##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

Form 10-Q



---

|  |  |                                                                                                 
|- |  | ------------------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 
| 
|  |  | For the quarterly period ended
    November 30, 2002                                            
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-09911



---

Capital Pacific Holdings, Inc.

(Exact name of Registrant as specified in its
charter)


|                                                                                                   |  |                                            
|-------------------------------------------------------------------------------------------------- |  | -------------------------------------------
|Delaware                                                                                           |  | 95-2956559                                 
|(State or other jurisdiction of
    incorporation or organization)                                 |  | (I.R.S. Employer
    Identification Number)
|                                                                                                  
|4100 MacArthur Blvd., Suite 200,
    Newport Beach, CA(Address of principal executive
    offices) |  | 92660(Zip Code)                            

Registrants telephone number, including
area code:

(949) 622-8400




---

Indicate by check mark whether the Registrant
(1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date.

|                                         |  |                         
|---------------------------------------- |  | ------------------------
|Class and Title of                       |  | Shares Outstanding as of
|Capital Stock                            |  | December 31, 2002       
|                                         |  |                         
|Common Stock, $0.10 Par Value            |  | 13,679,362              
|Non-Voting Common Stock, $0.10 Par Value |  | 1,235,000               








---

TABLE OF CONTENTS



|                                |                                                                                               |                                            |  |  |  |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION
|                                | Item 1. Financial Statements                                                                 
|                                |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME         
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                | Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
|                                | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                | Item 4. Controls and Procedures                                                              
|PART II -- OTHER INFORMATION   
|                                | Item 1. Legal Proceedings                                                                    
|                                | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                     
|CERTIFICATIONS                 
|EXHIBIT INDEX                  
|EXHIBIT 99.1                   
|EXHIBIT 99.2                   



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC.

INDEX TO FORM 10-Q

|                                   |  |                                                                                                      |    |      |    | 
|---------------------------------- |  | ---------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                   |  |                                                                                                      |    | Page
|                                   |  |                                                                                                      |    |     
|PART I  FINANCIAL
    INFORMATION
|Item 1.                            |  | Financial Statements                                                                                 |    |      |    | 
|                                   |  | Consolidated Balance
    Sheets  November 30, 2002 and
    February 28, 2002                        |    |      | 1  | 
|                                   |  | Consolidated Statements of Income for the Three
    and Nine Months Ended November 30, 2002 and 2001 |    |      | 2  | 
|                                   |  | Consolidated Statements of Cash Flows for the
    Nine Months Ended November 30, 2002 and 2001       |    |      | 3  | 
|                                   |  | Notes to Consolidated Financial Statements                                                           |    |      | 4  | 
|Item 2.                            |  | Managements Discussion and Analysis of
    Results of Operations and Financial Condition            |    |      | 11 | 
|Item 3.                            |  | Quantitative and Qualitative Disclosures about
    Market Risk                                       |    |      | 16 | 
|Item 4.                            |  | Controls and Procedures                                                                              |    |      | 16 | 
|PART II  OTHER
    INFORMATION   
|Item 1.                            |  | Legal Proceedings                                                                                    |    |      | 17 | 
|Item 6.                            |  | Exhibits and Reports on Form 8-K                                                                     |    |      | 17 | 
|SIGNATURES                         |  |                                                                                                      | 18 |     
|CERTIFICATIONS                     |  |                                                                                                      | 19 |     

i



---



##### Table of Contents






PART I  FINANCIAL
INFORMATION






|        |                     
|------- | --------------------
|Item 1. | Financial Statements

CAPITAL PACIFIC HOLDINGS, INC. AND
SUBSIDIARIES






CONSOLIDATED BALANCE SHEETS


(In thousands, except share data)


|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |          |         | 
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------ | ------- | - | ------- | -------- | ------- | 
|                                                                |                                                                                                                                                                                                      | November 30,                               |         | February 28,
|                                                                |                                                                                                                                                                                                      | 2002                                       |         | 2002        
|                                                                |                                                                                                                                                                                                      |                                            |         |             
|                                                                |                                                                                                                                                                                                      | (Unaudited)                                |         |             
|ASSETS                                                         
|Cash and cash equivalents                                       |                                                                                                                                                                                                      | $                                          | 14,193  |              |         | $ | 5,080   |         
|Restricted cash                                                 |                                                                                                                                                                                                      |                                            | 365     |              |         |   | 365     |         
|Accounts and notes receivable                                   |                                                                                                                                                                                                      |                                            | 9,313   |              |         |   | 14,537  |         
|Real estate projects                                            |                                                                                                                                                                                                      |                                            | 192,108 |              |         |   | 203,685 |         
|Property and equipment                                          |                                                                                                                                                                                                      |                                            | 7,768   |              |         |   | 971     |         
|Investment in and advances to unconsolidated
    joint ventures |                                                                                                                                                                                                      |                                            | 12,836  |              |         |   | 8,549   |         
|Prepaid expenses and other assets                               |                                                                                                                                                                                                      |                                            | 25,920  |              |         |   | 17,008  |         
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|                                                                |                                                                                                                                                                                                      | Total assets                               |         | $            | 262,503 |   |         | $        | 250,195 | 
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                       
|Accounts payable and accrued liabilities                        |                                                                                                                                                                                                      | $                                          | 20,163  |              |         | $ | 35,369  |         
|Notes payable                                                   |                                                                                                                                                                                                      |                                            | 144,334 |              |         |   | 116,265 |         
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|                                                                |                                                                                                                                                                                                      | Total liabilities                          |         |              | 164,497 |   |         |          | 151,634 | 
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|Negative goodwill                                               |                                                                                                                                                                                                      |                                            |        |              |         |   | 5,447   |         
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|Stockholders equity:                                           |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|                                                                | Common stock, par value $0.10 per share,
    60,000,000 shares authorized; 16,353,951 and
    16,230,000 shares issued, respectively; 14,914,362 and
    14,878,711 shares outstanding, respectively |                                            |         | 1,635        |         |   |         | 1,623    |        
|                                                                | Additional paid-in capital                                                                                                                                                                           |                                            |         | 217,249      |         |   |         | 216,853  |        
|                                                                | Accumulated deficit                                                                                                                                                                                  |                                            |         | (113,893     | )       |   |         | (120,762 | )      
|                                                                | Treasury stock                                                                                                                                                                                       |                                            |         | (4,875       | )       |   |         | (4,080   | )      
|                                                                | Accumulated other comprehensive income (loss)                                                                                                                                                        |                                            |         | (2,110       | )       |   |         | (520     | )      
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|                                                                |                                                                                                                                                                                                      | Total stockholders equity                 |         |              | 98,006  |   |         |          | 93,114  | 
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         
|                                                                |                                                                                                                                                                                                      | Total liabilities and stockholders equity |         | $            | 262,503 |   |         | $        | 250,195 | 
|                                                                |                                                                                                                                                                                                      |                                            |         |              |         |   |         |         

See accompanying notes to financial statements.

1



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)


(In thousands, except per share
data)


|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |        |       | 
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ------------------ | ------- | ----------------- | --- | ---- | ------- | ------ | --- | - | -------- | ------ | ----- | - | -------- | ------ | ----- | 
|                                                                                               |                                                                                                      |                    |         |                  
|                                                                                               |                                                                                                      | Three Months Ended |         | Nine Months Ended
|                                                                                               |                                                                                                      | November 30,       |         | November 30,     
|                                                                                               |                                                                                                      |                    |         |                  
|                                                                                               |                                                                                                      | 2002               |         | 2001              |     | 2002 |         | 2001  
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |       
|Sales of homes and land                                                                        |                                                                                                      | $                  | 70,398  |                   |     | $    | 60,209  |        |     | $ | 162,264  |        |       | $ | 218,909  |       
|Cost of sales                                                                                  |                                                                                                      |                    | (56,302 | )                 |     |      | (46,074 | )      |     |   | (125,359 | )      |       |   | (164,963 | )     
|Interest expense                                                                               |                                                                                                      |                    | (5,118  | )                 |     |      | (5,698  | )      |     |   | (11,696  | )      |       |   | (21,352  | )     
|Selling, general and administrative expenses                                                   |                                                                                                      |                    | (9,197  | )                 |     |      | (7,594  | )      |     |   | (24,495  | )      |       |   | (27,780  | )     
|Income from unconsolidated joint ventures                                                      |                                                                                                      |                    | 363     |                   |     |      | 287     |        |     |   | 875      |        |       |   | 396      |       
|Interest and other income, net                                                                 |                                                                                                      |                    | 279     |                   |     |      | 430     |        |     |   | 598      |        |       |   | 1,129    |       
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Income from operations                                                                               |                    |         | 423               |     |      |         | 1,560  |     |   |          | 2,187  |       |   |          | 6,339  |      
|Minority interest                                                                              |                                                                                                      |                    |        |                   |     |      |        |        |     |   |         |        |       |   | (159     | )     
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Income before provision for income taxes and
    cumulative effect of change in accounting principle |                    |         | 423               |     |      |         | 1,560  |     |   |          | 2,187  |       |   |          | 6,180  |      
|Provision for income taxes                                                                     |                                                                                                      |                    | 147     |                   |     |      | 688     |        |     |   | 765      |        |       |   | 2,663    |       
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Income before cumulative effect of change in
    accounting principle                                |                    |         | 276               |     |      |         | 872    |     |   |          | 1,422  |       |   |          | 3,517  |      
|Cumulative effect of change in accounting
    principle  negative goodwill, net of tax effect |                                                                                                      |                    |        |                   |     |      |        |        |     |   | 5,447    |        |       |   |         |       
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               |                                                                                                      | Net income         |         | $                 | 276 |      |         | $      | 872 |   |          | $      | 6,869 |   |          | $      | 3,517 | 
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|Earnings per common share  basic and
    diluted:                                             |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Income before cumulative effect of change in
    accounting principle                                |                    | $       | 0.02              |     |      | $       | 0.06   |     |   | $        | 0.10   |       |   | $        | 0.24   |      
|                                                                                               | Cumulative effect of change in accounting
    principle  negative goodwill, net of tax effect       |                    |         |                  |     |      |         |       |     |   |          | 0.36   |       |   |          |       |      
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Net income                                                                                           |                    | $       | 0.02              |     |      | $       | 0.06   |     |   | $        | 0.46   |       |   | $        | 0.24   |      
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Weighted average common shares  basic                                                               |                    |         | 14,915            |     |      |         | 14,913 |     |   |          | 14,904 |       |   |          | 14,530 |      
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       
|                                                                                               | Weighted average common shares  diluted                                                             |                    |         | 14,957            |     |      |         | 15,129 |     |   |          | 14,962 |       |   |          | 14,761 |      
|                                                                                               |                                                                                                      |                    |         |                   |     |      |         |        |     |   |          |        |       |   |          |       

See accompanying notes to financial statements.

2



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Unaudited)


(In thousands)


|                                                                                                |                                                                             |                                                         |        |         |         |   |        |         |         |  
|----------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------- | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                                                                |                                                                             |                                                        
|                                                                                                |                                                                             | For the Nine Months                                    
|                                                                                                |                                                                             | Ended November 30,                                     
|                                                                                                |                                                                             |                                                        
|                                                                                                |                                                                             | 2002                                                    |        | 2001   
|                                                                                                |                                                                             |                                                         |        |        
|Operating activities:                                                                           |                                                                             |                                                         |        |         |         |   |        |        
|Net income                                                                                      |                                                                             | $                                                       | 6,869  |         |         | $ | 3,517  |        
|Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                | Depreciation and amortization                                               |                                                         |        | 398     |         |   |        | 142     |        
|                                                                                                | Accretion of deferred gain                                                  |                                                         |        | (531    | )       |   |        | (531    | )      
|                                                                                                | Accretion of negative goodwill                                              |                                                         |        |        |         |   |        | (997    | )      
|                                                                                                | Cumulative effect of change in accounting
    principle                     |                                                         |        | (5,447  | )       |   |        |        |        
|                                                                                                | Decrease in real estate projects                                            |                                                         |        | 11,577  |         |   |        | 29,540  |        
|                                                                                                | (Increase) decrease in receivables, prepaid
    expenses and other assets   |                                                         |        | (3,688  | )       |   |        | 7,945   |        
|                                                                                                | Decrease in accounts payable and accrued
    liabilities                    |                                                         |        | (16,265 | )       |   |        | (17,925 | )      
|                                                                                                | Minority interest                                                           |                                                         |        |        |         |   |        | 159     |        
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                |                                                                             | Net cash provided by (used in) operating
    activities |        |         | (7,087  | ) |        |         | 21,850  |  
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|Investing activities:                                                                           |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                | Purchases of property and equipment, net                                    |                                                         |        | (7,195  | )       |   |        | (921    | )      
|                                                                                                | Increase in investment in and advances to
    unconsolidated joint ventures |                                                         |        | (4,287  | )       |   |        | (2,699  | )      
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                |                                                                             | Net cash used in investing activities                   |        |         | (11,482 | ) |        |         | (3,620  | )
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|Financing activities:                                                                           |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                | Borrowings on notes payable, net                                            |                                                         |        | 28,069  |         |   |        | 42,336  |        
|                                                                                                | Retirement of senior unsecured notes payable                                |                                                         |        |        |         |   |        | (55,592 | )      
|                                                                                                | Issuance of common stock                                                    |                                                         |        | 408     |         |   |        |        |        
|                                                                                                | Repurchase of common stock and warrants                                     |                                                         |        | (795    | )       |   |        | (344    | )      
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|                                                                                                |                                                                             | Net cash provided by (used in) financing
    activities |        |         | 27,682  |   |        |         | (13,600 | )
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|Net increase in cash and cash equivalents                                                       |                                                                             |                                                         | 9,113  |         |         |   | 4,630  |        
|Cash and cash equivalents at beginning of period                                                |                                                                             |                                                         | 5,080  |         |         |   | 7,552  |        
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        
|Cash and cash equivalents at end of period                                                      |                                                                             | $                                                       | 14,193 |         |         | $ | 12,182 |        
|                                                                                                |                                                                             |                                                         |        |         |         |   |        |        

Non-Cash Activities

During the nine month period ended
November 30, 2001, the Company issued 1,235,000 shares of
non-voting common stock to CHF in return for CHFs
remaining 7% interest in CPH LLC in connection with the
Exchange Transaction described in Note 3 to the financial
statements. Below is a summary of amounts recorded as a result
of this transaction:

|                                                           |  |   |        |  
|---------------------------------------------------------- |  | - | ------ | -
|Minority interest acquired                                 |  | $ | 7,902  |  
|Issuance of non-voting common stock                        |  |   | (5,088 | )
|Deferred income taxes and accrued expenses
    recorded    |  |   | (2,061 | )
|Adjustment of remaining property and equipment to
    zero |  |   | (360   | )
|Negative goodwill recorded                                 |  |   | (393   | )
|                                                           |  |   |        |  
|                                                           |  | $ |       |  
|                                                           |  |   |        |  

See accompanying notes to financial statements.

3



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)


1.     Basis of
Presentation

The unaudited financial statements presented
herein have been prepared in accordance with the instructions to
Form 10-Q and do not include all of the information and
note disclosures required by accounting principles generally
accepted in the United States. These statements should be read
in conjunction with the consolidated financial statements, and
notes thereto, included in the Form 10-K for the fiscal
year ended February 28, 2002, of Capital Pacific Holdings,
Inc. (the Company or CPH, Inc.). In the
opinion of management, the financial statements presented herein
include all adjustments (which are solely of a normal recurring
nature) necessary to present fairly the Companys financial
position and results of operations. The results of operations
for the three and nine month periods ended November 30,
2002, are not necessarily indicative of the results that may be
expected for the year ending February 28, 2003. The
consolidated financial statements include the accounts of the
Company, wholly-owned subsidiaries and certain majority owned
joint ventures, as well as the accounts of Capital Pacific
Holdings, LLC (CPH LLC), which is now
wholly-owned by the Company. All other investments are accounted
for on the equity method. All significant intercompany balances
and transactions have been eliminated in consolidation.

2.     Reclassifications

Certain items in prior period financial
statements have been reclassified in order to conform with the
current year presentation.

3.     Company
Organization and Operations

The Company is a regional builder and developer
with operations throughout selected metropolitan areas of
California, Texas, Arizona, Colorado and, until recently,
Nevada. The Companys principal business activities are to
develop subdivisions and master-planned communities and build
and sell single-family homes. The Companys single-family
homes are targeted to entry-level, move-up and luxury buyers.

In fiscal year 1998, the Company consummated an
equity and restructuring transaction whereby the Company and
certain of its subsidiaries transferred to CPH LLC substantially
all of their respective assets and CPH LLC assumed all the
liabilities of the Company and its subsidiaries. An unaffiliated
investment company, California Housing Finance, L.P.
(CHF) then acquired a 32.07% minority interest in
CPH LLC as a result of a cash investment in CPH LLC. From fiscal
1998 through fiscal 2001, the Company expanded its operating
strategy to encompass the acquisition and development of
commercial and mixed-use projects, as well as ownership of
existing commercial properties, primarily through non-majority
investments in limited liability companies, with 99.25% of the
capital for these projects being provided by CHF. CPH, Inc. and
CHF had contingent profits interests (after repayment of debt,
the costs of the project, invested capital and preferred return,
the latter typically 12%) of approximately 30% to CPH, Inc. and
70% to CHF.

Effective February 23, 2001, CPH, Inc. and
CHF consummated the first portion of an interest exchange
transaction (the Exchange Transaction), whereby CPH,
Inc. exchanged its 0.75% capital interests and contingent
profits interest in the majority of the joint ventures
capitalized by CHF, including certain entities which were
previously consolidated, (the Divested Joint
Ventures) for approximately 78% of CHFs interest in
CPH LLC and all of CHFs interests in certain residential
joint ventures. At February 28, 2001 and during the three
month period ended May 31, 2001, CPH, Inc. had a 93%
interest in CPH LLC and CHF held a 7% minority interest (as
compared to 32.07% formerly). As a result of the first portion
of the Exchange Transaction, CPH Inc.s interest in the
total capital of CPH LLC increased by 37% or $27.2 million. Both
CPH, Inc. and CHF had an option to convert CHFs remaining
7% interest in CPH LLC into 1,235,000 shares of non-voting
Common Stock of CPH, Inc. at the equivalent of approximately
$6.40 per share. This option was exercised by CPH, Inc. on
May 31, 2001, and as a result of this second portion of the
Exchange Transaction, CPH, Inc. owned 100% of CPH LLC, and had
obtained an additional increment of CPH LLCs

4



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

total capital of $7.9 million. In addition,
Capital Pacific Homes, Inc., a wholly-owned subsidiary of the
Company, has entered into construction, management and marketing
agreements relating to certain of the Divested Joint Ventures
with residential components (the Managed Projects),
whereby the Company is compensated for performing such services
through a management fee arrangement, including reimbursement of
all project costs. As a result of the Exchange Transaction, the
Company has no further exposure to the economic or entitlement
risks associated with the Divested Joint Ventures or the Managed
Projects, including no obligation to provide any capital.

The Exchange Transaction was accounted for as the
simultaneous acquisition of CHFs minority interest in CPH
LLC and certain other residential joint ventures and the
disposition of the Companys interest in the Divested Joint
Ventures. As a result, no gain was initially recognized, the
remaining balance of the Companys property and equipment
was adjusted to zero at February 28, 2001, and again at
May 31, 2001, a deferred gain of approximately
$3.5 million was recorded on the disposition of one of the
Divested Joint Ventures, and the balance of the transaction was
recorded as negative goodwill in the amount of
$6.8 million. Negative goodwill represents the portion of
the positive difference between the Companys basis in the
assets acquired in the Exchange Transaction as compared to the
assets which were divested which was not otherwise accounted for
as an adjustment to property and equipment or as a deferred
gain. Both negative goodwill and the deferred gain were being
accreted over five years, which accretion was included as a
reduction in selling, general and administrative expenses. As
further discussed in Note 9 below, due to a recently
promulgated change in accounting principles, the remaining
$5.4 million in unaccreted negative goodwill as of
February 28, 2002 increased net income in the quarter ended
May 31, 2002 through a cumulative effect of change in
accounting principle. The remaining deferred gain will continue
to be accreted over the four years of its remaining expected
life.

Assets under management, including assets owned
by unconsolidated joint ventures (see Note 4 below) and
Managed Projects, totaled $518 million at November 30,
2002 in 61 residential projects. At November 30, 2002,
CPH LLC, which is now 100% owned by the Company, had
$247 million in assets and a net worth of $105 million.

References to the Company are, unless the context
indicates otherwise, also references to CPH LLC and the
project-specific entities in which the Company has an equity
ownership interest. At the current time, all significant
financing transactions and arrangements are incurred either by
CPH LLC or by the project-specific entities, or in the case
of Managed Projects, by the owner of such projects.

4.     Investments in
and Advances to Unconsolidated Entities

The Company is a general partner or a direct or
indirect managing member and has a 50 percent or lesser
ownership in 14 unconsolidated entities at November 30,
2002. The Companys net investment in and

5



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

advances to unconsolidated entities are as
follows at November 30, 2002 and February 28, 2002 (in
thousands):

|                               |                               |          |         |              |        |              |  |   |       |       | 
|------------------------------ | ----------------------------- | -------- | ------- | ------------ | ------ | ------------ |  | - | ----- | ----- | 
|                               |                               | Capital  |         | November 30, |        | February 28,
|                               |                               | Interest |         | 2002         |        | 2002        
|                               |                               |          |         |              |        |             
|Unconsolidated Joint Ventures: |                               |          |         |              |        |              |  |   |       |      
|                               | JMP Canyon Estates, L.P.      |          | 10%     |              | $      | 112          |  |   | $     | 112   | 
|                               | JMP Harbor View, L.P.         |          | 10%     |              |        | 310          |  |   |       | 318   | 
|                               | Grand Coto Estates, L.P.      |          | 10%     |              |        | 627          |  |   |       | 546   | 
|                               | M.P.E. Partners, L.P.         |          | 10%     |              |        | 257          |  |   |       | 989   | 
|                               | LB/L  CPH Providence, LLC    |          | 10%     |              |        | 462          |  |   |       | 1,065 | 
|                               | LB/L  CPH Longmont, LLC      |          | 10%     |              |        | 1,138        |  |   |       | 1,004 | 
|                               | LB/L  CPH Laguna Street, LLC |          | 10%     |              |        | 1,040        |  |   |       | 946   | 
|                               | CPH Daily Ranch, L.P.         |          | 10%     |              |        | 3,253        |  |   |       | 3,103 | 
|                               | CPH Sierra Peak, L.P.         |          | 50%     |              |        | 5,129        |  |   |       |      | 
|                               | Other                         |          | Various |              |        | 508          |  |   |       | 466   | 
|                               |                               |          |         |              |        |              |  |   |       |      
|                               |                               |          |         | $            | 12,836 |              |  | $ | 8,549 |      
|                               |                               |          |         |              |        |              |  |   |       |      

The Companys economic interests in the
unconsolidated joint ventures vary. Generally, the Company
receives a portion of earnings after a preferred return on
invested capital is provided. Typically, the majority of capital
is provided by capital partners. In addition, the Company is
typically required to contribute the full amount of its capital
obligation at the commencement of the joint ventures
business, but in some cases the Company may have a contingent
obligation to contribute additional capital. The Company is
typically the direct or indirect managing entity pursuant to
terms in each ventures agreement. In the case of Divested
Joint Ventures which are now Managed Projects, the Company or a
subsidiary manages the development of the project under a
management contract. Such management contracts as well as the
unconsolidated joint venture agreements typically provide for
the payment of a fee to compensate the Company for overhead
expenditures as well as reimbursement of all direct project
costs. The Company provides for income taxes currently on its
share of distributed and undistributed earnings and losses from
the investments.

The Company uses the equity method of accounting
for its investments in the unconsolidated 50 percent or
less owned entities. The accounting policies of the entities are
substantially the same as those of the Company.

Following is summarized, combined financial
information for the unconsolidated entities at November 30,
2002 and February 28, 2002 and for the three and nine month
periods ended November 30, 2002 and November 30, 2001
(in thousands). This information includes in each case the
interest of all equity owners of the entities, not just that of
the Company and its subsidiaries.

Assets

|                     |  |              |         |              |  |   |        | 
|-------------------- |  | ------------ | ------- | ------------ |  | - | ------ | 
|                     |  | November 30, |         | February 28,
|                     |  | 2002         |         | 2002        
|                     |  |              |         |             
|Cash                 |  | $            | 1,068   |              |  | $ | 1,163  | 
|Real estate projects |  |              | 111,728 |              |  |   | 94,818 | 
|Other assets         |  |              | 2,521   |              |  |   | 1,275  | 
|                     |  |              |         |              |  |   |        | 
|                     |  | $            | 115,317 |              |  | $ | 97,256 | 
|                     |  |              |         |              |  |   |        | 

6



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Liabilities and Equity

|                                       |  |              |         |              |  |   |        | 
|-------------------------------------- |  | ------------ | ------- | ------------ |  | - | ------ | 
|                                       |  | November 30, |         | February 28,
|                                       |  | 2002         |         | 2002        
|                                       |  |              |         |             
|Accounts payable and other liabilities |  | $            | 6,883   |              |  | $ | 5,818  | 
|Notes payable                          |  |              | 4,314   |              |  |   | 5,539  | 
|                                       |  |              |         |              |  |   |        | 
|                                       |  |              | 11,197  |              |  |   | 11,357 | 
|                                       |  |              |         |              |  |   |        | 
|Equity                                 |  |              | 104,120 |              |  |   | 85,899 | 
|                                       |  |              |         |              |  |   |        | 
|                                       |  | $            | 115,317 |              |  | $ | 97,256 | 
|                                       |  |              |         |              |  |   |        | 

Income Statement

|                               |  |                    |       |                   |  |              |       |              |  |   |        |  |  |   |       | 
|------------------------------ |  | ------------------ | ----- | ----------------- |  | ------------ | ----- | ------------ |  | - | ------ |  |  | - | ----- | 
|                               |  |                    |       |                  
|                               |  | Three Months Ended |       | Nine Months Ended
|                               |  |                    |       |                  
|                               |  | November 30,       |       | November 30,      |  | November 30, |       | November 30,
|                               |  | 2002               |       | 2001              |  | 2002         |       | 2001        
|                               |  |                    |       |                   |  |              |       |             
|Sales of homes and land        |  | $                  | 2,020 |                   |  | $            | 4,937 |              |  | $ | 13,072 |  |  | $ | 7,905 | 
|Interest and other income, net |  |                    | 340   |                   |  |              | 2     |              |  |   | 895    |  |  |   | 20    | 
|                               |  |                    |       |                   |  |              |       |              |  |   |        |  |  |   |       | 
|                               |  |                    | 2,360 |                   |  |              | 4,939 |              |  |   | 13,967 |  |  |   | 7,925 | 
|Costs and expenses             |  |                    | 2,094 |                   |  |              | 4,633 |              |  |   | 12,395 |  |  |   | 7,336 | 
|                               |  |                    |       |                   |  |              |       |              |  |   |        |  |  |   |       | 
|Net income                     |  | $                  | 266   |                   |  | $            | 306   |              |  | $ | 1,572  |  |  | $ | 589   | 
|                               |  |                    |       |                   |  |              |       |              |  |   |        |  |  |   |       | 

5.     Notes
Payable

Notes payable at November 30, 2002 and
February 28, 2002, are summarized as follows (in thousands):

|                                                                                                                                                                                                                                                                            |  |              |         |              |  |   |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ------------ |  | - | ------- | 
|                                                                                                                                                                                                                                                                            |  | November 30, |         | February 28,
|                                                                                                                                                                                                                                                                            |  | 2002         |         | 2002        
|                                                                                                                                                                                                                                                                            |  |              |         |             
|Senior unsecured revolving credit facility,
    bearing interest varying from LIBOR to prime, as selected by the
    Company, plus applicable margins                                                                                                                       |  | $            | 107,126 |              |  | $ | 90,658  | 
|Senior subordinated note, bearing interest at
    LIBOR plus applicable margin, maturing October 31, 2007                                                                                                                                                                   |  |              | 20,000  |              |  |   |        | 
|Notes payable to banks, including interest
    varying from prime plus one quarter percent to LIBOR plus four
    and one quarter percent, maturing between February 9, 2003
    and November 30, 2003, secured by certain real estate
    projects on a non-recourse basis |  |              | 9,853   |              |  |   | 18,011  | 
|Other                                                                                                                                                                                                                                                                       |  |              | 7,355   |              |  |   | 7,596   | 
|                                                                                                                                                                                                                                                                            |  |              |         |              |  |   |         | 
|                                                                                                                                                                                                                                                                            |  | $            | 144,334 |              |  | $ | 116,265 | 
|                                                                                                                                                                                                                                                                            |  |              |         |              |  |   |         | 

During the third quarter of fiscal 2002, CPH LLC
entered into a senior unsecured revolving credit facility (the
Senior Facility) with several participant banks. The
facility had a maximum commitment of $125 million and a two
year revolving term. Proceeds from this facility were used to
pay down CPH LLCs existing facilities and retire the
remaining $55.6 million of 12 3/4% Senior Notes (the
Senior Notes) at face value. In addition, the
Company fixed the interest rate on $50 million and
$25 million of borrowings at 5.93% and 5.87%, respectively,
until September 2003 through interest rate swap agreements with
a bank which were required by the terms of the Senior Facility.
In October 2002, the Company extended the maturity of the Senior
Facility to October 2005 and increased the maximum commitment to
$130 million. In addition, the Company entered into a
Senior Subordinated Credit Agreement in the initial amount of
$20 million, with a

7



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

maturity date in October 2007. The Company
extended the maturity of the interest rate swaps on the Senior
Facility to October 2005, and also entered into an interest swap
as required by the terms of the Senior Subordinated Credit
Agreement effectively fixing the interest rate on that
obligation at 9.50% through its maturity in October 2007.

6.     Earnings Per
Common Share

Basic earnings per common share is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding. Diluted earnings
per common share includes the effect of the potential shares
outstanding, including dilutive securities using the treasury
stock method. The table below reconciles the components of the
basic earnings per common share calculation to diluted earnings
per common share (in thousands, except per share data):

|                                                                                                 |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |      |  |   |     |     |  |  |        |        |  |   |      |      | 
|------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | ------------------ | --- | ----------------- |  | --- | ------ | ------ |  | ------ | ---- | ---- |  | - | --- | --- |  |  | ------ | ------ |  | - | ---- | ---- | 
|                                                                                                 |                                                                                                        |                   
|                                                                                                 |                                                                                                        | Three Months Ended
|                                                                                                 |                                                                                                        |                   
|                                                                                                 |                                                                                                        |                    |     |                  
|                                                                                                 |                                                                                                        | November 30, 2002  |     | November 30, 2001
|                                                                                                 |                                                                                                        |                    |     |                  
|                                                                                                 |                                                                                                        | Income             |     | Shares            |  | EPS |        | Income |  | Shares |      | EPS 
|                                                                                                 |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |     
|Basic earnings per common share:                                                                 |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |      |  |   |     |     |  |  |        |        |  |   |      |     
|                                                                                                 | Income available to common stockholders before
    cumulative effect of change in accounting principle |                    | $   | 276               |  |     |        | 14,915 |  |        | $    | 0.02 |  |   | $   | 872 |  |  |        | 14,913 |  |   | $    | 0.06 | 
|Effect of dilutive securities:                                                                   |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |      |  |   |     |     |  |  |        |        |  |   |      |     
|                                                                                                 | Warrants                                                                                               |                    |     |                  |  |     |        |       |  |        |      |     |  |   |     |    |  |  |        | 35     |  |   |      |     | 
|                                                                                                 | Stock options                                                                                          |                    |     |                  |  |     |        | 42     |  |        |      |     |  |   |     |    |  |  |        | 181    |  |   |      |     | 
|                                                                                                 |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |      |  |   |     |     |  |  |        |        |  |   |      |     
|Diluted earnings per common share before
    cumulative effect of change in accounting principle |                                                                                                        | $                  | 276 |                   |  |     | 14,957 |        |  | $      | 0.02 |      |  | $ | 872 |     |  |  | 15,129 |        |  | $ | 0.06 |     
|                                                                                                 |                                                                                                        |                    |     |                   |  |     |        |        |  |        |      |      |  |   |     |     |  |  |        |        |  |   |      |     

|                                                                                                 |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |      |  |   |       |       |  |  |        |        |  |   |      |      | 
|------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | ----------------- | ----- | ----------------- |  | --- | ------ | ------ |  | ------ | ---- | ---- |  | - | ----- | ----- |  |  | ------ | ------ |  | - | ---- | ---- | 
|                                                                                                 |                                                                                                        |                  
|                                                                                                 |                                                                                                        | Nine Months Ended
|                                                                                                 |                                                                                                        |                  
|                                                                                                 |                                                                                                        |                   |       |                  
|                                                                                                 |                                                                                                        | November 30, 2002 |       | November 30, 2001
|                                                                                                 |                                                                                                        |                   |       |                  
|                                                                                                 |                                                                                                        | Income            |       | Shares            |  | EPS |        | Income |  | Shares |      | EPS 
|                                                                                                 |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |     
|Basic earnings per common share:                                                                 |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |      |  |   |       |       |  |  |        |        |  |   |      |     
|                                                                                                 | Income available to common stockholders before
    cumulative effect of change in accounting principle |                   | $     | 1,422             |  |     |        | 14,904 |  |        | $    | 0.10 |  |   | $     | 3,517 |  |  |        | 14,530 |  |   | $    | 0.24 | 
|Effect of dilutive securities:                                                                   |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |      |  |   |       |       |  |  |        |        |  |   |      |     
|                                                                                                 | Warrants                                                                                               |                   |       |                  |  |     |        |       |  |        |      |     |  |   |       |      |  |  |        | 44     |  |   |      |     | 
|                                                                                                 | Stock options                                                                                          |                   |       |                  |  |     |        | 58     |  |        |      |     |  |   |       |      |  |  |        | 187    |  |   |      |     | 
|                                                                                                 |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |      |  |   |       |       |  |  |        |        |  |   |      |     
|Diluted earnings per common share before
    cumulative effect of change in accounting principle |                                                                                                        | $                 | 1,422 |                   |  |     | 14,962 |        |  | $      | 0.10 |      |  | $ | 3,517 |       |  |  | 14,761 |        |  | $ | 0.24 |     
|                                                                                                 |                                                                                                        |                   |       |                   |  |     |        |        |  |        |      |      |  |   |       |       |  |  |        |        |  |   |      |     

7.     Stockholders
Equity

The Company has a stock repurchase program in
place whereby up to 1,000,000 shares of the Companys
outstanding common stock may be repurchased. As of
November 30, 2002, 750,100 shares have been repurchased
cumulatively under this program. In addition, the Company has
repurchased, on a cumulative basis, 657,095 of the 790,000
warrants originally issued in connection with the issuance of
the Senior Notes. Of the remaining warrants, 123,951 were
exercised and 8,954 expired unexercised during the quarter ended
May 31, 2002.

8



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

8.     Comprehensive
Income and Implementation of SFAS No. 133

The Company follows Statement of Financial
Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities
(SFAS 133), as amended. SFAS 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities by requiring that all
derivatives be recognized in the balance sheet and measured at
fair value. The Companys policy is to designate at a
derivatives inception the specific assets, liabilities, or
future commitments being hedged and monitor the derivative to
determine if it remains an effective hedge.

The Company was required under the terms of the
Senior Facility to enter into interest rate swap agreements
which effectively fix the variable interest rate on a notional
amount of $75 million of outstandings under the Senior
Facility. In addition, the Company was required to enter into an
interest rate swap agreement in connection with the Senior
Subordinated Credit Agreement in the notional amount of
$20 million. The swap agreements have been designated as
cash flow hedges and, accordingly, are reflected at their fair
value in the consolidated balance sheets. Since applicable
interest rates are somewhat lower as of November 30, 2002
than at the time the swaps were entered into, the current fair
value of the swaps is negative. The unrealized loss, as of
November 30, 2002, of $2.1 million is recorded in
stockholders equity as accumulated other comprehensive
loss.

Amounts to be received or paid as a result of the
swap agreements are recognized as adjustments to interest
incurred on the related debt instruments. The Company believes
that there will be no ineffectiveness related to the interest
rate swaps and therefore no portion of the accumulated other
comprehensive loss would be reclassified into future earnings.
The net effect on the Companys operating results is that
interest on the variable-rate debt being hedged is recorded and
paid based on fixed interest rates.

9.     New Accounting
Pronouncements

In June 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards No. 141, Business
Combinations (SFAS 141). This Statement
addresses financial accounting and reporting for business
combinations and supersedes APB Opinion No. 16,
Business Combinations, and FASB Statement
No. 38, Accounting for Preacquisition Contingencies
of Purchased Enterprises. All business combinations in the
scope of this Statement are to be accounted for using one
method, the purchase method. The Company has adopted
SFAS 141 for all business combinations initiated after
June 30, 2001.

Also in June 2001, the FASB issued Statement of
Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets (SFAS 142).
SFAS 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB
Opinion No. 17, Intangible Assets. This
pronouncement addresses, among other things, how goodwill and
other intangible assets should be accounted for after they have
been initially recognized in the financial statements. Goodwill
will no longer be amortized but will be assessed at least
annually for impairment using a fair value methodology. The
Company has adopted this statement for all goodwill and other
intangible assets acquired after June 30, 2001 and for all
existing goodwill and other intangible assets beginning
March 1, 2002. Upon adoption of this standard on
March 1, 2002, the Company was required to accrete the
remaining balance of negative goodwill through a cumulative
effect of change in accounting principle, which increased net
income in the first quarter of fiscal 2003 by $5.4 million,
or $0.36 per diluted share. Other than the accretion of the
remaining negative goodwill, the adoption of SFAS 142 did
not have a material impact on the Companys financial
position or results of operations.

In August 2001, the FASB issued Statement of
Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets
(SFAS 144). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets. SFAS 144 supersedes SFAS

9



---



##### Table of Contents



CAPITAL PACIFIC HOLDINGS, INC., AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

No. 121, and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. The provisions of
SFAS 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001. The
adoption of SFAS 144 did not have a material impact on the
Companys financial position or results of operations.

10.     Related Party
Transactions

During the third quarter of fiscal 2003, the
Company sold approximately 2,500 acres of undeveloped land
to a third party for $12.9 million under a March 2001
option agreement between the Company and an affiliate of the
third party. A former executive of the Company is currently
affiliated with the third party purchaser. All material
financial terms of the transaction were in place prior to the
former executives affiliation.

10



---



##### Table of Contents






Item 2.     Managements
Discussion and Analysis of Results of Operations and Financial
Condition

Forward-Looking Information Is Subject to Risk
and Uncertainty

Certain statements in the financial discussion
and analysis by management contain forward-looking
information (as defined in the Private Securities Litigation
Reform Act of 1995 and within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended) that involves risk
and uncertainty, including projections and assumptions regarding
the business environment in which the Company operates. Actual
future results and trends may differ materially depending on a
variety of factors, including the Companys successful
execution of internal performance strategies; changes in general
national and regional economic conditions, such as levels of
employment, consumer confidence and income; uncertainty arising
from acts of terrorism and similar factors; availability to
homebuilders of financing for acquisitions, development and
construction; availability to homebuyers of permanent mortgages
and interest rate levels; the demand for housing; supply levels
of land, labor and materials; difficulties in obtaining permits
or approvals from governmental authorities; difficulties in
marketing homes; regulatory changes and weather and other
environmental uncertainties, including water and power
shortages; competitive influences; and the outcome of pending
and future legal claims and proceedings.

Results of Operations 
General

As is noted in Note 1 to the financial
statements presented herein, the Company is reporting its
results on a consolidated basis with the results of its
wholly-owned subsidiaries, including CPH LLC. References to the
Company in this Item 2 are, unless the context indicates
otherwise, also references to such subsidiaries. At the current
time, all significant financing transactions and arrangements
are incurred either by CPH LLC or by project-specific entities,
or in the case of Managed Projects, by the owner of such
projects.

The following table illustrates the actual
results of the Companys operations, as well as the results
including the Companys unconsolidated joint ventures, for
the three and nine months ended November 30, 2002 and 2001.
The actual results have been adjusted to reflect the inclusion
of the operating results of the Companys unconsolidated
joint ventures, including the portion attributable to the
Companys Joint Venture partners, in order to facilitate
the discussion of the overall results in certain portions of the
discussion below.

Results of Operations

(Amounts in thousands)


|                        |              |                    |        |                   |  |              |        |                |  |   |        |        |  |   |        |        | 
|----------------------- | ------------ | ------------------ | ------ | ----------------- |  | ------------ | ------ | -------------- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                        |              |                   
|                        |              | Three Months Ended
|                        |              |                   
|                        |              |                    |        |                  
|                        |              | November 30, 2002  |        | November 30, 2001
|                        |              |                    |        |                  
|                        |              |                    |        | Including         |  |              |        | Including     
|                        |              | Consolidated       |        | Joint Ventures    |  | Consolidated |        | Joint Ventures
|                        |              |                    |        |                   |  |              |        |               
|Sales of homes and land |              | $                  | 70,398 |                   |  | $            | 72,418 |                |  | $ | 60,209 |        |  | $ | 65,146 |       
|Cost of sales           |              |                    | 56,302 |                   |  |              | 58,118 |                |  |   | 46,074 |        |  |   | 50,305 |       
|                        |              |                    |        |                   |  |              |        |                |  |   |        |        |  |   |        |       
|                        | Gross margin |                    | $      | 14,096            |  |              | $      | 14,300         |  |   | $      | 14,135 |  |   | $      | 14,841 | 
|                        |              |                    |        |                   |  |              |        |                |  |   |        |        |  |   |        |       

|                        |              |                   |         |                   |  |              |         |                |  |   |         |        |  |   |         |        | 
|----------------------- | ------------ | ----------------- | ------- | ----------------- |  | ------------ | ------- | -------------- |  | - | ------- | ------ |  | - | ------- | ------ | 
|                        |              |                  
|                        |              | Nine Months Ended
|                        |              |                  
|                        |              |                   |         |                  
|                        |              | November 30, 2002 |         | November 30, 2001
|                        |              |                   |         |                  
|                        |              |                   |         | Including         |  |              |         | Including     
|                        |              | Consolidated      |         | Joint Ventures    |  | Consolidated |         | Joint Ventures
|                        |              |                   |         |                   |  |              |         |               
|Sales of homes and land |              | $                 | 162,264 |                   |  | $            | 175,336 |                |  | $ | 218,909 |        |  | $ | 226,814 |       
|Cost of sales           |              |                   | 125,359 |                   |  |              | 136,555 |                |  |   | 164,963 |        |  |   | 171,697 |       
|                        |              |                   |         |                   |  |              |         |                |  |   |         |        |  |   |         |       
|                        | Gross margin |                   | $       | 36,905            |  |              | $       | 38,781         |  |   | $       | 53,946 |  |   | $       | 55,117 | 
|                        |              |                   |         |                   |  |              |         |                |  |   |         |        |  |   |         |       

Cost of sales, as shown above, does not include
the amount of previously capitalized interest costs which are
included in interest expense. As a result, the gross margin also
does not reflect the impact of previously capitalized interest
costs included in interest expense. Industry practice among
homebuilders varies, but

11



---



##### Table of Contents



Company management feels that gross margin,
exclusive of interest expense, is the most relevant comparable
measure given the Companys historical capital structure.


In addition to the results shown above, the
Company was responsible for the following activity in certain
Managed Projects (including the Divested Joint Ventures) for the
three and nine months ended November 30, 2002 and 2001:

Managed and Divested Operations

(Dollar amounts in thousands)


|                           |  |                    |       |                   |  |              |        |              |  |   |        |  |  |   |        | 
|-------------------------- |  | ------------------ | ----- | ----------------- |  | ------------ | ------ | ------------ |  | - | ------ |  |  | - | ------ | 
|                           |  |                    |       |                  
|                           |  | Three Months Ended |       | Nine Months Ended
|                           |  |                    |       |                  
|                           |  | November 30,       |       | November 30,      |  | November 30, |        | November 30,
|                           |  | 2002               |       | 2001              |  | 2002         |        | 2001        
|                           |  |                    |       |                   |  |              |        |             
|Number of Managed Projects |  |                    | 1     |                   |  |              | 3      |              |  |   | 1      |  |  |   | 3      | 
|Unit closings              |  |                    | 1     |                   |  |              | 7      |              |  |   | 7      |  |  |   | 18     | 
|Revenues                   |  | $                  | 2,000 |                   |  | $            | 14,005 |              |  | $ | 16,180 |  |  | $ | 32,647 | 

During the three and nine months ended
November 30, 2002 and 2001, the Company was responsible for
construction and marketing activity in the Managed Projects and
the Companys sole economic interest is through management
arrangements.

Operating Data

The following table shows new home deliveries,
lot deliveries, net new orders and average sales prices for the
three and nine months ended November 30, 2002 and 2001,
including unconsolidated joint ventures but excluding Managed
Projects:

|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |         |     |     | 
|------------------------------ | ------------------------------------------ | ------------------ | --------------------- | ----------------- | --- | ------------ | --- | ------------ | --- | --- | --- | ------- | --- | --- | --- | ------- | --- | --- | 
|                               |                                            |                    |                       |                  
|                               |                                            | Three Months Ended |                       | Nine Months Ended
|                               |                                            |                    |                       |                  
|                               |                                            | November 30,       |                       | November 30,      |     | November 30, |     | November 30,
|                               |                                            | 2002               |                       | 2001              |     | 2002         |     | 2001        
|                               |                                            |                    |                       |                   |     |              |     |             
|New homes delivered:           |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|                               | California                                 |                    |                       | 57                |     |              |     | 24           |     |     |     | 110     |     |     |     | 66      |    
|                               | Texas                                      |                    |                       | 38                |     |              |     | 56           |     |     |     | 123     |     |     |     | 230     |    
|                               | Nevada                                     |                    |                       |                  |     |              |     |             |     |     |     |        |     |     |     | 68      |    
|                               | Arizona                                    |                    |                       | 43                |     |              |     | 52           |     |     |     | 93      |     |     |     | 137     |    
|                               | Colorado                                   |                    |                       | 29                |     |              |     | 31           |     |     |     | 73      |     |     |     | 99      |    
|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|                               |                                            | Subtotal           |                       |                   | 167 |              |     |              | 163 |     |     |         | 399 |     |     |         | 600 |    
|                               | Unconsolidated Joint Ventures (California) |                    |                       | 7                 |     |              |     | 18           |     |     |     | 45      |     |     |     | 29      |    
|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|                               |                                            |                    | Total homes delivered |                   |     | 174          |     |              |     | 181 |     |         |     | 444 |     |         |     | 629 | 
|Lots delivered                 |                                            |                    | 261                   |                   |     |              | 59  |              |     |     | 349 |         |     |     | 135 |        
|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|Total homes and lots delivered |                                            |                    | 435                   |                   |     |              | 240 |              |     |     | 793 |         |     |     | 764 |        
|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|Homes and lots net new orders  |                                            |                    | 220                   |                   |     |              | 181 |              |     |     | 662 |         |     |     | 509 |        
|                               |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|Average home sales price:      |                                            |                    |                       |                   |     |              |     |              |     |     |     |         |     |     |     |        
|                               | California                                 |                    | $                     | 576,000           |     |              | $   | 766,000      |     |     | $   | 607,000 |     |     | $   | 975,000 |    
|                               | Texas                                      |                    |                       | 228,000           |     |              |     | 266,000      |     |     |     | 257,000 |     |     |     | 250,000 |    
|                               | Nevada                                     |                    |                       |                  |     |              |     |             |     |     |     |        |     |     |     | 235,000 |    
|                               | Arizona                                    |                    |                       | 149,000           |     |              |     | 156,000      |     |     |     | 147,000 |     |     |     | 155,000 |    
|                               | Colorado                                   |                    |                       | 224,000           |     |              |     | 245,000      |     |     |     | 241,000 |     |     |     | 232,000 |    
|                               | Combined                                   |                    |                       | 336,000           |     |              |     | 348,000      |     |     |     | 354,000 |     |     |     | 335,000 |    

12



---



##### Table of Contents



The following table shows backlog in units and
dollars at November 30, 2002 and 2001 for each of the
Companys operations, including unconsolidated joint
ventures:

|           |       |                   |     |                   |  |       |        |         |  |  |     |     |  |   |        |        | 
|---------- | ----- | ----------------- | --- | ----------------- |  | ----- | ------ | ------- |  |  | --- | --- |  | - | ------ | ------ | 
|           |       |                  
|           |       | Ending Backlog   
|           |       |                  
|           |       |                   |     |                  
|           |       | November 30, 2002 |     | November 30, 2001
|           |       |                   |     |                  
|           |       | Units             |     | ($000s)           |  | Units |        | ($000s)
|           |       |                   |     |                   |  |       |        |        
|California |       |                   | 144 |                   |  | $     | 50,800 |         |  |  | 88  |     |  | $ | 43,800 |       
|Texas      |       |                   | 102 |                   |  |       | 20,600 |         |  |  | 111 |     |  |   | 31,600 |       
|Arizona    |       |                   | 83  |                   |  |       | 12,300 |         |  |  | 40  |     |  |   | 5,600  |       
|Colorado   |       |                   | 57  |                   |  |       | 11,200 |         |  |  | 52  |     |  |   | 10,100 |       
|           |       |                   |     |                   |  |       |        |         |  |  |     |     |  |   |        |       
|           | Total |                   |     | 386               |  |       | $      | 94,900  |  |  |     | 291 |  |   | $      | 91,100 | 
|           |       |                   |     |                   |  |       |        |         |  |  |     |     |  |   |        |       



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Third Quarter of Fiscal 2003 (Ended
    November 30, 2002) Compared to Third Quarter of Fiscal 2002
    (Ended November 30, 2001)

The Company reported net income of $276,000, or
$0.02 per share, in the third quarter of fiscal 2003, as
compared to net income of $872,000, or $0.06 per share, in the
third quarter of fiscal 2002.

On a consolidated basis, sales of homes and land
increased to $70.4 million for the third quarter of fiscal
2003 compared to $60.2 million for the third quarter of
fiscal 2002. This increase is due primarily to a single large
land sale of $12.9 million in the current quarter, offset
by a slight decrease in total home closings, combined with a
decrease in the Companys average sales price per home to
$336,000 in the third quarter of fiscal 2003 from $348,000 in
the third quarter of fiscal 2002. Sales of homes and land
including unconsolidated joint ventures, but excluding Managed
Projects, increased from $65.1 million to
$72.4 million for the respective quarters. Total home
closings decreased from 181 in the third quarter of fiscal 2002
to 174 in the third quarter of fiscal 2003, including 18 and 7
homes, respectively, closed in unconsolidated joint ventures. In
addition, there was an increase in lot closings from 59 in the
third quarter of fiscal 2002 to 261 in the third quarter of
fiscal 2003.

The number of actively selling projects has
increased from 20 at November 30, 2001 to 28 at
November 30, 2002, which affected both backlog and net new
orders. The Company currently anticipates opening between 8 and
12 net new communities over the next few quarters.

Backlog has increased from 194 units at
February 28, 2002 to 386 units at November 30, 2002,
due to the opening of several new communities which have
experienced strong sales activity during the current fiscal year
as well as increased demand in certain of the Companys
markets. However, demand continues to be weak in certain other
markets, in particular Colorado and Texas. In order to continue
to sell and close homes in these markets, it may become
necessary to offer additional incentives to homebuyers, which
could have a negative impact on future profitability.

The Companys consolidated gross margin on
home and lot closings decreased to 20.0% for the third quarter
of fiscal 2003 as compared to 23.5% for the third quarter of
fiscal 2002, due primarily to the lower margin land sale noted
above. The gross margin on home closings decreased from 23.6% to
22.9% between quarters due in part to weak demand in Colorado
and Texas and in part due to the Companys current strategy
of moving towards a lower-margin, higher-volume product mix. The
Companys gross margin on home and lot closings, including
unconsolidated joint ventures, also decreased from 22.8% in the
third quarter of fiscal 2002 to 19.7% in the third quarter of
fiscal 2003. The Companys measure of gross margin may
differ from other homebuilders due to the exclusion of interest
expense from cost of sales, as discussed above.

Selling, general and administrative expense of
$9.2 million for the third quarter of fiscal 2003 increased
$1.6 million or 21.1% as compared to the third quarter of
fiscal 2002 due principally to an increase in certain
non-recurring expenses, including litigation expense and charges
related to a reduction in workforce in the Companys Texas
division. As a percentage of revenue, selling, general and
administrative expense increased from 12.6% for the third
quarter of fiscal 2002 to 13.1% for the third quarter of fiscal
2003.

13



---



##### Table of Contents



Income from unconsolidated joint ventures
increased from $287,000 in the third quarter of fiscal 2002 to
$363,000 in the third quarter of fiscal 2003 due to an increased
level of profit participation in the active joint ventures in
the current period.

Interest and other income decreased from $430,000
in the third quarter of fiscal 2002 to $279,000 in the third
quarter of fiscal 2003.

Interest incurred was $3.0 million in the
third quarter of fiscal 2003, as compared to $3.5 million
in the third quarter of fiscal 2002, while previously
capitalized interest expensed was $5.1 million during the
third quarter of fiscal 2003, as compared to $5.7 million
in the third quarter of fiscal 2002. Once the Company sells out
of certain older projects with higher capitalized interest, it
anticipates that interest expensed will be closer to its
currently lower level of interest incurred.

The Company recorded a provision for income taxes
of $147,000 in the third quarter of fiscal 2003, utilizing an
effective tax rate of 34.8%, as compared to $688,000 in the
third quarter of fiscal 2002, with an effective tax rate of
44.1%. The effective tax rate was lower than statutory rates in
the third quarter of fiscal 2003 as a result of non-taxable
accretion of deferred gain.



| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | First Nine Months of Fiscal 2003 (Ended
    November 30, 2002) Compared to First Nine Months of Fiscal
    2002 (Ended November 30, 2001)

The Company reported net income of
$6.9 million, or $0.46 per share, for the first nine months
of fiscal 2003, as compared to net income of $3.5 million,
or $0.24 per share, for the first nine months of fiscal 2002.
Net income for the nine months ended November 30, 2002
included a cumulative effect of change in accounting principle
which increased income by $5.4 million, or $0.36 per share.
Excluding the effect of cumulative change in accounting
principle, net income decreased from $3.5 million for the
nine months ended November 30, 2001 to $1.4 million in
the nine months ended November 30, 2002.

On a consolidated basis, sales of homes and land
decreased to $162.3 million for the first nine months of
fiscal 2003 compared to $218.9 million for the first nine
months of fiscal 2002. This decrease is due primarily to a
decrease in total home closings in the current period, partially
offset by an increase in lot sales. The Companys average
sales price per home increased slightly to $354,000 in the first
nine months of fiscal 2003 from $335,000 in the first nine
months of fiscal 2002. Sales of homes and land including
unconsolidated joint ventures, but excluding Managed Projects,
decreased to $175.3 million from $226.8 million for
the respective periods. Total home closings decreased from 629
in the first nine months of fiscal 2002 to 444 in the first nine
months of fiscal 2003, including 29 and 45 homes,
respectively, closed in unconsolidated joint ventures. This was
partially offset by an increase in lot closings from 135 in the
first nine months of fiscal 2002 to 349 in the first nine months
of fiscal 2003.

The Companys gross margin on home and lot
closings decreased to 22.7% for the first nine months of fiscal
2003 as compared to 24.6% for the first nine months of fiscal
2002 due principally to a higher proportion of lower-margin lot
sales in the current period. The gross margin on home and lot
closings, including unconsolidated joint ventures, decreased
from 24.3% in the first nine months of fiscal 2002 to 22.1% in
the first nine months of fiscal 2003. The Companys measure
of gross margin may differ from other homebuilders due to the
exclusion of interest expense from cost of sales, as discussed
above.

Selling, general and administrative expense of
$24.5 million for the first nine months of fiscal 2003
decreased $3.3 million or 11.8% as compared to the first
nine months of fiscal 2002 due principally to a reduction in
volume-related sales and marketing costs. As a percentage of
revenue, selling, general and administrative expense increased
from 12.7% for the first nine months of fiscal 2002 to 15.1% for
the first nine months of fiscal 2003. The increased percentage
of such expense compared to revenue is primarily due to a lower
level of sales activity in the current period.

Income from unconsolidated joint ventures
increased from $396,000 in the first nine months of fiscal 2002
to $875,000 in the first nine months of fiscal 2003, due to an
increased level of profit participation in the active joint
ventures in the current quarter.

14



---



##### Table of Contents



Interest and other income decreased from
$1.1 million the first nine months of fiscal 2002 to
$598,000 in the first nine months of fiscal 2003.

Minority interest of $159,000 for the first nine
months of fiscal 2002 primarily represents the share of CPH
LLCs income attributable to CHF, until the Company
acquired the remaining minority interest in CPH, LLC on
May 31, 2001. As CHF no longer holds an ownership interest
in CPH LLC, no minority interest was recorded in the current
period.

Interest incurred was $7.9 million in the
first nine months of fiscal 2003, as compared to
$12.6 million in the first nine months of fiscal 2002,
while previously capitalized interest expensed was
$11.7 million during the first nine months of fiscal 2003,
as compared to $21.4 million in the first nine months of
fiscal 2002. Once the Company sells out of certain older
projects with higher capitalized interest, it anticipates that
interest expensed will be closer to its currently lower level of
interest incurred.

The Company recorded a provision for income taxes
of $765,000 in the first nine months of fiscal 2003, utilizing
an effective tax rate of 35.0%, as compared to $2.7 million
in the first nine months of fiscal 2002, with an effective tax
rate of 43.1%. The effective tax rate was lower than statutory
rates in the first nine months of fiscal 2003 as a result of
non-taxable accretion of deferred gain.

Liquidity and Capital Resources

The Companys principal cash requirements
are for the acquisition, development, construction, marketing
and overhead of its projects. When building inventory, the
Company uses substantial amounts of cash that are generally
obtained from borrowings, available cash flow from operations
and partners contributions to joint ventures.

At the current time, all material financing
transactions and arrangements are incurred either by
CPH LLC or by certain project specific entities. During the
third quarter of fiscal 2002, CPH LLC entered into a senior
unsecured revolving credit facility (the Senior
Facility) with several participant banks. The Senior
Facility had a maximum commitment of $125 million and a two
year revolving term. Proceeds from the Senior Facility were used
to pay down CPH LLCs existing facilities and retire
the remaining 12 3/4% Senior Notes during the quarter
ending November 30, 2001, as discussed below. The Senior
Facility has substantially more favorable pricing than the
12 3/4% Senior Notes which have been retired. In October
2002, the Company extended the maturity of the Senior Facility
to October 2005 and increased the maximum commitment to
$130 million. In addition, the Company entered into a
Senior Subordinated Note Agreement in the initial amount of
$20 million, with a maturity date in October 2007.

As of November 30, 2002, the Company has in
place several credit facilities, including the Senior Facility,
totaling $208 million (the Facilities) with
various bank lenders (the Banks), of which
approximately $137 million was outstanding. The Facilities
other than the Senior Facility and the Senior Subordinated Note
Agreement are secured by liens on various completed or under
construction homes and lots held by certain wholly-owned
subsidiaries of the Company. Pursuant to the Facilities, the
Company is subject to certain covenants, which require, among
other things, the maintenance of a consolidated liabilities to
net worth ratio, minimum liquidity, minimum net worth and loss
limitations, all as defined in the documents that evidence the
Facilities. At November 30, 2002, the Company was in
compliance with these covenants. The Facilities also define
certain events that constitute events of default. As of
November 30, 2002, no such event had occurred. Commitment
fees are payable annually on some of the Facilities.

Homebuilding activity, excluding Managed
Projects, is being financed out of CPH LLC cash, bank
financing, and the existing joint ventures, including joint
ventures with institutional investors. In addition, development
work undertaken in certain of the Companys joint ventures
is financed through various non-recourse lending arrangements.
The Company anticipates that it will continue to utilize both
third party financing and joint ventures to cover financing
needs in excess of internally generated cash flow.

Management expects that cash flow generated from
operations and from bank financing will be sufficient to cover
the debt service and to fund CPH LLCs current
development and homebuilding activities for the reasonably
foreseeable future, absent force majeure or other unforeseen
events, and expects that capital

15



---



##### Table of Contents



commitments from its joint venture partners and
other bank facilities will provide sufficient financing for the
operation of its joint ventures.


Critical Accounting Policies

The Companys financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires management to make estimates and
judgments that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and costs and expenses during the
reporting period. Management evaluates its estimates and
judgments, including those which impact its most critical
accounting policies, on an ongoing basis. Management bases its
estimates and judgments on historical experience and on various
other factors that are believed to be reasonable under the
circumstances within the framework of current accounting
literature. Actual results may differ from these estimates under
different assumptions or conditions. The Companys key
accounting policies are discussed in detail in the
Companys Form 10-K for the fiscal year ended
February 28, 2002.






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

The Market Risk Exposure paragraphs
are presented to provide an update about material changes to the
Quantitative and Qualitative Disclosures about Market
Risk paragraphs included in the Companys 2002 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission and should be read in conjunction with those
paragraphs.

The Company is exposed to market risks related to
fluctuations in interest rates on its debt. Under the Senior
Facility and the Senior Subordinated Credit Agreement, the
Company has utilized interest rate swaps in order to fix the
interest rate on $95 million of its variable rate debt. The
Company has not used forward or option contracts on foreign
currencies or commodities, or other types of derivative
financial instruments.

The Company uses debt financing primarily for the
purpose of acquiring and developing land and constructing and
selling homes. Historically, the Company has made short-term
borrowings under its revolving credit facilities to fund those
expenditures. In addition, the Company had previously issued
$100 million in fixed-rate 12 3/4% Senior Notes to
provide longer-term financing. Prior to the third quarter of
fiscal 2002, the Company had repurchased Senior Notes with a
face value of $44.4 million. During the third quarter of
fiscal 2002, the Company redeemed at face value the remaining
$55.6 million of the Senior Notes.

For fixed rate debt, changes in interest rates
generally affect the fair market value, but not the
Companys earnings or cash flows. Conversely, for variable
rate debt, changes in interest rates generally do not have an
impact on fair market value, but do affect the Companys
future earnings and cash flows. The Company does not have an
obligation to prepay fixed rate debt prior to maturity, and as a
result, interest rate risk and changes in fair market value
should not have a significant impact on such debt until the
Company would be required to refinance such debt. Based upon the
amount of variable rate debt outstanding at the end of the third
quarter, and holding the variable rate debt balance constant,
each one percentage point increase in interest rates occurring
on the first day of an annual period would result in an increase
in interest incurred for the coming year of approximately
$500,000.

The Company does not believe that future market
interest rate risks related to its debt obligations will have a
material impact on the Companys financial position,
results of operations or liquidity.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

As of December 31, 2002, an evaluation was
performed under the supervision and with the participation of
the Companys management, including the CEO, CFO, COO and
CLO, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based on that
evaluation, the Companys management, including the CEO,
CFO, COO and CLO, concluded that the Companys significant
disclosure controls and procedures were effective as of
December 31, 2002. There have been no significant changes
in the Companys internal controls or in other factors that
could significantly affect internal controls subsequent to
December 31, 2002.

16



---



##### Table of Contents








PART II  OTHER
INFORMATION







|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

As described in the Companys 10-Q for the
period ending August 31, 2002, a former senior executive of
the Company filed a suit styled in part as a shareholder
derivative suit. This action has been settled and the settlement
has received preliminary approval of the Court. In the event the
settlement receives final approval from the Court in its current
form, the Company will have no financial obligations in
connection with the settlement, other than payment of future
legal fees of the Company-related defendants and related
expenses. The Company is involved in routine claims and
litigation arising out of the ordinary course of its business.
Although the legal responsibility and financial impact to the
Company with respect to other pending claims and litigation
cannot be presently ascertained, the Company does not believe
that these matters will result in the payment by the Company,
giving consideration to any applicable insurance proceeds or
contributions by other parties, that, in the aggregate, would be
material in relation to the financial position of the Company.






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

(a) Exhibits

|        |      |             |  |                                                                                                      
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 99.1 |             |  | Certification of Hadi Makarechian pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002      
|        | 99.2 |             |  | Certification of Steven O. Spelman, Jr.
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

None filed.

17



---



##### Table of Contents






SIGNATURES

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



| |     |                     
| | --- | --------------------
| | By: | /s/ HADI MAKARECHIAN

| |                                          
| | -----------------------------------------
| |                                          
| | Hadi Makarechian                         
| | Chairman of the Board,                   
| | Chief Executive Officer and
    President
| | (Principal Executive Officer)            

Date: January 14, 2003



| |     |                           
| | --- | --------------------------
| | By: | /s/ STEVEN O. SPELMAN, JR.

| |                                                    
| | ---------------------------------------------------
| |                                                    
| | Steven O. Spelman, Jr.                             
| | Chief Financial Officer and Corporate
    Secretary
| | (Principal Financial Officer)                      

Date: January 14, 2003

18



---



##### Table of Contents






CERTIFICATIONS

I, Hadi Makarechian, certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of Capital Pacific
    Holdings, Inc.:                                                                                                                                                                                                                                                         
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this quarterly report;                       
|
| | 4.     The
    registrants other certifying officers and I are
    responsible for establishing and maintaining disclosure controls
    and procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and have:                                                                                                                



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officers and I have
    disclosed, based on our most recent evaluation, to the
    registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this quarterly report whether there were significant changes
    in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |     |                     
| | --- | --------------------
| | By: | /s/ HADI MAKARECHIAN

| |                                          
| | -----------------------------------------
| |                                          
| | Hadi Makarechian                         
| | Chairman of the Board,                   
| | Chief Executive Officer and
    President
| | (Principal Executive Officer)            

Date: January 14, 2003

19



---



##### Table of Contents



I, Steven O. Spelman, Jr., certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of Capital Pacific
    Holdings, Inc.:                                                                                                                                                                                                                                                         
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this quarterly report;                       
|
| | 4.     The
    registrants other certifying officers and I are
    responsible for establishing and maintaining disclosure controls
    and procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and have:                                                                                                                



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officers and I have
    disclosed, based on our most recent evaluation, to the
    registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this quarterly report whether there were significant changes
    in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |     |                           
| | --- | --------------------------
| | By: | /s/ STEVEN O. SPELMAN, JR.

| |                                                    
| | ---------------------------------------------------
| |                                                    
| | Steven O. Spelman, Jr.                             
| | Chief Financial Officer and Corporate
    Secretary
| | (Principal Financial Officer)                      

Date: January 14, 2003

20



---



##### Table of Contents






EXHIBIT INDEX

|        |      |             |  |                                                                                                      
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 99.1 |             |  | Certification of Hadi Makarechian pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002      
|        | 99.2 |             |  | Certification of Steven O. Spelman, Jr.
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002