<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 September 30, 1999

              [ ] 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                            October 31, 1999
        ---------------------                            ----------------
            $.01 par value                                  20,081,200

<PAGE>

                               SCHULER HOMES, INC.

                                      INDEX

<TABLE>
<CAPTION>

PART I. FINANCIAL INFORMATION
<S>                                                                                     <C>
Item 1.           Financial Statements

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

                  Consolidated Balance Sheets - September 30, 1999 and
                        December 31, 1998 .........................................      4

                  Consolidated Statements of Income - Three and nine months
                        ended September 30, 1999 and 1998 .........................      5

                  Consolidated Statements of Cash Flows - Nine
                        months ended September 30, 1999 and 1998 ..................      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................................................     19

SIGNATURES ........................................................................     20


</TABLE>

                                        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 September 30, 1999, and the related consolidated
statements of income for the three-month and nine-month periods ended
September 30, 1999 and 1998, and the consolidated statements of cash flows
for the nine-month periods ended September 30, 1999 and 1998. 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, 1998, 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 15, 1999, 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, 1998, 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
November 10, 1999


                                        3

<PAGE>

                               SCHULER HOMES, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                        September 30,1999       December 31, 1998
                                                                                        -----------------       -----------------
                                                                                           (unaudited)
<S>                                                                                     <C>                     <C>
ASSETS

Cash and cash equivalents (restricted-Note 1) .......................................     $   6,650,000          $   4,915,000
Real estate inventories (Note 2) ....................................................       432,000,000            325,166,000
Investments in unconsolidated joint ventures (Note 3) ...............................         9,369,000             23,998,000
Deferred income taxes ...............................................................         2,866,000              3,957,000
Intangibles, net ....................................................................        15,779,000             13,879,000
Other assets (Note 3) ...............................................................        21,932,000             13,628,000
                                                                                        -----------------       -----------------
Total assets ........................................................................     $ 488,596,000          $ 385,543,000
                                                                                        -----------------       -----------------
                                                                                        -----------------       -----------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable ....................................................................     $  30,087,000          $  15,954,000
Accrued expenses ....................................................................        18,831,000             16,703,000
Notes payable to banks (Note 4) .....................................................        85,276,000             17,365,000
Notes payable to others .............................................................         3,233,000              3,954,000
9% senior notes due 2008 ............................................................        98,631,000             98,512,000
6-1/2% convertible subordinated debentures due 2003 .................................        57,500,000             57,500,000
                                                                                        -----------------       -----------------
Total liabilities ...................................................................       293,558,000            209,988,000

Commitments and contingencies (Notes 4 and 5)

Minority interest in consolidated subsidiary (Note 3) ...............................         1,522,000                     --

Stockholders' equity (Notes 3 and 6):
    Common stock, $.01 par value; 30,000,000 shares authorized;
     20,928,158 and 20,892,465 shares issued at September 30, 1999 and December 31,
     1998, respectively .............................................................           214,000                209,000
    Additional paid-in capital ......................................................        95,965,000             93,201,000
    Retained earnings ...............................................................       105,923,000             87,762,000
    Treasury stock, at cost; 1,278,400 and 869,000 shares at September 30, 1999
      and December 31, 1998,  respectively...........................................        (8,586,000)            (5,617,000)
                                                                                        -----------------       -----------------
Total stockholders' equity ..........................................................       193,516,000            175,555,000
                                                                                        -----------------       -----------------
Total liabilities and stockholders' equity ..........................................     $ 488,596,000          $ 385,543,000
                                                                                        -----------------       -----------------
                                                                                        -----------------       -----------------

</TABLE>

                             See accompanying notes.


                                        4

<PAGE>

                               SCHULER HOMES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                Three months ended September 30,   Nine months ended September 30,
                                                                --------------------------------   -------------------------------
                                                                    1999               1998                1999            1998
                                                                -------------     -------------    ---------------   -------------
                                                                           (unaudited)                        (unaudited)
<S>                                                             <C>               <C>              <C>               <C>
Residential real estate sales (Note 3) ...................      $ 128,335,000     $  79,186,000      $ 355,851,000   $ 202,131,000

Costs and expenses:
    Residential real estate sales ........................        102,642,000        63,206,000        282,436,000     161,064,000
    Selling and commissions ..............................          8,101,000         5,180,000         22,623,000      13,772,000
    General and administrative ...........................          6,505,000         4,165,000         18,400,000      11,685,000
                                                                -------------     -------------    ---------------   -------------
        Total costs and expenses .........................        117,248,000        72,551,000        323,459,000     186,521,000
                                                                -------------     -------------    ---------------   -------------
    Operating income .....................................         11,087,000         6,635,000         32,392,000      15,610,000

Income from unconsolidated joint ventures ................            556,000           750,000           893,0000       1,546,000
Minority interest in pretax income of consolidated
  subsidiary (Note 3) ....................................            (99,000)              ---           (272,000)            ---
Other income (expense) (Note 4) ..........................           (625,000)       (1,618,000)        (3,492,000)     (3,492,000)
                                                                -------------     -------------    ---------------   -------------
   Income before provision for income taxes ..............         10,919,000         5,767,000         29,521,000      13,664,000
Provision for income taxes (Note 7) ......................          4,224,000         2,184,000         11,360,000       5,228,000
                                                                -------------     -------------    ---------------   -------------
   Net income ............................................      $   6,695,000     $   3,583,000      $  18,161,000   $   8,436,000
                                                                -------------     -------------    ---------------   -------------
                                                                -------------     -------------    ---------------   -------------
Net income per share (Note 8):
   Basic .................................................      $        0.34     $        0.18      $        0.91   $        0.42
                                                                -------------     -------------    ---------------   -------------
                                                                -------------     -------------    ---------------   -------------
   Diluted ...............................................      $        0.33     $        0.18      $        0.91   $        0.42
                                                                -------------     -------------    ---------------   -------------
                                                                -------------     -------------    ---------------   -------------

</TABLE>

                                              See accompanying notes.


                                        5

<PAGE>

                               SCHULER HOMES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                            Nine months ended September 30,
                                                                                         -------------------------------------
                                                                                              1999                   1998
                                                                                         -------------           -------------
                                                                                                       (unaudited)
<S>                                                                                      <C>                     <C>
OPERATING ACTIVITIES:
Net income ....................................................................          $  18,161,000           $   8,436,000
Adjustments to reconcile net income to net cash provided by (used in)
   operating activities:
     Depreciation and amortization expense ....................................              3,366,000               2,387,000
     Increase in allowance for doubtful accounts ..............................                     --                  96,000
     (Income) loss from unconsolidated joint ventures .........................               (424,000)             (1,463,000)
     Change in principal balance of notes receivable ..........................                735,000                 150,000
     Minority interest ........................................................                272,000                      --
 Changes in assets and liabilities, net of effects of purchase of additional
 40% interest in Stafford:
   (Increase) decrease in real estate inventories .............................            (56,093,000)            (27,198,000)
   (Increase) decrease in other assets ........................................             (2,327,000)               (658,000)
   Increase (decrease) in accounts payable ....................................              9,257,000               1,939,000
   Increase (decrease) in accrued expenses ....................................              4,078,000               3,092,000
   Change in deferred income taxes ............................................              1,144,000                 (83,000)
                                                                                         -------------           -------------
       Net cash provided by (used in) operating activities ....................            (21,831,000)            (13,302,000)


INVESTING ACTIVITIES:
Purchase of additional 40% interest in Stafford, net of cash acquired .........             (4,227,000)                     --
Acquisition of certain assets of Keys Homes ...................................             (1,000,000)                     --
Investment in unconsolidated joint ventures ...................................             (2,185,000)             (1,000,000)
Advances to unconsolidated joint ventures .....................................               (517,000)             (5,359,000)
Repayments of advances to unconsolidated joint ventures .......................                975,000                 262,000
Capital distributions from unconsolidated joint ventures ......................              1,713,000               3,457,000
Purchase of furniture, fixtures, and equipment ................................             (1,004,000)               (181,000)
                                                                                         -------------           -------------
       Net cash provided by (used in) investing activities ....................             (6,245,000)             (2,821,000)

FINANCING ACTIVITIES:
Proceeds from bank borrowings .................................................            240,373,000             128,029,000
Principal payments on bank borrowings .........................................           (172,462,000)           (208,113,000)
Principal payments on notes payables to others ................................               (729,000)                     --
Proceeds from issuance of senior notes, net of discount and offering costs ....                     --              97,210,000
Refinancing of Stafford's debt ................................................            (29,378,000)                     --
Advances to affiliates (Note 3) ...............................................             (5,810,000)                     --
Repayment of advances to affiliates ...........................................                255,000                      --
Net decrease in discount on issuance of senior notes ..........................                119,000                  65,000
Proceeds from issuance of common stock from exercise of stock options .........                 64,000                 101,000
Proceeds from issuance of common stock under Employee Stock Purchase Plan .....                348,000                      --
Reacquisition of the Company's common stock ...................................             (2,969,000)                     --
                                                                                         -------------           -------------
        Net cash provided by (used in) financing activities ...................             29,811,000              17,292,000
                                                                                         -------------           -------------
Increase (decrease) in cash ...................................................              1,735,000               1,169,000
Cash and cash equivalents (restricted) at beginning of period .................              4,915,000               3,842,000
                                                                                         -------------           -------------
Cash and cash equivalents (restricted) at end of period .......................          $   6,650,000           $   5,011,000
                                                                                         -------------           -------------
                                                                                         -------------           -------------

</TABLE>

                             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, 1998
     contained in the Company's 1998 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.

     Certain amounts in the Consolidated Financial Statements relating to 1998
     have been reclassified to conform to the 1999 presentation.

     Included in Cash and Cash Equivalents at September 30, 1999 is a restricted
     amount of $712,000, which primarily represents a collection allowance
     resulting from the sale of second mortgage notes.

     In July 1999, the Company acquired certain assets of a homebuilder that
     operates in Southern California and Arizona, thereby establishing two new
     divisions of the Company. See Note 3.


2.   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 economic and real estate market conditions
     in general. Accordingly, there exists at any date, a reasonable possibility
     that changes in estimates will occur in subsequent periods.



                                        7

<PAGE>

<TABLE>
<CAPTION>
    Real estate inventories at September 30, 1999 consist of the following:
<S>                                                             <C>
       Unimproved land held for future development............  $    42,356,000
        Development projects in progress......................      346,518,000
       Completed inventory (including lots held for sale).....       43,126,000
                                                                ---------------
                                                                $   432,000,000
                                                                ---------------
                                                                ---------------

</TABLE>

      Completed inventory includes residential units which are substantially
ready for occupancy.


3.   Related Party Transactions

     In January 1999, the Company exercised its option to purchase an additional
     40% ownership interest in Stafford Homes (Stafford), increasing its total
     ownership to 89%. As a result, the financial statements of Stafford for the
     three-month and nine-month periods ended September 30, 1999 are
     consolidated with those of the Company. In connection with this
     transaction, the Company refinanced Stafford's existing debt, which
     included $1,251,000 in certain notes payable to affiliates of Stafford.

     Through October 1999, Stafford leased its main office building from an
     affiliate of its President. The Company also leases its main office in
     Oregon from a family member of the Division President of the Oregon
     Division. During the quarter ended September 30, 1999, the Company incurred
     total rental expense in connection with such leases of approximately
     $32,000.

     In connection with the acquisition of certain assets of Keys Homes, Inc.
     (Keys) in October 1998, the Division President of the Company's Oregon
     Division (formerly the president of Keys) earns a percentage of the profits
     of the Oregon Division. In addition, included in Other Assets at September
     30, 1999 is a note receivable of $1,000,000 from the Oregon Division
     President, which was issued on January 4, 1999, is due on December 31,
     2005, bears interest at 7%, and requires minimum annual payments of
     $200,000 plus accrued but unpaid interest. Accrued interest receivable
     relating to the note was approximately $52,000 at September 30, 1999.
     During the quarter ended September 30, 1999, the Company sold 14 of its
     homes for an aggregate sales price of $2,273,000 to a group of which the
     Division President of the Company's Oregon Division is a member.

     In connection with the acquisition in July 1999 that established the new
     divisions in Southern California and Arizona, the owners of the seller, who
     became officers of the new divisions, will retain an interest in the
     profits of the two new divisions, until the sooner of the occurrence of
     certain agreed upon events or December 31, 2004, which may be extended to
     December 31, 2006. In connection with the acquisition, the Company issued
     400,000 shares of its common stock and provided a loan to the seller in the
     amount of $4,810,000, which is included in Other Assets. The loan is due on
     December 31, 2004 and bears interest at 7%. Accrued interest receivable
     relating to the loan was approximately $63,000 at September 30, 1999.

     From time to time, the Company engages the law firm in which a director of
     the Company is a partner. During the quarterly period ended September 30,
     1999, no such legal fees were incurred by the Company.


4.   Notes Payable to Banks

     On October 1, 1999, the Company increased its Revolving Credit Facility
     with a consortium of banks from $120,000,000 to $170,000,000. The Company
     has a one-time option to reduce the amount of the facility by up to
     $30,000,000 on an irrevocable basis, provided the facility has remained at
     $170,000,000 for at least six months. The facility expires on July 1, 2002
     and includes an option for the lenders to extend the term for an additional
     year as of July 1 of each 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 ability to draw upon its line of credit is dependent upon meeting
     certain financial ratios and covenants. As of September 30, 1999, the
     Company met such


                                        8

<PAGE>

     financial ratios and covenants.

     The Company entered into two interest rate swaps. One swap requires the
     Company to pay a fixed rate of 5.75% on $30,000,000, while receiving in
     return an interest payment at a floating one-month LIBOR. However, if the
     one-month LIBOR resets at or above 7%, the swap reverses for that payment
     period and no interest payments are exchanged. This interest rate swap
     terminates on August 1, 2003. The second swap, which became effective on
     August 9, 1999 and terminates on August 9, 2002, requires the Company to
     pay interest at a floating one month LIBOR (5.21% on initial effective
     date) on $30,000,000, while receiving in return an interest payment at a
     fixed rate of 6.31%. The interest rate differential on these swaps to be
     received or paid is recognized during the period as an adjustment to
     interest incurred.

     Notes Payable to Banks at September 30, 1999 consist of borrowings under
     its credit facilities. At September 30, 1999, the Company's bank borrowings
     were at interest rates of prime (8.25%) and LIBOR plus 1.5% (6.9%). At
     September 30, 1999, $34,724,000 of the Company's $120,000,000 line of
     credit is unused, of which $5,804,000 is restricted for outstanding but
     unused letters of credit.

     In April 1999, the Company entered into a separate 90-day $10,000,000 line
     of credit with one of the banks included in the $120,000,000 Revolving
     Credit Facility. In July 1999, the Company extended this line of credit for
     an additional 90 days. This separate line of credit was canceled on October
     1, 1999.

     The interest amounts in this paragraph relate to Notes Payable to Banks,
     Notes Payable to Others, Senior Notes and the Convertible Subordinated
     Debentures. The Company paid interest of approximately $3,316,000 during
     the quarter ended September 30, 1999. Interest incurred during the quarter
     ended September 30, 1999 was approximately $4,777,000. All of such interest
     was capitalized to real estate inventories except for $372,000, which was
     expensed (included in Other Income (Expense)) and not capitalized, as such
     interest did not meet the requirements for capitalization. Interest,
     previously capitalized to real estate inventories, expensed as a component
     of Cost of Residential Real Estate Sales during the quarter ended September
     30, 1999 totaled $4,524,000.


5.   Commitments and Contingencies

     At September 30, 1999, the Company had land for residential development
     under contract to purchase for approximately $4,000,000.

     In April 1996, the Company was served with a purported class action
     complaint by owners of units and the Association of Owners of Fairway
     Village at Waikele alleging, among other things, material construction
     defects and deficiencies, misrepresentations regarding the cost of
     insurance and breach of a covenant of good faith and fair dealing.
     Following the Court's denial of a class certification request, a second
     action involving other homeowners at Fairway Village advancing the same
     claims was initiated. While the Company believed the claims to be largely
     without merit, during April 1999 a settlement agreement was entered into by
     the Company, third party defendants, insurance carriers and all of the
     plaintiffs in both lawsuits, except for the owners of three units. The
     settlement amount incurred by the Company will be charged against the
     warranty accruals previously established by the Company. Although the cost
     of remediation for certain units called for under the settlement agreement
     is not determinable until the work is completed, the Company believes that
     the cost of such work will not exceed its warranty accruals. A new trial
     date in December 1999 has been set for the initial suit, which has two
     remaining plaintiffs. A trial date in April 2000 has been set in the second
     action, which includes one remaining plaintiff. 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.

     The Company is also 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.


                                        9


<PAGE>

6.   Stockholders' Equity

     During the quarter ended September 30, 1999, options to purchase 66,800
     shares of common stock were granted. In addition, 31,628 shares were issued
     on August 31, 1999 pursuant to the Company's Employee Stock Purchase Plan.

     In November 1998, the Company adopted a stock repurchase program to
     reacquire up to an aggregate of $10,000,000 of its outstanding common stock
     through August 30, 1999 (subsequently extended through December 31, 2000).
     As of September 30, 1999, the Company has repurchased 504,400 shares under
     the program at a total cost of $3,585,650.


7.   Income Taxes

     During the three months ended September 30, 1999, the Company made income
     tax payments of $4,250,000.


8.   Net Income Per Share

     Basic net income per share for the quarter and nine months ended September
     30, 1999 were computed using the weighted average number of common shares
     outstanding during the periods of 19,968,925 and 19,967,688, respectively.
     Basic net income per share for the quarter and nine months ended September
     30, 1998 were computed using the weighted average number of common shares
     outstanding during the periods of 20,113,323 and 20,106,346, respectively.

     Diluted net income per share for the three months ended September 30, 1999
     was computed by adding to net income the interest charged to Cost of
     Residential Real Estate Sold of $842,000 (net of related income taxes)
     which is applicable to convertible subordinated debentures, and dividing by
     22,602,915, which represents the weighted average number of shares assuming
     conversion of all convertible subordinated debentures. The computation of
     diluted net income per share for the nine-month period ended September 30,
     1999 and the three-month and nine-month periods ended September 30, 1998
     resulted in amounts greater than the basic net income per share.
     Accordingly, the basic net income per share is also presented as the
     diluted net income per share.


                                        10


<PAGE>

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


     Except for historical information contained herein, matters discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain "forward-looking statements" within the meaning of the
Private Securities Litigation Act of 1995 that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Forward-looking
statements are based on various factors and assumptions that include risks
and uncertainties, including but not limited to the costs and achievability
of Year 2000 compliance, the closing and profitability of sales in backlog
reported, the market for homes generally and in areas where the Company
operates, the availability and cost of land, changes in economic conditions
and interest rates, increases in raw material and labor costs, consumer
confidence, government regulation, weather conditions and general competitive
factors, all or each of which may cause actual results to differ materially.
In addition, other factors that might cause such a difference include 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

     Schuler Homes, Inc. designs, constructs, markets and sells single-family
residences, townhomes and condominiums primarily to entry-level and
first-time move-up buyers. The Company operates in seven geographic markets:
Arizona, Colorado, Hawaii, Northern California, Oregon, Southern California
and Washington. Southern California and Arizona represent new geographic
markets for the Company, as a result of the July 1999 acquisition of certain
assets of Rielly Homes, Inc.

     For the quarter ended September 30, 1999, sales of residential real
estate (revenues) were $128.3 million and operating income was $11.1 million,
compared to revenues of $79.2 million and operating income of $6.6 million
during the third quarter last year. Net income was $6.7 million ($0.33 per
share) for the quarter ended September 30, 1999, compared to net income of
$3.6 million ($0.18 per share) during the 1998 third quarter. For the third
quarter of 1998 compared to the third quarter of 1999, revenues grew 62.1%,
net income grew 86.9%, the number of units closed increased from 510 to 692
and operating profit margins improved from 8.4% to 8.6%.

     In July 1999, the Company acquired certain assets of Rielly Homes, Inc.
("Rielly"), a homebuilder in Southern California and Phoenix, Arizona.
Founded by Tom Rielly in 1986, Rielly has built over 3,000 homes, focusing
primarily on the entry-level and first and second move-up markets. In 1998,
Rielly closed the sales of approximately 165 homes, generating revenues of
approximately $50.6 million.



                                        11

<PAGE>

RESULTS OF OPERATIONS

The following tables set forth, for the periods indicated, the percentage of the
Company's revenues represented by each income statement line item presented.

<TABLE>
<CAPTION>

                                                               Three months ended       % Change in Dollar Amounts
                                                                    September 30,              from
                                                               1999            1998         1998 to 1999
                                                             -------          -------      --------------
<S>                                                          <C>              <C>       <C>
Residential real estate sales ....................            100.0%           100.0%           62.1%

Costs and expenses:
    Residential real estate sales ................             80.0             79.8            62.4
    Selling and commissions ......................              6.3              6.5            56.4
    General and administrative ...................              5.1              5.3            56.2
                                                             -------          -------
              Total costs and expenses ...........             91.4             91.6            61.6
                                                             -------          -------
Operating income .................................              8.6              8.4            67.1

Income from unconsolidated joint ventures ........              0.4              0.9           (25.9)
Minority interest in pretax income of consolidated
 subsidiary ......................................               --               --              --
Other income (expense) ...........................             (0.5)            (2.0)          (61.4)
                                                             -------          -------
Income before provision for income taxes .........              8.5              7.3            89.3
Provision for income taxes .......................              3.3              2.8            93.4
                                                             -------          -------

    Net income ...................................              5.2%             4.5%           86.9
                                                             -------          -------
                                                             -------          -------


</TABLE>


<TABLE>
<CAPTION>


                                                                 Nine months ended      % Change in Dollar Amounts
                                                                   September 30,                 from
                                                                  1999         1998           1998 to 1999
                                                                --------      -------    -------------------------
<S>                                                          <C>              <C>        <C>
Residential real estate sales ....................            100.0%           100.0%           76.0%

Costs and expenses:
    Residential real estate sales ................              79.4            79.7            75.4
    Selling and commissions ......................               6.3             6.8            64.3
    General and administrative ...................               5.2             5.8            57.5
                                                                --------      -------
              Total costs and expenses ...........               90.9           92.3            73.4
                                                                --------      -------
Operating income .................................                9.1            7.7           107.5

Income from unconsolidated joint ventures ........                0.2            0.8           (42.2)
Minority interest in pretax income of consolidated
 subsidiary.......................................                 --             --              --
Other income (expense) ...........................               (1.0)          (1.7)             --
                                                                --------      -------
Income before provision for income taxes .........                8.3            6.8           116.0
Provision for income taxes .......................                3.2            2.6           117.3
                                                                --------      -------
    Net income ...................................                5.1%           4.2%          115.3
                                                                --------      -------
                                                                --------      -------

</TABLE>

RESIDENTIAL REAL ESTATE SALES

     The Company's Residential Real Estate Sales (revenues) for the quarter
ended September 30, 1999 were approximately $128.3 million as compared to
approximately $79.2 million during the quarter ended September 30, 1998. This
represents an increase of approximately $49.1 million or 62.1%. The increase
in revenues reflects a larger number of unit sales closed at higher average
sales prices in the third quarter of 1999 relative to the third quarter of
1998. The Company's average sales price per unit increased to $202,000 during
the 1999 third quarter (excluding one sale under the Company's "zero-down"
sales program in Hawaii and 7 lot sales), an increase from an average sales
price per unit during the 1998 third quarter of $185,000.


                                        12


<PAGE>

     The Company's Residential Real Estate Sales (revenues) were
approximately $355.9 million for the nine months ended September 30, 1999,
compared to $202.1 million during the same period in 1998, an increase of
76.0%. The increase is attributable to the increase in the number and average
sales price of unit sales closed during the first nine months of 1999
compared to the first nine months of 1998. The average sales price per unit
closed was $194,000 during the nine months ended September 30, 1999, compared
to $180,000 during the nine months ended September 30, 1998.

     As a result of the increase in the Company's ownership of Stafford to
89% in early 1999, the operating results of Stafford are consolidated with
those of the Company during the quarter and nine months ended September 30,
1999, contributing to the Company's higher 1999 revenues and average sales
prices as compared to 1998. Stafford's average sales price of home sales
closed was $253,000 during the quarter ended September 30, 1999 and $241,000
for the nine months ended September 30, 1999.

     The following table sets forth the number of sales closed during the
three-month and nine-month periods ended September 30, 1999 and 1998, which
includes 100% of the sales closed at projects developed by the Company's
joint ventures.

<TABLE>
<CAPTION>

                                            Three months ended September 30,       Nine months ended September 30,
                                               1999              1998                 1999                  1998
                                            -----------      --------------        -------------       -----------
<S>                                         <C>              <C>                   <C>                 <C>
Consolidated:
  Colorado                                      339               303                  995                   788
  Hawaii (1)                                     71                82                  229                   235
  Northern California                            76                24                  159                    59
  Oregon                                         85                20                  243                    44
  Washington (2)                                 71                --                  199                    --
                                            -----------      --------------        -------------       -----------
    Total Consolidated                          642               429                1,825                 1,126

Unconsolidated Joint Ventures:
 Colorado (3)                                    36                --                   56                    --
 Hawaii (4)                                       5                 7                   16                    17
 Southern California (5)                          9                --                    9                    --
 Washington (2)                                  --                74                   --                   190
                                            -----------      --------------        -------------       -----------

Total                                           692               510                1,906                 1,333
                                            -----------      --------------        -------------       -----------
                                            -----------      --------------        -------------       -----------


</TABLE>

(1)  Includes homes and lots sold and closed pursuant to the Company's
     "zero-down" sales program in Hawaii. The amount for the three months ended
     September 30, 1999 includes one "zero-down" closing. The amount for the
     nine months ended September 30, 1999 excludes 11 sales that closed prior to
     January 1, 1999 under the Company's "zero-down" sales program, for which
     the second mortgage notes were sold during the 1999 first quarter.
(2)  Reflects 100% of the information with respect to Stafford Homes, which the
     Company acquired a 49% interest in July 1997, which it increased to 89% in
     January 1999.
(3)  Reflects 100% of the information with respect to the Company's 50%-owned
     joint venture in Colorado.
(4)  Reflects 100% of the information with respect to the Company's two
     50%-owned joint ventures in Hawaii.
(5)  Reflects 100% of the information with respect to the Company's 24.5% to
     49%-owned joint ventures in Southern California.

COSTS AND EXPENSES - RESIDENTIAL REAL ESTATE SALES

     Costs and Expenses - Residential Real Estate Sales represents the
acquisition and development costs of a project attributable to the homes
closed. 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.

     Costs and Expenses - Residential Real Estate Sales increased from
approximately $63.2 million during the quarter ended September 30, 1998 to
approximately $102.6 million during the same period in 1999, representing an
increase of approximately $39.4 million or 62.4%. This increase reflects a
larger number of units closed and related increased revenue during the third
quarter of 1999 relative to the third quarter of 1998 and the consolidation
of Stafford's


                                        13


<PAGE>

operating results with those of the Company during the quarter ended
September 30, 1999. As a percentage of revenues, Cost of Residential Real
Estate Sales was 80.0% and 79.8% during the quarters ended September 30, 1999
and 1998, respectively.

     Costs and Expenses - Residential Real Estate Sales increased from
approximately $161.1 million during the nine months ended September 30, 1998
to approximately $282.4 million during the same period in 1999, representing
an increase of approximately $121.4 million or 75.4%, primarily reflecting a
larger number of units closed and related increased revenue during the first
nine months of 1999 relative to the same period in 1998.

     Costs and Expenses - Residential Real Estate Sales as a percentage of
revenues decreased from 79.7% for the nine months ended September 30, 1998 to
79.4% for the nine months ended September 30, 1999. The decrease in the cost
of residential real estate sold as a percentage of revenues reflects higher
margins realized by the Colorado division.

     Total interest incurred during the quarters ended September 30, 1999 and
1998 was approximately $4.8 million and $3.7 million, respectively. The
increase in interest incurred reflects the higher level of average debt
outstanding. Of the amounts incurred, approximately $372,000 and $1.1 million
were expensed currently (included in Other Income (Expense)) in the third
quarters of 1999 and 1998, respectively, and the remaining interest incurred
was 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. The amount of previously
capitalized interest, which was expensed through Cost of Residential Real
Estate Sales, totaled $4.5 million and $2.7 million during the quarters ended
September 30, 1999 and 1998, respectively.

     Average debt outstanding was approximately $244.7 million and $180.2
million during the third quarters of 1999 and 1998, respectively, reflecting
the increase in debt outstanding associated with the increase in the
Company's ownership in Stafford and simultaneous refinancing of Stafford's
debt, as well as the higher volume of inventories in the Company's U.S.
mainland divisions. The Company's average interest rate on its debt for the
quarters ended September 30, 1999 and 1998 was approximately 7.8% and 8.0%,
respectively. The Company's Notes Payable to Banks 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

     Selling costs and commissions represented approximately 6.3% and 6.5% of
sales of residential real estate during the quarters ended September 30, 1999
and 1998, respectively. Selling costs and commissions represented
approximately 6.3% and 6.8% of sales of residential real estate during the
nine months ended September 30, 1999 and 1998, respectively. These decreases
are a result of the selling costs and commissions increasing at a lower rate
than revenues.

COSTS AND EXPENSES - GENERAL AND ADMINISTRATIVE

     General and Administrative Expenses include salaries, office and other
administrative costs. Indirect costs attributable to specific projects are
capitalized and deducted as part of Costs and Expenses - Residential Real
Estate Sales.

     General and Administrative Expenses increased by $2.3 million during the
third quarter of 1999 as compared to the same period in 1998, primarily due
to expansion at the Company's U. S. mainland divisions and the consolidation
of Stafford's operating results with those of the Company during the quarter
and nine months ended September 30, 1999. As a percentage of sales, General
and Administrative Expenses decreased from 5.3% during the quarter ended
September 30, 1998 to 5.1% during the quarter ended September 30, 1999. This
decrease is a result of General and Administrative Expenses increasing at a
lower rate than revenues.

     General and Administrative Expenses increased by $6.7 million or 57.5%
during the first nine months of 1999 as compared to the same period in 1998.
As a percentage of sales, General and Administrative Expense decreased from
5.8% during the first nine months of 1998 to 5.2% during the first nine
months of 1999. This decrease is a result of General and Administrative
Expenses increasing at a lower rate than revenues.


                                        14


<PAGE>


INCOME FROM UNCONSOLIDATED JOINT VENTURES

      During the first three quarters of 1999, Income from Unconsolidated
Joint Ventures represents (i) the Company's 50% interest in the operations of
two joint ventures in Hawaii, (ii) beginning in the second quarter of 1999,
the Company's 50% interest in its joint venture in Colorado and (iii)
beginning in the third quarter of 1999, the Company's 24.5% interest in a
joint venture in Southern California. During the comparable periods in 1998,
Income from Unconsolidated Joint Ventures represented the Company's 49%
interest in the operations of Stafford in addition to its 50% interest in the
operations of two joint ventures in Hawaii. The decrease in this income from
the first three and nine months of 1998 to the same period in 1999 is
primarily the result of Stafford being accounted for as a consolidated
subsidiary for the quarter and nine months ended September 30, 1999, rather
than an unconsolidated joint venture, due to the increase of the Company's
ownership interest to 89% in January 1999.

MINORITY INTEREST IN PRETAX INCOME OF CONSOLIDATED SUBSIDIARY

      Minority Interest in Pretax Income of Consolidated Subsidiary
represents the income relating to the 11% of Stafford not owned by the
Company.

OTHER INCOME (EXPENSE)

     Other Income (Expense) consists primarily of (i) interest incurred less
interest capitalized to inventory (interest expense), (ii) amortization of
financing fees, net of amounts capitalized to inventory, and (iii)
amortization of goodwill and covenants-not-to-compete; less interest income.
The decrease in Other Income (Expense) of $993,000 from the third quarter of
1998 to the third quarter of 1999, is primarily due to a lower ratio of debt
to inventory under development, offset by additional interest expense
resulting from the consolidation of Stafford.

PROVISION FOR INCOME TAXES

     The Company's effective income tax rate for the third quarters of 1999
and 1998 was approximately 38.7% and 37.9%, respectively.

VARIABILITY OF RESULTS; OTHER FACTORS

     The Company has experienced, and expects to continue to experience,
significant variability in sales and net income. 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 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, geographic area
to geographic area, and from fiscal quarter to fiscal quarter.

     Certain of the Company's currently planned projects as well as future
projects, particularly in Hawaii, 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.

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


                                        15


<PAGE>

     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
would consider the acquisition of or joint venture with an existing company,
as it has done in the past, as well as its own 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.

In addition, the Company believes that the market price of its common stock
may at times be adversely affected due to the Company's relatively small size
when compared to certain other publicly traded national homebuilding firms.
The Company further believes that the price of its common stock may be
adversely affected due to the relatively low trading volume for its shares.

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 September 30, 1999 and 1998, which includes homes and
lots sold pursuant to the Company's "zero-down" sales program and 100% of the
backlog related to projects developed by the Company's unconsolidated joint
ventures.

<TABLE>
<CAPTION>

                                             September 30, 1999                      September 30, 1998
                                          -----------------------------         ------------------------------
                                                             Aggregate                              Aggregate
                                            Number          Sales Value          Number            Sales Value
                                          ---------       -------------         ----------       -------------
<S>                                       <C>             <C>                   <C>            <C>
Consolidated:
  Colorado                                   621          $ 114,218,000           414            $ 69,841,000
  Hawaii                                      97             26,955,000            58              16,771,000
  Northern California                        114             30,280,000            28               4,619,000
  Oregon                                      66             12,763,000            46               8,836,000
  Washington                                  77             21,662,000            --                      --
                                          ---------       -------------         ----------       -------------
    Total Consolidated                       975            205,878,000           546             100,067,000

Unconsolidated Joint Ventures:
 Colorado                                     41              7,156,000            --                      --
 Hawaii                                        6                820,000             3                 355,000
 Southern California                          10              3,063,000            --                      --
 Washington                                   --                     --            59              15,753,000
                                          ---------       -------------         ----------       -------------

Total                                      1,032           $216,917,000           608           $ 116,175,000
                                          ---------       -------------         ----------       -------------
                                          ---------       -------------         ----------       -------------


</TABLE>

     The average sales prices of the homes and lots comprising backlog for
consolidated projects at September 30, 1999 and 1998 were $211,000 and
$183,000, respectively. 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.


                                        16


<PAGE>

YEAR 2000 COMPLIANCE

     The Company has developed and is currently executing a plan designed to
make its computer systems Year 2000 compliant. The plan covers four stages
including (i) inventory, (ii) assessment, (iii) remediation, and (iv)
testing. The Company has substantially completed the inventory, assessment,
remediation and testing stages for its systems and applications. The Company
expects to complete the remainder of its testing prior to the end of 1999.

     The Company currently estimates that approximately $80,000 will be
incurred to address Year 2000 issues. As of September 30, 1999, approximately
$77,000 has been incurred and expensed. The Company anticipates that its Year
2000 costs will be funded from operations, and does not expect to defer any
other information technology projects as a result of its Year 2000 efforts.
The Company does not anticipate the Year 2000 issue will have material
adverse effects on the business operations or financial performance of the
Company. However, the failure of any internal system to achieve Year 2000
readiness could result in material disruption to the Company's operations.

     The Company has also initiated discussions with parties with whom it
does business to ensure that those parties have appropriate plans to
remediate Year 2000 issues where their systems impact the Company's
operations. Although the Company believes that alternative sources of labor
and materials will be available, there can be no assurance that the inability
of the Company's key subcontractors and suppliers to attain Year 2000
compliance will not have a material adverse effect on the business operations
and financial performance of the Company. In addition, the Company is
materially reliant on third parties with respect to its ability to collect
sales proceeds and pay its vendors and employees. Such third parties include
governmental agencies in various jurisdictions that record the conveyance of
property, title and escrow companies, banks and payroll processing firms. We
have received assurances that systems have been remediated to address Year
2000 issues from a majority of the parties with which discussions were
initiated. Even where assurances are received from these parties, there
remains a risk that failure of systems and products of these parties and
other companies on which the Company relies could have a material adverse
effect on the Company.

     The costs of Year 2000 compliance and the foregoing statements are based
upon management's best estimates at the present time, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third party modification plans and other
factors. There can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific
factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, the nature and
amount of programming required to upgrade or replace each of the affected
programs, the rate and magnitude of related labor and consulting costs and
the success of the Company's external customers and suppliers in addressing
the Year 2000 issue. The Company's evaluation is on-going and it expects that
new and different information will become available to it as that evaluation
continues. Consequently, there is no guarantee that all material elements
will be Year 2000 ready in time.

LIQUIDITY AND CAPITAL RESOURCES

     The Company uses its liquidity and capital resources to, among other
things, (i) support its operations including its inventories of homes, home
sites and land; (ii) provide working capital; (iii) fund market expansion,
including acquisitions, investments in and advances to joint ventures, and
start-up operations; and (iv) make interest payments on outstanding debt.

CAPITAL RESOURCES

     The Company anticipates continuing to acquire land for use in its future
homebuilding operations. The Company currently intends to acquire a portion
of the land inventories required in future periods through takedowns of lots
subject to option contracts entered into in prior periods and under new
option contracts. The use of option contracts lessens the Company's
land-related risk and improves liquidity. Because of increased demand for
undeveloped, partially developed and finished lots in certain of the markets
where the Company builds homes, the Company's ability to acquire lots using
option contracts has been reduced or has become more expensive.

     In January 1999, the Company increased its ownership interest in
Stafford to 89% and refinanced Stafford's existing debt. The Company
anticipates that it will acquire the remaining 11% interest in Stafford in
January 2001.


                                        17


<PAGE>

     The Company anticipates that it has adequate financial resources to
satisfy its current and near-term capital requirements based on its current
capital resources and additional liquidity available under existing credit
agreements. The Company believes that it can meet its long-term capital needs
(including, among other things, meeting future debt payments and refinancing
or paying off other long-term debt as it becomes due) from operations and
external financing sources, assuming that no significant adverse changes in
the Company's business, or general economic conditions as a result of the
various risk factors, particularly increases in interest rates, described
elsewhere herein and in the Company's Annual Report on Form 10-K.

NOTES PAYABLE

     On October 1, 1999, the Company increased its Revolving Credit Facility
with a consortium of banks from $120.0 million to $170.0 million. The Company
has a one-time option to reduce the amount of the facility by up to $30.0
million on an irrevocable basis, provided the facility has remained at $170.0
million for at least six months. The facility expires on July 1, 2002 and
includes an option for the lenders to extend the term for an additional year
as of July 1 of each 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 under the credit agreement, the
interest rate may vary from LIBOR plus 1.5% to 2% or prime plus 0% to 0.25%.
The Revolving Credit Facility contains covenants, including certain financial
covenants, and also contains provisions, which may, in certain circumstances,
limit the amount the Company may borrow. In April 1999, the Company entered
into a separate 90-day $10.0 million line of credit with one of the banks
included in the $120.0 million Revolving Credit Facility (extended for an
additional 90 days in July 1999 and cancelled on October 1, 1999). At October
31, 1999, and September 30, 1999, the Company had bank notes payable of
approximately $104.6 million and $85.3 million, respectively.

COMMITMENTS

     At October 31, 1999, the Company had commitments to purchase parcels of
land for approximately $4.0 million. The Company expects to utilize a
combination of cash flow from operations and bank financing to purchase these
land parcels. The Company intends to consummate the purchases of these land
parcels during 1999 and 2000. However, no assurances can be given that these
purchases will be completed.

    In November 1998, the Company adopted a stock repurchase program to
reacquire up to an aggregate of $10 million of its outstanding common stock
through August 30, 1999 (subsequently extended through December 31, 2000). As
of September 30, 1999, the Company has repurchased 504,400 shares under the
program at a total cost of $3.6 million.

     The Company has no material commitments or off-balance sheet financing
arrangements that would tend to affect future liquidity. 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
1999. However, there can be no assurance that the Company will not require
additional financing within this time frame. The Company may need to raise
additional funds in order to support more rapid expansion, respond to
competitive pressures, acquire complementary businesses or respond to
unanticipated requirements. The Company may seek to raise additional funds
through private or public sales of debt or equity securities, bank debt, or
otherwise. There can be no assurance that such additional funding, if needed,
will be available on terms attractive to the Company, or at all.


                                        18

<PAGE>

                              SCHULER HOMES, INC.

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     In April 1996, the Company was served with a purported class action
     complaint by owners of units and the Association of Owners of Fairway
     Village at Waikele alleging, among other things, material construction
     defects and deficiencies, misrepresentations regarding the cost of
     insurance and breach of a covenant of good faith and fair dealing.
     Following the Court's denial of a class certification request, a second
     action involving other homeowners at Fairway Village advancing the same
     claims was initiated. While the Company believed the claims to be largely
     without merit, during April 1999 a settlement agreement was entered into by
     the Company, third party defendants, insurance carriers and all of the
     plaintiffs in both lawsuits, except for the owners of three units. The
     settlement amount incurred by the Company will be charged against the
     warranty accruals previously established by the Company. Although the cost
     of remediation for certain units called for under the settlement agreement
     is not determinable until the work is completed, the Company believes that
     the cost of such work will not exceed its warranty accruals. A new trial
     date in December 1999 has been set for the initial suit, which has two
     remaining plaintiffs. A trial date in April 2000 has been set in the second
     action, which includes one remaining plaintiff. 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.

     The Company is also 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
     manage- ment, have a material adverse effect on the financial condition of
     the Company.


Items 2 through 5.  Not applicable.

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

      (a)Exhibits.

<TABLE>
<CAPTION>

              Exhibit
              Number             Document Description
              -------            --------------------
<S>                              <C>
               10.1              Third Amended and Restated Credit Agreement
                                 between the Company, certain Banks, First
                                 Hawaiian Bank and Bank of America, N.A., dated
                                 as of September 30, 1999.

               10.2              Guaranty by wholly-owned subsidiaries of the
                                 Company to certain Banks, First Hawaiian Bank
                                 and Bank of America, N.A., dated as of
                                 September 30, 1999.

                27               Financial Data Schedule.

</TABLE>

(b) Reports on Form 8-K. There were no reports on Form 8-K for the quarter ended
    September 30, 1999.


                                        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:  November 10, 1999           By:  /s/ James K. Schuler
                                      ---------------------------------------
                                   James K. Schuler
                                   Chairman of the Board,
                                   President and Chief Executive Officer
                                   (principal executive officer)



Date:  November 10, 1999           By:  /s/ Pamela S. Jones
                                      ---------------------------------------
                                   Pamela S. Jones
                                   Senior Vice President of Finance,
                                   Chief Financial Officer and
                                   Director (principal financial officer)



Date:  November 10, 1999           By:  /s/ Douglas M. Tonokawa
                                      --------------------------------
                                   Douglas M. Tonokawa
                                   Vice President of Finance,
                                   Chief Accounting Officer
                                   (principal accounting officer)




                                        20