxes & extraordinary charge	5,117			5,062			7,721			6,505
Provision for income taxes	2,046			2,025			3,088			2,602
Net income before extraordinary charge	3,071			3,037			4,633			3,903
Extraordinary charge, net of tax	-			-			-			612
Net income	$	3,071		$	3,037		$	4,633		$	3,291
Basic and diluted earnings per share:
Net income per share before extraordinary charge	$	0.52		$	0.52		$	0.79		$	.67
Extraordinary charge	-			-			-			(.11		)
Net income per share	$	0.52		$	0.52		$	0.79		$	0.56
Weighted average shares outstanding	5,893			5,852			5,881			5,852

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2001			2000			2001			2000

Net sales – home sales	$	60,224		$	59,641		$	173,584		$	181,602
Net sales – land/lot sales	-			4,658			13,365			8,068
	60,224			64,299			186,949			189,670

Cost of sales – home sales	49,196			48,559			141,491			150,502
Cost of sales – land/lot sales	-			4,658			13,524			7,901
	49,196			53,217			155,015			158,403

Gross profit – home sales	11,028			11,082			32,093			31,100
Gross profit (loss) – land/lot sales	-			-			(159		)	167
	11,028			11,082			31,934			31,267

Selling, general and administrative expense	6,522			7,400			20,128			20,444
Operating income	4,506			3,682			11,806			10,823

Other (income) expense:
Interest expense	-			155			2			1,046
Other income	(354		)	(89		)	(777		)	(343		)

Income before income taxes & extraordinary charge	4,860			3,616			12,581			10,120

Provision for income taxes	1,944			1,447			5,032			4,049
Net income before extraordinary charge	2,916			2,169			7,549			6,071
Extraordinary charge, net of tax	-			-			-			612

Net income	$	2,916		$	2,169		$	7,549		$	5,459

Basic earnings per share:
Net income per share before extraordinary charge	$	0.50		$	0.37		$	1.29		$	.1.04
Extraordinary charge	-			-			-			(.11		)
Net income per share	$	0.50		$	0.37		$	1.29		$	0.93

Weighted average shares outstanding	5,853			5,852			5,853			5,852

Diluted earnings per share:
Net income per share before Extraordinary charge	$	0.49		$	0.37		$	1.28		$	.1.04
Extraordinary charge	-			-			-			(.11		)
Net income per share	$	0.49		$	0.37		$	1.28		$	0.93

Weighted average shares outstanding	5,903			5,852			5,888			5,852

	For the Nine Months Ended December 31,
	2001			2000

OPERATING ACTIVITIES:

Net income	$	7,549		$	5,459
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation & amortization	257			309
Changes in operating items:
Escrow and other receivables	897			758
Land, development costs and finished lots	1,333			(1,057		)
Residential housing completed and under construction	(4,960		)	120
Other assets	(4,478		)	(449		)
Accounts payable	(5,013		)	(1,155		)
Accrued expenses	871			2,032
Income taxes payable	(2,439		)	496
Net cash provided by (used for) operating activities	(5,983		)	6,513

INVESTING ACTIVITIES:
Increase in notes receivable	(6,743		)	-
Purchase of property and equipment, net	(255		)	(193		)
Net cash provided by (used for) investing activities	(6,998		)	(193		)

FINANCING ACTIVITIES:
Proceeds from (repayments of) notes payable, net	3,413			(1,094		)
Proceeds from revolving credit facility, net	3,950			9,090
Proceeds from stock options exercised	4			-
Repayment of senior notes payable	-			(21,845		)
Net cash provided by (used for) financing activities	7,367			(13,849		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(5,614		)	(7,529		)

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

End of period	$	1,465		$	558

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid for interest, net of $2,165 and $1,941 capitalized, respectively	$	2		$	1,046
Cash paid for income taxes	$	7,471		$	3,144

NON CASH TRANSACTION
Increase in land and financing liability	$	3,572		-

	Percentage of Net Sales
	For the Three Months Ended September 30,				For the Six Months Ended September 30,
	2001		2000		2001		2000
Net sales – home sales	83.2	%	95.5	%	89.5	%	97.3	%
Net sales – land/lot sales	16.8		4.5		10.5		2.7
	100.0		100.0		100.0		100.0
Cost of sales – home sales	67.1		79.0		72.8		81.3
Cost of sales – land/lot sales	17.0		4.3		10.7		2.6
	84.1		83.3		83.5		83.9
Gross profit – home sales	16.1		16.5		16.6		16.0
Gross profit (loss) – land/lot sales	(0.2	)	0.2		(0.1	)	0.1
	12,412		16.7		16.5		16.1
Selling, general and administrative expense	9.7		9.7		10.7		10.4
Operating income	6.2		7.0		5.8		5.7
Other (income) expense:
Interest	-		.5		-		0.7
Other	(.3	)	(.1	)	(.3	)	(.2	)
Income before income taxes & extraordinary charge	6.5		6.6		6.1		5.2
Provision for income taxes	2.6		2.6		2.4		2.1
Net income before extraordinary charge	3.9		4.0		3.7		3.1
Extraordinary charge, net of tax	-		-		-		612
Net income	3.9	%	4.0	%	3.7	%	2.6	%
Number of homes closes	295		392		523		689

			Percentage of Net Sales

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2001		2000		2001		2000

Net sales – home sales	100.0	%	92.7	%	92.9	%	95.7	%
Net sales – land/lot sales	-		7.3		7.1		4.3
	100.0		100.0		100.0		100.0

Cost of sales – home sales	81.7		75.5		75.7		79.3
Cost of sales – land/lot sales	-		7.3		7.2		4.2
	81.7		82.8		82.9		83.5

Gross profit – home sales	18.3		17.2		17.2		16.4
Gross profit (loss) – land/lot sales	-		-		(0.1	)	0.1
	18.3		17.2		17.1		16.5

Selling, general and administrative expense	10.8		11.5		10.8		10.8
Operating income	7.5		5.7		6.3		5.7

Other (income) expense:
Interest	-		.2		-		0.6
Other	(.5	)	(.1	)	(.4	)	(.2	)

Income before income taxes & extraordinary charge	8.0		5.6		6.7		5.3

Provision for income taxes	3.2		2.2		2.7		2.1
Net income before extraordinary charge	4.8		3.4		4.0		3.2
Extraordinary charge, net of tax	-		-		-		.3

Net income	4.8	%	3.4	%	4.0	%	2.9	%

Number of homes closed	306		312		829		1001

	Number of
September 30,	Homes	Sales Value
2001	602	$112,000,000
2000	580	$120,000,000

	Number of
December 31,	Homes	Sales Value

2001	620	$116 million
2000	534	$116 million

		THE ROTTLUND COMPANY, INC.



Date:	January 17, 2002	By:	/s/ David H. Rotter
		David H. Rotter
		President and
		Chief Executive Officer



Date:	January 17, 2002	By:	/s/ Steven A. Kahn
		Steven A. Kahn
		Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

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