Prepared by MERRILL CORPORATION

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As filed with the Securities and Exchange Commission on November 9, 2001

Registration No. 333-69498

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Schuler Homes, Inc.
(Exact name of registrant as specified in its charter)

Delaware		1531		99-0351900
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

400 Continental Boulevard
Suite 100
El Segundo, California 90245
(310) 648-7200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

THOMAS CONNELLY
Senior Vice President and Chief Financial Officer
Schuler Homes, Inc.
400 Continental Boulevard
Suite 100
El Segundo, California 90245
(310) 648-7200
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)

With a copy to:
ROBERT K. MONTGOMERY, ESQ.
CASEY M. NAULT, ESQ.
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, California 90067
(310) 552-8500

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the exchange offer pursuant to the registration rights agreement described in the enclosed prospectus have been satisfied or waived.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / /

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

Table of Additional Registrants

Each of the following subsidiaries of Schuler Homes, Inc., and each other subsidiary that is or becomes a guarantor of the securities registered hereby, is hereby deemed to be a registrant.


Name	State of Incorporation or Formation	Primary Standard Industrial Classification Number	I.R.S. Employer Identification Number

Melody Homes, Inc.	Delaware	1531	88-0309544

Melody Mortgage Co.	Colorado	6162	84-1261600

Schuler Homes of California, Inc.	California	1531	99-0328127

Schuler Homes of Washington, Inc.	Washington	1531	99-0329483

Schuler Homes of Oregon, Inc.	Oregon	1531	99-0330791

SHLR of Washington, Inc.	Washington	1531	99-0334375

SHLR of Colorado, Inc.	Colorado	1531	99-0336801

SHLR of Nevada, Inc.	Nevada	1531	99-0343628

Schuler Realty/Maui. Inc.	Hawaii	1531	99-0290557

Schuler Realty/Oahu, Inc.	Hawaii	1531	99-0290556

Vertical Construction Corporation	Delaware	1531	22-3216488

SHLR of Utah, Inc.	Utah	1531	99-0336937

Schuler Mortgage, Inc.	Delaware	6162	99-0349664

SHLR of California, Inc.	California	1531	99-0350554

SSHI LLC	Delaware	1531	91-1842222

SRHI LLC	Delaware	1531	99-0343629

Schuler Homes of Arizona LLC	Delaware	1531	99-0350555

SHA Construction LLC	Delaware	1531	86-1002579

LAMCO Housing, Inc.	California	1531	33-0492375

AP LHI, Inc.	California	1531	95-4583663

APLAM, LLC	California	1531	95-4565731

AP Western GP Corporation	Delaware	1531	06-4519840

AP WP Partners L.P.	Delaware	1531	51-0351840

AP WP Operating Corporation	Delaware	1531	51-0351837

HPH Homebuilders 2000 LP	California	1531	68-0368156

Porter GP LLC	Delaware	1531	95-4691314

Porter LP LLC	Delaware	1531	95-4691315

Western Pacific Housing, Inc.	California	1531	95-4692688

Western Pacific Housing Development Limited Partnership	California	1531	95-4454126

Western Pacific Housing Development II Limited Partnership	California	1531	95-4584539

WPH-Porter, LLC	Delaware	1531	95-4691312

Tracy, LLC (formerly WPH-Edgewood 65, LLC)	Delaware	1531	95-4761818

Western Pacific Housing-Agoura I, LLC	Delaware	1531	95-4794127

Western Pacific Housing-American Canyon, LLC	Delaware	1531	95-4755207

Western Pacific Housing-Antigua, LLC	Delaware	1531	95-4750872

Western Pacific Housing-Bay Vista, LLC	Delaware	1531	95-4661789

Western Pacific Housing-Boardwalk, LLC	Delaware	1531	95-4871227

Western Pacific Housing Brea Olinda, LLC	Delaware	1531	95-4871226

Western Pacific Housing-Broadway, LLC	Delaware	1531	95-4850687


Name	State of Incorporation or Formation	Primary Standard Industrial Classification Number	I.R.S. Employer Identification Number

Western Pacific Housing-Cabrera, LLC	Delaware	1531	95-4850556

Western Pacific Housing-Calvine, LLC	Delaware	1531	95-4807841

Western Pacific Housing-Carrillo, LLC	Delaware	1531	95-4815705

Western Pacific Housing-Cloverdale I, LLC	Delaware	1531	95-4817407

Western Pacific Housing-Cloverdale II, LLC	Delaware	1531	95-4746985

Western Pacific Housing-Communications Hill, LLC	Delaware	1531	95-4637162

Western Pacific Housing-Cordelia Commons I, LLC	Delaware	1531	95-4755206

Western Pacific Housing-Coto I, LLC	Delaware	1531	95-4737760

Western Pacific Housing-Creekside, LLC	Delaware	1531	95-4769848

Western Pacific Housing-Cypress Woods, LLC	Delaware	1531	95-4844408

Western Pacific Housing-Deer Creek, LLC	Delaware	1531	95-4807843

Western Pacific Housing-East Park, LLC	Delaware	1531	95-4756369

Western Pacific Housing-Edgewood 45, LLC	Delaware	1531	95-4761816

Western Pacific Housing-Escondido, LLC	Delaware	1531	95-4697545

Western Pacific Housing-Fieldstone, LLC	Delaware	1531	95-4809833

Western Pacific Housing-LC Gonsalves, LLC	Delaware	1531	95-4877069

Western Pacific Housing-Hercules MRB, LLC	Delaware	1531	95-4833526

Western Pacific Housing-Hercules Village, LLC	Delaware	1531	95-4833534

Western Pacific Housing-Land Park North, LLC	Delaware	1531	95-4746715

Western Pacific Housing-Laurel Woods II, LLC	Delaware	1531	95-4697541

Western Pacific Housing-Lemon Grove, LLC	Delaware	1531	95-4870835

Western Pacific Housing-Lomas Verdes, LLC	Delaware	1531	95-4783214

Western Pacific Housing-Martinez, LLC	Delaware	1531	95-4756366

Western Pacific Housing-Menifee, LLC	Delaware	1531	95-4794124

Western Pacific Housing-Montellano, LLC	Delaware	1531	95-4850558

Western Pacific Housing-Murrieta, LLC	Delaware	1531	95-4686653

Western Pacific Housing-Natomas Village 13, LLC	Delaware	1531	95-4762522

Western Pacific Housing-Norco Estates, LLC	Delaware	1531	95-4686652

Western Pacific Housing-Paradise Creek, LLC	Delaware	1531	95-4762523

Western Pacific Housing-Providence I, LLC	Delaware	1531	95-4737763

Western Pacific Housing-Robinhood Ridge, LLC	Delaware	1531	95-4838666

Western Pacific Housing-Rowland Heights, LLC	Delaware	1531	95-4833529

Western Pacific Housing-Saddlebrook, LLC	Delaware	1531	95-4697539

Western Pacific Housing-San Elijo, LLC	Delaware	1531	95-4750597

Western Pacific Housing-Simi I, LLC	Delaware	1531	95-7080836

Western Pacific Housing-Sonoma, LLC	Delaware	1531	95-4724455

Western Pacific Housing-Spanish Hills, LLC	Delaware	1531	95-4768297

Western Pacific Housing-Stone Lake, LLC	Delaware	1531	95-4778282

Western Pacific Housing-Studio 528, LLC	Delaware	1531	95-4877071

Western Pacific Housing-Sun Valley, LLC	Delaware	1531	95-4793508

Western Pacific Housing-Terra Bay Duets, LLC	Delaware	1531	95-4878114

Western Pacific Housing-Terra Bay Woods, LLC	Delaware	1531	95-4833539

Western Pacific Housing-Torrey Glenn, LLC	Delaware	1531	95-4724454

Western Pacific Housing-Torrey Meadows, LLC	Delaware	1531	95-4878113

iii


Name	State of Incorporation or Formation	Primary Standard Industrial Classification Number	I.R.S. Employer Identification Number

Western Pacific Housing-Towngate, LLC	Delaware	1531	95-4844405

Western Pacific Housing-Valpico, LLC	Delaware	1531	95-4806709

Western Pacific Housing-Vineyard Terrace, LLC	Delaware	1531	95-4761820

Western Pacific Housing-Wesminster, LLC	Delaware	1531	95-4837536

Western Pacific Housing-Windsor Pointe, LLC	Delaware	1531	95-4769851

Western Pacific Housing-Black Mountain, LLC	Delaware	1531	95-4828061

Western Pacific Housing-Cameron Meadows, LLC	Delaware	1531	95-4652043

Western Pacific Housing-Carlsberg Ranch, LLC	Delaware	1531	95-4710350

Western Pacific Housing-Carpenteria, LLC	Delaware	1531	95-4793501

Western Pacific Housing-Dos Vientos 78, LLC	Delaware	1531	95-4802937

Western Pacific Housing-Fillmore, LLC	Delaware	1531	95-4746721

Western Pacific Housing-Lyons Canyon Partners, LLC	Delaware	1531	95-4777808

Western Pacific Housing-San Elijo Area R, LLC	Delaware	1531	95-4854975

Western Pacific Housing-Scott Ranch, LLC	Delaware	1531	95-4809835

Western Pacific Housing-Sorrento, LLC	Delaware	1531	95-4698559

Western Pacific Housing-Torrey Village Center, LLC	Delaware	1531	95-4837541

Western Pacific Housing-Torrey, LLC	Delaware	1531	95-4724456

Western Pacific Housing-Torrey Santa Fe, LLC	Delaware	1531	95-4769209

WPH-Camino Ruiz, LLC	Delaware	1531	95-4802985

WPH-HPH LLC	Delaware	1531	95-4691311

WPH-SAL2, L.P. (formerly WPH-Sunset Hills III, L.P.)	California	1531	95-4708474

Western Pacific Funding, Inc.	California	6162	68-0346564

Western Pacific Housing-McGonigle Canyon, LLC	Delaware	1531	95-4735759

Western Pacific Housing-Torrey Commercial, LLC	Delaware	1531	95-4769208

Western Pacific Housing-Torrey Multi-Family, LLC	Delaware	1531	95-4781243

WPH-SAL1, L.P.	California	1531	95-4584540

WPH Management Co., Inc.	California	1531	95-4452257

Allegra, LLC	California	1531	95-4583667

HPH Homebuilders LP 1995	California	1531	68-0346563

HPH Homebuilders LP 1996	California	1531	68-0394412

Livermore Homebuilders LP	California	1531	68-0368153

Oakley-Avalon LP	California	1531	68-0399725

Western Pacific Housing-Altamar, LLC	Delaware	1531	95-4639435

Western Pacific Housing-Altura, L.P.	California	1531	95-4550004

Western Pacific Housing-Arbor Hills, LLC	Delaware	1531	95-4656930

Western Pacific Housing-Aviara, L.P.	California	1531	95-4550008

Western Pacific Housing-Bella Nevona, LLC	Delaware	1531	95-4686654

Western Pacific Housing Co.	California	1531	33-0634552

Western Pacific Housing-Canyon Park, LLC	Delaware	1531	95-4716219

Western Pacific Housing-Carlsbad I, LLC	Delaware	1531	95-4769207

Western Pacific Housing-Carmel, LLC	Delaware	1531	95-4717091

Western Pacific Housing-Carter Station, LLC	Delaware	1531	95-4688429

Western Pacific Housing-Corona, L.P.	California	1531	95-4454127

Western Pacific Housing-Coto Venture, L.P.	California	1531	95-4565733


Name	State of Incorporation or Formation	Primary Standard Industrial Classification Number	I.R.S. Employer Identification Number

Western Pacific Housing-Culver City, L.P.	California	1531	95-4539563

Western Pacific Housing-Curran Grove, LLC	Delaware	1531	95-4693257

Western Pacific Housing-Del Sol, L.P.	California	1531	95-4524516

Western Pacific Housing-El Camino, LLC	Delaware	1531	95-4716220

Western Pacific Housing-Financing Partners, L.P.	California	6162	95-4530593

Western Pacific Housing-Glen View, LLC	Delaware	1531	95-4674822

Western Pacific Housing-Hamptons, L.P.	California	1531	95-4454128

Western Pacific Housing-Lost Hills Park, LLC	Delaware	1531	95-4652041

Western Pacific Housing-Mayfair, LLC	Delaware	1531	95-4691316

Western Pacific Housing-Mountaingate, L.P.	California	1531	95-4539564

Western Pacific Housing-Oso, L.P.	California	1531	95-4496774

Western Pacific Housing-Pacific Park, L.P.	California	1531	95-4583679

Western Pacific Housing-Pacific Park II, LLC	Delaware	1531	95-4636584

Western Pacific Housing-Penasquitos, LLC	Delaware	1531	95-4661785

Western Pacific Housing-Poinsettia, L.P.	California	1531	95-4619838

Western Pacific Housing-Rancho Del Tio, LLC	Delaware	1531	95-4661791

Western Pacific Housing-Riverside I, LLC	Delaware	1531	95-4708473

Western Pacific Housing-San Simeon, L.P.	California	1531	95-4509222

Western Pacific Housing-San Simeon II, L.P.	California	1531	95-4591377

Western Pacific Housing-Santa Fe, LLC	Delaware	1531	95-4741001

Western Pacific Housing-Saugus, L.P.	California	1531	95-4547741

Western Pacific Housing-Scripps, L.P.	California	1531	95-4608187

Western Pacific Housing-Scripps II, LLC	Delaware	1531	95-4688133

Western Pacific Housing-Seacove, L.P.	California	1531	95-4473471

Western Pacific Housing-Shadow Creek, LLC	Delaware	1531	95-4639436

Western Pacific Housing-Skyridge, L.P.	California	1531	95-4583677

Western Pacific Housing-Stanton I, LLC	Delaware	1531	95-4674821

Western Pacific Housing-Sunset Hills I, L.P.	California	1531	95-4583660

Western Pacific Housing-Sunset Hills II, L.P.	California	1531	95-4583661

Western Pacific Housing-Sutton Place, LLC	Delaware	1531	95-4639438

Western Pacific Housing-Tiburon II, L.P.	California	1531	95-4591375

Western Pacific Housing-Torrey Hills, LLC	Delaware	1531	95-4761823

Western Pacific Housing-Westlake, L.P.	California	1531	95-4496762

Western Pacific Housing-Westlake II, L.P.	California	1531	95-4584385

Western Pacific Housing-Windflower, L.P.	California	1531	95-4504317

Western Pacific Housing-Winterhaven, LLC	Delaware	1531	95-4686655

Western Pacific Housing-Woods, L.P.	California	1531	95-4461394

The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

OFFER TO EXCHANGE
$250,000,000 9³/8% Senior Exchange Notes Due 2009
$150,000,000 10¹/2% Senior Subordinated Exchange Notes Due 2011
Which Have Been Registered Under the Securities Act of 1933
For
Any and All of Our Outstanding
$250,000,000 9³/8% Senior Notes Due 2009
$150,000,000 10¹/2% Senior Subordinated Notes Due 2011
(CUSIP Nos. 808188AE6 and 808188AG1)

We are offering to exchange our 9³/8% Senior Exchange Notes Due 2009 (senior exchange notes), and our 10¹/2% Senior Subordinated Exchange Notes Due 2011 (senior subordinated exchange notes), all of which have been registered under the Securities Act of 1933, as amended, for any and all of our outstanding 9³/8% Senior Notes Due 2009 (old senior notes) in the aggregate principal amount of $250,000,000 and 10¹/2% Senior Subordinated Notes Due 2011 (old senior subordinated notes) in the aggregate principal amount of $150,000,000, respectively. We refer to the senior exchange notes and senior subordinated exchange notes collectively as the exchange notes, and to the old senior notes and old senior subordinated notes collectively as the old notes.

The Exchange Notes

•: The terms of the registered exchange notes to be issued are substantially identical to the terms of the old notes, except for transfer restrictions, registration rights and liquidated damages provisions relating to the old notes which will not apply to the exchange notes.
•: Interest on the senior exchange notes and senior subordinated exchange notes will accrue at the rates of 9³/8% and 10¹/2% per year, respectively, payable in cash every six months on January 15 and July 15, with the first payment on July 15, 2001.
•: We may redeem the senior exchange notes, in whole or in part, at any time on or after July 15, 2005, and we may redeem the senior subordinated exchange notes, in whole or in part, at any time on or after July 15, 2006, in each case at a redemption price equal to 100% of the principal amount plus a premium declining ratably to par, plus accrued interest. In addition, at any time on or before July 15, 2004, we may redeem up to 35% of the exchange notes with the net proceeds of qualified equity offerings. If we undergo a change of control or sell certain of our assets, we may be required to offer to purchase exchange notes from you.
•: The senior exchange notes will be unsecured and will rank equally with all of our existing and future unsecured and unsubordinated obligations, including our new unsecured senior credit facility. The senior subordinated exchange notes will be unsecured and will be subordinated in right of payment to all of our existing and future senior debt, including the senior exchange notes and borrowings under our credit facility. All of our existing and future restricted subsidiaries will guarantee the exchange notes. These guarantees will be unsecured and, with respect to the senior exchange notes, will rank equally with all existing and future unsecured and unsubordinated obligations of the guarantors and, with respect to the senior subordinated exchange notes, will be subordinated in right of payment to all existing and future senior debt of the guarantors, including obligations in respect of the senior exchange notes and our credit facility. The exchange notes and the guarantees will also be effectively subordinated to all existing and future secured debt to the extent of the value of the assets securing that debt.
•: This prospectus includes additional information on the terms of the exchange notes, including redemption and repurchase prices, covenants and transfer restrictions.
•: We do not intend to list the exchange notes on any securities exchange.

Material Terms of the Exchange Offer

•: The exchange offer expires at 5:00 p.m., New York City time, on December 10, 2001, unless extended.
•: All old notes that are validly tendered and not validly withdrawn will be exchanged for an equal principal amount of exchange notes which are registered under the Securities Act of 1933.
•: Tenders of old notes may be withdrawn at any time prior to the expiration of the exchange offer.
•: The exchange offer is not subject to any minimum tender condition, but is subject to the terms of the registration rights agreement that we entered into on June 28, 2001 with the initial purchasers of the old notes.
•: We will not receive any proceeds from the exchange offer. We will pay the expenses of the exchange offer.

For a discussion of risks that should be considered by holders in deciding whether to tender old notes in the exchange offer see "Risk Factors" beginning on page 14.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The exchange offer is not being made to, nor will we accept surrender for exchange from, holders of old notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the securities or Blue Sky laws of such jurisdiction.

The date of this prospectus is November 9, 2001

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any person to provide you with any information or represent anything not contained in this prospectus, and if given or made, any such information or representation should not be relied upon as having been authorized by us. This prospectus incorporates important business and financial information aboiut Schuler Homes, Inc. that is not included in or delivered with the document. This information is available without charge to security holders upon written or oral request. You may make such a request by contacting us at Schuler Homes, Inc., 400 Continental Blvd., Suite 100, El Segundo, CA 90245, (310) 648-7200, Attention: Investor Relations. In order to obtain timely delivery of this information, you should request this information no later than five business days before the expiration of the exchange offer, or December 5, 2001.

TABLE OF CONTENTS

		Page
Disclosure Regarding Forward-Looking Statements		iii
Market Data		iii
Prospectus Summary		1
Risk Factors		14
The Exchange Offer		24
Use of Proceeds		33
Capitalization		34
Unaudited Pro Forma Condensed Combined Financial Data		35
Selected Financial and Other Data of Schuler Homes		40
Selected Historical Consolidated Financial Data of Schuler Residential		42
Selected Historical Combined Financial Data of Western Pacific		44
Management's Discussion and Analysis of Financial Condition and Results of Operations		46
Business		61
Management		73
Security Ownership of Certain Beneficial Owners and Management		79
Certain Relationships and Related Transactions		82
Description of Existing Indebtedness		83
Description of the Notes		85
Exchange Offer; Registration Rights		119
Certain United States Federal Income Tax Considerations		122
Plan of Distribution		126
Legal Matters		126
Experts		126
Available Information and Incorporation by Reference		126
Index to Financial Statements		F-1

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical or current fact included in this prospectus, including, without limitation, statements regarding our future financial position and profitability, business strategy, and management's plans and objectives for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe" or "continue" or the negative thereof or variations thereon or similar terminology.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations ("cautionary statements") are set forth below and elsewhere in this prospectus including under the section entitled "Risk Factors." These factors include, among others:

•: our ability to continue profitable, growing operations;
•: our ability to pay interest and principal on our substantial debt including the notes being offered;
•: our ability to borrow or otherwise finance our operations in the future;
•: our ability to compete in our existing or future markets;
•: our ability to retain or replace key executives or operational management;
•: our ability to locate parcels of land at prices that will allow us to sustain the profitability of our operations;
•: an increase in the level of governmental regulation, particularly with respect to the land approval process;
•: significant increases in labor costs, the cost of construction materials and the cost of financing; or
•: general economic trends and other events as may affect consumer confidence or our customers' ability or desire to purchase a new home.

We urge you to review carefully the section "Risk Factors" in this prospectus for a more complete discussion of the risks of participating in the exchange offer. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.

MARKET DATA

Market data and other statistical information used throughout this prospectus are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates, which are derived from our review of internal surveys, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and completeness.

iii

PROSPECTUS SUMMARY

This is only a summary of the prospectus. You should read the entire prospectus, including the financial data and related notes, before making an investment decision. Unless the context indicates otherwise, all references to "Schuler Homes," "we," "our," "ours" and "us" refer to Schuler Homes, Inc. and its consolidated subsidiaries and the information presented in this prospectus gives effect to the transactions described under the heading "Our History—The Merger." References to "pro forma combined" or "on a pro forma combined basis" give effect to the merger as if the merger had occurred at the beginning of the period presented for operating data and at the end of the period for balance sheet data.

THE COMPANY

We are among the fifteen largest homebuilders in the country based on numbers of homes sold. In the fiscal year ended March 31, 2001, on a pro forma combined basis, we delivered 4,897 new homes, and generated over $1.3 billion in revenues. We are among the top five homebuilders based on numbers of homes sold in Southern California, Northern California, Colorado, Hawaii, Washington and Oregon, and we have a growing presence in Arizona, where we recently began operations.

We design, build, and market single-family attached and detached homes to entry-level and first-time move-up buyers and, to a lesser extent, second-time move-up buyers in major suburban markets in California, Colorado, Hawaii, Washington, Oregon and Arizona. We offer a variety of homes generally ranging from 700 to 5,000 square feet in size with an average sales price during the three months ended June 30, 2001 of $274,000.

From 1996 to the fiscal year ended March 31, 2001, on a pro forma combined basis, our revenues grew from $163.3 million to $1,341.5 million, and net income grew from $2.2 million to $61.3 million. We recorded revenues of $315.2 million, primarily from the closings of 1,164 new homes during the quarter ended June 30, 2001, a 29.1% increase as compared to pro forma combined revenues of $244.2 million, primarily from the closings of 1,057 new homes during the quarter ended June 30, 2000. Net income during the quarter ended June 30, 2001 totaled $16.9 million (with diluted earnings of $0.40 per share), a 37.4% increase from pro forma combined net income of $12.3 million ($0.30 diluted earnings per share) during the same quarter in 2000.

We believe we are well positioned for future growth. As of June 30, 2001, we controlled approximately 28,500 building lots, approximately 50% of which were under option. This lot position represents approximately five to six years of supply given our current expectations for growth. In addition, as of June 30, 2001, we were actively selling in 79 communities and had a backlog of 1,970 homes under contract awaiting delivery, representing $550.0 million in future revenues. We have received orders for 1,409 new homes with a value of $414.1 million for the three months ended June 30, 2001, up from 1,207 new orders with a value of $332.4 million for the same period of 2000 on a pro forma combined basis, or an increase of 24.7% in dollar value.

COMPETITIVE STRENGTHS

We believe we possess the following competitive strengths:

•: Conservative operating profile. In all areas of our business, we seek to minimize risk while maximizing profitability. As a result, we take a conservative approach to land management by utilizing land purchase options, generally investing in residential developments that do not exceed a 2-3 year build-out period and closely controlling our inventory of unsold homes. In addition, we maintain stringent financial and operational control with a sophisticated management information systems platform. This system enables executive management to closely monitor home construction and financial performance at the divisional level. Also, we believe our financial leverage is conservative and,

in conjunction with our strong margins, will enable us to better manage through a cyclical downturn in the housing industry or in the general economy.

•: Industry-leading margins. Among public homebuilders, we currently have among the highest EBITDA margins in the industry. These margins enable us to generate high returns on our invested capital and also afford us strong discretionary pricing flexibility during slower economic periods. We believe our strong margins are a result of our land positions in areas of favorable demographics, experienced local management teams and conservative operating strategy.
•: Leading positions in high growth western markets. We believe that we are among the top five builders based on numbers of homes sold in California, Colorado, Hawaii, Washington and Oregon. Standard and Poor's Data Resources, Inc. projects single family housing starts in these states to grow at a weighted average compounded annual growth rate of 2.2% from 2001 to 2005 as compared to 1.0% for the U.S. as a whole. Given the positive long-term growth dynamics of each of these markets, we believe that we are well positioned for future growth. Additionally, as one of the leading builders in each of these markets, we believe that we enjoy a competitive advantage with respect to general market knowledge, access to land deals, access to subcontractors and knowledge of local regulatory requirements.
•: Diverse customer base. We build a wide variety of homes targeting first-time, first-time move-up and, to a lesser extent, second-time move-up homebuyers. By doing so, we are able to focus our product on the buyer segment with the most attractive demand characteristics in each market in which we operate as driven by economic and demographic trends.
•: Deep and experienced management with significant equity ownership. Our executive management team has an average of 19 years of experience in the homebuilding industry and controls over 25% of our common stock. Additionally, our divisional presidents average 16 years of experience in the markets in which they build. The divisional presidents have incentives to create value in our company because a substantial portion of their compensation is tied to their division's pre-tax income and because they own or have options to acquire our common stock. In addition, we have retained virtually all of the senior management of companies that we have acquired, thereby providing local market experience and expertise.

BUSINESS STRATEGY

We attribute our strong financial performance, in part, to the following elements of our business strategy:

•: Grow within existing markets. We are among the top five homebuilders in some of the fastest growing states within the western United States. We believe that within our markets there are significant growth opportunities in terms of demand and ability to deliver product. By focusing on our existing markets, we are able to best leverage our local market knowledge and our relationships with local land sellers, subcontractors and other key trades people and suppliers.
•: Build diverse range of homes. We offer a wide range of homes targeted to different types of home buyers in order to maximize our potential customer base. We have historically built single family homes, town homes and condominiums focused on entry-level and first-time move-up home buyers. We also, though to a lesser extent, build second-time move-up single family homes. Our homes currently range from 700 to 5,000 square feet in size with an average sales price during the three months ended June 30, 2001 of $274,000.
•: Manage land inventory efficiently. We seek to control sufficient building lots for 5-6 years of homebuilding operations but only own a sufficient supply for 2-3 years of homebuilding operations, with the remainder controlled by options. In order to minimize risk, we generally limit the number of lots acquired for a specific project so that project build-out typically does not exceed three years. To the

extent that land is unentitled, we seek to control it through options and purchase it only after it has been entitled. Our use of option contracts generally lessens land-related risks and improves liquidity by allowing us to control a large number of lots with contract deposits.

•: Target conservative financial leverage. Our objectives include a conservative approach to financial leverage and we seek to maximize financial flexibility. While we expect to experience seasonal variations in our leverage position that are typical of our industry, we manage our financial leverage to be conservative on an overall basis, taking seasonal variations into account. At June 30, 2001, we had $42.4 million in cash and cash equivalents, $950.6 million in real estate inventories, approximately $580.5 million in debt and $412.6 million of stockholders' equity.
•: Provide superior quality and customer service. We seek to build the highest quality homes and aim to achieve 100% customer satisfaction. To this end, we have a dedicated manager at each operating division whose role is to provide senior executive support to the customer throughout the sales process, and, following the closing, to ensure that any questions, concerns or complaints are dealt with expeditiously. We also offer a warranty program that provides for a one-year warranty on building materials, appliances and workmanship and a ten-year statutory warranty with respect to structural defects.

OUR HISTORY

Schuler Residential

Our co-Chairman, President and CEO, James K. Schuler, originally began business in the Hawaii market in 1973. In 1992, the former Schuler Homes, Inc. (which changed its name to Schuler Residential, Inc. in connection with the merger and which has subsequently been merged into us) completed its initial public offering and in late 1996 adopted a strategic expansion plan designed to geographically diversify its operations outside of the Hawaii market. Schuler Residential entered the Southern California, Colorado, Washington, Oregon and Arizona housing markets by acquiring existing homebuilders and integrating them, becoming one of the top five homebuilders in each of those markets other than Arizona, where we recently commenced operations. Schuler Residential entered the Northern California market by starting a new division.

Western Pacific

Western Pacific was formed in December 1993 by Eugene S. Rosenfeld, our co-Chairman, with the objective of taking advantage of the anticipated recovery of the residential real estate market in California. Mr. Rosenfeld began his career in homebuilding in 1963 at Kaufman & Broad, Inc., later serving as their CEO from 1968 to 1976. Western Pacific began operations in Orange County and the Inland Empire in 1993 and expanded its presence in southern California by entering San Diego County in 1995, Los Angeles County in 1996 and Ventura County in 1997.

In 1996, the northern California housing market showed signs of strengthening. Focused on geographic diversification, Western Pacific began operations in northern California in 1996 in the South Bay area of San Francisco and entered San Jose in 1997. Western Pacific acquired Porter Homes in April 1998, further expanding its presence in northern California, particularly in the Sacramento Valley.

The Merger

We were formed in order to effect the combination of the operations of Western Pacific and Schuler Residential, Inc. (formerly Schuler Homes, Inc.). On April 3, 2001, the operations of the two entities were combined. On June 21, 2001, we effectuated the upstream merger of Schuler Residential into ourselves.

In connection with, and as a result of, the April 3, 2001 merger, we had outstanding approximately 40.3 million shares of common stock. Benefits from the merger include strong, diversified land positions, increased equity market capitalization and increased visibility in the capital markets. We believe that the merger will be successful due to a variety of factors including our complementary market positions, similar corporate cultures, depth of management and proven track records.

Our corporate headquarters are located at:

Schuler Homes, Inc.
400 Continental Boulevard
Suite 100
El Segundo, California 90245
(310) 648-7200

RECENT EVENTS

On October 22, 2001, we entered into a definitive agreement with D.R. Horton, Inc., one of the nation's largest homebuilders, pursuant to which we would merge with and into D.R. Horton and our stockholders would receive a combination of cash and D.R. Horton common stock in exchange for their shares of our common stock. The proposed merger is subject to a number of closing conditions, one of which is the approval of the stockholders of each company. If the merger is consummated on the terms and conditions set forth in the merger agreement, D.R. Horton would become the obligor under the old notes and the exchange notes. For more information about the proposed merger with D.R. Horton, please refer to our Current Report on Form 8-K dated October 22, 2001, which is incorporated by reference into this prospectus and which includes as an exhibit the definitive merger agreement.

Summary of the Exchange Offer

The following is a summary of the principal terms of the exchange offer. A more detailed description is contained in the section "The Exchange Offer." The term "old senior notes" refers to our outstanding 9³/8% Senior Notes due 2009, and the term "senior exchange notes" refers to our 9³/8% Senior Exchange Notes due 2009. The term "old senior subordinated notes" refers to our outstanding 10¹/2% Senior Subordinated Notes due 2011, and the term "senior subordinated exchange notes" refers to our 10¹/2% Senior Exchange Notes due 2011. The senior exchange notes and the senior subordinated exchange notes are referred to collectively as the "exchange notes," and the old senior notes and the old senior subordinated notes are referred to collectively as the "old notes." The term "senior notes indenture" refers to the indenture that governs both the old senior notes and the senior exchange notes. The term "senior subordinated notes indenture" refers to the indenture that governs both the old senior subordinated notes and the senior subordinated exchange notes. The term "indentures" refers to the senior notes indenture and the senior subordinated notes indenture.

The Exchange Offer		We are offering to exchange $1,000 principal amount of our exchange notes, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount of our unregistered old notes. We issued the old notes on June 28, 2001 in a private offering. The terms of the exchange notes are substantially identical to the terms of the old notes.
		In order to exchange your old notes, you must properly tender them before the expiration of the exchange offer. All old notes that are validly tendered and not validly withdrawn will be exchanged. We will issue the exchange notes on or promptly after the expiration of the exchange offer.
		You may tender your old notes for exchange notes in whole or in part in integral multiples of $1,000 principal amount.
Registration Rights Agreement		We sold the old notes on June 28, 2001 to a group of initial purchasers. Simultaneously with that sale, we entered into a registration rights agreement relating to the old notes with the initial purchasers, which requires us to conduct the exchange offer.
		You have the right under the registration rights agreement to exchange your old notes for exchange notes with substantially identical terms. This exchange offer is intended to satisfy those rights. After this exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your old notes.
		For a description of the procedures for tendering your old notes, see "The Exchange Offer—Procedures for Tendering Old Notes."
Expiration Date		5:00 p.m., New York City time, December 10, 2001, unless the exchange offer is extended, in which case the expiration date will be the latest date and time to which the exchange offer is extended. See "The Exchange Offer—Terms of the Exchange Offer."

Consequences of Failure to Exchange Your Old Notes		If you do not exchange your old notes for exchange notes in the exchange offer, you will still have the restrictions on transfer provided in the old notes and in the indentures. In general, the old notes may not be offered or sold unless registered or exempt from registration under the Securities Act, or in a transaction not subject to the Securities Act and applicable state securities laws. We do not plan to register the old notes under the Securities Act.
Conditions to the Exchange Offer		The exchange offer is subject to customary conditions described under "The Exchange Offer—Conditions to the Offer," some of which we may waive in our sole discretion. The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered. We reserve the right in our sole and absolute discretion, subject to applicable law, at any time and from time to time:
		• to terminate the exchange offer if one or more specific conditions have not been satisfied;
		• to extend the expiration date of the exchange offer and retain all tendered old notes, subject, however, to the right of the tendering holders to withdraw their tendered old notes; or
		• to waive any condition or otherwise amend the terms of the exchange offer in any respect.
		See "The Exchange Offer—Terms of the Exchange Offer."
Procedures for Tendering Old Notes		If you wish to tender your old notes for exchange notes, you must:
		• complete and sign a letter of transmittal in accordance with the instructions contained in the letter of transmittal; and
		• forward the completed letter of transmittal by mail, facsimile or hand delivery, together with any other required documents, to the exchange agent, either with the old notes to be tendered or in compliance with the specified procedures for guaranteed delivery of such old notes.
		Specified brokers, dealers, commercial banks, trust companies and other nominees may also effect tenders by book-entry transfer.
		Letters of transmittal and certificates representing old notes should not be sent to us. Those documents should be sent only to the exchange agent. The address, and telephone and facsimile numbers, of the exchange agent are set forth in "The Exchange Offer—Exchange Agent" and in the letter of transmittal.

Special Procedures for Beneficial Owners		If your old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, we urge you to contact your nominee holder promptly if you wish to tender such old notes. See "The Exchange Offer—Procedures for Tendering Old Notes."
Withdrawal of Tenders		You may withdraw the tender of your old notes at any time on or prior to the expiration date by delivering a written notice of withdrawal to the exchange agent in conformity with the procedures discussed under "The Exchange Offer—Withdrawal of Tenders."
Acceptance of Old Notes and Delivery of Exchange Notes		Upon consummation of the exchange offer, we will accept any and all old notes that are properly tendered in the exchange offer and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date. The exchange notes issued pursuant to the exchange offer will be delivered promptly after acceptance of the tendered old notes. See "The Exchange Offer—Terms of the Exchange Offer."
Resales of Exchange Notes		We believe that you will be able to offer for resale, resell or otherwise transfer exchange notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the federal securities laws, provided that:
		• you are acquiring the exchange notes in the ordinary course of your business;
		• you are not participating, and have no arrangement or understanding with any person to participate, in a distribution of the exchange notes; and
		• you are not an "affiliate" of Schuler Homes, Inc., as the term is defined for the purposes of Rule 144A under the Securities Act.
		Our belief is based on interpretations by the staff of the Securities and Exchange Commission, as set forth in no-action letters issued to third parties unrelated to us. The staff of the Securities and Exchange Commission has not considered this exchange offer in the context of a no-action letter, and we cannot assure you that the staff of the Securities and Exchange Commission would make a similar determination with respect to this exchange offer.
		If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the federal securities laws or without an exemption from these laws, you may incur liability under the federal securities laws. We do not and will not assume, or indemnify you against, this liability.
		Each broker-dealer that receives exchange notes for its own account in exchange for old notes that such broker-dealer acquired as a result of market-making or other trading activities must agree to deliver a prospectus meeting the requirements of the federal securities laws in connection with any resale of the exchange notes. See "The Exchange Offer—Resales of the Exchange Notes."

Exchange Agent		The exchange agent for the exchange offer is U.S. Bank Trust National Association. The address, telephone number and facsimile number of the exchange agent are provided in "The Exchange Offer—Exchange Agent" and in the letter of transmittal.
Use of Proceeds		We will not receive any cash proceeds from the issuance of the exchange notes. See "Use of Proceeds."
Certain Federal Income Tax Consequences		Your acceptance of an exchange offer and the related exchange of your old notes for exchange notes will not be a taxable exchange for United States federal income tax purposes. You should not recognize any taxable gain or loss or any interest income as a result of the exchange.

Summary of the Terms of the Exchange Notes

The following is a summary of the principal terms of the exchange notes. A more detailed description is contained in the section "Description of the Exchange Notes."

Issuer		Schuler Homes, Inc.
Securities Offered		$400,000,000 aggregate principal amount of our exchange notes consisting of:
		• $250,000,000 aggregate principal amount of 9³/8% Senior Exchange Notes due 2009, and
		• $150,000,000 aggregate principal amount of 10¹/2% Senior Subordinated Exchange Notes due 2011.
Maturity Date		The senior exchange notes will mature on July 15, 2009 and the senior subordinated exchange notes will mature on July 15, 2011.
Interest Rate and Payment Dates		The senior exchange notes will accrue interest from June 28, 2001 at the rate of 9³/8% per year, and the senior subordinated notes will accrue interest from June 28, 2001 at the rate of 10¹/2% per year. Interest on each series of notes will be payable semi-annually in arrears on each January 15 and July 15, commencing on July 15, 2002.
Optional Redemption		We may redeem the senior exchange notes, in whole or in part, at any time on or after July 15, 2005, and we may redeem the senior subordinated exchange notes, in whole or in part, at any time on or after July 15, 2006, in each case at a redemption price equal to 100% of the principal amount plus a premium declining ratably to par, plus accrued interest.

		In addition, prior to July 15, 2004, we may redeem up to 35% of the aggregate principal amount of each series of notes issued with the proceeds of qualified equity offerings at a redemption price equal to 109.375% of the principal amount of the senior exchange notes and 110.500% of the principal amount of the senior subordinated exchange notes, in each case plus accrued interest.
Change of Control		If we experience a change of control, we may be required to offer to purchase each series of notes at a purchase price equal to 101% of the principal amount, plus accrued interest. We might not be able to pay you the required price for notes you present us at the time of a change of control because our credit facility or other indebtedness may prohibit payment or we might not have enough funds at that time.
Ranking; Guarantees		Senior Exchange Notes The senior exchange notes will be unsecured and will rank equally with all of our existing and future unsecured and unsubordinated obligations.
		Each of our restricted subsidiaries will jointly and severally guarantee the senior exchange notes on a senior basis. Future direct and indirect subsidiaries, excluding subsidiaries that are designated unrestricted subsidiaries in accordance with the indentures, will be required to guarantee the senior exchange notes.
		The guarantees of the obligations under the senior exchange notes will be general unsecured obligations of the guarantors and will rank equally with all existing and future unsecured and unsubordinated debt of the guarantors.
		Senior Subordinated Exchange Notes The senior subordinated notes will be unsecured and will be subordinated in right of payment to all of our existing and future senior debt, including the senior exchange notes and our credit facility.
		Each of our restricted subsidiaries will jointly and severally guarantee the senior subordinated exchange notes on a senior subordinated basis. Future direct and indirect subsidiaries, excluding subsidiaries that are designated unrestricted subsidiaries in accordance with the indentures, will be required to guarantee the senior subordinated exchange notes.
		The guarantees of the obligations under the senior subordinated exchange notes will be general unsecured obligations of the guarantors and will be subordinated in right of payment to all existing and future senior debt of the guarantors, which includes obligations in respect of the senior exchange notes and our credit facility.
		As of June 30, 2001, we and the guarantors had approximately $373.1 million of senior debt and $207.5 million of subordinated debt, and additionally had over $176 million available to be borrowed under our new credit facility. Of that senior debt, as of June 30, 2001 $24.1 million was secured indebtedness, effectively ranking senior to all of the notes.

Restrictive Covenants		The indentures governing the notes contain covenants that will limit our ability and the ability of our subsidiaries to, among other things:
		• incur additional indebtedness;
		• pay dividends or make other distributions or repurchase or redeem our stock;
		• make investments;
		• sell assets;
		• incur liens;
		• enter into agreements restricting our subsidiaries' ability to pay dividends;
		• enter into transactions with affiliates; and
		• consolidate, merge or sell all or substantially all of our assets.
		These covenants are subject to important exceptions and qualifications, which are described under the heading "Description of the Notes" in this prospectus.

RISK FACTORS

You should consider carefully the information set forth in the section of this prospectus entitled "Risk Factors" beginning on page 14 and all the other information provided to you in this prospectus in deciding whether to participate in the exchange offer.

For additional information regarding the exchange notes, see "Description of the Notes."

SUMMARY FINANCIAL AND OTHER DATA

The summary unaudited pro forma combined financial and other data set forth below gives effect to the merger. We derived this information from the historical financial statements of Schuler Residential and Western Pacific. In December 2000, Schuler Residential changed its accounting year-end from a December 31 year-end to a fiscal year-end of March 31. You should read this summary unaudited pro forma combined financial and other data in conjunction with "Unaudited Pro Forma Condensed Combined Financial Data," which includes the detailed adjustments and assumptions used to prepare the pro forma combined financial and other data included with this summary information, as well as the historical financial statements including the notes thereto included in this prospectus. Data is presented on a pro forma combined basis for all periods indicated other than the three months ended June 30, 2001.

While this pro forma information is based on adjustments set forth in the "Unaudited Pro Forma Condensed Combined Financial Data" and which are factually supported based on currently available data, the pro forma information may not be indicative of what actual results would have been, nor does this information purport to present our financial results for future periods.

	Pro Forma Combined
	Pro Forma Combined												Actual
	Year ended March 31,												Actual
	Year ended March 31,									Three Months Ended June 30, 2000			Three Months Ended June 30, 2001
	1999			2000			2001			Three Months Ended June 30, 2000			Three Months Ended June 30, 2001
	(dollars in thousands)
Statements of income data(1):
Revenues	$	746,596		$	1,106,640		$	1,341,504		$	244,218		$	315,230
Cost of sales		(603,555	)		(883,452	)		(1,040,376	)		(191,596	)		(249,435	)

Gross profit		143,041			223,188			301,128			52,622			65,795
Selling, general and administrative expenses		(78,035	)		(117,108	)		(139,111	)		(29,036	)		(36,853	)
Non-cash charge for impairment of long-lived assets		—			—			(36,398	)		—			—
Amortization of intangibles(2)		(1,166	)		(1,410	)		(2,181	)		(341	)		(62	)
Interest and other income (expense), net		(7,900	)		(7,155	)		(5,855	)		(2,366	)		28

Income before minority interests in income of consolidated joint ventures and provision for income taxes		55,940			97,515			117,583			20,879			28,908
Minority interests in income of consolidated joint ventures and subsidiary		(10,572	)		(5,886	)		(17,001	)		(944	)		(847	)

Income before provision for income taxes		45,368			91,629			100,582			19,935			28,061
Provision for income taxes(3)		(17,834	)		(36,332	)		(40,056	)		(7,683	)		(11,194	)

Net income	$	27,534		$	55,297		$	60,526		$	12,252		$	16,867

Other financial data:
EBITDA(4)	$	104,431		$	160,317		$	220,937		$	33,988		$	46,180
EBITDA margin(5)		14.0	%		14.5	%		16.5	%		13.9	%		14.6	%
Depreciation and amortization	$	4,092		$	6,749		$	7,306		$	2,543		$	3,769
Other non-cash charges	$	31		$	1,488		$	340		$	340		$	—
Lenders' profit participation(6)	$	6,577		$	5,836		$	2,390		$	315		$	234

Interest and debt costs, amortized or expensed(7)	$	37,791		$	48,729		$	56,920		$	9,911		$	13,269
Interest incurred(8)	$	39,853		$	48,723		$	59,390		$	13,014		$	13,765
Ratio of EBITDA to interest incurred		2.6	x		3.3	x		3.7	x		2.6	x		3.4	x
Ratio of total debt to EBITDA		3.9	x		2.7	x		2.2	x		—			—
Other financial data, as adjusted(9):
Interest incurred							$	57,890					$	13,219
Ratio of EBITDA to interest incurred								3.8	x					3.5	x
Ratio of total debt to EBITDA								2.3	x					—
Ratio of total debt to total capitalization								56.0	%					58.5	%
Selected operating data(1)(10):
Homes closed		3,605			4,609			4,897			1,057			1,164
New orders		3,820			4,852			5,102			1,207			1,409
Average sales price per home closed	$	216		$	248		$	284		$	240		$	274
Average sales price per new order	$	225		$	256		$	285		$	275		$	294
Backlog at end of period, homes(11)		1,277			1,520			1,725			1,670			1,970
Backlog at end of period, aggregate sales value(9)	$	291,959		$	389,393		$	455,663		$	455,673		$	549,954

	At March 31, 2001				At June 30, 2001
	Pro Forma combined		Pro Forma combined as adjusted(7)		At June 30, 2001
	Pro Forma combined		Pro Forma combined as adjusted(7)		Actual
	(dollars in thousands)
Balance sheet data(1):
Inventories	$	858,080	$	858,080	$	950,624
Total assets	$	1,063,124	$	1,071,924	$	1,147,463
Total debt	$	494,369	$	503,169	$	580,543
Total stockholders' equity	$	394,578	$	394,578	$	412,566

(1): Data is presented on a pro forma combined basis for all periods indicated.
(2): In June 2001, the Financial Accounting Standards Board issued Statements No. 141 "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. We have early-adopted the new rules on accounting for goodwill and other intangible assets beginning April 1, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the statements. Other intangible assets will continue to be amortized over their useful lives.
(3): Includes the pro forma effect on combined provision for income taxes resulting from the operations of Western Pacific and Schuler Residential, and other pro forma adjustments based on an effective tax rate for Western Pacific of 40.72% based on federal and California tax rates on a pro forma combined basis for all periods indicated. Prior to the merger, Western Pacific was operated through a series of partnerships and therefore was not subject to taxation at the entity level. See "Unaudited Pro Forma Combined Financial Data" for additional details.
(4): EBITDA means income (loss) before provision for income taxes, plus (i) interest expense, (ii) amortization of capitalized interest included in cost of sales, (iii) lenders' profit participation, (iv) minority interest in income of consolidated joint ventures and subsidiary, (v) depreciation and amortization, (vi) inventory impairment losses and (vii) other non-cash charges. EBITDA is a widely accepted financial indicator of a company's availability to service debt; however, other companies may

calculate EBITDA differently. EBITDA should not be considered as an alternative to operating income or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of our operating performance or as a measure of liquidity.

(5): EBITDA margin is calculated by dividing EBITDA by revenues.
(6): Represents lenders' profit participation in connection with participating loans.
(7): Includes (i) amortization of capitalized interest and debt costs included in cost of sales and (ii) interest and debt costs not capitalized, but recorded as a period expense.
(8): Interest incurred is the amount of interest paid and the net amount accrued (whether expensed or capitalized) during such period excluding amortization of debt costs and amortization of interest previously capitalized.
(9): As adjusted to reflect the offering and the application of the estimated net proceeds therefrom. See "Use of Proceeds" and "Capitalization."
(10): Includes information relating to 100% of the operations of our unconsolidated joint ventures.
(11): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority on a pro forma combined basis for all periods indicated other than the three months ended June 30, 2001, which is presented on a historical consolidated basis. In the past, our backlog has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

RISK FACTORS

Before you participate in the exchange offer, you should carefully consider the following factors in addition to the other information contained in this prospectus and incorporated by reference in this prospectus.

Risks Relating to Our Business

Our substantial level of indebtedness could adversely affect our financial condition, and we may incur significant additional debt.

The operations of homebuilders, including Schuler Homes, are financed largely with debt, and we currently have a substantial amount of debt. As of June 30, 2001 we had approximately $580.5 million of indebtedness outstanding. In addition, subject to restrictions in the indentures and our credit facility, we may incur additional indebtedness. In particular, as of June 30, 2001, we had, based on borrowing base limitations, over $176 million of additional borrowing capacity under the revolving portion of our credit facility. If new debt is added to our current debt levels, the related risks that we now face could intensify.

Our substantial debt could have important consequences for you as holders of the exchange notes, including:

•: making it more difficult for us to pay interest and principal with respect to the notes;
•: increasing our vulnerability to general adverse economic and industry conditions;
•: limiting our ability to obtain additional financing to fund future working capital, acquisitions and other general corporate requirements;
•: requiring a substantial portion of our cash flow from operations for interest and principal payments on our debt and reducing our ability to use our cash flow to fund working capital, acquisitions and general corporate requirements;
•: limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•: exposing us to fluctuations in the interest rate environment, because our credit facility is at a variable rate of interest; and
•: placing us at a disadvantage compared to our competitors who have less leverage.

Because of the cyclical nature of our industry, future changes in general economic, real estate construction or other business conditions could adversely affect our business.

The homebuilding industry is very cyclical and highly sensitive to changes in general economic and business conditions, both local and national, such as:

•: population growth;
•: employment levels;
•: availability of financing for land acquisitions, construction and permanent mortgages;
•: housing demand;
•: interest rates; and
•: consumer confidence and income.

An oversupply of alternatives to new homes, such as rental properties and resale homes, could depress prices and reduce margins for the sale of new homes. Sales of new homes are also affected by the condition of the resale market for homes, including foreclosed homes.

General economic and business conditions, both local and national, may be less favorable in the future. For example, California underwent a significant recession in the early 1990s. Because a substantial portion of our projects are located within California, a decline in the economic and business conditions in California could significantly affect the demand for our homes. Increases in the rate of inflation could adversely affect our margins by increasing our costs and expenses. In times of high inflation, demand for housing may decline and we may be unable to recover our increased costs through higher sales prices.

The recent slowdown in the economy and recent terrorist attacks in the U.S. may have an adverse effect on our business.

Terrorist attacks in New York City and Washington, D.C. on September 11, 2001 disrupted business and commerce throughout the U.S., resulted in significant loss of life and caused significant volatility and declines in U.S. and foreign securities markets. The continued threat of terrorism within the U.S. and abroad, and the potential for military action and heightened security measures in response to that threat, may cause additional disruptions to commerce, reduce economic activity and result in continued volatility in markets throughout the world. Our decline in new home orders for the quarter ended September 30, 2001 as compared to the pro forma number of new orders for the quarter ended September 30, 2000 suggests that these events have adversely affected our rate of new home orders and may continue to do so in coming months.

Inventory risk can be substantial for homebuilders.

We must continuously seek and make acquisitions of land for expansion into new markets and for replacement and expansion of land inventory within our current markets. The risks inherent in purchasing and developing land increase as consumer demand for housing decreases. Thus, we may have bought and developed land on which we cannot profitably build and sell homes. As a result of our growth, we are developing more land than we were in recent years. The market value of undeveloped land, building lots and housing inventories can fluctuate significantly as a result of changing market conditions. We cannot assure you that the measures we employ to manage inventory risks will be successful.

In addition, inventory carrying costs can be significant and can result in losses in a poorly performing project or market. In the event of significant changes in economic or market conditions, we may have to sell homes at significantly low margins or at a loss.

Supply risks and shortages can harm our business.

The homebuilding industry has from time to time experienced significant difficulties, including:

•: shortages of qualified tradespeople;
•: reliance on local subcontractors, who may be inadequately capitalized; and
•: volatile increases in the cost of materials, particularly increases in the price of lumber, drywall, framing and cement, which are significant components of home construction costs.

Moreover, the residential construction industry has from time to time experienced material and labor shortages, including shortages in insulation, drywall, cement and lumber. These labor and material shortages can be more severe during periods of strong demand for housing. Some of these materials, including lumber, cement and drywall in particular, have experienced volatile price swings. Similar shortages and price increases in the future could cause delays in and increase our costs of home construction, which in turn would harm our operating results. To date, none of the foregoing has had a

material adverse effect on our results of operations or financial condition. We do not reasonably expect any of the foregoing to have a material adverse effect on our future operations or financial condition.

Our business could be adversely affected by natural disaster.

Weather may significantly influence demand in some of our markets. In addition, adverse weather conditions may delay site improvements and foundation work, among other construction processes. Landslides, soil subsidence, earthquakes and other geologic events could occur that could cause damage to, delays in the completion of, or a reduction in consumer demand for, our projects. A large portion of our projects are located in California and Washington, which have experienced significant earthquake activity, and some of our projects are located in Hawaii, which is characterized by dynamic volcanic activity. Losses associated with these events may not be insurable, insurable at a reasonable cost or subject to effective indemnification arrangements. In addition to direct damage to our projects, earthquakes or other geologic events could damage roads and highways providing access to those projects, thereby adversely affecting our ability to market homes in those areas and possibly increasing the costs of completion. Weather patterns that result in unseasonably cool temperatures, rain or snow, water shortages or floods, or any of the other factors described above may materially adversely affect our financial condition or results of operations.

As a result of all of the foregoing, in the future, potential customers may be less willing or able to buy our homes. It may also be more costly and take us longer to build our homes. We may not be able to recapture increased costs by raising prices in many cases because we fix our prices up to six months in advance of delivery by signing home sales contracts. In addition, some home buyers may cancel or not honor their home sales contracts altogether.

States, cities and counties in which we operate may adopt slow growth initiatives reducing our ability to build in these areas, which could harm our future sales and earnings.

Several states, cities and counties, including some in which we have sold a significant number of homes, have in the past approved, or approved for inclusion on their ballot, various "slow growth" initiatives and other measures which could impact the availability of land and building opportunities within those localities. For example, in Colorado, a state-wide initiative was on the November 2000 ballot which, if it had passed, would have generally limited development to growth areas designated by local governments and approved by popular vote of the electorate at a regular election in the applicable jurisdiction. Also, in Arizona, a state-wide initiative was on the November 2000 ballot which, if it had passed, would have restricted the ability of homebuilders to build outside of designated, pre-existing urban areas. Neither of these initiatives passed, but approval of other slow growth measures would reduce our ability to build and sell homes in the affected markets and create additional costs and administrative requirements, which in turn could harm our future sales and earnings.

We may need additional funds for the growth and development of our business, and if we are unable to obtain these funds, we may not be able to expand our business as planned.

Our operations require significant amounts of cash, and while we have no current need for additional sources of financing following the closing of the offering, we may be required to seek additional capital, whether from sales of equity or by borrowing more money, for the future growth and development of our business. If additional funds are raised through the incurrence of debt, we will incur increased debt servicing costs and may become subject to additional restrictive financial and other covenants. We can give no assurance as to the terms or availability of additional capital. Moreover, the indentures for our outstanding debt and our revolving credit facility contain provisions that may restrict the debt we may incur in the future. If we are not successful in obtaining sufficient capital, it could reduce our sales and may adversely affect our future growth and earnings.

Utility shortages or pricing increases could harm our business.

California, one of our homebuilding markets, has experienced widespread shortages and outages of electric utility service in recent periods, in addition to significantly increased utility costs. Similar shortages or pricing increases may occur in any of our other markets. Continued shortages or outages and increased pricing of electric utilities could cause us to incur significant additional costs or slow our planned growth, or could adversely affect regional economic factors such as job and population growth and new housing demand. Any of these factors could have a negative effect on our growth and cash flow.

The cost and availability of home mortgage financing could substantially affect our business.

Most home buyers obtain mortgage loans to finance a substantial portion of the purchase price of their homes. In general, housing demand is adversely affected by increases in interest rates, and by decreases in the availability of mortgage financing. In addition, there have been discussions of possible changes in federal income tax laws which would remove or limit the deduction of home mortgage interest and to limit the exclusion of gain from the sale of a principal residence. If effective mortgage interest rates increase and the ability or willingness of prospective buyers to finance home purchases is adversely affected, our operating results may be negatively affected. Our homebuilding activities are also dependent upon the degree to which the availability and cost of mortgage financing permits potential customers to sell their existing homes and purchase homes from us. Any limitations or restrictions on the availability of such financing could adversely affect our sales.

We may not be able to acquire suitable land to develop new projects at a reasonable price, which could reduce our profits.

Due to the improved economy in many of our markets and the increased availability of capital during the past several years, we have experienced an increase in competition for available land in some of our market areas. Our ability to continue development activities over the long-term will be dependent upon our continued ability to locate and enter into options or agreements to purchase land, obtain governmental approvals for suitable parcels of land and consummate the acquisition and complete development of such land. The increase in land costs may result in reduced profits for our operating subsidiaries and could have a material adverse effect on our results of operations and financial condition.

Fluctuations in real estate values or changes in our strategies may require us to write-down the book value of our real estate assets.

The homebuilding industry is subject to significant variability and fluctuations in real estate values. As a result, we may be required to write-down the book value of our real estate assets in accordance with generally accepted accounting principles, and some of those write-downs could be material. Changes in strategy may also require us to write-down the book value of our real estate assets. For example, in contemplation of changes in strategy resulting from the merger, we have increased our product offerings in Hawaii by adding projects in various areas on the islands of Oahu, Maui, Kauai and Hawaii, while reducing our investment in longer term land parcels in areas where we have a concentration of land. This change in strategy resulted in an after tax non-cash charge for impairment of long-lived assets of approximately $22.2 million recognized during the quarter ended September 30, 2000. Any material write-downs of assets could have a material adverse effect on our earnings.

Our operating subsidiaries have recently each experienced substantial growth, and we may not be able to successfully manage or sustain that growth.

We have historically experienced substantial growth. While we have recently expanded our management, particularly with respect to administrative personnel in the land acquisition, construction management, financial and administrative areas, we cannot assure you that we will be able to hire the necessary personnel or develop the infrastructure necessary to meet our anticipated future growth.

Furthermore, we may not be able to further expand or enhance our operations on a timely and cost-effective basis, if at all, without disrupting our operations.

Laws and regulations may increase our expenses, limit the number of homes that we can build or delay completion of our projects.

We are subject to numerous local, state, federal and other statutes, ordinances, rules and regulations concerning zoning, development, building design, construction and similar matters which impose restrictive zoning and density requirements in order to limit the number of homes that can eventually be built within the boundaries of a particular area. Hawaii, in particular, has some of the strictest land use, environmental and agricultural laws in the United States, and the rezoning of land for urban development in Hawaii is a difficult and time-consuming process. We may also be subject to periodic delays in our homebuilding projects due to building moratoria and the slow growth initiatives discussed earlier.

Despite our past ability to obtain necessary permits and approvals for our communities, we anticipate that increasingly stringent requirements will be imposed on homebuilders in the future. Although we cannot predict the effects of these requirements, they could result in time-consuming and expensive compliance programs and in substantial expenditures and increased carrying costs of unimproved property acquired for the purpose of development and construction, any of which could have a material adverse effect on our results of operations and financial condition. In addition, the continued effectiveness of permits we have already received or approvals we have already obtained is dependent upon many factors, some of which are beyond our control, such as changes in policies, rules and regulations and their interpretation and application.

We are also subject to a variety of local, state, federal and other statutes, ordinances, rules and regulations concerning the protection of health and the environment. The particular environmental laws which apply to any given homebuilding site vary according to the site's location, its environmental conditions and the present and former uses of the site, as well as that of adjoining properties. Although we attempt to limit our risk by thorough pre-purchase due diligence and the use of options for land acquisition where possible, environmental laws and conditions may still result in delays, may cause us to incur substantial compliance and other costs, and can prohibit or severely restrict our homebuilding activity in environmentally sensitive regions or areas.

We may not be able to succeed against our competitors.

The homebuilding industry is highly competitive. Homebuilders compete for, among other things, desirable properties, financing, raw materials and skilled labor. We will compete both with large homebuilding companies, some of which have greater financial resources than we do, and with smaller local builders. We will also compete for sales with individual resales of existing homes and with available rental housing. If we cannot compete successfully for the raw materials and resources to construct our homes or with respect to sales of our homes, it could have a material adverse effect on our financial condition and results of operations. Competition will be particularly intense when we enter or start operations in a new market area until our reputation becomes firmly established in that area.

Mr. Schuler will be able to exercise control over our business.

We currently have two classes of stock outstanding, Class A Common Stock and Class B Common Stock. Although the holders of the Class B Common Stock have some approval rights in the case of certain extraordinary transactions, the Class A Common Stock generally has greater voting power than the Class B Common Stock because the Class A Common Stock has one vote per share, while the Class B Common Stock has one-half a vote per share. Furthermore, the holders of the Class A Common Stock have the ability to elect a majority of our board of directors.

Mr. Schuler, by virtue of his substantial beneficial ownership of our outstanding Class A Common Stock, has the effective power to elect all of the directors that are elected by the holders of our Class A Common Stock. Consequently, he is able to elect a majority of our board of directors and exercise control over our business and affairs. Furthermore, Mr. Schuler is effectively able to determine the outcome of all matters submitted to the Class A stockholders, including approval of significant transactions, such as a sale of the company. Circumstances may occur in which the interests of Mr. Schuler could be in conflict with your interests as a noteholder. In addition, Mr. Schuler may have an interest in pursuing acquisitions, divestitures or other transactions that, in his judgment, could enhance his equity investment, even though such transactions might involve risks to you.

Our ability to successfully integrate and operate Schuler Residential and Western Pacific as a combined company is uncertain.

Since the consummation of the merger, we have been proceeding with the integration of our operations. The integration will involve a number of risks. In particular, the combined companies may experience attrition among management and personnel. The integration process could also disrupt the activities of our experience of our respective businesses. The combination of the two companies will require, among other things, coordination of management, administrative and other functions. Failure to overcome these challenges or any other problems encountered in connection with the merger could cause our financial condition, results of operations and competitive position to decline.

We are highly dependent upon key executive, financial and operational management and the loss of their services could adversely affect us.

Our success in integrating and conducting our business operations will be highly dependent upon our ability to retain the continuing service of our key management personnel. There is intense competition to attract and retain management and key employees in the markets where our operations are conducted, particularly in strong homebuilding markets like California. We believe we will be able to retain substantially all of our key management personnel; however, we cannot assure you that we will be able to do so. The loss of the services of one or more key management employees, particularly during the integration period, or our inability to attract and retain qualified personnel on an ongoing basis, could have a material adverse effect on our financial condition and results of operations.

The indentures for the notes and our credit facility impose significant operating and financial restrictions which may limit our ability to operate our business.

The indentures governing the notes and our credit facility impose significant operating and financial restrictions on us. These restrictions will limit our ability to, among other things:

•: borrow money;
•: pay dividends or make distributions on, or purchase or redeem, stock;
•: make investments and extend credit;
•: engage in transactions with affiliates;
•: consummate certain asset sales;
•: consolidate or merge with another entity or sell, transfer, lease or otherwise dispose of all or substantially all of our assets; and
•: use our assets as collateral.

We cannot assure you that these covenants will not adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities.

In addition, our credit facility requires us to maintain specified financial ratios and satisfy certain financial condition tests which may require that we take action to reduce our debt or to act in a manner contrary to our business objectives. Events beyond our control, including changes in general economic and business conditions, may affect our ability to meet those financial ratios and financial condition tests. We cannot assure you that we will meet those tests or that the lenders will waive any failure to meet those tests. A breach of any of these covenants or our inability to maintain the required financial ratios could result in a default under the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.

Risks Relating to the Exchange Notes

There are consequences associated with failing to exchange the old notes for the exchange notes.

If you do not exchange your old notes for exchange notes in the exchange offer, you will still have the restrictions on transfer provided in the old notes and the indenture. In general, the old notes may not be offered or sold unless registered or exempt from registration under the Securities Act, or in a transaction not subject to the Securities Act and applicable state securities laws. We do not plan to register the old notes under the Securities Act.

Servicing our debt will require a significant amount of cash, and our ability to generate sufficient cash depends on many factors, many of which are beyond our control.

Our ability to pay our expenses and to pay principal and interest on the exchange notes, our credit facility and other debt depends on our ability to generate cash flow in the future. Our ability to meet our expenses thus depends in part on our future performance, which is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to pay principal and interest on our debt (including the exchange notes) or to fund other liquidity needs.

If we do not have enough cash flow from operations, we may be required to borrow more money, refinance all or part of our existing debt (including the exchange notes) or sell assets. Our ability to borrow funds under our credit facility in the future will depend on our meeting the financial covenants in the credit facility and we cannot guarantee that sufficient borrowings will be available to us. If we are required to refinance our existing debt or sell some of our assets, we cannot guarantee that we will be able to do so on terms acceptable to us. In addition, the terms of existing or future debt agreements, including our credit facility and the indentures, may restrict us from adopting any of these alternatives. Any inability to generate sufficient cash flow or refinance our debt on favorable terms could significantly adversely affect our financial condition, the value of the exchange notes and our ability to pay principal of and interest on the exchange notes.

The guarantees may be voided under specific legal circumstances.

The exchange notes will be guaranteed by all of our existing and future restricted subsidiaries. The guarantees may be subject to review under U.S. federal bankruptcy law and comparable provisions of state fraudulent conveyance laws if a bankruptcy or reorganization case or lawsuit is commenced by or on behalf of our or one of a guarantor's unpaid creditors. Under these laws, if a court were to find in such a bankruptcy or reorganization case or lawsuit that, at the time any guarantor issued a guarantee of the exchange notes, the guarantor:

•: incurred the guarantee of the exchange notes with the intent of hindering, delaying or defrauding current or future creditors;

•

was a defendant in an action for money damages, or had a judgment for money damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied; or

•

received less than reasonably equivalent value or fair consideration for incurring the guarantee of the exchange notes and such guarantor:

•: was insolvent or was rendered insolvent by reason of issuing the guarantee;
•: was engaged, or about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business; or
•: intended to incur, or believed that it would incur, debts beyond its ability to pay as such debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes);

then such court could void the guarantee of such guarantor or subordinate the amounts owing under such guarantee to such guarantor's presently existing or future debt or take other actions detrimental to you.

The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, a company would be considered insolvent if, at the time it incurred the debt or issued the guarantee, either:

•: the sum of its debts (including contingent liabilities) was greater than its assets, at fair valuation; or
•: the present fair saleable value of its assets was less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured.

If the guarantees of the exchange notes were challenged, we cannot be sure as to the standard that a court would use to determine whether any of our guarantors was solvent at the relevant time. If such a case were to occur, the guarantee could also be subject to the claim that, since the guarantee was incurred for the benefit of us, the parent holding company, and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. If a guarantor were also found to be insolvent, a court could thus void the obligations under the guarantee, subordinate the guarantee to the applicable guarantor's other debt or take other action detrimental to holders of the exchange notes. If a guarantee is avoided as a fraudulent conveyance or found to be unenforceable for any other reason, you will not have a claim against that guarantor and will only be a creditor of ours or any guarantor whose obligation was not set aside or found to be unenforceable.

The exchange notes are unsecured and effectively subordinated to any secured indebtedness that we may incur.

The exchange notes will not be secured. Our new credit facility is not secured. At June 30, 2001, we had $24.1 million of secured indebtedness. However, under the terms of the exchange notes, we may be able to incur significant additional secured indebtedness without equally and ratably securing the exchange notes. If we become insolvent or are liquidated, or if payment under any of our secured debt obligations is accelerated, our secured lenders would be entitled to exercise the remedies available to a secured lender under applicable law and will have a claim on those assets before the holders of the exchange notes. As a result, the exchange notes are effectively subordinated to our secured indebtedness to the extent of the value of the assets securing that indebtedness and the holders of the exchange notes may recover ratably less than the lenders of our secured debt in the event of our bankruptcy or liquidation.

We cannot assure you that an active trading market will develop for the exchange notes.

There is no established trading market for the exchange notes and we cannot assure you that a market for the exchange notes will develop in the future. If such a market were to develop, the exchange notes could trade at prices that are higher or lower than the initial offering prices depending on many factors, including the number of holders of the exchange notes, the overall market for similar securities, our financial performance and prospects and prospects for companies in our industry generally. The initial purchasers of the old notes have informed us that they intend to make a market in the exchange notes. However, the initial purchasers are not obligated to do so, and may cease market-making activities at any time without notice. As a result, you cannot be sure that an active trading market will develop for the exchange notes. We do not intend to apply (and are not obligated to apply) for listing of the exchange notes on any securities exchange or any automated quotation system.

You must comply with the procedures for the exchange offer in order to receive the exchange notes.

You are responsible for complying with all exchange offer procedures. You will only receive exchange notes in exchange for your old notes if, prior to the expiration date, you deliver the following to the exchange agent:

•: certificate for the old notes or a book-entry confirmation of a book-entry transfer of the old notes into the exchange agent's account with the Depository Trust Company "DTC");
•: the letter of transmittal (or facsimile thereof), properly completed and duly executed by you, together with any required signature guarantees; and
•: and other documents required by the letter of transmittal.

You should allow sufficient time to ensure that the exchange agent receives all required documents before the expiration date. Neither we nor the exchange agent has any duty to inform you of defects or irregularities with respect to the tender of your old notes for exchange notes. See "The Exchange Offer."

We may not be able to satisfy our obligations to holders of the notes upon a change of control or a decline in our consolidated net worth.

Upon the occurrence of a "change of control," as defined in the indentures, each holder of old notes and each holder of exchange notes will have the right to require us to purchase the notes at a price equal to 101% of the principal amount, together with any accrued and unpaid interest as of the date of repurchase. Our failure to purchase, or give notice of purchase of, the old notes or the exchange notes would be a default under the indentures, which would in turn be a default under our credit facility. In addition, a change of control may constitute an event of default under our credit facility. A default under our credit facility would result in an event of default under the indentures if the lenders were to accelerate the debt under our credit facility.

In addition, if our consolidated tangible net worth falls below $150 million for any two consecutive fiscal quarters, we are required to make an offer to purchase up to 10% of the old notes and up to 10% of the exchange notes then outstanding at a price equal to 100% of the principal amount, together with any accrued interest and liquidated damages, if any, to the date of purchase. As of June 30, 2001, our consolidated tangible net worth was $343.1 million.

If either event occurs, we may not have enough assets to satisfy all obligations under our credit facility and the indentures related to the notes. The source of funds for any purchase of notes in either event will be our available cash or cash generated from our operations or other sources, including borrowing, sales of assets or sales of equity. If we did not have sufficient cash on hand, we could seek to refinance the indebtedness under our credit facility and the notes or obtain a waiver from the lenders or the holders of the notes. We cannot assure you, however, that we would be able to obtain a

waiver or refinance our indebtedness on commercially reasonable terms, if at all. In addition, the terms of our senior credit facilities may limit our ability to purchase the notes in those circumstances. If the holders of the notes exercise their right to require us to repurchase all of the notes in either event, the financial effect of this repurchase could cause a default under our other debt, even if the event itself would not cause a default. Accordingly, it is possible that we will not have sufficient funds at the time of such event to make the required repurchase of notes or that restrictions in our senior credit facilities will not allow such repurchases.

Your right to receive payments on the senior subordinated exchange notes and guarantees is subordinated to senior debt.

Payment on the senior subordinated exchange notes and guarantees will be subordinated in right of payment to all of our and the guarantors' senior debt, including the senior exchange notes, senior notes and our credit facility. As a result, upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our guarantors or our or their property, the holders of senior debt will be entitled to be paid in full in cash before any payment may be made on the senior subordinated exchange notes or the subsidiary guarantees thereof. In these cases, we and the guarantors may not have sufficient funds to pay all of our creditors, and holders of senior subordinated exchange notes may receive less, ratably, than the holders of senior debt, including the senior exchange notes and the senior notes, and, due to the turnover provisions in the senior subordinated notes indenture, less, ratably, than the holders of unsubordinated obligations, including trade payables. In addition, all payments on the senior subordinated exchange notes and the related guarantees will be blocked in the event of a payment default on designated senior debt and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on designated senior debt.

As of June 30, 2001, the senior subordinated exchange notes and the related guarantees had been subordinated to approximately $373.1 million of senior debt, and over $176 million of additional senior debt was available for borrowing under the revolving portion of our credit facility. In addition, the indentures and our credit facility permit us, subject to specified limitations, to incur additional debt, some or all of which may be senior debt.

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

In connection with the sale of the old notes, we entered into a registration rights agreements with the initial purchasers of the old senior notes and old senior subordinated notes, respectively, pursuant to which we agreed to file and to use our best efforts to cause to become effective with the Securities and Exchange Commission a registration statement with respect to the exchange of the old notes for exchange notes with terms identical in all material respects to the terms of the old notes. Copies of the registration rights agreements have been filed as exhibits to the registration statement of which this prospectus is a part. The exchange offer is being made to satisfy our obligations under the registration rights agreements.

By tendering old notes for exchange notes, each holder represents to us that:

•: such holder is not our "affiliate" (as defined in Rule 405 or Rule 144A under the Securities Act) or, if such holder is our affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable;
•: any exchange notes to be received by such holder will be acquired in the ordinary course of such holder's business;
•: at the time the exchange offer begins, such holder has no arrangement or understanding with any person to participate in the distribution of the exchange notes in violation of the provisions of the Securities Act;
•: if such holder is not a broker-dealer, such holder is not engaged in, and does not intend to engage in, a distribution of exchange notes;
•: such holder has full power and authority to tender, exchange, sell, assign and transfer the tendered old notes;
•: we will acquire good, marketable and unencumbered title to the tendered old notes, free and clear of all liens, restrictions, charges and encumbrances; and
•: the old notes tendered for exchange notes are not subject to any adverse claims or proxies.

Each tendering holder also warrants and agrees that it will, upon request, execute and deliver any additional documents deemed by us or the exchange agent to be necessary or desirable to complete the exchange, sale, assignment and transfer of the old notes tendered pursuant to the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for old notes pursuant to the exchange offer, where such old notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See "Plan of Distribution."

The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of old notes in any jurisdiction in which the exchange offer or the acceptance of the exchange notes would be in violation of securities or blue sky laws of that jurisdiction.

Unless the context requires otherwise, the term "holder" with respect to an exchange offer means any person in whose name the old notes are registered on the books of Schuler Homes, Inc. or any other person who has obtained a properly completed bond power from the registered holder, or any participant in DTC whose name appears on a security position listing as a holder of old notes (which, for purposes of the exchange offer, include beneficial interests in old notes held by direct or indirect participants in DTC and old notes held in definitive form).

Terms of the Exchange Offer

We hereby offer, upon the terms and conditions described in this prospectus and in the accompanying letter of transmittal, to exchange $1,000 principal amount of our 9³/8% senior exchange notes due 2009 for each $1,000 principal amount of our old 9³/8% senior notes due 2009, and $1,000 principal amount of our 10¹/2% senior subordinated exchange notes due 2011 for each $1,000 principal amount of our old 10¹/2% senior subordinated notes due 2011, in each case properly tendered before the expiration date and not validly withdrawn according to the procedures described below. Holders may tender their old notes in whole or in part in integral multiples of $1,000 principal amount.

The form and terms of the exchange notes are the same as the form and terms of the old notes, except that:

(1): the exchange notes have been registered under the Securities Act and therefore are not subject to the restrictions on transfer applicable to the old notes, and
(2): holders of the exchange notes will not be entitled to some of the rights of holders of the old notes under the registration rights agreement.

The exchange notes evidence the same indebtedness as the old notes (which they replace) and will be issued pursuant to, and entitled to the benefits of, the indenture.

The exchange offer is not conditioned upon any minimum principal amount of old notes being tendered for exchange. We reserve the right in our sole discretion to purchase or make offers for any old notes that remain outstanding after the expiration date or, as described under "Conditions to the Exchange Offer," to terminate the exchange offer and, to the extent permitted by applicable law, purchase old notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the exchange offer. As of date of this prospectus, $400.0 million principal amount of the old notes is outstanding.

Holders of the old notes do not have any appraisal or dissenters' rights in connection with the exchange offer. Old notes that are not tendered for, or are tendered but not accepted in connection with, the exchange offer will remain outstanding. See "Risk Factors—You must comply with the procedures for the exchange offer in order to receive exchange notes."

If any tendered old notes are not accepted for exchange because of an invalid tender, the occurrence of particular other events described in this prospectus or otherwise, certificates for any such unaccepted old notes will be returned, without expense, to the tendering holder thereof promptly after the expiration date.

Holders who tender old notes in connection with the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of the old notes in connection with the exchange offer. We will pay certain charges and expenses, other than specified applicable taxes. See "Fees and Expenses."

WE MAKE NO RECOMMENDATION TO THE HOLDERS OF THE OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES IN THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF THE OLD NOTES MUST MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER, AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER, AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR FINANCIAL POSITIONS AND REQUIREMENTS.

Expiration Date; Extensions; Amendments

The expiration date for the exchange offer is 5:00 p.m. New York City time, on December 10, 2001, unless we, in our sole discretion, extend the exchange offer. If we do extend the exchange offer, the expiration date will be the latest date and time to which the exchange offer is extended.

We expressly reserve the right, in our sole and absolute discretion, subject to applicable law, at any time and from time to time:

•: to terminate the exchange offer (whether or not any old notes have already been accepted for exchange) if we determine, in our reasonable discretion, that any of the events or conditions referred to under "Conditions to the Exchange Offer" has occurred or exists or has not been satisfied;
•: to extend the expiration date and retain all old notes tendered pursuant to the exchange offer, subject, however, to the right of holders of old notes to withdraw their tendered old notes as described under "Withdrawal of Tenders"; and
•: to waive any condition or otherwise amend the terms of the exchange offer in any respect.

If we amended the exchange offer in a manner we determine constitutes a material change, or if we waive a material condition of the exchange offer, we will promptly disclose such material amendment by means of a prospectus supplement that will be distributed to the registered holders of the affected old notes, and we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act.

Any such extension, termination or amendment will be followed as promptly as possible by oral or written notice to the exchange agent (any such oral notice to be promptly confirmed in writing) and by making a public announcement, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Without limiting the manner in which we may choose to make any public announcement, and subject to applicable laws, we will have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency.

Acceptance for Exchange and Issuance of Exchange Notes

Upon the terms and subject to the conditions of the exchange offer, we will exchange, and will issue to the exchange agent, exchange notes for old notes validly tendered and not withdrawn (pursuant to the withdrawal rights described under "Withdrawal of Tenders") promptly after the expiration date.

In all cases, delivery of exchange notes in exchange for old notes tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of:

(1): old notes or a book-entry confirmation of a book-entry transfer of old notes into the exchange agent's account at DTC;
(2): the letter of transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees; and
(3): any other documentation required by the letter of transmittal.

Accordingly, the delivery of the exchange notes might not be made to all tendering holders at the same time, and will depend upon when old notes, book-entry confirmations with respect to old notes and other required documents are received by the exchange agent.

The term "book-entry confirmation" means a timely confirmation of a book-entry transfer of old notes into the exchange agent's account at DTC.

Subject to the terms and conditions of the exchange offer, we will be deemed to have accepted for exchange, and thereby exchanged, old notes validly tendered and not withdrawn as, if and when we give oral or written notice to the exchange agent (and such oral notice to be promptly confirmed in writing) of our acceptance of such old notes for exchange pursuant to the exchange offer. Our acceptance for exchange of old notes tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering holder and us upon the terms and subject to the conditions of the exchange offer. The exchange agent will act as agent for us for the purpose of receiving tenders of old notes, letters of transmittal and related documents and transmitting exchange notes to holders who have validly tendered old notes. Such exchange will be made promptly after the expiration date of the exchange offer. If for any reason the acceptance for exchange or the exchange of any old notes tendered pursuant to the exchange offer is delayed (whether before or after our acceptance for exchange of old notes), or we extend the exchange offer or are unable to accept for exchange or exchange old notes tendered pursuant to the exchange offer, then, without prejudice to our rights set forth in this prospectus and in the letter of transmittal, the exchange agent may, nevertheless, on our behalf and subject to Rule 14e-1(c) under the Exchange Act, retain tendered old notes and such old notes may not be withdrawn except to the extent tendering holders are entitled to withdrawal rights as described under "Withdrawal of Tenders."

Procedures for Tendering Old Notes

Valid Tender

Except as set forth below, in order for old notes to be validly tendered pursuant to the exchange offer, either:

(1): (a) a properly completed and duly executed letter of transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must be received by the exchange agent at the address set forth under "Exchange Agent" prior to the expiration date, and (b) tendered old notes must be received by the exchange agent, or such old notes must be tendered pursuant to the procedures for book-entry transfer set forth below and a book-entry confirmation must be received by the exchange agent, in each case prior to the expiration date; or
(2): the guaranteed delivery procedures set forth below must be complied with.

If less than all of the old notes are tendered, a tendering holder should fill in the amount of old notes being tendered in the appropriate box on the letter of transmittal. The entire amount of old notes delivered to the exchange agent will be deemed to have been tendered unless otherwise indicated.

If any letter of transmittal, endorsement, bond power, power of attorney or any other document required by the letter of transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing. Unless waived by us, evidence satisfactory to us of such person's authority to so act must also be submitted.

Any beneficial owner of old notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial holder wishes to participate in the exchange offer.

The method of delivery of old notes, the letter of transmittal and all other required documents is at the option and sole risk of the tendering holder. Delivery will be deemed made only when actually

received by the exchange agent. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery and proper insurance should be obtained. No letter of transmittal or old notes should be sent to Schuler Homes, Inc. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect these transactions for them.

Book-Entry Transfer

The exchange agent will make a request to establish an account with respect to the applicable old notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC's Book-Entry Transfer Facility system may make book-entry delivery of the old notes by causing DTC to transfer the old notes into the exchange agent's account via the ATOP system in accordance with DTC's transfer procedure. Although delivery of old notes may be effected through book-entry transfer into the exchange agent's account at DTC, the letter of transmittal (or facsimile thereof), properly completed and duly executed, any required signature guarantees and any other required documents, must, in any case, be transmitted to and received or confirmed by the exchange agent at its addresses in this prospectus prior to 5:00 p.m., New York City time, on the expiration date, or the guaranteed delivery procedure set forth below must be complied with.

DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

Signature Guarantees

Certificates for old notes need not be endorsed and signature guarantees on a letter of transmittal or notice of withdrawal, as the case may be, are unnecessary unless:

(1): a certificate for old notes is registered in the name other than that of the person surrendering the certificate; or
(2): a registered holder completes the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal.

In the case of (1) or (2) above, such certificates for old notes must be duly endorsed or accompanied by a properly executed bond power, with the endorsement or signature on the bond power and on the letter of transmittal or the notice of withdrawal, as the case may be, guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution," including (as such terms are defined therein): (a) a bank, (b) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer, (c) a credit union, (d) a national securities exchange, registered securities association or clearing agency, or (e) a savings association that is a participant in a Securities Transfer Association. See Instruction 1 to the letter of transmittal.

Guaranteed Delivery

If a holder desires to tender old notes pursuant to an exchange offer and the certificates for such old notes are not immediately available or time will not permit all required documents to reach the exchange agent prior to the expiration date, or the procedures for book-entry transfer cannot be completed on a timely basis, such old notes may nevertheless be tendered, provided that all of the following guaranteed delivery procedures are complied with:

(1): such tenders are made by or through an eligible guarantor institution;
(2): prior to the expiration date, the exchange agent receives from an eligible guarantor institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the

form accompanying the letter of transmittal, setting forth the name and address of the holder of the old notes and the amount of old notes tendered, stating that the tender is being made thereby and guaranteeing that, within three business days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered old notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent. The Notice of Guaranteed Delivery may be delivered by hand, or transmitted by facsimile or mail to the exchange agent and must include a guarantee by an eligible guarantor institution in the form set forth in the Notice of Guaranteed Delivery; and

(3): the certificates (or book-entry confirmation) representing all tendered old notes, in proper form for transfer, together with a properly completed and duly executed letter of transmittal, with any required signature guarantees and any other documents required by the letter of transmittal, are received by the exchange agent within three business days after the date of execution of the Notice of Guaranteed Delivery.

Company Determinations Final

All questions as to the form of documents, validity, eligibility, including time of receipt, and acceptance for exchange of any tendered old notes will be determined by us, in our reasonable discretion, which determination will be final and binding on all parties. We reserve the absolute right, in our reasonable discretion, to reject any and all tenders we determine not to be in proper form or the acceptance for exchange of which may, in the view of our counsel, be unlawful. We also reserve the absolute right, subject to applicable law, to waive any of the conditions of the exchange offer as set forth under "Conditions to the Exchange Offer" or any defect or irregularity in any tender of old notes of any particular holder, whether or not similar defects or irregularities are waived in the case of other holders.

Our interpretation of the terms and conditions of the exchange offer (including the letter of transmittal and its instructions) will be final and binding upon all parties. No tender of old notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. None of Schuler Homes, Inc., any of our affiliates, the exchange agent or any other person will be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification.

Resale of the Exchange Notes

Based on previous interpretations by the staff of the Securities and Exchange Commission set forth in no-action letters issued to third parties, we believe that the exchange notes issued in the exchange offer may be offered for resale, resold and otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933. This would not apply, however, to any holder that is a broker-dealer that acquired old notes as a result of market-making activities or other trading activities or directly from us for resale under an available exemption under the Securities Act. Also, resale would only be permitted for exchange notes that (1) are acquired in the ordinary course of a holder's business, (2) where such holder has no arrangement or understanding with any person to participate in the distribution of such exchange notes, and (3) such holder is not an "affiliate" of Schuler Homes, Inc. The staff of the Securities and Exchange Commission has not considered the exchange offer in the context of a no-action letter, and there can be no assurance that the staff of the Securities and Exchange Commission would make a similar determination with respect to the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for old notes, where the old notes were acquired by that broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. See "Plan of Distribution." In order to facilitate the disposition

of exchange notes by broker-dealers participating in the exchange offer, we have agreed, subject to specific conditions, to make this prospectus, as it may be amended or supplemented from time to time, available for delivery by those broker-dealers to satisfy their prospectus delivery obligations under the Securities Act.

In the event that our belief regarding resale is inaccurate, those who transfer exchange notes in violation of the prospectus delivery provisions of the Securities Act and without an exemption from registration under the federal securities laws may incur liability under these laws. We do not assume, nor will we indemnify you against, this liability. The exchange offer is not being made to, nor will we accept surrenders for exchange from, holders of old notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of the particular jurisdiction.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, tenders of old notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date.

In order to withdraw a tender of old notes in the exchange offer, a written or facsimile transmission notice of withdrawal must be received by the exchange agent at the address given under "The Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration date. Any notice of withdrawal must:

•: specify the name of the person having deposited the old notes to be withdrawn;
•: identify the old notes to be withdrawn, including the certificate number or numbers and principal amount of the old notes;
•: be signed by the depositor in the same manner as the original signature on the letter of transmittal by tendering the old notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee of the old notes to register the transfer of the old notes into the name of the depositor withdrawing the tender; and
•: specify the name in which any old notes are to be registered, if different from that of the depositor.

Any old notes that have been properly withdrawn will not be deemed validly tendered for purposes of the exchange offer, but may be retendered by following one of the procedures described above under "Procedures for Tendering Old Notes" at any time prior to the expiration date.

All questions as to the validity, form and eligibility, including time of receipt, of any withdrawal notices will be determined by us, and will be final and binding on all parties. Neither Schuler Homes, Inc., nor any of our affiliates, the exchange agent or any other person will be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any tendered old notes that have been properly withdrawn will be returned to the holder promptly after withdrawal.

Interest on the Exchange Notes

The exchange notes will bear interest from the issue date of the old notes and will be paid with the first interest payment on the exchange notes. If interest has not yet been paid, the exchange notes will bear interest from and including June 28, 2001. Interest on the old notes accepted for exchange will cease to accrue upon issuance of the exchange notes and will be superceded by the interest accruing with respect to the exchange notes.

The senior exchange notes will bear interest at a rate of 9³/8% per annum, and the senior subordinated exchange notes will bear interest at a rate of 10¹/2% per annum. Interest on the exchange notes will be payable semi-annually, in arrears, on each January 15 and July 15 following the consummation of the exchange offer. Untendered old senior notes that are not exchanged for senior exchange notes pursuant to the exchange offer will bear interest at a rate of 9³/8% per annum after the expiration date, and untendered old senior subordinated notes that are not exchanged for senior subordinated exchange notes pursuant to the exchange offer will bear interest at a rate of 10¹/2% per annum after the expiration date.

Conditions to the Offer

If any of the following conditions has occurred or exists or has not been satisfied prior to the expiration date of the exchange offer, we will not be required to accept for exchange any old notes and will not be required to issue exchange notes in exchange for any old notes. In addition, we may, at any time and from time to time, terminate or amend the exchange offer (whether or not any old notes have already been accepted for exchange) or may waive any condition to or amend the exchange offer.

•: A change in the current interpretation by the staff of the Securities and Exchange Commission that permits resale of exchange notes as described under "Resales of Exchange Notes."
•: Any action or proceeding is instituted or threatened in any court or by or before any governmental agency or body with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.
•: Any law, statute, rule or regulation is proposed, adopted or enacted, or any existing law, statute, rule or regulation is interpreted by the staff of the Securities and Exchange Commission in a manner that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.
•: The issuance of a stop order is threatened by the Securities and Exchange Commission or any state securities authority or is in effect for the registration statement of which this prospectus is a part, or proceedings for that purposes are instituted.
•: Failure to obtain any governmental approval that we consider necessary for the consummation of the exchange offer as contemplated hereby.
•: Any change or development involving a prospective change in our business or financial affairs that we think might materially impair our ability to consummate the exchange offer.

If we determine in our reasonable discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied at any time prior to the expiration date, we may, subject to applicable law, terminate the exchange offer (whether or not any old notes have already been accepted for exchange) or may waive any such condition or otherwise amend the terms of the exchange offer in any respect. If such waiver or amendment constitutes a material change to the exchange offer, we will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to each registered holder of old notes, and we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act.

Exchange Agent

U.S. Bank Trust National Association has been appointed as exchange agent for the exchange offer. Delivery of the letter of transmittal and any other required documents, questions, requests for

assistance and requests for additional copies of this prospectus or of the letter of transmittal should be directed to the exchange agent addressed as follows:

By Mail, Overnight Courier or Hand Delivery:
U.S. Bank Trust National Association
550 South Hope Street
Suite 500
Los Angeles, California 90071

Telephone number: (800) 934-6802
Facsimile transmission: (213) 533-8729

DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT CONSTITUTE A VALID DELIVERY.

Fees and Expenses

We will bear the expenses of soliciting tenders pursuant to the exchange offer. The principal solicitation for tenders pursuant to the exchange offer is being made by mail. Additional solicitations may be made by our officers and regular employees and our affiliates in person, by telegraph or by telephone.

We have not retained any dealer-manager or similar agent in connection with the exchange offer and will not make any payments to brokers, dealers or other persons soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with this exchange offer. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses they incur in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the old notes and in handling or forwarding tenders for exchange.

We will pay the fees and expenses incurred in connection with the exchange offer for the exchange agent and the trustee, as well as our accounting and legal services.

We will pay all transfer taxes, if any, applicable to the exchange of old notes pursuant to the exchange offer. The amount of these transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder if:

•: certificates representing exchange notes or old notes not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the old notes tendered;
•: tendered old notes are registered in the name of any person other than the person signing the letter of transmittal; or
•: a transfer tax is imposed for any reason other than the exchange of old notes pursuant to the exchange offer.

If satisfactory evidence of payment of, or exemption from, these taxes is not submitted with the letter of transmittal, the amount of these transfer taxes will be billed directly to the tendering holder.

Accounting Treatment

The exchange notes will be recorded at the same carrying value as the old notes, which is face value, as reflected in our accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by us upon the consummation of the exchange offer. The costs of the exchange offer will be capitalized and amortized by us over the term of the exchange notes under accounting principles generally accepted in the United States.

USE OF PROCEEDS

The exchange offer is intended to satisfy certain of our obligations under the registration rights agreements. We will not receive any proceeds from the issuance of the exchange notes or the closing of the exchange offer.

In consideration for issuing the exchange notes as contemplated in this prospectus, we will receive, in exchange, an equal number of old notes in like principal amount. The form and terms of the exchange notes are identical in all material respects to the form and term of the old notes, except as otherwise described in "The Exchange Offer—Terms of the Exchange Offer." The old notes surrendered in exchange of the exchange notes will be retired and canceled and cannot be reissued.

The net proceeds from the offering of the old notes, after deducting fees and costs, of $391.2 million are expected to be used (1) to refinance existing senior credit facilities, (2) to repay subordinated notes payable and (3) to repay other higher-priced debt. See "Capitalization" and "Description of Existing Indebtedness" for additional information.

		(in millions)
Refinance existing senior credit facilities		$	338.4
Repay subordinated notes payable			29.3
Repay other debt			23.5

	Total uses	$	391.2

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2001.

				As of June 30, 2001
				(dollars in thousands)
Cash and cash equivalents				$	42,373

Total debt:
	Existing senior credit facilities(1)				—
	9% Senior notes due 2008			$	98,910
	9³/8% Senior notes due 2009				250,000
	10¹/2% Senior subordinated notes due 2011				150,000
	6.5% Convertible subordinated debentures due 2003(1)				57,500
	Subordinated notes payable				—
	Other debt				24,133

		Total debt			580,543
Stockholders' equity					412,566

			Total capitalization	$	993,109

(1): Subsequent to June 30, 2001, we drew down approximately $58.1 million from our senior credit facility in order to redeem outstanding 6.5% convertible subordinated debentures due 2003. We repurchased $11.7 million principal amount of these debentures during July 2001. August 31, 2001 was the redemption date for the remaining debentures.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined financial data are derived from the historical financial statements of Schuler Residential and Western Pacific.

The unaudited pro forma condensed combined financial statements reflect the following:

•: Pro forma combined for the merger; and
•: Pro forma combined as adjusted for the issuance of $250 million of senior notes and $150 million of senior subordinated notes in the offering of the old notes and related use of proceeds.

Pro forma adjustments to historical financial statements include adjustments that we deem appropriate, reflecting items of recurring significance and which are factually supported based on currently available information. The unaudited pro forma condensed combined balance sheet as of March 31, 2001 and the unaudited pro forma condensed combined statement of income for the year ended March 31, 2001 are presented on a pro forma combined basis as if the merger and the offering of the old notes had been completed:

•: on March 31, 2001 for purposes of the unaudited pro forma condensed combined balance sheet; and
•: on April 1, 2000 for purposes of the unaudited pro forma condensed combined statement of income.

The following unaudited pro forma condensed combined financial data should be read in conjunction with the historical consolidated financial statements of Schuler Residential, including the notes thereto, included in this prospectus, and the historical combined financial statements of Western Pacific, including the notes thereto, included in this prospectus. The unaudited pro forma condensed combined financial data are presented for illustrative purposes only and do not purport to represent our financial position as of March 31, 2001 or our results of operations for the year ended March 31, 2001 that would actually have occurred had the merger and the offering of the old notes been completed on the dates indicated, nor do they represent a forecast of our financial position or results of operations as of any future date or any future period.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2001

(dollars in thousands)

			Schuler Residential		Western Pacific		Merger Adjustments			Schuler Homes Pro Forma Combined		Offering Adjustments			Pro Forma Combined As Adjusted
Assets
	Cash and cash equivalents		$	5,366	$	47,025		—		$	52,391				$	52,391
	Inventories			519,013		339,067		—			858,080					858,080
	Investments in unconsolidated joint ventures			9,724		18,483					28,207					28,207
	Deferred income taxes			17,389		—	$	(8,500	)(b)		8,889					8,889
	Goodwill			9,432		2,800		53,396	(b)		65,628					65,628
	Intangibles, net			3,937		—					3,937					3,937
	Other assets, net			31,030		27,046		(7,584	)(b)		45,992	$	8,800	(c)		54,792
								(4,500	)(b)

		Total assets	$	595,891	$	434,421	$	32,812		$	1,063,124	$	8,800		$	1,071,924

Liabilities
	Accounts payable and accrued liabilities		$	70,211	$	88,779	$	3,737	(b)	$	167,227				$	167,227
								4,500	(b)
	Debt			294,047		200,322					494,369	$	400,000	(c)		503,169
													(391,200	)(c)
	Minority interests			—		6,950					6,950					6,950
	Owners' equity			—		138,370		(138,370	)(b)		—
Stockholders' equity
	Common stock			231,633		—		(231,633	)(a)		—					—
	Class A common stock			—		—		231,633	(a)		231,633					231,633
	Class B common stock			—		—		162,945	(b)		162,945					162,945

	Total stockholders' equity			231,633		—		162,945			394,578					394,578

	Total liabilities and equity		$	595,891	$	434,421	$	32,812		$	1,063,124	$	8,800		$	1,071,924

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED MARCH 31, 2001

(dollars in thousands)

		Schuler Residential			Western Pacific			Merger Adjustments			Schuler Homes Pro Forma Combined			Offering Adjustments			Schuler Homes Pro Forma Combined As Adjusted
Revenues		$	632,354		$	709,150					$	1,341,504			—		$	1,341,504
Cost of sales			(480,245	)		(560,131	)					(1,040,376	)	$	1,267	(e)		(1,039,109	)

	Gross profit		152,109			149,019						301,128			1,267			302,395
Selling, general and administrative expenses			(73,688	)		(65,423	)					(139,111	)					(139,111	)
Non-cash charge for impairment of long-lived assets(f)			(36,398	)		—						(36,398	)					(36,398	)
Non-cash charge for compensation expense			—			(4,207	)	$	4,207	(g)		—						—
Amortization of intangibles			(1,781	)		(400	)					(2,181	)					(2,181	)
Interest and other income (expense), net			(6,320	)		465						(5,855	)					(5,855	)

	Income before minority interests in income of consolidated joint ventures and provision for income taxes		33,922			79,454			4,207			117,583			1,267			118,850
Minority interests in income of consolidated joint ventures			(999	)		(16,002	)					(17,001	)					(17,001	)

Income before provision for income taxes			32,923			63,452			4,207			100,582			1,267			101,849
Provision for income taxes			(12,505	)		—			(27,551	)(d)		(40,056	)		(516	)(d)		(40,572	)

Net income(h)		$	20,418		$	63,452		$	(23,344	)	$	60,526		$	751		$	61,277

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2001

(dollars in thousands)

		Schuler Homes			Offering Adjustments			Schuler Homes Pro Forma Combined As Adjusted
Revenues		$	315,230			—		$	315,230
Cost of sales			(249,435	)	$	470	(e)		(248,965	)

	Gross profit		65,795			470			66,265
Selling, general and administrative expenses			(36,853	)					(36,853	)
Amortization of intangibles			(62	)					(62	)
Interest and other income (expense), net			28						28

	Income before minority interests in income of consolidated joint ventures and provision for income taxes		28,908			470			29,378
Minority interests in income of consolidated joint ventures			(847	)					(847	)

Income before provision for income taxes			28,061			470			28,531
Provision for income taxes			(11,194	)		(191	)(d)		(11,385	)

Net income(h)		$	16,867		$	279		$	17,146

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AND
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

(dollars in thousands)

(a): Represents the adjustment to reflect the exchange of shares of Schuler Residential common stock for shares of our Class A common stock in connection with the merger of our subsidiary with Schuler Residential, which for accounting purposes is treated as a reorganization of Schuler Residential that is accounted for on a historical cost basis.
(b): Represents purchase adjustments to reflect the assets and liabilities of Western Pacific as if the merger had occurred on March 31, 2001 in accordance with Accounting Principles Board Opinion No. 16.

For accounting purposes, the merger is treated as a reorganization of Schuler Residential accounted for on a historical cost basis, and a merger of Western Pacific with Schuler Residential using purchase accounting, and is based upon the following estimated purchase price and related goodwill, assuming the historical cost of Western Pacific's assets and liabilities approximates their fair value, except as noted below:

(in thousands, except per share data)
Shares of Class B common stock		20,166
Estimated fair market value per share	$	8.08

Estimated purchase price of Western Pacific		162,945
Acquisition costs incurred as of March 31, 2001		3,893
Estimated remaining acquisition costs		3,737

Total estimated purchase price and acquisition costs		170,575
Purchase of minority interests		9,000

Total merger costs		179,575
Less Western Pacific historical equity		(138,370	)
Adjustment to reduce historical cost of Western Pacific other assets to estimated fair value		3,691
Deferred income tax liability		8,500

Excess of purchase price over net assets acquired (goodwill)	$	53,396

In accordance with our adoption of Financial Accounting Standards Board Statement No. 142, "Goodwill and Intangible Assets", goodwill will not be amortized but will be subject to annual impairment tests.

In connection with the merger with Western Pacific, the Company purchased minority interests for $9,000, which is payable as follows: $2,500 upon completion of the merger (paid in April 2001), $2,000 on the one-year anniversary of the completion of the merger, and a note for $4,500 that matures four years after the completion of the merger and that bears interest at 7%. The note payable can be offset against a related note receivable in other assets and as a result, the Company has a net liability of $4,500, which is reflected in accounts payable and accrued liabilities.

The actual number of shares of our Class B common stock issued in connection with the merger equaled the number of shares of Schuler Residential common stock outstanding at the consummation of the merger. Of the 20,166,430 shares of our Class B common stock issued in connection with the merger, 18,754,727 were issued to WPH-Schuler and 1,411,703 were issued to Greenwood Properties Corp., an affiliate of Bankers Trust Company, one of Western Pacific's lenders. WPH-Schuler held all of the ownership interests of Western Pacific immediately prior to

the merger and received shares of our Class B common stock as consideration for the contribution of the ownership interests of Western Pacific to us in connection with the merger. The estimated fair market value per share of the Class B common stock reflected a nominal discount to the average market price of the Schuler Residential common stock for several days before and after the announcement of the merger. The nominal discount is based on the different terms of our Class A and Class B common stock, as well as the trading restrictions on our Class B common stock. The shares of our Class B common stock issued to Greenwood Properties Corp. were issued in connection with a loan agreement between Western Pacific and Bankers Trust Company for $32,000 of subordinated notes.

The deferred income tax liability is related to the income tax effect of timing differences created as a result of the contribution to us of the ownership interests in Western Pacific that were previously held in limited partnerships and limited liability companies.

(c): The net proceeds from the offering of the old notes, after fees and costs, were $391,200, all of which was used to repay outstanding debt.
(d): Represents the pro forma effect on combined provision for income taxes resulting from the operations of Western Pacific and Schuler Residential, and other pro forma adjustments based on an effective tax rate for Western Pacific of 40.72% based on federal and California tax rates. Prior to the
merger, Western Pacific was operated through a series of partnerships and therefore was not subject to taxation at the entity level.
(e): Represents the decrease in cost of sales as a result of a net decrease in interest incurred and debt cost amortization in connection with the repayment of debt using the proceeds of our recent notes offering.
(f): In contemplation of the merger, Schuler Residential increased its product offerings in Hawaii by adding projects in various areas of the Hawaiian islands, while reducing its investment in longer term land parcels in areas where it has a concentration of land. This change in strategy resulted in the recognition of a non-cash charge for impairment of long-lived assets of approximately $36,398, or $22,198 after taxes, during the year ended March 31, 2001. This charge is a nonrecurring item and is not indicative of future operating results.
(g): Represents the elimination of a non-cash charge for compensation expense recognized in conjunction with equity interests granted to Western Pacific executives during the year ended March 31, 2001. This charge is directly related to the merger, is a nonrecurring item and is not indicative of future operating results.
(h): Pro forma amounts do not reflect any extraordinary loss or other costs which may result from the early extinguishments of indebtedness related to the expected retirement of certain debt using the proceeds of the offering of the old notes. Any gain or loss recognized by us from the early extinguishments of indebtedness using proceeds from the offering of the old notes will be treated as an extraordinary item in the income statement for the period in which the notes offering is completed.

SELECTED FINANCIAL AND OTHER DATA OF SCHULER HOMES

The following selected financial and other data are presented on a pro forma combined basis for the three months ended June 30, 2000 and on a historical consolidated basis for the three months ended June 30, 2001. The following selected financial and other data are derived from the historical financial statements of Schuler Residential and Western Pacific and the related notes incorporated by reference in this prospectus, for the three months ended June 30, 2000, and our consolidated financial statements and the related notes incorporated by reference in this prospectus and other financial data of Schuler Homes, for the three months ended June 30, 2001. These historical results are not necessarily indicative of the results to be expected in the future. In December 2000, Schuler Residential changed its accounting year-end from a December 31 year-end to a fiscal year-end of March 31. You should read the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes to those statements incorporated by reference in this prospectus in conjunction with the information contained in this table.

		Three Months Ended June 30,
		2000(1)			2001
		(dollars in thousands)
Statements of Operations Data:
Revenues		$	244,218		$	315,230
Cost of sales			(191,596	)		(249,435	)

Gross profit			52,622			65,795
Selling, general and administrative expenses			(29,036	)		(36,853	)

Operating income			23,586			28,942
Interest and other income (expense), net			(2,707	)		(34	)

Income before minority interests in income of consolidated joint ventures and provision for income taxes			20,879			28,908
Minority interests in income of consolidated joint ventures			(944	)		(847	)

Income before provision for income taxes			19,935			28,061
Provision for income taxes(2)			(7,683	)		(11,194	)

Net income		$	12,252		$	16,867

Net income per share
	Basic(3)	$	0.30		$	0.42

	Diluted(4)	$	0.30		$	0.40

Other Financial Data (unaudited):
EBITDA(5)			33,988			46,180
EBITDA margin(6)			13.9	%		14.6	%
Depreciation and amortization			2,543			3,769
Lenders' profit participation			315			234
Other non-cash charges			340			—
Interest and debt costs, amortized or expensed(7)			9,911			13,269
Interest incurred(8)			13,014			14,002
Ratio of EBITDA to interest incurred			2.6	x		3.4	x
Ratio of total debt to total capitalization			60.0	%		58.5	%
Ratio of earnings to fixed charges(9)			2.3	x		3.2	x
Selected Operating Data (unaudited)(10):
Homes closed			1,057			1,164
New orders			1,207			1,409
Average sales price per home closed		$	252		$	274
Average sales price per new order		$	275		$	294
Backlog at end of period, homes(11)			1,670			1,970
Backlog at end of period, aggregate sales value(11)		$	455,674		$	549,954

	At June 30, 2001
	(dollars in thousands)
Balance Sheets Data:
Inventories	$	950,624
Total assets	$	1,147,463
Total debt	$	580,543
Total stockholders' equity	$	412,566

(1): June 2000 results are shown on a pro forma combined basis to include Western Pacific, which merged with Schuler Homes on April 3, 2001.
(2): The three months ended June 30, 2000 includes the pro forma effect on combined provision for income taxes resulting from the operations of Western Pacific and Schuler Residential, based on an effective tax rate for Western Pacific of 40.72% based on federal and California tax rate. Prior to the merger, Western Pacific was operated through a series of partnerships and therefore was not subject to taxation at the entity level.
(3): Basic net income per share was computed using weighted average number of shares of 40,436,247 for the three months ended June 30, 2001 and 40,267,376 for the three months ended June 30, 2000.
(4): Diluted net income per share fort the three month periods ended June 30, 2001 and 2000 was computed by adding to net income the interest expense applicable to convertible subordinated debentures of $570 and $720, respectively. Weighted average number of shares used to compute diluted net income per share for the three months ended June 30, 2001 and 2000 were 43,680,179 and 42,901,366, respectively.
(5): EBITDA means income (loss) before provision for income taxes, plus (i) interest expense, (ii) amortization of capitalized interest included in cost of sales, (iii) depreciation and amortization, (iv) minority interest in income of consolidated joint ventures and subsidiary; (v) inventory impairment losses and (vi) other non-cash charges. EBITDA is a widely accepted financial indicator of a company's availability to service debt, however, other companies may calculate EBITDA differently. EBITDA should not be considered as an alternative to operating income or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of our operating performance or as a measure of liquidity.
(6): EBITDA margin is calculated by dividing EBITDA by revenues.
(7): Includes (i) amortization of capitalized interest and debt costs included in cost of sales and (ii) interest and debt costs not capitalized, but recorded as a period expense.
(8): Interest incurred is the amount of interest paid and the net amount accrued (whether expensed or capitalized) during such period excluding amortization of debt costs and amortization of interest previously capitalized.
(9): For purposes of calculating this ratio, fixed charges consist of all interest, whether expensed or capitalized, amortization of debt costs and the representative interest portion of rent expense. Earnings consists of income before provision for income taxes (and any discontinued operations or extraordinary items) plus, (i) fixed charges reduced by interest and amortized debt costs capitalized, (ii) amortization of capitalized interest in cost of sales, and (iii) income distributions from unconsolidated joint ventures reduced by income from unconsolidated joint ventures.
(10): Includes information relating to 100% of the operations of our joint ventures.
(11): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority. In the past, our backlog has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SCHULER RESIDENTIAL

The following selected consolidated financial data of Schuler Residential are derived from Schuler Residential's consolidated financial statements and the related notes included elsewhere in this prospectus and other financial data of Schuler Residential. These historical results are not necessarily indicative of the results to be expected in the future. In December 2000, Schuler Residential changed its accounting year-end from a December 31 year-end to a fiscal year-end of March 31. You should read the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes to those statements included elsewhere in this prospectus in conjunction with the information contained in this table.

																Three Months Ended March 31,
	Years Ended December 31,
	Years Ended December 31,												Year Ended March 31, 2001
	1996			1997			1998			1999			Year Ended March 31, 2001			2000			2001
	(dollars in thousands)
Statements of Operations Data:
Revenues	$	93,645		$	229,624		$	282,902		$	506,778		$	632,354		$	160,736		$	145,314
Cost and expenses:
Home and lot sales		(76,612	)		(184,843	)		(225,370	)		(403,684	)		(480,245	)		(126,819	)		(109,098	)
Selling, general and administrative		(11,946	)		(30,864	)		(35,132	)		(57,228	)		(73,688	)		(17,286	)		(18,069	)
Non-cash charge for impairment of long-lived assets		(23,910	)		—			—			—			(36,398	)		—			—

Total costs and expenses		(112,468	)		(215,707	)		(260,502	)		(460,912	)		(590,331	)		(144,105	)		(127,167	)

Operating income (loss)		(18,823	)		13,917			22,400			45,866			42,023			16,631			18,147
Income (loss) from unconsolidated joint ventures		157			(136	)		2,435			1,322			136			753			2
Minority interest in pretax income of consolidated subsidiary		—			—			—			(444	)		(999	)		(150	)		—
Other income (expense)		(9	)		(4,261	)		(4,243	)		(4,851	)		(8,237	)		(1,381	)		(1,662	)

Income (loss) before provision (credit) for income taxes		(18,675	)		9,520			20,592			41,893			32,923			15,853			16,487
Provision (credit) for income taxes		(7,289	)		3,634			7,876			16,173			12,505			6,161			6,330

Net income (loss)	$	(11,386	)	$	5,886		$	12,716		$	25,720		$	20,418		$	9,692		$	10,157

Other Financial Data (unaudited):
EBITDA(1)	$	9,958		$	23,500		$	37,495		$	69,429		$	99,885		$	23,496		$	23,352
EBITDA margin(2)		10.6	%		10.2	%		13.3	%		13.7	%		15.8	%		14.6	%		16.1	%
Depreciation and amortization	$	814		$	2,883		$	3,162		$	5,371		$	6,409		$	1,413		$	1,450
Other non-cash charges	$	—		$	522		$	—		$	901		$	340		$	589		$	—
Interest and debt costs, amortized or expensed(3)	$	3,909		$	10,575		$	13,741		$	20,820		$	22,816		$	5,491		$	5,415
Interest incurred(4)	$	7,865		$	11,845		$	13,789		$	18,652		$	21,203		$	4,908		$	5,807
Ratio of EBITDA to interest incurred		1.3	x		2.0	x		2.7	x		3.7	x		4.7	x		4.8	x		4.0	x
Ratio of total debt to EBITDA		10.3	x		6.4	x		4.7	x		3.4	x		2.9	x		—			—
Ratio of total debt to total capitalization		39.4	%		48.1	%		50.3	%		54.1	%		55.9	%		51.6	%		55.9	%
Ratio of earnings to fixed charges(5)		(1.7	x)		1.6	x		2.1	x		3.2	x		2.5	x		4.0	x		3.6	x
Selected Operating Data (unaudited)(6):
Homes closed		512			1,427			1,827			2,643			2,799			781			624
New orders		453			1,757			2,100			2,936			2,851			876			763
Average sales price per home closed	$	225		$	172		$	189		$	200		$	236		$	215		$	236
Average sales price per new order	$	224		$	172		$	187		$	209		$	242		$	237		$	242
Backlog at end of period, homes(7)		78			408			681			974			1,121			1,069			1,121
Backlog at end of period, aggregate sales value(7)	$	18,277		$	76,125		$	123,886		$	208,727		$	277,408		$	248,926		$	277,408

	At December 31,
	At December 31,								At March 31, 2001
	1996		1997		1998		1999		At March 31, 2001
	(dollars in thousands)
Balance Sheets Data:
Inventories	$	238,358	$	291,081	$	325,166	$	436,305	$	519,013
Total assets	$	268,947	$	340,571	$	385,543	$	490,466	$	595,891
Total debt	$	102,190	$	151,204	$	177,331	$	236,763	$	294,047
Total stockholders' equity	$	157,465	$	163,355	$	175,555	$	201,148	$	231,633

(1): EBITDA means income (loss) before provision for income taxes, plus (i) interest expense, (ii) amortization of capitalized interest included in cost of sales, (iii) depreciation and amortization, (iv) minority interest in income of consolidated joint ventures and subsidiary; (v) inventory impairment losses and (vi) other non-cash charges. EBITDA is a widely accepted financial indicator of a company's availability to service debt, however, other companies may calculate EBITDA differently. EBITDA should not be considered as an alternative to operating income or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of our operating performance or as a measure of liquidity.
(2): EBITDA margin is calculated by dividing EBITDA by revenues.
(3): Includes (i) amortization of capitalized interest and debt costs included in cost of sales and (ii) interest and debt costs not capitalized, but recorded as a period expense.
(4): Interest incurred is the amount of interest paid and the net amount accrued (whether expensed or capitalized) during such period excluding amortization of debt costs and amortization of interest previously capitalized.
(5): For purposes of calculating this ratio, fixed charges consist of all interest, whether expensed or capitalized, amortization of debt costs and the representative interest portion of rent expense. Earnings consists of income before provision for income taxes (and any discontinued operations or extraordinary items) plus, (i) fixed charges reduced by interest and amortized debt costs capitalized, (ii) amortization of capitalized interest in cost of sales, and (iii) income distributions from unconsolidated joint ventures reduced by income from unconsolidated joint ventures.
(6): Includes information relating to 100% of the operations of our joint ventures.
(7): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority. In the past, our backlog has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

SELECTED HISTORICAL COMBINED FINANCIAL DATA OF WESTERN PACIFIC

The following selected combined financial data of Western Pacific are derived from Western Pacific's combined financial statements and the related notes included elsewhere in this prospectus, and other financial data of Western Pacific. These historical results are not necessarily indicative of the results to be expected in the future. You should read the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes to those statements included elsewhere in this prospectus in conjunction with the information contained in this table.

	Years Ended March 31,
	1997			1998			1999			2000			2001
				(unaudited)
	(dollars in thousands)
Combined Statements of Income Data:
Revenues	$	78,687		$	192,894		$	423,313		$	535,019		$	709,150
Cost of sales		(65,870	)		(162,501	)		(346,858	)		(428,163	)		(560,131	)

Gross profit		12,817			30,393			76,455			106,856			149,019
Selling, general and administrative expenses		(11,825	)		(20,587	)		(39,037	)		(54,150	)		(65,423	)
Non-cash charge for compensation(1)		—			—			—			—			(4,207	)

Operating income(2)		992			9,806			37,418			52,706			79,389
Interest and other income (expense), net		1			(59	)		(6,648	)		(5,696	)		65
Minority interest in (income) loss of consolidated joint ventures		338			(2,312	)		(10,479	)		(5,385	)		(16,002	)

Net income(3)	$	1,331		$	7,435		$	20,291		$	41,625		$	63,452

Other Combined Financial Data (unaudited):
EBITDA(4)	$	6,208		$	24,954		$	60,740		$	80,271		$	121,052
EBITDA margin(5)		7.9	%		12.9	%		14.3	%		15.0	%		17.1	%
Depreciation and amortization	$	587		$	747		$	804		$	839		$	897
Lenders' profit participation(6)		451			546			6,577			5,836			2,390
Interest and debt costs, amortized or expensed(7)	$	4,177		$	13,914		$	22,589		$	26,586		$	34,104
Interest incurred(8)	$	12,016		$	17,779		$	24,639		$	29,533		$	38,187
Ratio of EBITDA to interest incurred		0.5	x		1.4	x		2.5	x		2.7	x		3.2	x
Ratio of total debt to EBITDA		16.0	x		4.8	x		3.0	x		2.6	x		1.7	x
Ratio of total debt to total capitalization		76.8	%		76.2	%		71.7	%		64.9	%		59.1	%
Ratio of earnings to fixed charges(9)		0.5	x		1.2	x		1.7	x		2.3	x		2.5	x
Selected Combined Operating Data (unaudited)(10):
Homes closed		460			970			1,660			1,693			2,098
New orders		534			1,184			1,525			1,766			2,251
Average sales price per home closed	$	171		$	195		$	251		$	319		$	348
Average sales price per new order	$	171		$	195		$	281		$	318		$	341
Backlog at end of period, homes(11)		167			381			378			451			604
Backlog at end of period, aggregate sales value(11)	$	32,218		$	77,890		$	119,070		$	140,468		$	178,256

	At March 31,
	1997		1998		1999		2000		2001
	(unaudited)		(unaudited)
	(dollars in thousands)
Combined Balance Sheets Data:
Inventories	$	142,993	$	169,453	$	268,802	$	330,349	$	339,067
Total assets	$	149,798	$	183,703	$	309,451	$	394,938	$	434,421
Total debt	$	99,182	$	118,979	$	184,834	$	212,007	$	200,322
Total partners' capital	$	29,928	$	37,149	$	72,952	$	114,577	$	138,370

(1): Represents a non-cash charge for compensation expense recognized in conjunction with equity interests granted to Western Pacific executives during the year ended March 31, 2001. This charge is a nonrecurring item and is not indicative of future operating results.
(2): Operating income is defined as gross profit, or revenues less cost of sales, less selling, general and administrative expenses.
(3): Western Pacific consists of partnerships and limited liability companies. Each partner and member reflects its share of taxable income on a separate tax return. Accordingly, no provision for income taxes has been included on Western Pacific's financial statements.
(4): EBITDA means income (loss) before provision for income taxes, plus (i) interest expense, (ii) amortization of capitalized interest included in cost of sales, (iii) lenders' profit participation, (iv) minority interest in income of consolidated joint ventures and subsidiary, (v) depreciation and amortization, (vi) inventory impairment losses, and (vii) other non-cash charges. EBITDA is a widely accepted financial indicator of a company's availability to service debt; however, other companies may calculate EBITDA differently. EBITDA should not be considered as an alternative to operating income or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of our operating performance or as a measure of liquidity.
(5): EBITDA margin is calculated by dividing EBITDA by revenues.
(6): Represents lenders' profit participation in connection with participating loans.
(7): Includes (i) amortization of capitalized interest and debt costs included in cost of sales and (ii) interest and debt costs not capitalized, but recorded as a period expense.
(8): Interest incurred is the amount of interest paid and the net amount accrued (whether expensed or capitalized) during such period excluding amortization of debt issuance costs and amortization of interest previously capitalized.
(9): For purposes of calculating this ratio, fixed charges consist of all interest, whether expensed or capitalized, amortization of debt costs and the representative interest portion of rent expense. Earnings consists of income before provision for income taxes (and any discontinued operations or extraordinary items) plus, (i) fixed charges reduced by interest and amortized debt costs capitalized, (ii) amortization of capitalized interest in cost of sales, and (iii) income distributions from unconsolidated joint ventures reduced by income from unconsolidated joint ventures.
(10): Includes information relating to 100% of the operations of our unconsolidated joint ventures.
(11): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority. In the past, our backlog has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

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

The following discussion and analysis should be read in conjunction with the section "Selected Historical Consolidated Financial Data of Schuler Residential" and "Selected Historical Combined Financial Data of Western Pacific" and the financial statements and related notes included elsewhere in this prospectus.

Overview

We were formed in connection with the April 3, 2001 merger in which the businesses of Western Pacific and Schuler Residential (formerly Schuler Homes, Inc.) were combined. As we have a very limited combined operating history going back only to April 3, 2001, our historical financial condition and results of operations described in this section are based upon the historical operations of Schuler Residential and Western Pacific, with only the results from the quarter ended June 30, 2001 presented on a combined basis. The following discussion and analysis has been organized to state the results of operations and comparisons of the previous three fiscal years for each of Schuler Residential and Western Pacific on a stand-alone basis, and to state the results of operations for the quarter ended June 30, 2001 for the combined company and comparing those results to the pro forma combined results of Schuler Residential and Western Pacific for the quarter ended June 30, 2000. Prior to the merger, Schuler Residential's fiscal year end was December 31, but in connection with the merger, Schuler Residential changed its fiscal year end to March 31 in order to be aligned with Western Pacific's fiscal year end. Accordingly, the year-over-year comparisons for Schuler Residential compare the fiscal year ended March 31, 2001 to the fiscal year ended December 31, 1999 and the fiscal year ended December 31, 1999 to the fiscal year ended December 31, 1998. The presentation also includes a comparison of the three-month periods ended March 31, 2001 and March 31, 2000.

SCHULER HOMES, INC.

Schuler Homes—Results of Operations

Our number of homes closed, average sales prices of homes closed and backlog are set forth below for the periods indicated.

		Three Months Ended June 30,
		2000(1)		2001
Selected Operating Data
Homes closed
	Southern California		205		345
	Northern California		148		246
	Colorado		441		347
	Hawaii		93		88
	Washington		100		70
	Oregon		70		60
	Arizona		—		8

Total homes closed			1,057		1,164

New orders
	Southern California		336		500
	Northern California		240		323
	Colorado		346		363
	Hawaii		105		92
	Washington		82		70
	Oregon		98		31
	Arizona		—		30

Total new orders			1,207		1,409

Backlog at end of period, homes
	Southern California		445		573
	Northern California		383		461
	Colorado		551		601
	Hawaii		99		149
	Washington		119		95
	Oregon		73		38
	Arizona		—		53

Total backlog at end of period, homes(2)			1,670		1,970

Backlog at period end, aggregate sales value (in thousands)(2)		$	455,673	$	549,954

(1): June 2000 results are shown on a pro forma combined basis to include Western Pacific, which we acquired on April 3, 2001.
(2): Backlog represents homes subject to pending sales contracts, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and government project approvals and, accordingly, no assurances can be made that homes in backlog will result in actual closings.

Our number of projects in the sales stage, and land position (including joint ventures) as of June 30, 2001 are as follows:

Market		Total Number of Projects for Development(2)	As of June 30, 2001(1) Number of Projects in Sales Stage(3)	Building Sites Owned or Controlled(4)
Southern California		51	18	6,700
Northern California		65	18	9,300
Colorado		46	19	7,200
Hawaii		20	8	2,600
Washington		16	7	1,000
Oregon		6	5	300
Arizona		14	4	1,400

	Total	218	79	28,500

(1): Includes information relating to 100% of the operations of our unconsolidated joint ventures.
(2): Reflects the total number of projects owned or under option or similar contract, including projects with homes in the sales stage, under construction and projects in various stages of planning.
(3): Represents the number of active projects in respect of which home or lot sales closed or homebuyers have entered into standard sales contracts and there remain at least seven unsold homes in the project.
(4): Represents the estimated number of homes based on approximately 14,300 lots relating to land owned and approximately 14,200 lots relating to land under option or similar contracts, including homes under construction and backlog. Although we currently intend to consummate the purchase of the parcels under purchase options or similar contracts, we cannot assure you that we will complete the purchases or acquire the land purchase option.

New Home Orders and Backlog

New home orders during the quarter ended June 30, 2001 totaled 1,409, a 16.7% increase as compared to pro forma combined new home orders of 1,207 during the same quarter in 2000. This was accomplished with only an 8.6% increase in the number of active projects in the sales stage. The increase in new home orders reflects the strength in our California markets, especially in Southern California, where we have increased our focus on first-time buyers. As a result of our increased presence in the first-time buyer segment in Southern California, we have decreased the average sales price per new home order in that area from $341,000 during the quarter ended June 30, 2000 on a pro forma combined basis to $295,000 during the quarter ended June 30, 2001.

The aggregate sales value of homes in backlog at June 30, 2001 increased by 20.7% from a year ago, reflecting an 18.0% increase in the number of homes in backlog and a 2.2% increase in the average sales price of homes in backlog.

Revenues

We recorded revenues of $315.2 million during the quarter ended June 30, 2001, or 29.1% increase as compared to pro forma combined revenues of $244.2 million during the quarter ended June 30, 2000. This is a result of a 15.3% increase in the number of homes closed and a 10.8% increase in the average sales price of homes closed, reflecting a larger portion of homes closed in California and a smaller portion of homes closed in Colorado in the quarter ended June 30, 2001 as compared to the quarter ended June 30, 2000 on a pro forma combined basis.

Cost of Sales

Cost of sales as a percentage of revenues increased slightly from 78.5% during the quarter ended June 30, 2000 on a pro forma combined basis to 79.1% during the quarter ended June 30, 2001, primarily reflecting a differing product mix between the periods.

Selling, General and Administrative Expense

Our selling, general and administrative expense decreased slightly from 11.9% during the quarter ended June 30, 2000 on a pro forma combined basis to 11.7% during the quarter ended June 30, 2001.

Interest and Other Income (Expense)

Interest and other income (expense) decreased by $2.7 million from the quarter ended June 30, 2000 on a pro forma combined basis to the quarter ended June 30, 2001. This was primarily due to (a) amortization of intangibles and forgiveness of a portion of a note receivable during the June 30, 2000 quarter relating to the departure of the former president of our Oregon division and (b) increased marketing fees earned during the quarter ended June 30, 2001 relating to the sale of model homes previously under leaseback.

Minority Interest in Income of Consolidated Joint Ventures

Minority interest in income of consolidated joint ventures remained consistent at $0.8 million and $0.9 million during the quarters ended June 30, 2001 and 2000, respectively.

Provision for Income Taxes

Our effective income tax rate was 39.9% and 38.5% for the quarters ended June 30, 2001 and 2000, respectively.

Liquidity and Capital Resources

We require significant capital resources to acquire land, develop land into building lots, construct and market our homes and pay our overhead and administrative expenses. In addition, funds are required for market expansion and to make interest and principal payments on outstanding debt.

On June 28, 2001, we consummated the issuance and sale of our 9³/8% Senior Notes due 2009 in the aggregate principal amount of $250 million and our 10¹/2% Senior Subordinated Notes due 2011 in the aggregate principal amount of $150 million (collectively, the "notes"). In connection with the issuance and sale of the notes, we entered into: (i) a Purchase Agreement with our subsidiaries, and with UBS Warburg LLC, Banc of America Securities LLC, Fleet Securities, Inc. and Salomon Smith Barney Inc. (collectively, the "initial purchasers") providing for the purchase of the notes by the initial purchasers; (ii) Registration Rights Agreements with our subsidiaries and the initial purchasers, pursuant to which we agreed to file a registration statement within 90 days with the Securities and Exchange Commission with respect to the offer and sale of $400 million in aggregate principal amount of exchange notes that will be issued and offered in exchange for the notes in an exchange offer, as well as to register the notes pursuant to one or more shelf registrations under specific circumstances, all at our expense; and (iii) Indentures with U.S. Bank Trust National Association, as Trustee, pursuant to which the notes and the exchange notes will be governed. We repaid a substantial portion of our and our subsidiaries' outstanding indebtedness (other than our 9% Senior Notes due 2008 and the 6.5% Convertible Subordinated Debentures due 2003) with the proceeds of the offering of the notes.

In conjunction with the offerings of the notes, we also closed a transaction with Bank of America, N.A., Fleet National Bank, First Hawaiian Bank and California Bank & Trust for them to provide us a $225 million senior unsecured revolving credit facility (the "Revolving Credit Facility"). The Revolving

Credit Facility was subsequently increased to $360 million with the addition of Guaranty Bank, Bank of Hawaii, Bank One N.A., Comerica Bank, Key Bank N.A., US Bank N.A., Washington Mutual Bank F.A. and American Savings Bank F.S.B. and the increase of Fleet National Bank's commitment. We may use up to $50 million of the Revolving Credit Facility for letters of credit. Amounts available under the Revolving Credit Facility are subject to borrowing base limitations based upon, among other things, the amount of outstanding debt and the amount of our eligible inventory, multiplied by advance rates determined by reference to the stage of development of each item of eligible inventory. At June 30, 2001, our maximum limit for borrowings and additional financial letters of credit was $176.3 million.

We may select an interest rate applicable to the borrowings under the Revolving Credit Facility based on either LIBOR, for a one, two, three or six-month term, or the prime rate. Subject to our then-effective leverage ratio, as defined, the interest rate may vary from LIBOR plus 1.75% to 2.50% or the prime rate plus 0% to 0.50%.

The Revolving Credit Facility is guaranteed by most of our wholly-owned subsidiaries. It has a three-year term, extendible to a full three-year term on each anniversary of the closing date. Under the terms of the Revolving Credit Facility, we will be required to meet certain financial ratios and tests on an on-going basis, including minimum consolidated tangible net worth, maximum ratio of consolidated liabilities to consolidated tangible net worth, minimum interest coverage, minimum liquidity and maximum inventory levels. Additionally, some covenants will limit our and our subsidiaries' ability to incur additional debt or guarantees, create or permit to exist, liens on our property or grant negative pledges, make investments or advances, merge with other entities, change the nature of our business, engage in transactions with affiliates and make asset sales. The Revolving Credit Facility also includes covenants restricting dividends or prepayments of some kinds of indebtedness, including the notes. Under defined conditions, some of the terms of the Revolving Credit Facility, including pricing, may change. In addition, if James K. Schuler ceases to be our CEO for any reason, his replacement must be approved by a majority of the lenders within 120 days of his departure or removal in order to avoid an event of default under the Revolving Credit Facility.

We obtained the Revolving Credit Facility to retire our former credit facilities and other outstanding indebtedness previously incurred by us or our subsidiaries and for general corporate and working capital purposes.

In May 1998, Schuler Residential issued $100 million principal amount of 9% Senior Notes due April 15, 2008. As a result of the merger of Schuler Residential into us, these notes were assumed by us and guaranteed by the same subsidiaries guaranteeing the notes issued in the June 2001 offerings. The 9% Senior Notes are senior unsecured obligations. Interest on these notes is due and payable on April 15 and October 15 of each year.

The 9% Senior Notes due 2008 are not redeemable at our option prior to April 15, 2003. Thereafter, these notes may be redeemed at a price initially equal to 104.50% of the principal amount, decreasing in stages to 100% of the principal amount from and after April 15, 2006, in each case together with accrued and unpaid interest. We will be obligated to make an offer to purchase a portion of the 9% Senior Notes if we do not maintain a minimum consolidated net worth, as defined, of at least $75 million. We may also be required to offer to purchase these notes upon a change of control. In addition, the 9% Senior Notes contain other restrictive covenants that, among other things, impose certain limitations on our liability to incur additional indebtedness, create liens, make restricted payments, as defined, or sell assets.

In January 1993, Schuler Residential issued $50 million aggregate principal amount of 6.5% convertible subordinated debentures due January 15, 2003. In February 1993, the related over-allotment option for an additional $7.5 million was exercised in full. As a result of the merger of Schuler Residential into us, these convertible subordinated debentures, were assumed by us. The convertible

debentures are convertible at any time prior to maturity into shares of our common stock at a conversion price of $21.83 per share, subject to certain adjustments. As of June 30, 2001, none of the convertible debentures has been converted into shares of our common stock and the total principal amount outstanding was $57.5 million. During July 2001, we repurchased $11.7 million principal amount of our convertible subordinated debentures at a price equal to 100.75% of the principal amount. We redeemed the remaining outstanding principal amount of these convertible debentures on August 31, 2001, at a price equal to 101.0% of the principal amount plus accrued and unpaid interest according to the terms and conditions of the convertible debentures.

We expect to acquire land for future homebuilding operations through takedowns of lots subject to option purchase contracts. The use of option contracts generally lessens land-related risk and improves liquidity by allowing us to control a large number of lots with contract deposits. As of June 30, 2001, we controlled approximately 28,500 lots in 79 communities. Of these lots, approximately 50% were under options contracts with deposits totaling $32.5 million. We expect to utilize a combination of cash flow from operations and our revolving credit facility to acquire these land parcels.

We have also entered into financial joint ventures to acquire and develop residential communities, typically with financial partners who fund the acquisition and development of land and sell finished building sites to us pursuant to an option purchase contract and with sellers of land who contribute their property to the joint venture in exchange for a profits interest upon completion and sale of the homes. As of June 30, 2001, we were participating in 9 joint ventures totaling 1,077 building lots with an investment of $25.8 million.

During the quarter ended June 30, 2001, we incurred new debt secured by land purchased of approximately $8.9 million.

We have no material commitments or material off-balance sheet financing arrangements that would tend to affect future liquidity and anticipate that we can satisfy our current and near-term capital requirements based on our current capital resources and additional liquidity available under our new credit facility. We believe we can meet our long-term capital needs, including meeting debt payments and refinancing or paying off other long-term debt, from operations and external financing sources, assuming that no significant adverse changes in our business or general economic conditions occur. However, we cannot assure you that we will not require additional financing and may need additional funds to support more rapid expansion, respond to competitive pressures or respond to unanticipated requirements. We cannot assure you that additional funding will be available on attractive terms, or at all.

Raw Materials

Generally, the materials that we use in our homebuilding operations are standard items carried by major suppliers. Increases in the costs of building materials, particularly lumber, land development activities and subcontracted labor may affect future gross margins to the extent that market conditions prevent the recovery of increased costs through higher sales prices. We generally take orders for homes that are already under construction or for which we can contract for materials and labor at a fixed price during the anticipated construction period. This allows us to minimize the risks associated with increases in building material and labor costs between the time construction begins on a home and the time it is delivered to its buyer. Although we did not experience any significant shortages in the availability of building materials or labor through June 30, 2001, we may experience shortages and delays in the future which may result in delays in the delivery of homes under construction, reduced gross margins or both.

Inflation and Interest Rates

The residential homebuilding industry is affected by changes in general economic factors, particularly by interest rates and the impact of inflation. Inflation can adversely affect the rates on funds that we borrow and the affordability of permanent mortgage financing available to our prospective customers. Increased construction costs and rising interest rates, as well as increased material costs, may reduce gross margins in the short-term; however, we attempt to recover increased costs by increasing sales prices without reducing sales volume. Inflation has not had a material adverse effect on our results of operations. However, there can be no assurance that inflation will not have a material adverse impact on our future results of operations. When analyzing the purchase of land, we do not assume any inflation in home sales prices.

Impact of New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by Statement No. 137 and Statement No. 138, which is required to be adopted for fiscal years beginning after June 15, 2000. Statement No. 133 will require us to recognize all derivatives on our balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, a change in the fair value of the derivative will either be offset against the change in the fair value of the hedged asset, liability, or firm commitment through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. We do not currently believe that the implementation of Statement No. 133 will have a material impact on our results of operations or financial position.

In June 2001, the Financial Accounting Standards Board issued Statements No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. We will early-adopt the new rules on accounting for goodwill and other intangible assets beginning April 1, 2001. We recorded amortization expense of approximately $1 million (which includes $400,000 by Western Pacific) during the year ended March 31, 2001 which would not have been recorded had the Statements been in effect during such period.

SCHULER RESIDENTIAL, INC.

Schuler Residential—Results of Operations

Schuler Residential's number of homes closed, average sales prices of homes closed and backlog are set forth below for the periods indicated.

		Year Ended March 31,				Years Ended December 31,		Three Months Ended March 31,
		1998		1999		2001		2000		2001
Selected Operating Data(1)
Homes closed
	Northern California		83		256		358		78		104
	Southern California		—		18		123		27		32
	Colorado		1,090		1,448		1,396		448		299
	Hawaii		340		340		344		94		79
	Washington		251		273		343		55		62
	Oregon		63		308		234		79		47
	Arizona		—		—		1		—		1

Total homes closed			1,827		2,643		2,799		781		624

New orders
	Northern California		104		319		363		97		78
	Southern California		—		41		162		41		46
	Colorado		1,300		1,623		1,335		442		346
	Hawaii		322		361		402		108		113
	Washington		249		301		301		123		87
	Oregon		125		291		256		65		64
	Arizona		—		—		32		—		29

Total new orders			2,100		2,936		2,851		876		763

Backlog at end of period, homes
	Northern California		35		98		122		117		122
	Southern California		—		23		76		37		76
	Colorado		477		652		585		646		585
	Hawaii		52		73		145		87		145
	Washington		41		69		95		137		95
	Oregon		76		59		67		45		67
	Arizona		—		—		31		—		31

Total backlog at end of period, homes(2)			681		974		1,121		1,069		1,121

Backlog at period end, aggregate sales value (in thousands)(2)		$	123,886	$	208,727	$	277,408	$	248,926	$	277,408

(1): Includes information relating to 100% of the operations of Schuler Residential's unconsolidated joint ventures (271, 119, 122, 58 and 10 closings in the years ended December 31, 1998 and 1999, the year ended March 31, 2001, and the three months ended March 31, 2000 and 2001, respectively).
(2): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority. In the past, our backlog

has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

Schuler Residential—Comparison of the Years Ended March 31, 2001 and December 31, 1999 and 1998

Revenues. Schuler Residential's revenues for the year ended March 31, 2001 were $632.4 million, an increase of 24.8% from revenues of $506.8 million for the year ended December 31, 1999. This increase is due to a 6.1% increase in number of homes closed from 2,524 for the year ended December 31, 1999 to 2,677 for the year ended March 31, 2001 and an 17.5% increase in average sales price per home closed from $200,000 for the year ended December 31, 1999 to $235,000 for the year ended March 31, 2001.

Schuler Residential's revenues for the year ended December 31, 1999 were $506.8 million, an increase of 79.1% from revenues of $282.9 million for the year ended December 31, 1998. This increase is due to a 62.2% increase in number of homes closed from 1,556 for the year ended December 31, 1998 to 2,524 for the year ended December 31, 1999 and a 9.9% increase in average sales price per home closed from $182,000 for the year ended December 31, 1998 to $200,000 for the year ended December 31, 1999. The increase in revenues, homes closed and sales price per home occurred in part because Schuler Residential's operating results for the year ended December 31, 1999 include Stafford Homes' operating results for the year ended December 31, 1999. Stafford Homes' average sales price per home was $246,000 for the year ended December 31, 1999. The operating results are consolidated because Schuler Residential increased its ownership of Stafford Homes to 89.0% in January 1999. Strong market conditions and a different mix of homes delivered in the year ended December 31, 1999 as compared to the year ended December 31, 1998 also contributed to increased revenues, homes closed and average sales price per home.

Costs and Expenses—Home and Lot Sales. Costs and expenses—home and lot sales for the year ended March 31, 2001 were $480.2 million, an increase of 19.0% from costs and expenses—home and lot sales for the year ended December 31, 1999 of $403.7 million. The increase reflects the larger number of homes closed in the year ended March 31, 2001 relative to the year ended December 31, 1999. As a percentage of revenues, costs and expenses—home and lot sales decreased to 75.9% for the year ended March 31, 2001 from 79.7% for the year ended December 31, 1999.

Costs and expenses—home and lot sales for the year ended December 31, 1999 were $403.7 million, an increase of 79.1% from costs and expenses—home and lot sales for the year ended December 31, 1998 of $225.4 million. The increase reflects the larger number of homes closed in the year ended December 31, 1999 relative to the year ended December 31, 1998. As a percentage of revenues, costs and expenses—home and lot sales were 79.7% for the years ended December 31, 1999 and 1998.

Costs and Expenses—Selling and Commissions. Selling and commissions expenses for the year ended March 31, 2001 were $38.4 million, an increase of 21.0% compared to selling and commissions expenses for the year ended December 31, 1999 of $31.7 million. The increase is primarily attributable to a higher level of homes closed in the year ended March 31, 2001 compared to the year ended December 31, 1999. As a percentage of revenues, selling and commissions expenses decreased to 6.1% for the year ended March 31, 2001 from 6.3% for the year ended December 31, 1999.

Selling and commissions expenses for the year ended December 31, 1999 were $31.7 million, an increase of 66.0% compared to selling and commissions expenses for the year ended December 31, 1998 of $19.1 million. The increase is primarily attributable to a higher level of homes closed in the year ended December 31, 1999 compared to the year ended December 31, 1998. As a percentage of revenues, selling and commissions expenses decreased to 6.3% for the year ended December 31, 1999 from 6.8% for the year ended December 31, 1998.

Costs and Expenses—General and Administrative. General and administrative expenses for the year ended March 31, 2001 were $35.3 million, an increase of 38.5% compared to general and administrative expenses for the year ended December 31, 1999 of $25.5 million, primarily due to expansion at Schuler Residential's U.S. mainland divisions. As a percentage of revenues, general and administrative expenses increased to 5.6% in the year ended March 31, 2001 from 5.0% in the year ended December 31, 1999. This increase is a result of general and administrative expenses incurred at the new Southern California and Arizona divisions, where only 56 homes closed as of March 31, 2001. In addition, this increase includes the accrual of incentive bonuses, which reward employees for higher profit margins and higher returns on investment.

General and administrative expense increased by $9.5 million or 59.2% during the year ended December 31, 1999 as compared to general and administrative expenses of $16.0 million for the year ended December 31, 1998. As a percentage of revenues, general and administrative expense decreased to 5.0% in the year ended December 31, 1999 from 5.7% in the year ended December 31, 1998. The decrease is a result of general and administrative expenses increasing at a slower rate than revenues.

Income from Unconsolidated Joint Ventures. Income from unconsolidated joint ventures represents (i) Schuler Residential's 50% interest in the operations of two joint ventures in Hawaii, (ii) Schuler Residential's 50% interest in its joint venture in Colorado in 2000 (iii) Schuler Residential's 24.5% to 49% interest in joint ventures in Southern California. Income from unconsolidated joint ventures decreased by $1.2 million during the year ended March 31, 2001 as compared to the year ended December 31, 1999. During 1999, the majority of the closings occurred in the Colorado joint venture project, which was much more profitable than the joint venture projects in other locations.

For the year ended December 31, 1998, income from unconsolidated joint ventures represents Schuler Residential's 49.0% interest in the operations of Stafford Homes, in addition to its 50.0% interest in the operations of two joint ventures in Hawaii. Income from unconsolidated joint ventures decreased for the year ended December 31, 1999 compared to the year ended December 31, 1998 primarily because Schuler Residential accounted for Stafford Homes as a consolidated subsidiary for the year ended December 31, 1999, rather than an unconsolidated joint venture.

Minority Interest in Pretax Income of Consolidated Subsidiary. Minority interest in pretax income of consolidated subsidiary represents income relating to the 11.0% of Stafford Homes not owned by Schuler Residential through December 31, 2000. In January 2001, Schuler Residential purchased the remaining 11.0% of Stafford Homes not already owned by it.

Other Expense. Other expense consists primarily of (i) interest incurred less interest capitalized to inventory (interest expense), (ii) amortization of financing fees, net of amounts capitalized to inventory, and (iii) amortization of goodwill and covenants-not-to-compete; reduced by (iv) interest income. The increase in other expense from the year ended December 31, 1999 to the year ended March 31, 2001 is due to a higher amount of interest expensed rather than capitalized at the Oregon division, resulting from a decrease in the amount of inventory under construction due to the current softness in the Oregon real estate market conditions and also due to the following, which occurred during the quarter ended June 30, 2000: (i) the amortization of the unamortized balance of intangibles associated with Schuler Residential's acquisition of certain assets of Keys Homes in October 1998 and (ii) the forgiveness by Schuler Residential of a portion of the note receivable from the former owner of Keys Homes and former Oregon Division President, who has relinquished his right to a percentage of profits of the Oregon division.

The increase in other expense of $608,000 from the year ended December 31, 1998 to the year ended December 31, 1999 is primarily attributable to additional interest expense resulting from the consolidation of Stafford Homes offset by a lower ratio of debt to inventory under development at Schuler Residential's divisions other than Stafford Homes.

Provision (Credit) for Income Taxes. Schuler Residential's effective combined income tax rate was approximately 38.0% for the year ended March 31, 2001, 38.6% for the year ended December 31, 1999 and 38.2% for the year ended December 31, 1998.

Schuler Residential—Comparison of the Three Months Ended March 31, 2001 and March 31, 2000

Revenues. Revenues for the quarter ended March 31, 2001 were approximately $145.3 million as compared to approximately $154.5 million (excluding the sale of a land parcel) during the quarter ended March 31, 2000. This represents a decrease of approximately $9.2 million or 6.0%. The decrease in revenues reflects a smaller number of homes closed, offset in part by higher average sales prices in the quarter ended March 31, 2001 relative to the quarter ended March 31, 2000. The average sales price per home increased to $237,000 during the quarter ended March 31, 2001, an increase from an average sales price per home of $214,000 during the quarter ended March 31, 2000.

Revenues from land sales were $6.2 million during the quarter ended March 31, 2000, resulting from the sale of a land parcel in Northern California. Generally, land sale revenues will fluctuate with decisions to maintain or decrease land ownership position in certain markets based upon the volume of its holdings, the strength and number of competing developers entering particular markets at given points in time, the availability of land in markets served by Schuler Residential and prevailing market conditions.

Costs and Expenses—Home and Lot Sales. Costs and expenses—home and lot sales decreased from approximately $122.7 million (excluding the cost of a land parcel sold) during the quarter ended March 31, 2000 to approximately $109.1 million during the same period in 2001, representing a decrease of approximately $13.6 million or 11.1%. This decrease reflects a smaller number of homes closed and related decreased revenue during the quarter ended March 31, 2001 relative to the quarter ended March 31, 2000. As a percentage of revenues, costs and expenses—home and lot sales decreased from 79.4% to 75.1%. This decrease is primarily attributable to higher margins realized in Northern California and Colorado. Sales price increases in Schuler Residential's Colorado market was the main contributor to this margin expansion. Average sales prices of homes closed in Colorado increased from approximately $193,000 during the quarter ended March 31, 2000 to $207,000 during the quarter ended March 31, 2001. While some of the sales price increases are the result of a different mix of homes closed, much of them are due to market strength.

Costs and Expenses—Selling and Commissions. Selling and commissions expenses represented approximately 6.2% and 5.8% of revenues from home and lot sales (excluding land sales) during the quarters ended March 31, 2001 and 2000, respectively. The increase in selling and commissions expenses as a percentage of revenues is primarily a result of advertising and marketing costs incurred in the Southern California and Arizona divisions during the quarter ended March 31, 2001.

Costs and Expenses—General and Administrative. General and administrative expenses increased by $0.7 million during the quarter ended March 31, 2001 as compared to the same period in 2000, primarily due to expansion at Schuler Residential's U. S. mainland divisions. As a percentage of revenues, general and administrative expenses increased from 5.2% during the quarter ended March 31, 2000 to 6.3% during the quarter ended March 31, 2001. This increase is a result of general and administrative expenses incurred at the new Southern California and Arizona divisions, where only 31 homes closed during the quarter ended March 31, 2001. In addition, the increase includes the accrual of incentive bonuses, which reward employees for higher profit margins and higher returns on investment.

Income from Unconsolidated Joint Ventures. Income from unconsolidated joint ventures represents (i) Schuler Residential's 50% interest in the operations of two joint ventures in Hawaii, (ii) Schuler Residential's 50% interest in its joint venture in Colorado in 2000 and (iii) Schuler Residential's 24.5% to 49% interest in joint ventures in Southern California. During the quarter ended March 31, 2001, there were only 10 sales closed at joint venture projects, compared to 58 during the quarter ended March 31, 2000. As a result, income from unconsolidated joint ventures declined from $753,000 in the quarter ended March 31, 2000 to $2,000 in the quarter ended March 31, 2001.

Minority Interest in Pretax Income of Consolidated Subsidiary. Minority interest in pretax income of consolidated subsidiary represents the income relating to the 11% of Stafford not owned by Schuler Residential. Schuler Residential acquired the remaining 11% interest in January 2001.

Provision for Income Taxes. Schuler Residential's effective income tax rate for the quarters ended March 31, 2001 and March 31, 2000 was approximately 38.4% and 38.9%, respectively.

WESTERN PACIFIC

Western Pacific—Results of Operations

Western Pacific's number of homes closed, average sales price of homes closed and backlog are set forth below for the periods indicated.

		Year Ended March 31,
		1999		2000		2001
Selected Operating Data(1)
Homes closed
	Orange County/Inland Empire		531		273		306
	Los Angeles/Ventura		231		302		366
	San Diego		284		398		571
	Bay Area		133		216		303
	North Bay/Sacramento		481		504		552

Total homes closed			1,660		1,693		2,098

New orders
	Orange County/Inland Empire		368		280		280
	Los Angeles/Ventura		242		279		382
	San Diego		277		487		646
	Bay Area		158		224		353
	North Bay/Sacramento		480		496		590

Total new orders			1,525		1,766		2,251

Backlog at end of period, homes
	Orange County/Inland Empire		61		68		42
	Los Angeles/Ventura		82		59		75
	San Diego		61		150		225
	Bay Area		43		51		101
	North Bay/Sacramento		131		123		161

Total backlog at end of period, homes(2)			378		451		604

Backlog at end of period, aggregate sales value (in thousands)(2)		$	119,070	$	140,468	$	178,256

(1): Includes information relating to 100% of the operations of Western Pacific's unconsolidated joint ventures (0, 48 and 131 closings in the years ended March 31, 1999, 2000 and 2001, respectively).
(2): Represents homes and lots subject to pending sales contracts that have not closed, some of which are subject to contingencies, including mortgage loan approval, the sale of existing homes by customers and project approvals by the applicable government authority. In the past, our backlog has been a reliable indicator of future closings, but we cannot assure you that homes and lots subject to pending sales contracts will close.

Western Pacific—Comparison of the Years Ended March 31, 2001, 2000 and 1999

Revenues. Western Pacific reported revenues of $709.2 million for the year ended March 31, 2001, representing a 32.5% increase from revenues of $535.0 million for the year ended March 31, 2000. Western Pacific closed 1,967 homes in the year ended March 31, 2001, a increase of 19.6% from the 1,645 homes closed in the year ended March 31, 2000. The increase in revenues is primarily attributable to the increase in the number of homes closed as a result of more homes being under construction during the year ended March 31, 2001, as well as an increase in the average sales price of homes closed to $354,000 for the year ended March 31, 2001, compared to $319,000 for the year ended

March 31, 2000. The results include revenues of $12.1 million for the year ended March 31, 2001 and $10.5 million for the year ended March 31, 2000 from land sales. New orders received in the year ended March 31, 2001 increased to 2,251, an increase of 27.5% compared to the 1,766 new orders received in the year ended March 31, 2000. As of March 31, 2001, Western Pacific had 604 homes in backlog with an aggregate sales value of $178.3 million, compared to 451 homes in backlog with an aggregate sales value of $140.5 million as of March 31, 2000, an increase in aggregate sales value of 26.9%.

Western Pacific reported revenues of $535.0 million for the year ended March 31, 2000, representing a 26.4% increase over revenues of $423.3 million for the year ended March 31, 1999. Western Pacific closed 1,645 homes in the year ended March 31, 2000, a decrease of 0.9% over the 1,660 homes closed in the year ended March 31, 1999. The increase in revenues is primarily attributable to a broadening of Western Pacific's product offering and a related increase in the average sales price of homes closed to $319,000 for the year ended March 31, 2000 compared to $251,000 for the year ended March 31, 1999, as well an increase in the number of homes closed as Western Pacific continued its geographic expansion efforts. The results include revenues of $10.5 million in the year ended March 31, 2000 and $5.9 million in the year ended March 31, 1999 from land sales. New orders received in the year ended March 31, 2000 increased to 1,766, an increase of 15.8% compared to the 1,525 new orders received in the year ended March 31, 1999. As of March 31, 2000, Western Pacific had 451 homes in backlog with an aggregate sales value of $140.5 million, compared to 378 homes in backlog with an aggregate sales value of $119.1 million as of March 31, 1999, an increase in aggregate sales value of 18.0%.

Gross Profits. Gross profit increased to $149.0 million for the year ended March 31, 2001, from $106.9 million for the year ended March 31, 2000. The increase in gross profit is primarily attributable to increased revenues due to the increase in the number of homes closed in the year ended March 31, 2001. Gross profit margin remained relatively constant at 21.0% of revenues for year ended March 31, 2001 compared to 20.0% for the year ended March 31, 2000. Interest and debt costs included in cost of sales was $34.1 million for the year ended March 31, 2001, compared to $26.6 million for the year ended March 31, 2000. The increase in interest and debt costs included in cost of sales is primarily attributable to the increase in the number of homes closed. Interest and debt costs as a percentage of revenues decreased to 4.8% for the year ended March 31, 2001 from 5.0% for the year ended March 31, 2000.

Gross profit increased to $106.9 million for the year ended March 31, 2000, compared to $76.5 million in the year ended March 31, 1999. The increase in gross profit is primarily attributable to substantially increased revenues. Gross profit margin increased to 20.0% of revenues for the year ended March 31, 2000, compared to 18.1% for the year ended March 31, 1999. The increase in the gross profit margin is primarily attributable to a lower percentage of interest and debt costs included in cost of sales and improvements in the average sales prices for Western Pacific's homes as the California market improved. Interest and debt costs included in cost of sales was $26.6 million for the year ended March 31, 2000, compared to $22.6 million for the year ended March 31, 1999. The increase in interest and debt costs included in cost of sales reflects an increase in total revenues, offset by a decrease in interest and debt costs included in cost of sales as a percentage of revenues to 5.0% for the year ended March 31, 2000, from 5.3% for the year ended March 31, 1999. The decrease in interest and debt costs as a percentage of revenues results from decreasing debt leverage and increased borrowings under Western Pacific's revolving credit facility.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $69.6 million for the year ended March 31, 2001, compared to $54.2 million for the year ended March 31, 2000. The increase in selling, general and administrative expense is primarily attributable to increased operating activity and a $4.2 million nonrecurring, non-cash charge for compensation expense recognized in connection with equity interests granted to Western Pacific executives during the year

ended March 31, 2001. Selling, general and administrative expense was 9.8% of revenues for the year ended March 31, 2001, compared to 10.1% for the year ended March 31, 2000 as a result of higher comparative revenues.

Selling, general and administrative expense increased to $54.2 million for the year ended March 31, 2000, compared to $39.0 million for the year ended March 31, 1999. The increase in selling, general and administrative expense is primarily attributable to an increased level of operations. Selling, general and administrative expense increased to 10.1% of revenues for the year ended March 31, 2000, compared to 9.2% for the year ended March 31, 1999 due to greater costs associated with the expansion of operations relative to increased revenues.

Interest. Interest incurred for the year ended March 31, 2001 was $38.2 million, all of which was capitalized to real estate inventories, compared to $29.5 million of interest incurred for the year ended March 31, 2000, all of which was capitalized real estate inventories. The increase in interest incurred resulted from increased inventory and debt levels to accommodate the expanded level of operations.

Interest incurred for the year ended March 31, 2000 was $29.5 million, all of which was capitalized to real estate inventories, compared to $24.6 million of interest incurred for the year ended March 31, 1999, all of which was capitalized real estate inventories. The increase in interest incurred resulted from increased inventory and debt levels to accommodate the expanded levels of operations.

Lender's Profit Participation and Minority Interests in Income from Consolidated Joint Ventures. Lenders' profit participation, which is included in interest expense, decreased to $2.4 million for the year ended March 31, 2001, compared to $5.8 million for the year ended March 31, 2000. The number of homes closed in projects financed with participating debt in the year ended March 31, 2001 was 270, compared to 445 homes closed in such projects in the year ended March 31, 2000. The number of lots owned by projects financed with participating debt as of March 31, 2001 was 136. Minority interests in income from consolidated joint ventures was $16.0 million for the year ended March 31, 2001, compared to $5.4 million for the year ended March 31, 2000 as our relative profit percentage increased from 2000 to 2001. The number of homes closed in projects developed by consolidated joint ventures in the year ended March 31, 2001 was 179, compared to 283 homes closed in projects developed by consolidated joint ventures in the year ended March 31, 2000. The number of lots owned by projects developed by consolidated joint ventures as of March 31, 2001 was six.

Lenders' profit participation, which is included in interest expense, decreased to $5.8 million for the year ended March 31, 2000, compared to $6.6 million for the year ended March 31, 1999. The number of homes closed in projects financed with participating debt in the year ended March 31, 2000 was 445, compared to 518 homes closed in projects financed with participating debt in the year ended March 31, 1999. Minority interests in income from consolidated joint ventures was $5.4 million for the year ended March 31, 2000, compared to $10.5 million for the year ended March 31, 1999. The number of homes closed in projects developed by consolidated joint ventures for the year ended March 31, 2000 was 283, compared to 507 homes closed from projects developed by consolidated joint ventures in the year ended March 31, 1999.

Net Income. Net income increased to $63.5 million for the year ended March 31, 2001, compared to $41.6 million for year ended March 31, 2000. The increase in net income is primarily attributable to the increase in gross margin percentage and the increase in the number of homes closed and average sales price and the resulting increase in revenues.

Net income increased to $41.6 million for the year ended March 31, 2000, compared to $20.3 million for the year ended March 31, 1999. The increase in net income is primarily attributable to the increase in gross margin percentage and the increase in the number of homes closed and average sales price and the resulting increase in revenues.

BUSINESS

The Company

We are among the fifteen largest homebuilders in the country based on numbers of homes sold. In the fiscal year ended March 31, 2001, on a pro forma combined basis, we delivered 4,897 new homes and generated over $1.3 billion in revenues. We are among the top five homebuilders based on numbers of homes sold in Southern California, Northern California, Colorado, Hawaii, Washington and Oregon, and we have a growing presence in Arizona, where we recently began operations.

Our History

Schuler Residential

Western Pacific

Inland Empire in 1993 and expanded its presence in southern California by entering San Diego County in 1995, Los Angeles County in 1996 and Ventura County in 1997.

The Merger

In connection with, and as a result of, the April 3rd merger, we had outstanding approximately 40.3 million shares of common stock. Benefits from the merger include strong, diversified land positions, increased equity market capitalization and increased visibility in the capital markets. We believe that the merger will be successful due to a variety of factors including our complementary market positions, similar corporate cultures, depth of management and proven track records.

Competitive Strengths

We believe we possess the following competitive strengths:

•: Conservative operating profile. In all areas of our business, we seek to minimize risk while maximizing profitability. As a result, we take a conservative approach to land management by utilizing land purchase options, generally investing in residential developments that do not exceed a 2-3 year build-out period and closely controlling our inventory of unsold homes. In addition, we maintain stringent financial and operational control with a sophisticated management information systems platform. This system enables executive management to closely monitor home construction and financial performance at the divisional level. Also, we believe our financial leverage is conservative and, in conjunction with our strong margins, will enable us to better manage through a cyclical downturn in the housing industry or in the general economy.
•: Industry-leading margins. Among public homebuilders, we currently have among the highest EBITDA margins in the industry. These margins enable us to generate high returns on our invested capital and also afford us strong discretionary pricing flexibility during slower economic periods. We believe our strong margins are a result of our land positions in areas of favorable demographics, experienced local management teams and conservative operating strategy.
•: Leading positions in high growth western markets. We believe that we are among the top five builders based on numbers of homes sold in California, Colorado, Hawaii, Washington and Oregon. Standard and Poor's Data Resources, Inc. projects single family housing starts in these states to grow at a weighted average compounded annual growth rate of 2.2% from 2001 to 2005 as compared to 1.0% for the U.S. as a whole. Given the positive long-term growth dynamics of each of these markets, we believe that we are well positioned for future growth. Additionally, as one of the leading builders in each of these markets, we believe that we enjoy a competitive advantage with respect to general market knowledge, access to land deals, access to subcontractors and knowledge of local regulatory requirements.
•: Diverse customer base. We build a wide variety of homes targeting first-time, first-time move-up and, to a lesser extent, second-time move-up homebuyers. By doing so, we are able to focus our product on the buyer segment with the most attractive demand characteristics in each market in which we operate as driven by economic and demographic trends.

•: Deep and experienced management with significant equity ownership. Our executive management team has an average of 19 years of experience in the homebuilding industry and controls over 25% of our common stock. Additionally, our divisional presidents average 16 years of experience in the markets in which they build. The divisional presidents have incentives to create value in our company because a substantial portion of their compensation is tied to their division's pre-tax income and because they own or have options to acquire our common stock. In addition, we have retained virtually all of the senior management of companies that we have acquired, thereby providing local market experience and expertise.

Business Strategy

We attribute our strong financial performance, in part, to the following elements of our business strategy:

•: Grow within existing markets. We are among the top five homebuilders in some of the fastest growing states within the western United States. We believe that within our markets there are significant growth opportunities in terms of demand and ability to deliver product. By focusing on our existing markets, we are able to best leverage our local market knowledge and our relationships with local land sellers, subcontractors and other key tradespeople and suppliers.
•: Build diverse range of homes. We offer a wide range of homes targeted to different types of home buyers in order to maximize our potential customer base. We have historically built single family homes, town homes and condominiums focused on entry-level and first-time move-up home buyers. We also, though to a lesser extent, build second-time move-up single family homes. Our homes currently range from 700 to 5,000 square feet in size with an average sales price during the three months ended June 30, 2001 of $274,000.
•: Manage land inventory efficiently. We seek to control sufficient building lots for 5-6 years of homebuilding operations but only own a sufficient supply for 2-3 years of homebuilding operations, with the remainder controlled by options. In order to minimize risk, we generally limit the number of lots acquired for a specific project so that project build-out typically does not exceed three years. To the extent that land is unentitled, we seek to control it through options and purchase it only after it has been entitled. Our use of option contracts generally lessens land-related risks and improves liquidity by allowing us to control a large number of lots with contract deposits.
•: Target conservative financial leverage. Our objectives include a conservative approach to financial leverage and we seek to maximize financial flexibility. While we expect to experience seasonal variations in our leverage position that are typical of our industry, we manage our financial leverage to be conservative on an overall basis, taking seasonal variations into account. At June 30, 2001, we had $42.4 million in cash and cash equivalents, $950.6 million in real estate inventories, approximately $580.5 million in debt and $412.6 million of stockholders' equity.
•: Provide superior quality and customer service. We seek to build the highest quality homes and aim to achieve 100% customer satisfaction. To this end, we have a dedicated manager at each operating division whose role is to provide senior executive support to the customer throughout the sales process, and, following the closing, to ensure that any questions, concerns or complaints are dealt with expeditiously. We also offer a warranty program that provides for a one-year warranty on building materials, appliances and workmanship and a ten-year statutory warranty with respect to structural defects.

Recent Events

Markets

We rank as one of the top five builders based on number of homes sold in each of the markets in which we operate (excluding the recently commenced division in Arizona). The current stage of a division's growth cycle will vary from division to division as will the level of investment in, or dependence upon the financial results of, a particular division. The Arizona division commenced operations during the past fiscal year, and, although it did not contribute significantly to current year results, it is expected to increase its contribution during future periods.

We believe that population and employment growth are two important drivers of demand for new housing. Presented below under the headings which pertain to each of the markets in which we operate are brief overviews of population and employment growth rate data, as well as data concerning growth in single-family housing starts for the corresponding periods, for each market and for the United States as a whole.

The compound annual growth rate (CAGR) data have been derived from data compiled by Standard & Poor's Data Resource, Inc. (DRI) from the U.S. Census Bureau statistics. In reviewing the projected statistical information presented below, you should bear in mind the inherent uncertainty contained in projected data. We can give no assurance that the data presented will accurately reflect changes in population, employment or single-family housing starts in the future periods indicated.

California

We entered California in 1994. Our California operations currently consist of six operating divisions, five of which operate under the Western Pacific brand and one, in Northern California, that operates as Schuler Homes. Of the six California divisions, five commenced operations as start-up divisions and the other, serving the North Bay/Sacramento marketplace, was developed through the acquisition of Porter Homes in April 1998. In conjunction with the acquisition of Porter Homes, we also acquired a mortgage brokerage company which now operates as Western Pacific Funding and serves our Northern California homebuyers. In the fiscal year ended March 31, 2001, on a pro forma combined basis, we closed 2,579 home sales. Schuler Residential entered the Southern California market through the acquisition of some of the assets, primarily joint venture interests and options to purchase land, of Reilly Homes, Inc., a homebuilder in Southern California and Phoenix, Arizona.

California is the third largest single-family housing market in the U.S., as ranked by the U.S. Census Bureau. According to the California Department of Housing and Community Development, California will require approximately 200,000 housing units (including multi-family and single-family

units) each year through 2020 in order to meet demand. In 2000, new single-family home production in California was 102,732 homes and multi-family home production was 42,035.

	Population		Employment			Single-Family Housing Starts
	1996-2000 CAGR(%)	2001-2005 CAGR(%)	1996-2000 CAGR(%)	2001-2005 CAGR(%)	Unemployment Rate(%)(1)	1996-2000 CAGR(%)	2001-2005 CAGR(%)
U.S.	0.9	0.9	1.8	1.2	3.9	2.5	1.0
California	1.4	1.2	3.3	1.7	4.9	8.8	5.4

(1): As of December 31, 2000.