<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q


                [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended March 31, 1997

               [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number  0-19891

                                SCHULER HOMES, INC.
                (Exact name of registrant as specified in its charter)

            Delaware                                        99-0293125
    (State or jurisdiction of                            (I.R.S. employer
    incorporation or organization)                       identification no.)

                        828 Fort Street Mall, Suite 400
                          Honolulu, Hawaii  96813-4321
              (Address of principal executive offices) (Zip code)

                                 (808) 521-5661
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.

       YES   X                                         NO      
           -----                                          -----

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

Outstanding at
    CLASS OF COMMON STOCK                        APRIL 30, 1997
    ---------------------                        --------------
       $.01 par value                              20,100,177

<PAGE>

                               SCHULER HOMES, INC.

                                      INDEX


PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Independent Accountants' Review Report.....................    3

           Consolidated Balance Sheets - March 31, 1997 and
            December 31, 1996.........................................    4

           Consolidated Statements of Income - Three months
            ended March 31, 1997 and 1996.............................    5

           Consolidated Statements of Cash Flows - Three
            months ended March 31, 1997 and 1996......................    6

           Notes to Consolidated Financial Statements.................    7

Item 2.    Management's Discussion and Analysis of
            Financial Condition and Results of Operations.............    11

PART II.   OTHER INFORMATION..........................................    17

SIGNATURES............................................................    18


                                      2
<PAGE>

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT


The Board of Directors and Stockholders
Schuler Homes, Inc.

We have reviewed the accompanying interim consolidated balance sheet of Schuler 
Homes, Inc. as of March 31, 1997, and the related consolidated statements of 
income and cash flows for the three-month periods ended March 31, 1997 and 
1996. These financial statements are the responsibility of the Company's 
management. 

We conducted our reviews in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim 
financial information consists principally of applying analytical procedures to 
financial data, and making inquiries of persons responsible for financial and 
accounting matters.  It is substantially less in scope than an audit conducted 
in accordance with generally accepted auditing standards, which will be 
performed for the full year with the objective of expressing an opinion 
regarding the financial statements taken as a whole.  Accordingly, we do not 
express such an opinion.

Based on our reviews, we are not aware of any material modifications that 
should be made to the accompanying interim consolidated financial statements 
referred to above for them to be in conformity with generally accepted 
accounting principles.  See Note 1.

We have previously audited, in accordance with generally accepted auditing 
standards, the consolidated balance sheet of Schuler Homes, Inc. as of 
December 31, 1996, and the related consolidated statements of operations, 
stockholders' equity, and cash flows for the year then ended (not presented 
herein) and in our report dated March 7, 1997, we expressed an unqualified 
opinion on those consolidated financial statements.  In our opinion, the 
information set forth in the accompanying consolidated balance sheet as of 
December 31, 1996, is fairly stated, in all material respects, in relation to 
the consolidated balance sheet from which it has been derived.

                                       ERNST & YOUNG LLP

Honolulu, Hawaii
May 14, 1997


                                      3
<PAGE>

                              SCHULER HOMES, INC.
                          CONSOLIDATED BALANCE SHEETS

                                                     March 31,1997  December 31,
                                                     -------------     1996
                                                      (unaudited)   ------------
ASSETS

Cash and cash equivalents (Note 2).................. $  3,394,000  $  1,619,000
Receivables.........................................    1,392,000       425,000
Prepaid income taxes................................    2,549,000     2,604,000
Amount due from affiliate (Note 5)..................       26,000        26,000
Real estate inventories (Note 3)....................  280,299,000   236,569,000
Investments in unconsolidated joint ventures........   11,560,000    11,611,000
Deposits............................................      570,000       483,000
Deferred offering costs.............................    1,342,000     1,399,000
Notes receivables (Note 2)..........................    1,822,000     3,944,000
Deferred income taxes...............................    5,985,000     7,356,000
Intangibles (Note 7)................................   14,281,000            --
Other assets........................................    3,235,000     1,122,000
                                                     ------------  ------------
Total assets........................................ $326,455,000  $267,158,000
                                                     ------------  ------------
                                                     ------------  ------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable....................................    1,760,000  $    593,000
Accrued expenses....................................    7,673,000     6,910,000
Notes payable to bank (Note 4)......................  101,280,000    44,690,000
6-1/2% convertible subordinated debentures due 2003.   57,500,000    57,500,000
                                                     ------------  ------------
Total liabilities...................................  168,213,000   109,693,000

Commitments and contingencies (Notes 4 and 9)

Stockholders' equity (Note 10):
    Common stock, $.01 par value; 30,000,000 shares 
     authorized; 20,874,177 shares issued at 
     March 31, 1997 and December 31, 1996...........      209,000       209,000
    Additional paid-in capital......................   93,096,000    93,096,000
    Retained earnings...............................   69,937,000    69,160,000
    Treasury stock, at cost; 774,000 shares at 
     March 31, 1997 and December 31, 1996...........   (5,000,000)   (5,000,000)
                                                     ------------  ------------
Total stockholders' equity..........................  158,242,000   157,465,000
                                                     ------------  ------------
Total liabilities and stockholders' equity.......... $326,455,000  $267,158,000
                                                     ------------  ------------
                                                     ------------  ------------

See accompanying notes.


                                       4
<PAGE>

                               SCHULER HOMES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME

                                                   Three months ended March 31,
                                                   ----------------------------
                                                        1997          1996
                                                        ----          ----
                                                            (unaudited)

Residential real estate sales......................  $49,995,000   $19,965,000

Costs and expenses
    Residential real estate sales..................   41,464,000    16,213,000
    Selling and commissions........................    3,463,000     1,543,000
    General and administrative.....................    2,920,000       906,000
                                                     -----------   -----------
        Total costs and expenses...................   47,847,000    18,662,000

Income from unconsolidated joint ventures..........        7,000        88,000
                                                     -----------   -----------
    Operating income ..............................    2,155,000     1,391,000
Other income (expense).............................     (899,000)      161,000
                                                     -----------   -----------
   Income before provision for income taxes........    1,256,000     1,552,000
Provision for income taxes (Note 6)................      479,000       604,000
                                                     -----------   -----------
   Net income .....................................  $   777,000    $  948,000
                                                     -----------   -----------
                                                     -----------   -----------
Net income per share (Note 8):
   Primary.........................................  $      0.04    $     0.05
                                                     -----------   -----------
                                                     -----------   -----------
   Fully diluted...................................  $      0.04    $     0.05
                                                     -----------   -----------
                                                     -----------   -----------

                             See accompanying notes.


                                       5
<PAGE>

                              SCHULER HOMES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                    Three months ended March 31,
                                                    ----------------------------
                                                         1997          1996
                                                         ----          ----
                                                             (unaudited)

OPERATING ACTIVITIES
Net income.......................................... $   777,000    $   948,000
Adjustments to reconcile net income to net cash 
   provided by operating activities:
     Depreciation and amortization expense..........     280,000         46,000
Income from unconsolidated joint venture 
   (undistributed)..................................     (16,000)       (85,000)
     Sales financed by Company......................    (143,000)           --
     Principal payments of notes receivable.........   1,447,000        127,000
     Changes in assets and liabilities, net of 
      effects from purchase of Melody Homes 
      and Mortgage:
        (Increase) decrease in receivables..........     142,000        (60,000)
        Decrease in prepaid income taxes............      55,000        143,000
        (Increase) in real estate inventories.......  (4,765,000)    (8,518,000)
        (Increase) in deposits......................     (87,000)            --
        (Increase) in other assets..................    (454,000)      (396,000)
        (Decrease) in accounts payable..............  (3,607,000)      (448,000)
        Increase (decrease) in accrued expenses.....   1,534,000     (1,215,000)
        Change in deferred income taxes.............   1,371,000        500,000
                                                     ------------   ------------
          Net cash (used in) operating activities...  (3,466,000)    (8,958,000)

INVESTING ACTIVITIES
Payment for purchase of Melody Homes and Mortgage,
  net of cash acquired.............................. (29,508,000)           --
Advances to unconsolidated joint venture............     (44,000)    (2,002,000)
Repayments of advances to unconsolidated joint
  venture...........................................      64,000      1,447,000
Capital distributions from unconsolidated joint
  venture...........................................      48,000         24,000
Purchase of furniture, fixtures, and equipment......    (298,000)        (4,000)
                                                     ------------   ------------
          Net cash (used in) investing activities... (29,738,000)      (535,000)

FINANCING ACTIVITIES
Proceeds from bank borrowings.......................  57,771,000     84,933,000
Principal payments on bank borrowings............... (22,848,000)   (75,767,000)
Advances to affiliate...............................     (27,000)       (38,000)
Repayment of advances to affiliate..................      26,000         25,000
Net decrease in deferred offering costs.............      57,000         57,000
                                                     ------------   ------------
          Net cash provided by financing activities.  34,979,000      9,210,000
                                                     ------------   ------------
Increase (decrease) in cash.........................   1,775,000       (283,000)
Cash and cash equivalents at beginning of period....   1,619,000      6,147,000
                                                     ------------   ------------
Cash and cash equivalents at end of period..........  $3,394,000     $5,864,000
                                                     ------------   ------------
                                                     ------------   ------------

                            See accompanying notes.


                                       6
<PAGE>

                              SCHULER HOMES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 


1.   General

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with generally accepted accounting principles for
     interim financial information and with the instructions to Form 10-Q and
     Article 10 of Regulation S-X.  Accordingly, they do not include all of the
     information and footnotes required by generally accepted accounting
     principles for complete financial statements.  In the opinion of
     management, all adjustments (consisting of normal recurring adjustments)
     considered necessary for a fair presentation have been included.

     These financial statements should be read in conjunction with the Notes to
     Consolidated Financial Statements for the year ended December 31, 1996
     contained in the Company's 1996 annual report on Form 10-K.

     The Company has experienced, and expects to continue to experience,
     significant variability in quarterly sales and net income.  The results of
     any interim period are not necessarily indicative of the results that can
     be expected for the entire year.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ from those
     estimates.

     On January 8, 1997, the Company completed the acquisition of the common 
     stock of Melody Homes, Inc., a Colorado homebuilder, and Melody Mortgage 
     Company, a mortgage brokerage firm for Melody home buyers. The 
     operations of Melody Mortgage during the quarter ended March 31, 1997
     consist primarily of transactions with Melody Homes, which are eliminated
     upon consolidation.


2.   Notes Receivable

     Notes receivable consist primarily of notes receivable on seller financed
     sales of residential units and residential lots.  The notes provide for
     terms and conditions similar to those offered by financial institutions and
     are collateralized by the residential units and residential lots sold. 
     Certain of the notes are collateralized by second mortgages relating to
     home buyers who purchased homes as part of the Company's "zero-down" sales
     program.  Revenue and profit recognition on such transactions are deferred
     until the down payment requirement for revenue and profit recognition is
     satisfied.  In March 1997, the Company sold second mortgage notes of
     approximately $2,500,000, resulting in the recognition of sales and gross
     profit of approximately $11,303,000 and $817,000 (net of discount and
     collection reserve relating to sale), respectively (includes five sales
     which closed during the first quarter of 1997).  The collection reserve 
     results in a restriction on the Company's cash in the amount of 
     approximately $506,000. Cumulative revenue and gross profit remaining 
     deferred on such transactions as of March 31, 1997 are $4,679,000 and 
     $588,000, respectively. 


                                       7
<PAGE>

3.   Real Estate Inventories

     Inventories which are substantially completed are carried at the lower of
     cost or fair value less cost to sell.  Fair value is determined by applying
     a risk adjusted discount rate to estimates of future cash flows.  In
     addition, land held for future development or inventories under current
     development are adjusted to fair value, only if an impairment to their
     value is indicated.
     
     The estimates of future cash flows require significant judgment relating to
     the level of sales prices, rate of new home sales, amount of marketing
     costs and price discounts needed in order to stimulate sales, rate of
     increase in the cost of building materials and labor, introduction of
     building code modifications, and level of consumer confidence, among other
     items.  Accordingly, there exists at any date, a reasonable possibility
     that changes in estimates will occur in subsequent periods.


                                       8
<PAGE>

     Real estate inventories at March 31, 1997 consist of the following:

        Unimproved land held for future development........... $ 61,108,000
        Development projects in progress......................  158,268,000
        Completed inventory (including lots held for sale)....   60,923,000
                                                               ------------
                                                               $280,299,000
                                                               ------------
                                                               ------------
     Completed inventory includes residential units which are substantially 
     ready for occupancy.


4.   Notes Payable to Bank

     At March 31, 1997, $32,684,000 of the Company's line of credit is unused,
     of which $621,000 is restricted as to withdrawal for project expenses and
     $3,033,000 is restricted as to withdrawal for outstanding but unused
     letters of credit.  

     In March 1997, the Company amended its Credit Agreement, increasing the
     unsecured revolving line of credit facility from $110,000,000 to
     $137,600,000.  The facility expires on July 1, 1999 and includes an option
     for the lenders to extend the term for an additional year.  The Company can
     select an interest rate based on either LIBOR (1, 2, 3 or 6 month term) or
     prime for each borrowing.  Based on the Company's leverage ratio, as
     defined,  the interest rate may vary from LIBOR plus 1.5% to 2% or prime
     plus 0% to 0.25%.  At March 31, 1997, the Company's outstanding borrowings
     were at interest rates of LIBOR plus 1.75% (7.5% ) and prime plus 0%
     (8.5%).  The Company's ability to draw upon its line of credit is dependent
     upon meeting certain financial ratios and covenants.

     The Company paid interest (relating to notes payable to bank and the
     convertible subordinated debentures) of approximately $3,581,000
     during the quarter ended March 31, 1997.  Interest capitalized to real
     estate inventories during the quarter ended March 31, 1997 was
     approximately $2,169,000.  The difference between the amount of
     interest paid and the amount capitalized is comprised of accrued interest
     payable and interest of $667,000 expensed (included in Other income
     (expense)) and not capitalized.


5.   Related Party Transactions

     The Company charged $26,000 for the quarter ended March 31, 1997 to James
     K. Schuler & Associates, Inc. (an affiliate) under the management agreement
     entered into between the Company and James K. Schuler & Associates, Inc.,
     pursuant to which certain management and administrative personnel of the
     Company will perform certain functions for James K. Schuler & Associates,
     Inc., to be reimbursed by James K. Schuler & Associates, Inc.  At March 31,
     1997, the $26,000 was included in Amount due from affiliate.  Subsequent to
     March 31, 1997, the receivable was paid in full.

     From time to time, the Company engages the law firms in which directors of
     the Company are partners.  During the quarterly period ended March 31,
     1997, legal fees of approximately $167,000 to such firms were incurred by
     the Company.


                                       9
<PAGE>

6.   Income Taxes

     During the three months ended March 31, 1997, no income tax payments were
     required to be made by the Company. 


7.   Acquisition of Melody Homes, Inc. and Melody Mortgage Company

     On January 8, 1997, the Company completed the acquisition of the common
     stock of Melody Homes, Inc., a Colorado homebuilder, and Melody Mortgage
     Company, a mortgage brokerage firm for Melody home buyers.  The
     consideration of approximately $24,100,000 (excludes $4,000,000 of the
     covenant-not-to-compete paid to certain former Melody shareholders and
     certain other acquisition related costs) consisted of cash, in addition
     to liabilities assumed of approximately $26,500,000.  The transaction has
     been accounted for under the purchase method of accounting, wherein
     goodwill and a covenant-not-to-compete in the combined amount of
     approximately $14,500,000 has been recognized by the Company after
     recording other purchase adjustments necessary to allocate the purchase
     price to the value of assets acquired and liabilities assumed.  Goodwill
     and the covenant-not-to-compete is being amortized over a 20-year period. 
     Accumulated amortization at March 31, 1997 is approximately $184,000.


     In connection with his consultation services relating to the acquisition of
     Melody, the Company paid a fee of $90,000 to Mr. Martin T. Hart, a member
     of the Company's Board of Directors.  Combined revenue for Melody Homes,
     Inc. and Melody Mortgage Company was approximately $97,000,000 for the year
     ended June 30, 1996.


8.   Net Income Per Share

     Primary net income per share for the quarters ended March 31, 1997 and 1996
     were computed using the weighted average number of common shares
     outstanding during the quarters of 20,100,177 and 20,874,177, respectively.

     The computation of fully diluted net income per share for the quarters
     ended March 31, 1997 and 1996 resulted in amounts less than the primary net
     income per share.  Accordingly, the primary net income per share is also
     presented as the fully diluted net income per share.

     In February 1997, the Financial Accounting Standards Board issued Statement
     No. 128, EARNINGS PER SHARE, which is required to be adopted on December
     31, 1997.  At that time, the Company will be required to change the method
     currently used to compute earnings per share and restate all prior periods.
     Under the new requirements for calculating primary earnings per share, the
     dilutive effect of stock options will be excluded.  The impact of Statement
     128 on the calculation of primary and fully diluted earnings per share for
     the quarters ended March 31, 1997 and March 31, 1996 is not expected to be
     material.


                                      10
<PAGE>

9.   Commitments and Contingencies

     At March 31, 1997, the Company had under contract to purchase for
     approximately $6,133,000, land for residential development.

     The Company is from time to time involved in routine litigation or
     threatened litigation arising in the ordinary course of its business.  Such
     matters, if decided adversely to the Company, would not, in the opinion of
     management, have a material adverse effect on the financial condition of
     the Company.

     In April 1996, the Company was served with a lawsuit by owners of units and
     the Association of Owners of Fairway Village at Waikele, who seek to have a
     class of all owners certified.  The complaint alleges material construction
     defects and deficiencies, misrepresentation regarding the cost of
     insurance, breach of covenant of good faith and fair dealing, among other
     allegations.  The complaint does not specify an amount of damages, but
     includes a claim for punitive damages, among other claims.  However,
     this litigation is at an early stage of discovery.  Based upon its 
     current understanding of the lawsuit, the Company believes (at this 
     early stage of litigation) the claims to be largely without merit, or 
     that meritorious defenses, together with potential third party 
     defendants and insurance coverage, exist to offset a material portion 
     of the related claims. The litigation is being vigorously defended.
     However, if this lawsuit were decided adversely to the Company, it 
     could have a material adverse effect on the Company's business, 
     financial condition and operating results.

     Prior to its acquisition by the Company, Melody was joined in a 
     class-action lawsuit related to the use of polybutylene plumbing systems
     and certain alleged defects and deficiencies of such systems. In 
     September 1995, the Denver District Court stayed the action pending the 
     resolution of two similar "national class actions" involving the same 
     group of Plaintiffs as well as manufacturers of polybutylene plumbing
     systems. The Denver case was stayed to await a finalization of the 
     settlement agreed to in the courts of Tennessee and Alabama, which 
     required the assignment of Plaintiffs' claims to the manufacturers of
     polybutylene. These settlement agreements have since been finalized, 
     and subsequent to March 31, 1997, a stipulated motion for dismissal of 
     the Denver case was submitted to the Denver District Court by Melody, 
     the Plaintiffs, and other parties to the case. The Company believes that 
     the stipulated motion for dismissal will be granted by the Denver 
     District Court, although no assurance can be given that the dismissal of 
     the case will be granted.


10. Stockholders' Equity

     During the first quarter of 1997, options to purchase approximately 222,500
     shares of common stock were approved to be granted.  In addition, a plan
     was approved to permit option holders to effectively reprice certain of
     their outstanding options (covering up to an aggregate of approximately
     271,000 shares of common stock).  This plan would allow option holders to
     receive new options for the same number of shares covered by their existing
     options at an exercise price equal to $5.625.  Any such new options would
     be subject to a new vesting schedule and the existing options would be
     cancelled.  


                                      11
<PAGE>

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


     Except for historical information contained herein, the matters discussed 
in this report contain forward-looking statements that involve risks and 
uncertainties.  The Company's actual results may differ materially from the 
results discussed in the forward-looking statements.  Factors that might cause 
such a difference include, but are not limited to, those risks discussed 
herein, and other risks detailed in the Company's Annual Report on Form 10-K 
and other documents filed by the Company with the Securities and Exchange 
Commission from time to time. 


OVERVIEW

     For the quarter ended March 31, 1997, sales of residential real estate 
(revenue) were $50.0 million  and operating income was $2.2 million, compared 
to revenues of $20.0 million and operating income of $1.4 million during the 
first quarter last year.  Net income was $777,000 ($0.04 per share) for the 
quarter ended March 31, 1997, compared to net income of $948,000 ($0.05 per 
share) during the 1996 first quarter. 

On January 8, 1997, the Company announced the completion of its acquisition of 
Melody Homes, Inc., a leading homebuilder and 43-year old company in the Denver 
metropolitan area of Colorado, and Melody Mortgage Company, a mortgage 
brokerage firm for Melody home buyers.  The Company's 1997 first quarter 
results were positively impacted by its acquisition of Melody Homes and 
Mortgage.  The Colorado operations contributed approximately $24.4 million to 
the Company's 1997 first quarter revenues, generating improved operating 
results for the Company, which were partially offset by a decline in Hawaii's 
operating results and margins primarily caused by the continued softness in 
Hawaii's residential market.

During the quarter ended March 31, 1997, the Company closed the sales of 240 
homes and lots, including 167 homes in Colorado and 73 homes and lots in 
Hawaii. This compares to the closing of 98 homes and lots in Hawaii during the 
first quarter of last year.  Backlog at March 31, 1997 totaled 468 homes and 
lots with an aggregate sales value of $78.9 million, compared to $48.4 million 
in aggregate sales value of the 200 homes and lots in backlog at March 31, 
1996. The increase in backlog was solely attributable to strong sales activity 
in the Denver division offset, in part, by lower backlog amounts in Hawaii. Due 
to the ability of buyers to cancel their sales contracts, no assurances can be 
given that homes included in backlog will result in actual closings.

The Company believes that the lower amount of closings of home sales and 
quarter-end backlog in Hawaii this quarter as compared to the 1996 first 
quarter, is the result of the general uncertainty of prospective home buyers as 
to, and to their lack of confidence in, Hawaii's economy.  If new home sales 
rates persist at their current levels or decline further, the Company's Hawaii 
financial results will be adversely affected by fewer closings of home sales, 
lower revenues and continued pressure on margins in 1997 as compared to 1996.


                                      12
<PAGE>

   The following table sets forth, for the periods indicated, the percentage of 
the Company's sales represented by each income statement line item presented.

<TABLE>
<CAPTION>
                                                                              Percentage Change in
                                               Three months ended March 31,   Dollar Amounts From
                                                    1997        1996             1996 to 1997
                                                    ----        ----             ------------
<S>                                                <C>         <C>                <C>
Residential real estate sales...................   100.0%      100.0%              150.4%

Costs and expenses
    Residential real estate sales...............    82.9        81.2               155.7
    Selling and commissions.....................     6.9         7.7               124.4
    General and administrative..................     5.8         4.5               222.3
                                                   -----       -----
              Total costs and expenses..........    95.6        93.4               156.4

Income from unconsolidated joint ventures.......     0.0         0.4               (92.0)
                                                   -----       -----
    Operating income............................     4.4         7.0                54.9
Other income (expense)..........................    (1.8)        0.8              (658.4)
                                                   -----       -----
    Income before provision for income taxes....     2.6         7.8               (19.1)
Provision for income taxes......................     1.0         3.1               (20.7)
                                                   -----       -----
    Net income..................................     1.6%        4.7%              (18.0)
                                                   -----       -----
                                                   -----       -----
</TABLE>

RESULTS OF OPERATIONS

SALES OF RESIDENTIAL REAL ESTATE

     The Company's sales of residential real estate for the quarter ended March 
31, 1997 were approximately $50.0 million as compared to approximately $20.0 
million during the quarter ended March 31, 1996.  This represents an  increase 
of approximately $30.0 million or 150.4%.

     For the first quarter of 1997, the revenues of $50.0 million includes 
approximately $39.9 million related to 231 sales closed during the quarter (167 
in Colorado), in addition to approximately $10.1 million related to 53 sales 
that closed in 1996 under the Company's "zero-down" sales program, for which 
the second mortgage notes were sold during the 1997 first quarter.  Pre-tax 
profit of $762,000 was recognized in connection with the sale of the 53 second 
mortgages.  Revenue and profit recognition on these "zero-down" sales was 
deferred in 1996 until the requirements for revenue and profit recognition were 
satisfied, which occurred during the first quarter of 1997.  The average 
revenue recognized of $176,000 per unit for the first quarter of 1997 is lower 
than the 1996 first quarter average of $233,000, primarily due to a) the lower 
average sales prices of homes in Colorado as compared to homes in Hawaii and, 
to a lesser extent, b) the discount taken on the sale of the second mortgages.

     The number of Hawaii home sales closed in the first quarter of 1997 and 
years 1996 and 1995 is significantly lower than the number of home sales closed 
in 1994, primarily as a result of the reduction in home sales rates during the 
periods as compared to 1994.  The Company believes the reduction in the rate of 
new home sales to be the result of the general uncertainty of prospective home 
buyers as to, and to their lack of confidence in, Hawaii's economy.  Although 
the Company believes that the Hawaiian economy has shown signs of recovery, 
particularly in the tourism industry, the Company's rate of new home sales has 
not improved.  If new home sales rates persist at their current levels or 
decline further, the Company's financial results will be adversely affected by 
fewer closings of home sales, lower revenues and continued pressure on margins.


                                      13
<PAGE>

     Historically, Hawaii's unemployment rate has generally been lower than the 
U.S. national average.  However, in recent years Hawaii's unemployment rate has 
been comparable to the national average and jobs have declined an estimated 
0.5% to 2.0% per year from 1992 through 1996.  Any increases in Hawaii's 
unemployment rate or continued lack of job growth may adversely affect future 
demand for new homes.  In addition, increases in mortgage rates impact the home 
buyer's ability to qualify for mortgage loans, which could adversely affect 
demand for new homes.  Increases in mortgage rates may also reduce the sales 
price ceilings established on homes which are subject to governmentally imposed 
affordable housing requirements in Hawaii.  The affordable prices are generally 
determined at a price at which a purchaser earning up to 140% of the local 
median income is able to satisfy specified mortgage criteria.

COSTS AND EXPENSES - RESIDENTIAL REAL ESTATE SALES

     Cost of residential real estate sales represents the acquisition and 
development costs for a particular phase of a project attributable to the homes 
sold in that phase.  Acquisition and development costs primarily include land 
acquisition costs, sitework and construction payments to contractors, 
engineering and architectural costs, loan fees, interest and other indirect 
costs attributable to development and project management activities and 
miscellaneous construction costs.

     Cost of residential real estate sales increased to approximately $41.5 
million during the quarter ended March 31, 1997 from approximately $16.2 
million during the same period in 1996, representing an increase of 
approximately $25.3 million or 155.7%.  This increase in the first quarter of 
1997 as compared to the first quarter of 1996 is the result of   a) the closing 
of 167 home sales by the newly acquired Colorado operations and b) the 
recognition of costs related to the 53 "zero-down" sales deferred in 1996 and 
recognized in the first quarter of 1997 as a result of the sale of the related 
second mortgages.  Cost of residential real estate sales as a percentage of 
sales increased to 82.9% in the first quarter of 1997 from 81.2% in the first 
quarter of 1996, primarily as a result of an increased level of price discounts 
and sales incentives to homebuyers in Hawaii.  The Company anticipates this 
increased level of discounts and incentives will continue to affect its 
operating results in future periods and no assurances can be given that they 
will not increase to even greater levels than reached in the past.

     Total interest incurred during each of the quarters ended March 31, 1997 
and 1996 was approximately $2.8 million and $1.9 million, respectively.  All 
amounts incurred, except for approximately $667,000 in the first quarter of 
1997, were capitalized to development projects.  Interest capitalized to 
projects is expensed through cost of residential real estate sales as sales are 
closed and revenue is recognized in the particular project.  

     Average debt outstanding was approximately $155.6 million and $102.3 
million during the first quarters of 1997 and 1996, respectively.  The 
Company's average interest rate on its debt for the quarters ended March 31, 
1997 and 1996 was approximately 7.4% and 7.3%, respectively.  The Company's 
notes payable bear interest based on prime or LIBOR.  Changes in the prime or 
LIBOR rates will affect the amount of interest being capitalized to inventory 
and subsequently expensed through cost of residential real estate sales as 
sales are closed and revenue is recognized.

COST AND EXPENSES - SELLING AND COMMISSIONS

     Sales and marketing costs represented approximately 6.9% and 7.7% of sales
of residential real estate during the quarters ended March 31, 1997 and 1996,
respectively.  The decrease is a result of lower costs incurred in Colorado as
compared to Hawaii, offset in part by increases in the level of selling and
commission costs in Hawaii.


                                      14
<PAGE>

COSTS AND EXPENSES - GENERAL AND ADMINISTRATIVE

     General and administrative expense includes salaries, office and other 
administrative costs.  Indirect costs attributable to specific projects are 
capitalized and deducted as part of cost of residential real estate sales.

     General and administrative expenses increased by $2.0 million during the 
first quarter of 1997 as compared to the same period in 1996 primarily due to 
the addition of the Colorado division and the start-up of operations in 
Northern California and the Pacific Northwest.   As a percentage of sales, 
general and administrative expense increased from 4.5% during the quarter ended 
March 31, 1996 to 5.8% during the quarter ended March 31, 1997, which is a 
result of the same items mentioned in the preceding sentence.


INCOME FROM UNCONSOLIDATED JOINT VENTURES

     Income from unconsolidated joint ventures primarily represents the 
Company's 50% interest in the operations of Waiakoa Estates Subdivision Joint 
Venture and Iao Partners, the joint ventures developing the Waiakoa Kai Estates 
and Iao Parkside projects, respectively.  The decrease in this income from 
$88,000 during the first quarter of 1996 to $7,000 during the same period in 
1997 is primarily the result of the closing of 3 homes at Iao Parkside during 
the first quarter of 1997 as compared to 13 closings during the comparable 
quarter in 1996, and lower profit margins realized in this project during the 
first quarter of 1997 as compared to the first quarter of 1996.


OTHER INCOME (EXPENSE)

     Other income (expense) is primarily composed of interest income of $37,000 
and $156,000 earned on cash balances and notes receivable during the quarters 
ended March 31, 1997 and 1996, respectively, offset in the 1997 first quarter 
by a) approximately $712,000 of financing costs (primarily including interest 
of $667,000) expensed and not capitalized resulting from the acquisition of 
Melody Homes and Mortgage and reduced construction activity in Hawaii, and b) 
amortization of goodwill and the covenant-not-to-compete of $184,000 also 
associated with the acquisition of Melody Homes and Mortgage.


PROVISION FOR INCOME TAXES

     The Company's effective income tax rate for the first quarters of 1997 and 
1996 was approximately 38% and 39%, respectively.  The lower effective tax rate 
in the first quarter of 1997 reflects the lower Colorado state income tax rate 
as compared to Hawaii's state income tax rate.


                                      15
<PAGE>

VARIABILITY OF RESULTS

     The Company has experienced, and expects to continue to experience, 
significant variability in sales and net income.  For example, the Company's 
sales of residential real estate for each of the four quarters ended December 
31, 1995, ranged from approximately $26.8 million to $39.5 million and for each 
of the four quarters ended December 31, 1996, ranged from approximately $20.0 
million to $29.8 million.  The Company's net income (loss) for each of the four 
quarters ended December 31, 1995, ranged from a net loss of approximately  $3.1 
million (after giving effect to the $5.7 million after-tax charge relating to 
FASB 121) to net income of $4.7 million and for each of the four quarters ended 
December 31, 1996, ranged from a net loss of approximately $13.1 million (after 
giving effect to the $14.6 million after-tax charge relating to FASB 121) to 
net income of $948,000.  Factors that contribute to variability of the 
Company's results include:  the timing of home closings, a substantial portion 
of which historically have occurred in the last month of each quarter; the 
Company's ability to continue to acquire additional land on favorable terms for 
future developments;  the condition of the real estate markets and economies in 
states in which the Company operates;  the cyclical nature of the homebuilding 
industry and changes in prevailing interest rates;  costs of material and 
labor; and  delays in construction schedules caused by timing of inspections 
and approval by regulatory agencies, including zoning approvals and receipt of 
entitlements, the timing of completion of necessary public infrastructure, the 
timing of utility hookups and adverse weather conditions.  The Company's 
historical financial performance is not necessarily a meaningful indicator of 
future results and, in general, the Company's financial results will vary from 
development to development.

     The Company's recent expansion to markets in the mainland United States 
further exposes the Company to risks inherent in those markets.  For example, 
as a result of the Company's acquisition of Melody, it will encounter 
construction issues and risks such as expansive soils and extreme seasonal 
weather conditions (dissimilar to those encountered in Hawaii).

     The Company will continue to consider its expansion into additional 
selected residential housing markets in the United States mainland and into 
certain foreign countries and into other related industries.  The Company has 
and would consider the acquisition of or joint venture with an existing 
company, as well as its own acquisition and development of homebuilding 
projects in certain areas, in order to facilitate its expansion.  No assurances 
can be given that the Company will be able to successfully establish operations 
outside of its existing Hawaiian markets or that such expansion will not 
adversely affect its results of operations.


                                      16
<PAGE>

BACKLOG

     The Company's homes are generally offered for sale in advance of their
construction upon applicable regulatory approval and sold pursuant to standard
sales contracts.  The Company's standard sales contract may be canceled by the
buyer at any time prior to closing.  The Company does not recognize revenues on
homes covered by such contracts until the sales are closed.  Homes covered by
such sales contracts are considered by the Company as its backlog.

     The following table sets forth the Company's backlog (for both homes and
residential lots) at March 31, 1997 and 1996.



                           March 31, 1997                March 31, 1996
                                                         --------------

                                    Aggregate                     Aggregate
                      Number       Sales Value      Number       Sales Value
                      ------       -----------      ------       -----------
Homes - Hawaii          105        $24,939,000        192        $47,271,000
Lots - Hawaii             2            229,000          8          1,166,000
Homes - Colorado        361         53,701,000         --                 --
                      ------       -----------      ------       -----------
    Total               468        $78,869,000        200        $48,437,000
                      ------       -----------      ------       -----------
                      ------       -----------      ------       -----------

     The Company has observed an increase in its historical cancellation rates 
in Hawaii, which the Company believes to be attributable to uncertainty of 
prospective homebuyers as to, and to their general lack of confidence in, the 
Hawaiian economy.  The Company's historical cancellation experience (which 
prior to 1995 had been nominal) may not be indicative of cancellations in 
future periods.

     The average sales prices of the homes and lots comprising backlog at March 
31, 1997 and 1996 were $169,000 and $242,000, respectively. The decrease in 
average sales prices primarily reflects the lower average sales prices in 
Colorado, as compared to Hawaii.   Due to the ability of buyers to cancel their 
sales contracts, no assurances can be given that homes or residential lots in 
backlog will result in actual closings.  Backlog data includes 100% of the 
backlog of  Waiakoa Estates Subdivision Joint Venture and Iao Partners, the 
Company's two joint ventures developing the Waiakoa Kai Estates and Iao 
Parkside projects, respectively.


LIQUIDITY AND CAPITAL RESOURCES

     In March 1997, the Company amended its Credit Agreement, increasing the 
unsecured revolving line of credit facility from $110 million to $137.6 
million, and adding Bank One, Arizona, N.A. to the lending group.  The facility 
expires on July 1, 1999 and includes an option for the lenders to extend the 
term for an additional year.  The Company can select an interest rate based on 
either LIBOR (1, 2, 3 or 6 month term) or prime for each borrowing.  Based on 
the Company's leverage ratio, as defined, the interest rate may vary from LIBOR 
plus 1.5% to 2% or prime  plus 0% to 0.25%.  The Company's current rate is 
LIBOR plus 1.75% or prime plus 0%. The Company's ability to draw upon its line 
of credit is dependent upon meeting certain financial ratios and covenants.

     On January 8, 1997, the Company completed the acquisition of Melody Homes, 
Inc. ("Melody"), a homebuilder in the Denver metropolitan area of Colorado, and 
Melody Mortgage Company, a mortgage brokerage firm for Melody home buyers.  The 
Company funded the purchase and refinanced a portion of Melody's loans using 
its unsecured revolving line of credit facility.  Upon the finalization of the 
increase in the Company's unsecured revolving line of credit, all of Melody's 
loans were refinanced by the Company's line of credit.


                                      17
<PAGE>

     Companies in the homebuilding industry are generally highly leveraged and 
require significant up-front expenditures.  Accordingly, the Company incurs 
substantial indebtedness to finance its homebuilding and development 
activities. At March 31, 1997, the Company had bank notes payable of 
approximately $101.3 million.  Peak outstanding debt, including bank borrowings 
and the Convertible Subordinated Debentures, during the quarter ended March 31, 
1997 was $162.7 million. In order to service these obligations and fund its 
ongoing operations, the Company has used proceeds from its initial public 
offering, the offering of convertible subordinated debentures, secondary 
offering of common stock, cash flow from operations, its available bank credit 
facilities and financing sellers of land purchased.  The Company's business and 
earnings are substantially dependent on its ability to obtain debt financing on 
acceptable terms.  Although the Company has in the past been able to obtain 
credit facilities on acceptable terms and believes virtually all of its 
currently planned construction projects will be funded by a combination of cash 
flow from operations and bank or other financing, no assurance can be given 
that it will be able to obtain such bank or other debt financing or that any 
such financing will be on terms acceptable to the Company.  Further, the 
availability of borrowed funds to homebuilders, especially for land acquisition 
and construction financing, has been severely restricted and in some cases 
eliminated entirely.  In compliance with federal guidelines, certain lenders 
are now requiring increased equity commitments by borrowers in connection with 
both new loans and the extension of existing loans.

      At April 30, 1997, the Company had bank notes payable of approximately 
$107.9 million.

     At April 30, 1997, the Company has commitments to purchase several parcels 
of land for approximately $5.8 million, including land to be acquired for 
development by the Company's start-up divisions in Northern California and the 
Pacific Northwest, in addition to land purchase commitments of the Colorado 
division.  The Company expects to utilize a combination of cash flow from 
operations and bank financing to purchase the land parcels.  The Company 
intends to consummate the purchase of the land parcels in 1997.  However, no 
assurances can be given that the purchases will be completed or that the land 
under purchase option will be acquired.

     The Company believes that cash flow from operations, and borrowings under 
its credit facilities will provide adequate cash to fund the Company's 
operations at least through 1997.

     Certain of the Company's currently planned projects, as well as future 
projects, are anticipated to be longer term in nature than those developed in 
the past by the Company.  The increased length of such projects further exposes 
the Company to the risks inherent in the homebuilding industry, including 
reductions in the value of land inventory.


                                      18
<PAGE>

                              SCHULER HOMES, INC.

                          PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings

     The Company is from time to time involved in routine litigation or
     threatened litigation arising in the ordinary course of its business.  Such
     matters, if decided adversely to the Company, would not, in the opinion of
     management, have a material adverse effect on the financial condition of
     the Company.

     In April 1996, the Company was served with a lawsuit by owners of units and
     the Association of Owners of Fairway Village at Waikele, who seek to have a
     class of all owners certified.  The Complaint alleges material construction
     defects and deficiencies, misrepresentation regarding the cost of
     insurance, breach of covenant of good faith and fair dealing, among other
     allegations.  The complaint does not specify an amount of damages, but
     includes a claim for punitive damages, among other claims.  However,
     this litigation is at an early stage of discovery. Based upon its 
     current understanding of the lawsuit, the Company believes (at this 
     early stage of litigation) the claims to be largely without merit, or that
     meritorious defenses, together with potential third party defendants and 
     insurance coverage, exist to offset a material portion of the related 
     claims. The litigation is being vigorously defended.  However, if this 
     lawsuit were decided adversely to the Company, it could have a material 
     adverse effect on the Company's business, financial condition and 
     operating results.

     Prior to its acquisition by the Company, Melody was joined in a 
     class-action lawsuit related to the use of polybutylene plumbing systems
     and certain alleged defects and deficiencies of such systems. In 
     September 1995, the Denver District Court stayed the action pending the 
     resolution of two similar "national class actions" involving the same 
     group of Plaintiffs as well as manufacturers of polybutylene plumbing
     systems. The Denver case was stayed to await a finalization of the 
     settlement agreed to in the courts of Tennessee and Alabama, which 
     required the assignment of Plaintiffs' claims to the manufacturers of
     polybutylene. These settlement agreements have since been finalized, 
     and subsequent to March 31, 1997, a stipulated motion for dismissal of 
     the Denver case was submitted to the Denver District Court by Melody, 
     the Plaintiffs, and other parties to the case. The Company believes that 
     the stipulated motion for dismissal will be granted by the Denver 
     District Court, although no assurance can be given that the dismissal of 
     the case will be granted.


Items 2 through 5.  Not applicable.

Item 6.  Exhibits and Reports on Form 8-K.
 
     (a)  Exhibits. 

          Exhibit
           Number             Document Description 
          -------             --------------------
            10.1              Amended and Restated Credit Agreement between the
                              Company, certain Banks, and First Hawaiian Bank,
                              dated March 27, 1997.

            10.2              Amended and Restated Promissory Note between the
                              Company, certain Banks, and First Hawaiian Bank,
                              dated March 27, 1997.

            10.3              Amendment to Negative Pledge Agreement between the
                              Company, certain Banks, and First Hawaiian Bank,
                              dated March 27, 1997.

             27               Financial Data Schedule.

     (b)  Reports on Form 8-K. Current report on Form 8-K dated January 8, 1997.


                                      19
<PAGE>

                              SCHULER HOMES, INC.

                                   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 thereto duly authorized.


                                   SCHULER HOMES, INC.


Date:  May 14, 1997                By:  /s/ James K. Schuler
                                      -----------------------------------
                                   James K. Schuler
                                   Chairman of the Board,
                                   President and Chief Executive Officer
                                   (principal executive officer)



Date:  May 14, 1967                 By:  /s/ Pamela S. Jones
                                      -----------------------------------
                                    Pamela S. Jones
                                    Senior Vice President of Finance,
                                    Chief Financial Officer and
                                    Director (principal financial officer)



Date:  May 14, 1997                By:  /s/ Douglas M. Tonokawa
                                      -----------------------------------
                                   Douglas M. Tonokawa
                                   Vice President of Finance,
                                   Chief Accounting Officer
                                   (principal accounting officer)


                                      20