UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

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|(X) |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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|    |  | For the fiscal year ended December 31, 1999                                         

or

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|( ) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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|    |  | For the transition period from _____________ to _____________                           

Commission File Number: 0-23270

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

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| |  | Ohio                            |  | 31-1393233          |  | 
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| |  | (State or other jurisdiction of |  | (I.R.S. Employer   
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| |  | incorporation or organization)  |  | Identification No.)

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| |  | 5501 Frantz Road, Dublin, Ohio           |  |  | 43017     |   |  | 
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| |  | (Address of principal executive offices) |  |  | (Zip Code | )

Registrants telephone number, including area code: 614-761-6000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Shares with no par value

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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ( X )

Based upon the closing sale price reported on the NASDAQ National Market on
March 13, 2000, the aggregate market value of the Common Shares of the
Registrant held by non-affiliates (assuming, for this purpose, that all
executive officers and directors are affiliates) on that date was $10,530,809.

As of March 14, 2000 there were 6,366,920 Common Shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE



|1. |  | Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
April 26, 1999 (in pertinent part, as indicated)               Part III
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------





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PART I

Item 1 BUSINESS

Background

Dominion Homes, Inc. (the Company) was incorporated in Ohio in October
1993 in anticipation of its initial public offering. Prior to consummation of
the Companys initial public offering in March 1994, the Company was operated
as part of the homebuilding and related divisions (the Homebuilding
Divisions) of BRC Properties Inc. (BRC) (formerly known as Borror Realty
Company), an Ohio corporation incorporated in 1946. BRC started building homes
in 1976 under the direction of Donald A. Borror, the Companys current Chairman
Emeritus of the Board. In connection with the Companys initial public
offering, the Company acquired from BRC substantially all of the operating
assets of the Homebuilding Divisions. At March 14, 2000, BRC owned 4,146,500
Common Shares of the Company, representing 65.1% of the issued and outstanding
Common Shares.

The principal corporate offices of the Company are located at 5501 Frantz
Road, Dublin, Ohio and its telephone number is (614) 761-6000.

Market Overview

The Company conducts its homebuilding operations in two markets, Central
Ohio and Louisville, Kentucky. The Company is currently one of the largest
homebuilders in the Central Ohio market and had a 22.8% share of the Central Ohio homebuilding market in 1999. Columbus, the
capital of Ohio, has been a stable market, with diverse economic and employment
bases. Columbus is also the home of The Ohio State University. In addition, a
number of notable organizations have their headquarters in Central Ohio,
including Honda of America Manufacturing, Inc., The Limited, Inc., Nationwide
Insurance Company, Wendys International, Inc., Huntington Bancshares
Incorporated, Battelle Memorial Institute, Worthington Industries, Inc., The
Scotts Company and Cardinal Health, Inc. Columbus also is the county seat of
Franklin County and the largest city in Ohio. The Company builds its homes in
all of the counties in the Columbus Metropolitan Statistical Area (the CMSA)
which includes Franklin, Pickaway, Madison, Fairfield, Delaware and Licking
Counties (the CMSA Counties), and also in Union County. References herein to
Central Ohio means the CMSA Counties and Union County.

During late third quarter 1998, the Company entered the Louisville,
Kentucky market. This resulted from extensive research by the Company of
potential markets for expansion beyond Central Ohio. The Company chose
Louisville because of its proximity to Central Ohio, its lack of builders with
dominant market share and the ability of the Company to provide product
offerings similar to its Central Ohio homes. The Company also considered
Louisvilles strong economy, available land supply and subcontractor base.
Louisville is the home of The University of Louisville and headquarters for
major corporations such Humana Corporation and Tricon International. United
Parcel Service also has a major distribution center in Louisville. The
Louisville Metropolitan Statistical Area (the LMSA) is comprised of
Jefferson, Oldham, Bullitt and Shelby Counties in Kentucky and Harrison, Floyd
and Clark Counties in Southern Indiana.

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Products

The Company offers three distinct series of single-family homes that are
differentiated by size, price, standard features and available options. This
product diversity allows the Company to target specific market segments and
appeal to a wide range of homebuyers. The Companys products range from starter
homes to executive homes with prices from $120,000 to more than $300,000.
Homes offered in the Century Series generally range in size from 1,100 to 1,500
square feet, at prices from $120,000 to $160,000, and are targeted to appeal
primarily to young, entry level home buyers. Homes offered in the Celebrity
Series generally range in size from 1,500 to 2,000 square feet, at prices from
$145,000 to $200,000, and are targeted to appeal to both entry level and
move-up homebuyers. Homes offered in the Tradition Series generally range in
size from 2,000 to 3,000 square feet, at prices from $175,000 to more than
$300,000, and are targeted to appeal primarily to existing homeowners who
desire to move up to larger homes with more amenities.

The Company is a full option homebuilder. Each of the Companys homes
has a standard design and basic features. After the purchaser has chosen a home
from over 45 standard floor plans and elevations available, the purchaser can
individualize the home, at additional cost, through the selection of
structural, exterior and interior options. Structural options include two-foot
side-wall extensions, side-load garages and master bathrooms.
Exterior/interior options include brick or stone facades, fireplaces, and
upgrades on bathroom and kitchen fixtures, cabinets, tiles and floorings. The
Companys homes feature nationally recognized and industry leading brand names,
including Trane® natural gas furnaces, Andersen®
wood windows, Armstrong® flooring, General Electric®
appliances, Wilsonart® decorative laminate,
Aristokraft® cabinets and the Kohler® family of
bathroom and kitchen fixtures.

Marketing and Sales

The Company markets all of its homes under the Dominion
Homes® tradename. The Company has an extensive targeted
marketing program that includes advertising by radio, television, newspapers,
magazines, direct mail and billboards. The Companys advertising typically
emphasizes the quality of its homes, the location of its communities, the brand
name components used in its homes and the wide variety of its home styles and
options. The Company believes these factors differentiate its products and
reinforce its Dominion Homes  The Best of Everything® brand
awareness program. At the end of 1999, according to a third party survey, the
Dominion Homes® name was recognized by 87% of the Central Ohio
respondents.

The Company markets a Helping Hand Program to purchasers of its Century
and Celebrity Series homes. The Helping Hand Program is a work equity program
approved by the U.S. Department of Housing and Urban Development which permits
home buyers to reduce their down payments by performing some minor construction
tasks themselves. Through training conducted by the Companys personnel and a
detailed video, participating homebuyers receive step-by-step guidance on
completing these tasks. The Company aggressively markets this program because
it enables the Company to sell homes to entry level home buyers who otherwise
would not have the down payment necessary to qualify for mortgage financing.
This program also allows home buyers to purchase homes with more desirable
features and amenities

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than they would otherwise qualify to purchase. In 1999,
approximately 56.7% of the purchasers of the Companys homes participated in
the Helping Hand Program.

The Company conducts its home sales from 30 furnished model home sales
offices in Central Ohio and 3 furnished model home sales offices in Louisville,
Kentucky. In addition the Company opened a centralized sales office in Central
Ohio during 1999 to focus on participation sales with local realtors. Sales
representatives are employees of the Company and are trained to fully explain
the features and benefits of the Companys homes, to determine which home best
suits the customers needs, to explain available mortgage financing
opportunities and to explain the construction process. The Company devotes
significant attention to the continued training of sales representatives to
assure high levels of professionalism and product knowledge. The Company
believes that the use of an in-house sales staff allows for a more
knowledgeable sales presentation and enables the Company to communicate a
consistent message to its customers. Sales representatives are compensated on a
commission and bonus basis. At December 31, 1999, the Company employed 45 sales
representatives in Central Ohio and 4 in Louisville, Kentucky.

The Company welcomes independent real estate broker participation because
it believes that such participation introduces the Company to customers who
might not otherwise consider purchasing a home from the Company. The Companys
centralized sales office is designed to facilitate real estate broker
participation. In 1999, the Company paid sales commissions of $4.5 million to
independent brokers on 823 homes that had an aggregate sales price of $141.5
million.

The Company uses promotional and sales incentives such as discounts on the
purchase price of its homes or options to market its products. Generally, it is
the Companys intention to use this practice on a selective or seasonal basis
to target slow sales areas and manage production capacity. The Company also
offers a discount to customers who previously purchased a Dominion Home, to
employees of companies with which it does business and to its own employees.

Sales of the Companys homes are made pursuant to standard sales
contracts. These contracts generally require the purchaser to make a $500
deposit when the contract is executed and to pay the balance of the cash down
payment, typically up to 3.0% of the purchase price, at the start of
construction. The Company also has a zero down payment program whereby the
customer makes a $250 deposit, when the contract is executed, and a second $250
deposit when the customers loan is approved. Under the zero down payment
program there is no further down payment required.

The Company generally does not commence construction of a home until it
obtains a sales contract and notice from the customers lender that mortgage
financing has been approved. However, the Company routinely commences
construction of a home with a sales contract that is contingent upon the
customer selling an existing home. Some customers fail to complete their
contracts, which results in partially constructed homes that are no longer
under contract. In addition, the Company selectively starts construction of a
limited number of homes without a contract to create an inventory in
anticipation of seasonal demand and to attract customers, such as corporate
transferees, who need homes within 60 to 90 days. At December 31, 1999, the
Company had 133 inventory homes in various stages of construction.

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Design and Construction

The Company incorporates innovative ideas in building its homes. Its
homes include superior construction features such as its engineered floor truss
system; safer, less steep stairs; B.F. Goodrich® CPVC plumbing
pipe; and Category 5 wiring and two-way interactive cable wiring.

The Company employs a full-service architectural department which controls
the design of its homes. Each home design is value-engineered for greater
efficiency in the building process and lower cost to the purchaser. For
example, where possible, back-to-back bathrooms are designed to avoid the need
for multiple drains and room sizes are designed to correspond to standard
carpet widths to avoid the expense and waste involved in cutting carpet. On an
ongoing basis, the design team utilizes the Companys knowledge of its markets
and feedback gained from its customers to create new designs and modify
existing designs to keep pace with changing consumer preferences.

The design team is aided by a computer graphics design system. This
system provides the Company with greater flexibility in creating new designs
and modifying existing designs and enhances the Companys ability to accurately
estimate the materials necessary for a particular design.

The Company acts as the general contractor for the construction of its
homes. The Companys construction superintendents, together with the
construction managers to whom they report, monitor construction, coordinate the
activities of subcontractors and suppliers, maintain quality and cost controls
and monitor compliance with zoning and building codes.

The use of subcontractors enables the Company to minimize its investment
in employees, equipment and building supply inventory. This practice also
increases the Companys flexibility in responding to changes in the demand for
housing. The Company has longstanding business relationships with many of its
subcontractors. These relationships, coupled with the Companys building
volume, year round retention of subcontractors and efficient design have enabled
the Company to negotiate favorable agreements with its subcontractors.

The Company has reduced its exposure to risks of inadequate supply and
significant price fluctuations through its ownership and operation of a
lumberyard, which allows it to purchase its lumber directly from mills and
wholesalers. From time to time the Company purchases lumber for delayed
delivery to ensure adequate supply and predictable cost. Substantially all of
the lumber purchased by the lumberyard was used by the Company. Additionally,
the Company distributes roof shingles, windows and doors through its lumberyard
and will continue to explore other distribution opportunities.

The Company has integrated various information and administrative systems
to support its construction operations. This management information system
allows the Company to control construction costs by making available the
information necessary to monitor subcontractor performance and expenditures on
each home. Subcontracted work is authorized by work orders, the cost of
deviations from the work order must be approved for payment by the Companys
construction superintendents and significant cost variances are investigated.
The

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management information system also integrates the Companys sales
reporting, contract management and material distribution systems into the
construction process.

Decorating Center

Since introducing the decorating center concept in 1990, the Company has been
able to offer customers full-service advice in the decorating process.
Providing the ambiance of a quality retail store, the decorating center
features full-sized samples, vignettes, and computer-aided graphics that depict
the exterior of the customers home. These features allow the customer to
visualize color combinations and options, feel the textures and picture how the
selections work together. Decorating consultants are available to assist
customers in making selections from among hundreds of options on display at the
decorating center, from bathroom fixtures to outdoor siding. Management
believes that the decorating center reduces customer anxiety in the decorating
and selection process and significantly contributes to customer satisfaction.

Customer Satisfaction Program

The Company recognizes that for most customers the purchase of a home
represents the single largest investment they will ever make. The Company
strives to ensure the soundness of this investment through the timely delivery
of quality homes that are located in attractive communities and that provide
lasting value.

The Company also understands that many prospective customers are uncertain
about how to choose a homebuilder and a home and have little knowledge about
home construction. Accordingly, every phase of the Companys operations, from
the beginning of the selling process through construction, closing and service
after the closing, educates and involves the customer in the homebuilding
process.

At a construction conference, the Construction Orientation Manager meets
with the customer to review the home plans and explains the construction
process and schedule. Because the Company wants the customer to see the quality
built into the customers home, the customer is invited to visit the home site
at any time during the course of construction.

The Companys Gold Medal quality assurance program is designed to
provide the customer with peace of mind. Under this program, each home is
subject to eight separate inspections by the Companys construction personnel,
and members of the Companys senior management inspect randomly selected homes
on a monthly basis. Because of the Companys attention to quality and its
commitment to doing it right the first time, the Company offers a
comprehensive warranty program that features a two-year warranty covering all
mechanical elements (including heating, plumbing and electrical systems), roof,
windows and doors, as well as a thirty-year warranty covering all major
structural components. The structural warranty on each home is automatically
transferable to subsequent owners of the home. The Company also passes along to
its customers all warranties provided by manufacturers and suppliers. The
Company believes that its warranty program is one of the best warranty packages
offered in the homebuilding industry.

The Company invites each customer at and after closing to complete
questionnaires that rate the customers sales representative, construction
superintendent and decorating consultant

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and provide certain other information
regarding the customers homebuilding experience. The Company uses the
information obtained from these questionnaires to refine its products, programs
and services to assure that the Company continues to be responsive to its
customers.

Land Acquisition and Development

The Company believes that one of its key strengths has been its ability to
identify and acquire property to be utilized as lots for future residential
home development. The Companys practice has been to develop most of the lots
on which it builds its homes. The Company generally does not buy unimproved
land for speculation and generally limits its investment in unimproved land to
an amount that it expects to be able to develop and sell within three to five
years. In recent years the process to obtain the required zoning and other
approvals necessary to build the Companys communities has taken longer and has
become increasingly difficult. Consequently, the Company is identifying future
residential home sites sooner and starting these processes earlier than in the
past.

The Company believes that it obtains certain advantages through its
practice of acquiring and developing unimproved land. This practice provides
the Company with the ability to: (i) improve its profit margins by reducing
the cost of finished lots; (ii) maintain an adequate supply of finished lots to
meet market demand; (iii) control the details of development and create in its
communities a distinctive look of quality and success; and (iv) construct homes
more efficiently.

The Company believes that its understanding of homebuilding markets,
particularly in Central Ohio, gives it an advantage in identifying and
acquiring unimproved land with good market potential. In considering the
suitability of unimproved land for development, the Company reviews factors
such as (i) availability of existing community services such as sewers, water,
gas and electricity; (ii) estimated costs of development; (iii) quality of
school systems; (iv) population growth patterns; (v) proximity to developed
residential and retail areas; (vi) employment growth rates; (vii) anticipated
absorption rates for new housing; and (viii) availability of transportation.

Although the Company purchases land and engages in land development
activities primarily for the purpose of maintaining an adequate supply of lots
on which to build, the Company also sells unimproved land and finished lots to
developers and other homebuilders. Revenues from the sale of unimproved land
and developed lots in 1999 was $430,000.

Prior to its acquisition of unimproved land, the Company ensures that any
necessary zoning, environmental or other governmental approvals required to
develop the land into residential lots have been obtained and that the land is
served by utilities. The Companys engineering and design professionals then
plan and engineer the land and construct the streets, sewers, water and
drainage facilities and other improvements to meet the Companys
specifications. In developing land, the Company is required by some
municipalities and other governmental authorities to provide letters of credit
or performance bonds to secure performance of the Companys obligations to
install sewers, streets and other improvements. At December 31, 1999, the
Company had an aggregate of $13.3 million of letters of credit and performance
bonds outstanding for these purposes. In addition, the Company provided $3.4
million of letters of credit or performance bonds to secure contracts the
Company entered into for land

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commitments. The Company does not believe that
any of the outstanding letters of credit or performance bonds are likely to be
drawn upon.

To limit its risk, the Company attempts to control land through the use of
option and contingent purchase contracts. These contracts condition the
Companys obligation to purchase land upon the Companys review and approval of
such matters as zoning, utilities, soil and subsurface conditions,
environmental and wetland conditions, title matters, economic feasibility of
development and other property-related criteria.

The Company designs each residential community to have its own identity.
Through its control over the details of development, from the placement of
streets to the design of each community entryway, the Company creates in each
of its communities a distinctive look of quality and success. The Company
generally completes the sale of homes in its communities in time periods that
range from three to five years from first to last sale, with smaller
communities generally taking less time to complete than larger ones. In
addition, the Company typically incorporates a homeowner association for
communities with common areas to ensure the continued maintenance of the common
areas after the community is developed.

The Company occasionally enters into joint venture agreements with other
homebuilders to own and develop communities. The primary reason for these
joint venture agreements is to limit the Companys exposure to owning large
amounts of land in a single community and to limit the risks associated with
longer holding periods for these larger communities.

Land inventory owned by the Company includes land titled in the Companys
name or land the Company is committed to purchase. Land inventory controlled
by the Company represents land which the Company has the right to acquire under
contingent purchase contracts and option contracts.

The following table sets forth the Companys land inventory as of December
31, 1999:

|                           |                      |      |          |             |            |                |                 |                |       |  |        |       |  |  |        |       | 
|-------------------------- | -------------------- | ---- | -------- | ----------- | ---------- | -------------- | --------------- | -------------- | ----- |  | ------ | ----- |  |  | ------ | ----- | 
|                           |                      |      | Finished |             | Lots Under |                | Unimproved Land |                | Total
|Land Inventory             |                      | Lots |          | Development |            | Estimated Lots |                 | Estimated Lots
|                           |                      |      |          |             |            |                |                 |               
|Owned by the Company:     
|                          
|                          
|                          
|                          
|                           | Central Ohio         |      |          | 919         |            |                |                 | 753            |       |  |        | 3,882 |  |  |        | 5,554 | 
|                          
|                          
|                          
|                          
|                           | Louisville, Kentucky |      |          | 99          |            |                |                 | 59             |       |  |        | 114   |  |  |        | 272   | 
|                          
|                          
|                          
|                          
|Controlled by the
Company:
|                          
|                          
|                          
|                          
|                           | Central Ohio         |      |          | 0           |            |                |                 | 0              |       |  |        | 5,361 |  |  |        | 5,361 | 
|                          
|                          
|                          
|                          
|                           | Louisville, Kentucky |      |          | 0           |            |                |                 | 0              |       |  |        | 886   |  |  |        | 886   | 
|                           |                      |      |          |             |            |                |                 |                |       |  |        |       |  |  |        |      
|                           |                      |      | 1,018    |             |            |                | 812             |                |       |  | 10,243 |       |  |  | 12,073 |      
|                           |                      |      |          |             |            |                |                 |                |       |  |        |       |  |  |        |      

Customer Financing

On November 16, 1999 the Company organized Dominion Homes Financial
Service, Ltd. (DHFS) to provide mortgage financing services for its
homebuyers. The Company expects DHFS to be operational in second quarter 2000
and over time to provide most of the mortgage financing for its customers.
However, during 1999 and prior years, the Company did not offer customers home
financing but instead referred its customers to independent mortgage brokers

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that offer qualified customers a variety of financing options, including both
government insured and conventional financing programs. Additionally, the
Company pays certain elements of its customers costs of financing with certain
mortgage lenders with whom the Company has a relationship, including customer
origination fees, rate commitment fees and discount points. If a customer
chooses to make his or her own financing arrangements, the Company will reduce
the purchase price of the home.

The Company will build a home under Federal Housing Administration (FHA)
or Department of Veteran Affairs (VA) guidelines to allow the customer to
finance the purchase through a FHA or VA mortgage program. In comparison to
conventional financing, government insured financing generally allows customers
to purchase homes with a higher percentage of their incomes directed toward
housing expenses and with lower down payments (as little as no money down when
used in conjunction with the Companys Helping Hand Program). FHA and VA rules
are also generally more liberal with respect to the amount of points and
closing costs that the seller may pay. During 1999, 49.6% of the Companys
closings involved government insured financing. The Company expects more
customers will use FHA financing programs due to the increase in the FHA
financing limit that occurred in February 1999. At December 31, 1999, the FHA
financing limit was $191,425 in the CMSA Counties, $121,296 in Union County and
$163,875 in the LMSA Counties.

The Company offers its Helping Hand Program to purchasers of its Century
and Celebrity Series homes. The Helping Hand Program is a work-equity program,
approved by HUD, which allows homebuyers to significantly reduce down payments
by performing certain minor construction tasks themselves.

Virtually all of the Companys customers use long-term first mortgages to
finance their home purchases. Adverse economic conditions, increases in
unemployment, increases in mortgage interest rates and a reduction in the scope
or funding of government programs could deter or eliminate a substantial number
of potential customers for the Companys homes.

Title Insurance Agency

Alliance Title Agency (Alliance), which is 49.9% owned by the Company,
provides title insurance for most of the Companys homes in Central Ohio. The
Company believes that it has improved service to its customers and enhanced its
administrative processes through the operations of Alliance.

Availability of Labor and Raw Materials

During periods of increased construction activity, the homebuilding
industry has faced shortages in the availability of skilled labor. Waiting for
skilled labor to become available may result in construction delays, while the
use of less skilled labor to fill a skilled labor shortage may cause quality
standards to suffer. Additionally, harsh winters could result in a larger than
usual labor demand in the early spring from the homebuilding industry.
Increases in the demand for skilled labor can also result in increases in the
cost of such labor. The Company believes that, by taking a long-term approach
to its relationships with subcontractors and by providing consistent work, its
ability to retain subcontractors and better control the cost of skilled labor is

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enhanced. However, significant increases in home deliveries from year to
year have resulted in labor cost increases in past years.

The principal raw materials used in the homebuilding industry, lumber,
drywall, brick and concrete, as well as plumbing and electrical supplies,
generally are available from a variety of sources, but are subject to periodic
price fluctuations. In particular, lumber has occasionally been subject to
limited availability and significant price increases. Future price increases
in these items could have a material adverse effect on the Companys
profitability because the Company may not be able to pass price increases in
raw materials or labor on to its customers

Competition

The homebuilding industry in the Central Ohio and Louisville, Kentucky
markets is highly competitive. The Company competes with national, regional
and local homebuilders, some of which have greater financial, marketing, sales
and other resources than the Company. The Company competes with other
homebuilders and the resale market for the sale of homes on the basis of such
factors as location, price, design and the Companys reputation for quality and
service; The Company also competes with other homebuilders for materials and
skilled labor and with other homebuilders and land developers for financing and
desirable unimproved land. The Company believes its primary competitive
strengths are: (i) knowledge, financial strength and dominant size in the
Central Ohio market and its financial strength in the Louisville, Kentucky
market, which have allowed it to capitalize on opportunities for advantageous
land acquisition in desirable locations; (ii) ability to design and offer
communities and homes that home buyers find appealing; (iii) reputation for
quality and service and (iv) a vertically integrated company that includes a
lumber distribution center, land development division and a title company.

Regulation

The Company is subject to environmental, wetlands, zoning, land use,
sales, building design, construction, health and safety and other regulation by
various federal, state and local authorities. The Company must obtain
licenses, permits and approvals from various governmental authorities to
conduct its business, the granting of which are beyond the Companys control.
The Company is subject to local regulations which impose zoning and density
requirements in order to limit the areas for residential development and the
number of houses within particular areas.

The Company could be subject to periodic delays or precluded entirely from
developing land due to building moratoriums. Generally, such moratoriums relate
to insufficient water or sewage facilities within specific areas or
subdivisions. To date, moratoriums have not had a material adverse effect on
the Companys business.

The Company often obtains options to purchase unimproved land but does not
purchase such land until it is assured that the land will be serviced by
utilities, and has acceptable zoning in place, and it is satisfied with the
results of soil and wetland studies. Although these issues have not materially
affected the Company in the past, they are becoming more significant obstacles
to the development of land by the Company and the homebuilding industry in
general. Obtaining acceptable zoning and overcoming objections of neighborhood
groups and citizen

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activists is becoming more difficult, time consuming and
expensive. There can be no assurance that these issues will not adversely
affect the Company in the future. There can also be no assurance that the
Company will not be required to incur material liabilities relating to the
removal of hazardous waste or other environmental matters.

Service Marks

The Company uses, owns and has obtained federal registration for the
service marks Dominion Homes® and The Best of
Everything®.

Employees

On December 31, 1999, the Company employed 428 individuals (including 14
part-time employees) in Central Ohio and 15 individuals in Louisville,
Kentucky. In Central Ohio, the Company employed 180 individuals in
construction, 74 in sales and marketing, 71 in the lumber division, 13 in land
development and 90 in management, administrative or clerical positions. In
Louisville, the Company employed 5 individuals in construction, 6 in sales and
4 in management, administrative and clerical positions. The Companys employees
are not represented by labor unions or covered by collective bargaining
agreements. The Company believes its relationships with its employees and
subcontractors are generally good.

Other Information

Information regarding seasonality, practices of the Company regarding
working capital items and backlog orders is contained in the discussion under
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

11



---



Item 2 PROPERTIES

The Company leases its corporate offices in Central Ohio from BRC. The lease
was effective January 1, 1998 and runs for twelve years with a rental rate of
$12.00 per square foot on a total net basis. The lease contains two options to
renew for periods of five years each at then-current market rates. The rental
rates were established by an MAI appraiser commissioned by the Affiliated
Transaction Review Committee of the Companys Board of Directors, and confirmed
in a review by a second MAI appraiser.

The Company owns a lumberyard located on approximately six acres in
Columbus, Ohio. The facility includes nine buildings, constructed of steel,
wood or concrete block and contains approximately 75,000 square feet of space.

The Company leases 11,200 square feet in a Central Ohio shopping center
from BRC. The Company uses the space for a decorating center, centralized
sales office, mortgage company and construction conference center.

In addition, the Company leases from unaffiliated parties approximately
2,400 square feet of office space in Louisville, Kentucky and an aggregate of
3,600 square feet of office-warehouse space in two Central Ohio locations.

The Company has entered into a program with an unaffiliated party to sell
and lease back many of its model homes. The Company had 15 model homes in
Central Ohio under lease with this program at December 31, 1999. These leases
have one-year terms and then become month-to-month leases, controlled by the
Company.

Item 3 LEGAL PROCEEDINGS

The Company is involved in various legal proceedings, most of which arise
in the ordinary course of business and some of which are covered by insurance.
In the opinion of the Companys management, none of the claims relating to such
proceedings will have a material adverse effect on the financial condition or
results of operations of the Company.

Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

12



---



PART II

Item 5 MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Companys Common Shares are traded on the Nasdaq National Market under
the symbol DHOM. The following table sets forth for the periods indicated
the high and low sales prices for the Common Shares, as reported by the Nasdaq
National Market.

|                                       |  |              |      |     |  |   |      |  |  |  |  | 
|-------------------------------------- |  | ------------ | ---- | --- |  | - | ---- |  |  |  |  | 
|                                       |  | Sales Prices
|                                       |  |             
|Calendar Year Ending December 31, 2000 |  | High         |      | Low
|                                       |  |              |      |    
|First Quarter (Through March 13, 2000  |  | $            | 6.75 |     |  | $ | 5.31 | 

|                                      |  |      |       |     |  |   |      |  |  |  |  | 
|------------------------------------- |  | ---- | ----- | --- |  | - | ---- |  |  |  |  | 
|Calendar Year Ended December 31, 1999 |  | High |       | Low
|                                      |  |      |       |    
|First Quarter                         |  | $    | 11.13 |     |  | $ | 7.25 | 
|                                     
|                                     
|                                     
|                                     
|Second Quarter                        |  | $    | 8.75  |     |  | $ | 5.25 | 
|                                     
|                                     
|                                     
|                                     
|Third Quarter                         |  | $    | 7.75  |     |  | $ | 5.25 | 
|                                     
|                                     
|                                     
|                                     
|Fourth Quarter                        |  | $    | 6.94  |     |  | $ | 5.50 | 

|                                      |  |      |       |     |  |   |       |  |  |  |  | 
|------------------------------------- |  | ---- | ----- | --- |  | - | ----- |  |  |  |  | 
|Calendar Year Ended December 31, 1998 |  | High |       | Low
|                                      |  |      |       |    
|First Quarter                         |  | $    | 14.00 |     |  | $ | 9.25  | 
|                                     
|                                     
|                                     
|                                     
|Second Quarter                        |  | $    | 14.88 |     |  | $ | 12.00 | 
|                                     
|                                     
|                                     
|                                     
|Third Quarter                         |  | $    | 17.50 |     |  | $ | 9.25  | 
|                                     
|                                     
|                                     
|                                     
|Fourth Quarter                        |  | $    | 11.63 |     |  | $ | 8.00  | 

On March 13, 2000, the last sale price of the Common Shares, as reported
by the Nasdaq National Market, was $5.75 per share, and there were
approximately 207 holders of record of the Common Shares.

The Company has not paid any dividends in the past and does not anticipate
that it will pay any dividends in the near term. The provisions of the
Companys bank credit facilities limit the amount of dividends that the Company
may pay during any calendar year to 25% of the Companys net income after taxes
for such year.

13



---



Item 6 SELECTED FINANCIAL DATA

(dollars in thousands, except per share amounts)

The following table summarizes certain selected financial and operating
data of the Company. This data should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements of the Company, including
the notes thereto, appearing elsewhere herein.

|                                                      |                     |      |         |       |  |      |         |       |  |      |         |       |  |   |         |       |  |   |         |       | 
|----------------------------------------------------- | ------------------- | ---- | ------- | ----- |  | ---- | ------- | ----- |  | ---- | ------- | ----- |  | - | ------- | ----- |  | - | ------- | ----- | 
|Selected Financial Data                               |                     | 1999 |         | 1998  |  | 1997 |         | 1996  |  | 1995
|                                                      |                     |      |         |       |  |      |         |       |  |     
|Revenues                                              |                     | $    | 277,577 |       |  | $    | 264,937 |       |  | $    | 207,926 |       |  | $ | 175,579 |       |  | $ | 178,112 |      
|                                                     
|                                                     
|                                                     
|                                                     
|Gross profit                                          |                     |      | 53,103  |       |  |      | 49,830  |       |  |      | 42,244  |       |  |   | 32,579  |       |  |   | 27,102  |      
|                                                     
|                                                     
|                                                     
|                                                     
|Income from operations                                |                     |      | 19,502  |       |  |      | 21,110  |       |  |      | 18,919  |       |  |   | 12,756  |       |  |   | 887     |      
|                                                     
|                                                     
|                                                     
|                                                     
|Income (loss) before income taxes                     |                     |      | 13,478  |       |  |      | 16,553  |       |  |      | 13,274  |       |  |   | 6,411   |       |  |   | (5,182  | )    
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for income taxes                            |                     |      | 5,460   |       |  |      | 6,942   |       |  |      | 5,569   |       |  |   | 2,374   |       |  |   | (1,684  | )    
|                                                     
|                                                     
|                                                     
|                                                     
|Net income (loss)                                     |                     |      | 8,018   |       |  |      | 9,611   |       |  |      | 7,705   |       |  |   | 4,037   |       |  |   | (3,498  | )    
|                                                     
|                                                     
|                                                     
|                                                     
|Diluted earnings (loss) per share                     |                     |      | 1.23    |       |  |      | 1.46    |       |  |      | 1.20    |       |  |   | 0.64    |       |  |   | (0.56   | )    
|                                                     
|                                                     
|                                                     
|                                                     
|Total assets at year end                              |                     |      | 174,059 |       |  |      | 135,356 |       |  |      | 117,795 |       |  |   | 103,826 |       |  |   | 105,031 |      
|                                                     
|                                                     
|                                                     
|                                                     
|Long term obligations at year end                     |                     |      | 97,058  |       |  |      | 64,876  |       |  |      | 57,763  |       |  |   | 54,563  |       |  |   | 61,782  |      
|                                                     
|                                                     
|                                                     
|                                                     
|Operating Data                                        |                     |      | 1999    |       |  |      | 1998    |       |  |      | 1997    |       |  |   | 1996    |       |  |   | 1995    |      
|                                                      |                     |      |         |       |  |      |         |       |  |     
|                                                     
|                                                     
|                                                     
|                                                     
|Homes:                                               
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Sales contracts (1) |      |         | 1,680 |  |      |         | 1,783 |  |      |         | 1,402 |  |   |         | 1,308 |  |   |         | 1,253 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Closings            |      |         | 1,641 |  |      |         | 1,735 |  |      |         | 1,387 |  |   |         | 1,188 |  |   |         | 1,206 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Backlog at year end |      |         | 790   |  |      |         | 751   |  |      |         | 703   |  |   |         | 688   |  |   |         | 568   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Aggregate sales value of
homes in backlog at year
end |                     | $    | 140,220 |       |  | $    | 129,241 |       |  | $    | 106,686 |       |  | $ | 101,202 |       |  | $ | 83,167  |      



---

|(1) |  | Net of cancellations.
|--- |  | ---------------------

14



---



Item 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Companys homebuilding operations remained stable during 1999, with
higher revenues and gross profit than 1998, but lower net income due to higher
administrative and interest expenses. The Company had net income of $8.0
million from revenues of $277.6 million during 1999 compared to $9.6 million of
net income from revenues of $264.9 million during 1998. Revenues increased
because the Company was able to increase the average sales price of homes
delivered in 1999 to $168,800 from $150,300 in 1998, an increase of $18,500 per
house or 12.3%. The number of homes delivered in 1999 decreased 5.4% to 1,641
from 1,735 in 1998. Home sales during 1999 declined 5.8% to 1,680 homes from
1,783 homes in 1998. The lower number of home deliveries and sales during 1999
was principally due to an unusually strong first quarter 1998 sales effort in
which the Company sold a record 670 homes compared to 453 homes sold during
first quarter 1999. The Companys backlog of sales contracts at December 31,
1999 includes a record 790 homes with a sales value of $140.2 million compared
to 751 homes with a sales value of $129.2 million at December 31, 1998. Sales,
general and administrative expense increased 17.0%, or $4.9 million, during
1999 principally due to increased investment in the Louisville homebuilding
market, investment in technology and additional corporate infrastructure.
Interest expense increased 32.2%, or $1.5 million, principally because of
increased investment by the Company in real estate inventories.

Real estate inventories increased during 1999 compared to 1998 because the
Company made significant investments in land in Louisville, Kentucky and
expanded its investment in Central Ohio to ensure an adequate supply of lots
for future development. The Company also increased its investment in homes
under construction. The Companys investment in homes under construction and
the interest expense to carry those homes during the construction period
increased due to the higher average sales price of its homes.

During 1999 the Company positioned itself for growth in the Louisville,
Kentucky homebuilding market by offering homes in four sales communities. The
Company sold 62 homes and closed 25 homes from these communities during 1999.
On December 30, 1999, the Company formed Dominion Homes of Kentucky, Ltd., a
Kentucky limited partnership, which is wholly owned by the Company, to own and
operate the Companys homebuilding operations in Louisville, Kentucky.

On November 16, 1999, the Company formed Dominion Homes Financial
Services, Ltd. (DHFS) to provide mortgage services, primarily to the
Companys customers. DHFS is an Ohio limited liability company wholly owned by
the Company. DHFS was formed to better manage the home buying experience for
the Companys customers and to better control the costs of providing financing
for those customers. DHFS will originate and process mortgage applications
under the guidance of an unaffiliated company which will also provide sources
of mortgage funds from a network of mortgage lenders. DHFS will receive a fee
based upon a percentage of the mortgage amount. The Company does not
anticipate that DHFS will require

15



---



significant new sources of capital to fund
the mortgage operations. The Company expects DHFS to begin providing mortgage
services in second quarter 2000.

Company Outlook

The Company has undertaken a number of activities which are intended to
generate additional revenues, and will result in additional administrative
expenses, during 2000. The Company expects to increase the number of sales
communities in which it offers homes in Central Ohio and in Louisville,
Kentucky during 2000 and to offer its first age-restrictive active adult
community. The Companys new centralized sales office in Central Ohio, which
is designed to facilitate realtor sales, will become fully operational during
the first quarter of 2000. The Company expects its homebuilding operations in
Louisville, Kentucky to continue to grow and to become profitable in 2000 and
its start-up mortgage finance subsidiary to provide a modest profit in 2000.
In addition, during 1999, the Company made substantial investments in
additional land reserves and in its corporate infrastructure to enable it to
build more homes in 2000 than it did in 1999.

The Company faced several challenges during 1999 which it expects will
continue during 2000, including historically high land acquisition, development
and construction costs, shortages of contractor and labor supplies and rising
interest rates. The Company has attempted to be proactive in meeting these
challenges and in positioning the Company for continued growth.

The Company was able during 1999 to pass through to its customers, by
means of price increases, the higher land acquisition, development and
construction costs that it experienced. Should these costs continue to rise
during 2000, the Company would expect to employ a similar strategy.
Construction contractors and labor were highly sought after in both the Central
Ohio and Louisville, Kentucky markets during 1999 and remain so during the
first part of 2000. Through its contractor and labor retention and incentive
programs, the Company has been able to maintain an adequate supply of these
resources. Mortgage interest rates have climbed steadily during the past 14
months, from approximately 7.0% at January 1, 1999 to approximately 8.8% at
March 1, 2000. Through the Companys contributions to the mortgage financing
programs that it offers to its customers, the Company has been able to mitigate
the affects of these modest increases in mortgage rates. However, the Company
and the homebuilding industry in general would be adversely impacted if
mortgage rates would increase significantly.

Year 2000 Readiness

The Companys implementation of new systems, hardware and software, as
well as its testing procedures, proved effective in addressing the Year 2000
issue. The Company is not aware of problems caused to date by the Year 2000
issue.

16



---



Safe Harbor Statement under the Private Securities Litigation Act of 1995

The statements contained in this report under the captions Company
Outlook and other provisions of this report which are not historical facts are
forward looking statements that involve various important risks,
uncertainties and other factors which could cause the Companys actual results
for 2000 and beyond to differ materially from those expressed in such forward
looking statements. These important factors include, without limitation, the
following risks and uncertainties: real or perceived adverse economic
conditions, increases in mortgage interest rates, increases in the cost of
acquiring and developing land, mortgage commitments that expire prior to homes
being delivered, entry into the mortgage financing business, the Companys
ability to install public improvements or build and close homes on a timely
basis due to adverse weather conditions, delays or adverse decisions in the
zoning, permitting or inspection processes, the effect of changing consumer
tastes on the market acceptance for the Companys products, the impact of
competitive products and pricing, the effect of shortages or increases in the
costs of materials, subcontractors, labor and financing, the continued
availability of credit, the outcome of litigation, the impact of changes in
government regulation, problems associated with the Year 2000 issue, problems
that could arise from expansion into the Louisville, Kentucky market and other
risks described in the Companys Securities and Exchange Commission filings.

Seasonality and Variability in Quarterly Results

The Company has experienced, and expects to continue to experience,
significant seasonality and quarter-to-quarter variability in homebuilding
activity. Typically, closings and related revenues will increase in the second
half of the year. The Company believes this seasonality reflects the tendency
of homebuyers to shop for a new home in the Spring with the goal of closing in
the Fall or Winter. Weather conditions can also accelerate or delay the
scheduling of closings.

The following table sets forth certain data for each of the last eight
quarters:

|               |  |                |        |               |  |            |     |                 |  |  |     |         |  |  |       | 
|-------------- |  | -------------- | ------ | ------------- |  | ---------- | --- | --------------- |  |  | --- | ------- |  |  | ----- | 
|               |  |                |        |               |  | Sales      |     |                 |  |  |     | Backlog
|Three          |  | Revenues       |        | Contracts     |  | Closings   |     | (at period end)
|Months Ended   |  | (in thousands) |        | (in units)(1) |  | (in units) |     | (in units)     
|               |  |                |        |               |  |            |     |                
|Mar. 31, 1998  |  | $              | 54,458 |               |  |            | 670 |                 |  |  | 370 |         |  |  | 1,003 | 
|              
|              
|              
|              
|June 30, 1998  |  | $              | 68,031 |               |  |            | 402 |                 |  |  | 461 |         |  |  | 944   | 
|              
|              
|              
|              
|Sept. 30, 1998 |  | $              | 67,769 |               |  |            | 330 |                 |  |  | 437 |         |  |  | 837   | 
|              
|              
|              
|              
|Dec. 31, 1998  |  | $              | 74,679 |               |  |            | 381 |                 |  |  | 467 |         |  |  | 751   | 
|              
|              
|              
|              
|Mar. 31, 1999  |  | $              | 52,774 |               |  |            | 453 |                 |  |  | 331 |         |  |  | 873   | 
|              
|              
|              
|              
|June 30, 1999  |  | $              | 72,795 |               |  |            | 412 |                 |  |  | 436 |         |  |  | 849   | 
|              
|              
|              
|              
|Sept. 30, 1999 |  | $              | 73,067 |               |  |            | 404 |                 |  |  | 428 |         |  |  | 825   | 
|              
|              
|              
|              
|Dec. 31, 1999  |  | $              | 78,941 |               |  |            | 411 |                 |  |  | 446 |         |  |  | 790   | 



---

|(1) |  | Net of cancellations.
|--- |  | ---------------------

17



---



At December 31, 1999 the aggregate sales value of homes in backlog was
$140.2 million compared to $129.2 million at December 31, 1998. The average
sales value of homes in backlog at December 31, 1999 increased to $177,500 from
$172,100 at December 31, 1998.

The Company annually incurs a substantial amount of indirect construction
costs which are essentially fixed in nature. For purposes of quarterly
financial reporting, the Company capitalizes these costs to real estate
inventories on the basis of the ratio of estimated annual indirect costs to
direct construction costs to be incurred. Thus, variations in construction
activity cause fluctuations in interim and annual gross profits.

18



---



Results of Operations

The following table sets forth, for the periods indicated, certain items
from the Statements of Operations contained in the Financial Statements
expressed as percentages of total revenues, as well as certain operating data:

|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |       |  
|-------------------------------------------------------------------- | -------------------------- | - | ----------------------- | ----- | ---- | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                     |                            |   | Year Ended December 31,
|                                                                     |                            |   | 1999                    |       | 1998 |   | 1997   
|                                                                     |                            |   |                         |       |      |   |        
|Revenues                                                             |                            |   | 100.0                   | %     |      |   | 100.0   | %     |   |   | 100.0   | %    
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Cost of real estate sold                                             |                            |   | 80.8                    |       |      |   | 81.2    |       |   |   | 79.7    |      
|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |      
|                                                                     | Gross profit               |   |                         | 19.2  |      |   |         | 18.8  |   |   |         | 20.3  |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Selling, general and administrative                                  |                            |   | 12.2                    |       |      |   | 10.9    |       |   |   | 11.2    |      
|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |      
|                                                                     | Income from operations     |   |                         | 7.0   |      |   |         | 7.9   |   |   |         | 9.1   |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Interest expense                                                     |                            |   | 2.1                     |       |      |   | 1.7     |       |   |   | 2.7     |      
|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |      
|                                                                     | Income before income taxes |   |                         | 4.9   |      |   |         | 6.2   |   |   |         | 6.4   |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Provision for income taxes                                           |                            |   | 2.0                     |       |      |   | 2.6     |       |   |   | 2.7     |      
|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |      
|                                                                     | Net income                 |   |                         | 2.9   | %    |   |         | 3.6   | % |   |         | 3.7   | %
|                                                                     |                            |   |                         |       |      |   |         |       |   |   |         |      
|Homes:                                                              
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Sales contracts            |   |                         | 1,680 |      |   |         | 1,783 |   |   |         | 1,402 |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Closings                   |   |                         | 1,641 |      |   |         | 1,735 |   |   |         | 1,387 |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Backlog at year end        |   |                         | 790   |      |   |         | 751   |   |   |         | 703   |  
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Average sales price of homes closed
during the year (in thousands)   |                            | $ | 169                     |       |      | $ | 150     |       |   | $ | 148     |      
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Average sales price of homes in backlog
at year end (in thousands)   |                            | $ | 177                     |       |      | $ | 172     |       |   | $ | 152     |      
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Aggregate sales price of homes in
backlog at year end (in thousands) |                            | $ | 140,220                 |       |      | $ | 129,241 |       |   | $ | 106,686 |      

A home is included in sales contracts when the Companys standard sales
contract, which requires a deposit and generally has no contingencies other
than for buyer financing and/or for the sale of an existing home, is executed.
Closings or deliveries represent homes for which the closing has occurred
and conveyance of the deed has passed from the Company to the buyer. Revenue
and cost of real estate sold are recognized at the time of closing. Backlog
represents homes for which the Companys standard sales contract has been
executed, but for which closings had not occurred as of the end of the period.

Homes included in sales contracts in the foregoing table are net of
cancellations. Most cancellations occur because customers cannot qualify for
financing. While most cancellations occur prior to the start of construction,
some cancellations occur during the construction process. The cancellation
rates for homes in backlog as of December 31, 1998, 1997 and 1996 were 10.4%,
14.5%, and 15.2%, respectively.

19



---



1999 Compared to 1998

Revenues.Revenues for 1999 increased to $277.6 million from the delivery
of 1,641 homes compared to 1998 revenues of $264.9 million from the delivery of
1,735 homes. Revenues for 1999 increased $12.7 million or 4.8% due to a higher
average price of delivered homes. The average price of homes delivered in 1999
increased to $168,800 from $150,300 in 1998, an increase of $18,500 per house
or 12.3%. The higher average price of delivered homes in 1999 was the result
of the Company emphasizing the sale of larger homes and homes with more
options, combined with increased FHA mortgage limits. The increased FHA
mortgage limits allowed homebuyers to qualify for larger mortgages while
minimizing their required downpayment. The number of closings in 1999
decreased by 94 homes compared to 1998, principally due to the record number of
homes sold in first quarter 1998. Included in revenues are other revenues,
consisting of the sale of land and building supplies to other builders. These
other revenues amounted to $607,000 during 1999 compared to $4.2 million during
1998.

Gross Profit.Gross profit for 1999 increased to $53.1 million from $49.8
million in 1998. Gross profit as a percentage of revenues also increased in
1999 to 19.2% from 18.8% in 1998. The primary reasons for the increase in 1999
gross profit were the higher average sales price of homes delivered and more
effective control of financing and direct construction costs during 1999
compared to 1998.

Selling, General and Administrative Expenses.Selling, general and
administrative expense for 1999 increased to $33.6 million or 12.2% of revenues
compared to $28.7 million or 10.9% of revenues for 1998. Selling, general and
administrative expense increased primarily due to start-up costs in the
Louisville, Kentucky market, higher lease and amortization expense of
technology improvements and investment in corporate infrastructure.

Interest Expense.Interest expense for 1999 increased to $6.0 million
from $4.6 million for 1998. As a percentage of revenues, interest expense for
1999 increased to 2.1% from 1.7% for 1998. The primary reasons for the
increase in interest expense were higher average revolving line of credit
borrowings, offset by a slightly lower average interest rate. The Company also
capitalized additional interest in 1999 compared to 1998 due to the larger
backlog and increased real estate inventories. The average revolving line of
credit borrowings outstanding were $82.3 million and $56.0 million for 1999 and
1998, respectively. The weighted average rate of interest under the Companys
revolving line of credit was 7.5% for 1999 compared to 7.7% for 1998.

Provision for Income Taxes.Income tax expense for 1999 decreased to $5.5
million from $6.9 million for 1998. The Companys estimated annual effective
tax rate decreased to 40.5% for 1999 from 41.9% for 1998.

20



---



1998 Compared to 1997

Revenues.Revenues for 1998 increased to $264.9 million from $207.9
million for 1997, an increase of $57.0 million or 27.4%. The increase in
revenues was primarily the result of a 25.1% increase in the number of homes
delivered and a 1.5% increase in the average price per delivered home. In 1998
the Company delivered 1,735 homes compared to 1,387 homes in 1997, an increase
of 348 homes. Included in the 348 additional deliveries are 7 model homes the
Company sold and leased back for use as sales models. The increase in the
number of homes delivered in 1998 as compared to 1997 was due primarily to a
greater number of homes sold and more favorable weather conditions. The
average price per delivered home increased to $150,300 in 1998 from $148,100 in
1997, an increase of $2,200. The increase in the average price per delivered
home occurred principally in the second half of the year and reflects the sale
of larger homes with more customer selected options in 1998 than in 1997.
Included in revenues are other revenues, consisting principally of the sale of
land and building supplies to other homebuilders. In 1998, land sales to other
homebuilders increased to $3.8 million from $2.2 million in 1997 and building
supply sales increased to $400,000 from $300,000 in 1997.

Gross Profit.Gross profit for 1998 increased to $49.8 million from $42.2
million for 1997 due to the increased number of homes delivered. As a
percentage of revenues, the gross profit margin declined to 18.8% for 1998 from
20.3% for 1997. The most significant reason for the decline in gross profit
margin was the increase in construction costs attributed to the 25.1% increase
in the number of homes delivered. As production volume increased, the Company
found it necessary to pay higher costs in order to attract quality vendors and
expand the capacity of its existing subcontractors. The Company also
experienced increased customer financing costs during 1998 due to a change in
FHA rules that caused many customers to move from FHA financing to more
expensive conventional financing. During mid-1998 the Company was able to
increase its sales prices and somewhat offset the increased construction and
financing costs. The December 31, 1998 backlog reflects a 13.4% increase in
the average sales value of homes compared to the backlog of homes at December
31, 1997. This increase is related to increased sales prices and a change in
the product mix.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses for 1998 increased to $28.7 million from $23.3 million
for 1997. This increase was primarily due to the costs associated with selling
and delivering a larger number of homes in 1998 compared to 1997. In addition,
during 1998 the Company incurred additional marketing expenses, amortization of
improvements to its corporate office building, amortization of hardware and
software associated with its new computer system and start-up costs related to
entry into the Louisville, Kentucky market. As a percentage of revenues,
selling, general and administrative expenses decreased to 10.8% for 1998
compared to 11.2% for 1997.

Interest Expense.Interest expense for 1998 decreased to $4.6 million
from $5.6 million for 1997. As a percentage of revenues, interest expense for
1998 decreased to 1.7% from 2.7% for 1997. The primary reasons for the
decrease in interest expense were lower average revolving line of credit
borrowings, a lower average interest rate and additional capitalized interest
in 1998 compared to 1997 due to the larger backlog and increased real estate
inventories. The average revolving line of credit borrowings outstanding were
$56.0 million and $57.5 million for 1998

21



---



and 1997, respectively. The weighted
average rate of interest under the Companys revolving line of credit was 7.7%
for 1998 compared to 8.9% for 1997.

Provision for Income Taxes.Income tax expense for 1998 increased to $6.9
million from $5.6 million for 1997. The Companys estimated annual effective
tax rate decreased to 41.9% for 1998 from 42.0% for 1997.

Liquidity and Capital Resources

Historically, the Companys capital needs have depended upon sales volume,
asset turnover, land acquisition and inventory levels. The Companys
traditional sources of capital have been internally generated cash, bank
borrowings and seller financing. The Company has incurred substantial
indebtedness in the past and expects to incur substantial indebtedness in the
future to fund its operations and its investment in land.

Sources and Uses of Cash
1999 Compared to 1998

Net cash required by homebuilding operations increased $23.3 million
during 1999 to $25.5 million, from $2.2 million the previous year. Net cash
required by operations increased as the Company invested $32.7 million, or
$20.5 million more than during 1998, in real estate inventories. Investment in
real estate inventories during 1999 included land development costs of $23.0
million, homes under construction of $9.4 million and building materials of
$300,000. Net income for 1999 provided operating activities with cash of $8.0
million compared to $9.6 million for 1998. Net cash used in investing
activities during 1999 was $1.1 million compared to $2.0 million during 1998.
Financing activities provided the Company with $29.2 million in cash compared
to $4.2 million the previous year. The bank credit facility provided $31.9
million during 1999, which was used principally to fund real estate
inventories.

Sources and Uses of Cash
1998 Compared to 1997

Net cash required by homebuilding operations in 1998 declined to $2.2
million from $6.5 million in 1997. The principal reasons for this reduction
were the increase in net income to $9.6 million from $7.7 million and a
reduction in the incremental increase in 1998 real estate inventories to $12.2
million from $15.9 million in 1997. Increased payments during 1998 for prepaid
expenses offset these reductions by $1.3 million. The increase in prepaid
expenses principally reflected additional sales commissions and employee
benefits paid during 1998 compared to 1997.

The Company invested $2.1 million in property and equipment in 1998
compared to $530,000 during 1997. The most significant purchases during 1998
were for model home, office and lumberyard improvements. The Company also
upgraded its computer hardware systems to increase productivity and ensure Year
2000 compliance. In addition to these cash expenditures, the Company incurred
capital lease obligations of $1.4 million during 1998 to upgrade its

22



---



computer
software systems. Financing activities during 1998 provided cash of $4.2
million compared to $3.2 million during 1997.

Real Estate Inventories

The Companys practice is to develop most of the lots upon which it builds
its homes. Generally, the Company attempts to maintain a land inventory that
will be sufficient to meet its anticipated lot needs for the next three to five
years. At December 31, 1999, the Company either owned or was under contract to
purchase lots or land that could be developed into approximately 5,800 lots,
including 300 lots in Louisville, Kentucky. The Company controlled through
option agreements an additional 6,200 lots, including 900 lots in Louisville,
Kentucky. During 1999, the Company exercised options to purchase 2,645 lots,
including 277 lots in Louisville, Kentucky. Option agreements expire at
varying dates through 2003. The Companys decision to exercise any particular
option or otherwise acquire additional land is based upon an assessment of a
number of factors, including its existing land inventory at the time and its
evaluation of the future demand for its homes.

Real estate inventories increased to $159.2 million at December 31, 1999
compared to $125.2 million at December 31, 1998. Land and land development
costs increased $24.3 million, homes under construction increased $9.4 million
and other inventories, consisting primarily of lumber and other building
supplies, increased $300,000, for a combined increase of $34.0 million. Of the
$24.3 million increase in land and land development costs, $6.6 million is due
to new land inventories in Louisville, Kentucky and the balance of the increase
is principally due to having incurred more land development expense in Central
Ohio in 1999 than the previous year. The Company increased its Central Ohio
land inventories in anticipation of longer land development lead times and
greater community anti-development sentiment, to replace the record number of
lots it sold during 1998 and to increase the number and types of communities it
has available to sell to its customers. Homes under construction inventories
increased due to having a larger number of homes under construction and homes
with a higher sales value at December 31, 1999 compared to December 31, 1998.

On December 31, 1999, the Company had 133 inventory homes, including 10 in
Louisville, Kentucky, in various stages of construction, which represented an
aggregate investment of $9.4 million. At December 31, 1998, the Company had
119 inventory homes, including 2 in Louisville, Kentucky, in various stages of
construction, which represented an aggregate investment of $6.5 million.
Inventory homes are not reflected in sales or backlog.

Seller-Provided Debt

The Company had $2.8 million and $3.3 million of seller-provided term debt
outstanding at December 31, 1999 and 1998, respectively. The Company expects
to repay $1.6 million of seller-provided term debt in 2000 and the remaining
$1.2 million in August 2001. Interest rates range from 6.5% to the prime rate.

23



---



Land Purchase Commitments

At December 31, 1999, the Company had commitments to purchase residential
lots and unimproved land at an aggregate cost of $3.7 million, of which $3.1
million is expected to be funded during 2000. In addition, at December 31,
1999, the Company had cancelable obligations to purchase residential lots and
unimproved land of $81.8 million, of which $30.2 million is expected to be
funded during 2000. See Note 5 to the Consolidated Financial Statements for
additional details. The Company had a total of $6.5 million in good faith
deposits invested in purchase commitments and cancelable purchase obligations
at December 31, 1999. The Company did not have any commitments to purchase
lots or land in Louisville, Kentucky at December 31, 1999. Included in the
cancelable obligations of $81.8 million above, are cancelable obligations for
Louisville, Kentucky of $13.0 million. The Company expects to fund $5.6
million of the Louisville cancelable obligations in 2000.

Bank Facility

On May 29, 1998 the Company entered into a $125 million Senior Unsecured
Revolving Credit Facility (the Facility). Five lending banks are party to
the Facility, which was syndicated by Huntington Capital Corp. Huntington
National Bank is the Administrative Agent and Issuing Bank of the Facility.
Proceeds from the Facility were used to refinance the Companys previous $90
million bank facility and for working capital, capital expenditures,
acquisition financing, and other general corporate purposes. See Note 7 to the
Consolidated Financial Statements for additional details.

The Company has entered into interest rate swap contracts that fix the
interest rate on $30 million of borrowings under the Facility. The interest
rate swap contracts mature between October 16, 2000 and May 6, 2003 and fix
interest rates between 5.48% and 6.13%, plus a variable margin based on the
Companys Interest Coverage Ratio. The variable margin may range from 1.75% to
2.50% and is determined quarterly. Since the inception of the Facility the
variable margin has been 1.75%.

As of December 31, 1999, the Company was in compliance with Facility
covenants and had $16.2 million available under its Facility, after adjustment
for borrowing base limitations. Borrowing availability under the Facility could
increase, depending on the Companys utilization of the proceeds.

Inflation and Other Cost Increases

The Company is not always able to reflect all of its cost increases in the
prices of its homes because competitive pressures and other factors sometimes
require it to maintain or discount those prices. While the Company attempts to
maintain costs with subcontractors from the date a sales contract with a
customer is accepted until the date construction is completed, unanticipated
costs may be incurred which cannot be passed on to the customer. For example,
delays in construction of a home can cause the mortgage commitment to expire
and can require the Company, if mortgage interest rates have increased, to pay
significant amounts to the mortgage lender to extend the original mortgage
interest rate. In addition, during periods of high

24



---



construction activities,
additional costs may be incurred to obtain more subcontractors when certain
trades are not readily available, which additional costs can result in lower
gross profits.

New Accounting Standards

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This standard is effective for financial
statements for fiscal quarters of fiscal years beginning after June 15, 2000.
The Company will be required to adopt SFAS No. 133 effective January 1, 2001.
SFAS No. 133 standardizes the accounting for derivative instruments by
requiring that all entities recognize them as assets and liabilities in the
balance sheet and subsequently measure them at fair market value. It also
prescribes specific accounting principles to be applied to hedging activities
and hedging transactions which are significantly different from prior
accounting principles. The Company has not yet determined the impact of SFAS
No. 133.

25



---



Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has entered into three interest rate swap contracts with
notional amounts of $10,000,000 each, maturing on October 16, 2000, January 14,
2001 and May 6, 2003. These interest rate swap contracts, reflected in
aggregate in the table below, commenced on October 16, 1997, January 14, 1998
and May 6, 1998 and fix the variable interest rate on the Companys revolving
credit note at 6.125%, 5.475% and 5.960%, respectively. The Company enters
into interest rate swap contracts to achieve an appropriate level of variable
and fixed-rate debt as approved by senior management. Interest rate swap
contracts allow the Company to have variable-rate borrowings and to select the
level of fixed-rate debt for the Company as a whole. The expectation is that
the resulting cost of funds is lower than that available under the
variable-rate borrowings. Under interest rate swap contracts, the Company
agrees with other parties to exchange, at specified intervals, the difference
between fixed rate and floating-rate amounts calculated by reference to an
agreed notional amount. The level of fixed rate debt, after the effect of
interest rate swap contracts have been considered, is maintained at
approximately 32% of total borrowings under the revolving line of credit
facility. The Company does not enter into derivative financial instrument
transactions for speculative purposes.

The following table presents descriptions of the financial instruments and
derivative instruments that are held by the Company at December 31, 1999, and
which are sensitive to changes in interest rates. For the liabilities, the
table presents principal calendar year cash flows that exist by maturity date
and the related average interest rate. For the interest rate derivatives, the
table presents the notional amounts and expected interest rates that exist by
contractual dates. The notional amount is used to calculate the contractual
payments to be exchanged under the contract. The variable rates are estimated
based on the three-month forward LIBOR rate plus a variable margin of 1.75%.
All amounts are reflected in U.S. Dollars (thousands).

|              |                       |  |      |        |      |  |      |        |      |  |      |        |      |  |      |        |      |  |       |        |            |  |   |        |   |  |   |        |  |  |   |        |  
|------------- | --------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ----- | ------ | ---------- |  | - | ------ | - |  | - | ------ |  |  | - | ------ | -
|              |                       |  |      |        |      |  |      |        |      |  |      |        |      |  |      |        |      |  | TOTAL |        | FAIR VALUE
|              |                       |  |      |        |      |  |      |        |      |  |      |        |      |  |      |        |      |  |       |        |           
|              |                       |  | 2000 |        | 2001 |  | 2002 |        | 2003 |  | 1999 |        | 1998 |  | 1999 |        | 1998
|              |                       |  |      |        |      |  |      |        |      |  |      |        |      |  |      |        |     
|Liabilities  
|             
|             
|             
|             
|              | Variable rate         |  |      |        |      |  |      |        |      |  |      |        |      |  | $    | 92,308 |      |  | $     | 92,308 |            |  | $ | 60,415 |   |  | $ | 92,308 |  |  | $ | 60,415 |  
|             
|             
|             
|             
|              | Average interest rate |  |      |        |      |  |      |        |      |  |      |        |      |  |      | 7.751  | %    |  |       | 7.751  | %          |  |   | 6.820  | %
|             
|             
|             
|             
|Interest-Rate
|             
|             
|             
|             
|Derivatives  
|             
|             
|             
|             
|              | Notional amount       |  | $    | 30,000 |      |  | $    | 20,000 |      |  | $    | 10,000 |      |  | $    | 10,000 |      |  | $     | 30,000 |            |  | $ | 30,000 |   |  | $ | 378    |  |  | $ | (620   | )
|             
|             
|             
|             
|              | Average pay rate      |  |      | 5.853  | %    |  |      | 5.718  | %    |  |      | 5.960  | %    |  |      | 5.960  | %    |  |       | 5.873  | %          |  |   | 5.869  | %
|             
|             
|             
|             
|              | Average receive rate  |  |      | 7.751  | %    |  |      | 7.751  | %    |  |      | 7.751  | %    |  |      | 7.751  | %    |  |       | 7.751  | %          |  |   | 6.820  | %

26



---



Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Shareholders
of Dominion Homes, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of shareholder's equity and of cash flows present fairly,
in all material respects, the financial position of Dominion Homes, Inc. and
its subsidiaries at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Companys management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Columbus, Ohio
January 25, 2000

27



---



Dominion Homes, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share amounts)

|                                    |                            |            |         |                         |       |      |         |           |       |   |         |           |       | 
|----------------------------------- | -------------------------- | ---------- | ------- | ----------------------- | ----- | ---- | ------- | --------- | ----- | - | ------- | --------- | ----- | 
|                                    |                            |            |         | Year ended December 31,
|                                    |                            |            |         |                        
|                                    |                            |            |         | 1999                    |       | 1998 |         | 1997     
|                                    |                            |            |         |                         |       |      |         |          
|Revenues                            |                            | $          | 277,577 |                         |       | $    | 264,937 |           |       | $ | 207,926 |          
|                                   
|                                   
|                                   
|                                   
|Cost of real estate sold            |                            |            | 224,474 |                         |       |      | 215,107 |           |       |   | 165,682 |          
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|Gross profit                        |                            |            | 53,103  |                         |       |      | 49,830  |           |       |   | 42,244  |          
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |                            |            | 33,601  |                         |       |      | 28,720  |           |       |   | 23,325  |          
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|Income from operations              |                            |            | 19,502  |                         |       |      | 21,110  |           |       |   | 18,919  |          
|                                   
|                                   
|                                   
|                                   
|Interest expense                    |                            |            | 6,024   |                         |       |      | 4,557   |           |       |   | 5,645   |          
|                                   
|                                   
|                                   
|                                   
|                                    | Income before income taxes |            |         | 13,478                  |       |      |         | 16,553    |       |   |         | 13,274    |      
|                                   
|                                   
|                                   
|                                   
|Provision for income taxes          |                            |            | 5,460   |                         |       |      | 6,942   |           |       |   | 5,569   |          
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|                                    |                            | Net income |         | $                       | 8,018 |      |         | $         | 9,611 |   |         | $         | 7,705 | 
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|Earnings per share                  |                           
|                                   
|                                   
|                                   
|                                   
|                                    | Basic                      |            | $       | 1.27                    |       |      | $       | 1.53      |       |   | $       | 1.23      |      
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |           |       | 
|                                    | Diluted                    |            | $       | 1.23                    |       |      | $       | 1.46      |       |   | $       | 1.20      |      
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|Weighted average shares outstanding
|                                   
|                                   
|                                   
|                                   
|                                    | Basic                      |            |         | 6,318,148               |       |      |         | 6,275,388 |       |   |         | 6,250,918 |      
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          
|                                    | Diluted                    |            |         | 6,495,796               |       |      |         | 6,586,752 |       |   |         | 6,430,925 |      
|                                    |                            |            |         |                         |       |      |         |           |       |   |         |          

The accompanying notes are an integral part of the consolidated financial statements.

28



---



Dominion Homes, Inc.
Consolidated Balance Sheets
(In thousands, except share information)

|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|-------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------ | ------ | ----------------------------- | ------------------------------------------ | - | ------- | ------------ | ------- | ---- | ------- | - | ------- | 
|                                                   |                                                                    |                                      |        |                               |                                            |   |         | December 31,
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |             
|                                                   |                                                                    |                                      |        |                               |                                            |   |         | 1999         |         | 1998
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |     
|                                                   |                                                                    | ASSETS                               |        |                               |                                            |  
|                                                  
|                                                  
|                                                  
|                                                  
|Cash and cash equivalents                          |                                                                    | $                                    | 2,862  |                               |                                            | $ | 261     |             
|                                                  
|                                                  
|                                                  
|                                                  
|Notes and accounts receivable:                     |                                                                    |                                      |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Trade                                                              |                                      |        | 212                           |                                            |   |         | 133          |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Due from financial institutions for residential closings           |                                      |        | 544                           |                                            |   |         | 769          |        
|                                                  
|                                                  
|                                                  
|                                                  
|Real estate inventories:                           |                                                                    |                                      |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Land and land development costs                                    |                                      |        | 95,657                        |                                            |   |         | 71,404       |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Homes under construction                                           |                                      |        | 60,272                        |                                            |   |         | 50,843       |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other                                                              |                                      |        | 3,251                         |                                            |   |         | 2,906        |        
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        | Total real estate inventories |                                            |   | 159,180 |              |         |      | 125,153 |  
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|Prepaid expenses and other                         |                                                                    |                                      | 3,891  |                               |                                            |   | 3,111   |             
|                                                  
|                                                  
|                                                  
|                                                  
|Deferred income taxes                              |                                                                    |                                      | 1,904  |                               |                                            |   | 1,788   |             
|                                                  
|                                                  
|                                                  
|                                                  
|Property and equipment, at cost:                   |                                                                    |                                      | 9,055  |                               |                                            |   | 7,385   |             
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                    | Less accumulated depreciation        |        |                               | (3,589                                     | ) |         |              | (3,244  | )   
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        | Total property and equipment  |                                            |   | 5,466   |              |         |      | 4,141   |  
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        |                               | Total assets                               |   |         | $            | 174,059 |      |         | $ | 135,356
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    | LIABILITIES AND SHAREHOLDERS EQUITY |        |                               |                                           
|                                                  
|                                                  
|                                                  
|                                                  
|Accounts payable                                   |                                                                    | $                                    | 5,273  |                               |                                            | $ | 5,520   |             
|                                                  
|                                                  
|                                                  
|                                                  
|Deposits on homes under contract                   |                                                                    |                                      | 1,634  |                               |                                            |   | 2,601   |             
|                                                  
|                                                  
|                                                  
|                                                  
|Accrued liabilities                                |                                                                    |                                      | 11,364 |                               |                                            |   | 12,131  |             
|                                                  
|                                                  
|                                                  
|                                                  
|Note payable, banks                                |                                                                    |                                      | 92,308 |                               |                                            |   | 60,415  |             
|                                                  
|                                                  
|                                                  
|                                                  
|Term debt                                          |                                                                    |                                      | 4,750  |                               |                                            |   | 4,461   |             
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        | Total liabilities             |                                            |   | 115,329 |              |         |      | 85,128  |  
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|Commitments and contingencies
Shareholders equity |                                                                    |                                      |       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Common shares, without stated value, 12,000,000 shares authorized, |                                      |        |                              
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | 6,382,480 shares issued and 6,357,480 shares outstanding on        |                                      |        |                               |                                           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | December 31, 1999 and 6,281,504 shares issued and outstanding      |                                      |        |                               |                                           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | on December 31, 1998                                               |                                      |        | 31,388                        |                                            |   |         | 30,851       |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Deferred compensation                                              |                                      |        | (252                          | )                                          |   |         | (371         | )      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Retained earnings                                                  |                                      |        | 27,766                        |                                            |   |         | 19,748       |        
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Treasury stock                                                     |                                      |        | (172                          | )                                         
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        | Total shareholders equity    |                                            |   | 58,730  |              |         |      | 50,228  |  
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 
|                                                   |                                                                    |                                      |        |                               | Total liabilities and shareholders equity |   |         | $            | 174,059 |      |         | $ | 135,356 | 
|                                                   |                                                                    |                                      |        |                               |                                            |   |         |              |         |      |         |   |         | 

The accompanying notes are an integral part of the consolidated financial statements.

29



---



Dominion Homes, Inc.
Consolidated Statement of Changes in Shareholders Equity
(In thousands, except share information)

|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |       |   |        |  
|-------------------------- | -------------------------- |  | ------------------------------ | ------- | ------------- | ------- | --------------------- | --- | --------- | - | ------ | ----- | -------- | - | ------ | - | ----- | ------ | -------- | ----- | -------- | - | ---- | - | - | ---- | ------ | ----- | - | ------ | -
|                           |                            |  |                                |         | Common Shares |         | Deferred Compensation
|                           |                            |  |                                |         |               |         |                      
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   | Trust |        | Retained |       | Treasury
|                           |                            |  |                                |         | Shares        |         | Amount                |     | Liability |   | Shares |       | Earnings |   | Stock  |   | Total
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |      
|Balance, December 31, 1996 |                            |  | 6,239,153                      |         |               | $       | 30,526                |     |           | $ | (107   | )     |          |   |        |   |       | $      | 2,432    |       |          |   |      |   |   | $    | 32,851 |      
|                          
|                          
|                          
|                          
|                           | Net income                 |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          | 7,705 |          |   |      |   |   |      |        | 7,705 |  
|                          
|                          
|                          
|                          
|                           | Shares issued and redeemed |  |                                | 27,800  |               |         |                       | 147 |           |   |        | (127  | )        |   |        |   |       |        |          |       |          |   |      |   |   |      |        | 20    |  
|                          
|                          
|                          
|                          
|                           | Deferred compensation      |  |                                |         |               |         |                       |     |           |   |        | 84    |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        | 84    |  
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      
|Balance, December 31, 1997 |                            |  | 6,266,953                      |         |               |         | 30,673                |     |           |   | (150   | )     |          |   |        |   |       |        | 10,137   |       |          |   |      |   |   |      | 40,660 |      
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      
|                           | Net income                 |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          | 9,611 |          |   |      |   |   |      |        | 9,611 |  
|                          
|                          
|                          
|                          
|                           | Shares issued and redeemed |  |                                | 14,551  |               |         |                       | 178 |           |   |        | (208  | )        |   |        |   |       |        |          |       |          |   |      |   |   |      |        | (30   | )
|                          
|                          
|                          
|                          
|                           | Treasury shares:          
|                          
|                          
|                          
|                          
|                           |                            |  | Held for deferred compensation |         |               |         |                       |     |           |   |        |       |          |   |        |   | $     | (1,224 | )        |       |          |   |      |   |   |      |        |       |   | (1,224 | )
|                          
|                          
|                          
|                          
|                           | Deferred compensation      |  |                                |         |               |         |                       |     |           |   |        | 1,211 |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        | 1,211 |  
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      
|Balance, December 31, 1998 |                            |  | 6,281,504                      |         |               |         | 30,851                |     |           |   | 853    |       |          |   | (1,224 | ) |       |        | 19,748   |       |          |   |      |   |   |      | 50,228 |      
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      
|                           | Net income                 |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          | 8,018 |          |   |      |   |   |      |        | 8,018 |  
|                          
|                          
|                          
|                          
|                           | Shares issued and redeemed |  |                                | 100,976 |               |         |                       | 537 |           |   |        | (170  | )        |   |        |   |       |        |          |       |          |   |      |   |   |      |        | 367   |  
|                          
|                          
|                          
|                          
|                           | Treasury shares:          
|                          
|                          
|                          
|                          
|                           |                            |  | Held for deferred compensation |         |               |         |                       |     |           |   |        |       |          |   |        |   |       | (35    | )        |       |          |   |      |   |   |      |        |       |   | (35    | )
|                          
|                          
|                          
|                          
|                           |                            |  | Other shares purchased         |         |               | (25,000 | )                     |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   | $ | (172 | )      |       |   | (172   | )
|                          
|                          
|                          
|                          
|                           | Deferred compensation      |  |                                |         |               |         |                       |     |           |   |        | 324   |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        | 324   |  
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      
|Balance, December 31, 1999 |                            |  | 6,357,480                      |         |               | $       | 31,388                |     |           | $ | 1,007  |       |          | $ | (1,259 | ) |       | $      | 27,766   |       |          | $ | (172 | ) |   | $    | 58,730 |      
|                           |                            |  |                                |         |               |         |                       |     |           |   |        |       |          |   |        |   |       |        |          |       |          |   |      |   |   |      |        |      

The accompanying notes are an integral part of the consolidated financial statements.

30



---



Dominion Homes, Inc.
Consolidated Statements of Cash Flows
(In thousands)

|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |          |      |         |        |  
|---------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------- | -------------------------------- | --------------------------------------------------- | ----- | ----------------------- | ------- | -------- | --- | ------- | ------ | -------- | ---- | ------- | ------ | -
|                                                           |                                                                           |                                             |                                  |                                                     |       | Year Ended December 31,
|                                                           |                                                                           |                                             |                                  |                                                     |       |                        
|                                                           |                                                                           |                                             |                                  |                                                     |       | 1999                    |         | 1998     |     | 1997   
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |        
|Cash flows from operating activities:                     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Net income                                                                |                                             | $                                | 8,018                                               |       |                         | $       | 9,611    |     |         | $      | 7,705    |     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Adjustments to reconcile net income to cash used in
operating activities:
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Depreciation and amortization               |                                  |                                                     | 1,434 |                         |         |          | 635 |         |        |          | 934  |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Property and equipment disposal loss (gain) |                                  |                                                     | 6     |                         |         |          | (17 | )       |        |          | 91   |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Allowance for doubtful accounts             |                                  |                                                     |       |                         |         |          | (54 | )       |        |          | (52  | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Reserve for real estate inventories         |                                  |                                                     | 245   |                         |         |          |     |         |        |          | (483 | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Issuance of common shares for compensation  |                                  |                                                     | 367   |                         |         |          | 42  |         |        |          | 20   |        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Deferred income taxes                       |                                  |                                                     | (116  | )                       |         |          | 322 |         |        |          | (840 | )      
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           | Changes in assets and liabilities:         
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Notes and accounts receivable    |                                                     |       | 146                     |         |          |     | (307    | )      |          |      | (50     | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Real estate inventories          |                                                     |       | (32,700                 | )       |          |     | (12,150 | )      |          |      | (15,888 | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Prepaid expenses and other       |                                                     |       | (984                    | )       |          |     | (1,413  | )      |          |      | (77     | )     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Accounts payable                 |                                                     |       | (247                    | )       |          |     | (1,250  | )      |          |      | 515     |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Deposits on homes under contract |                                                     |       | (967                    | )       |          |     | 624     |        |          |      | 152     |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                           |                                             | Accrued liabilities              |                                                     |       | (699                    | )       |          |     | 1,758   |        |          |      | 1,494   |       
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           |                                                                           |                                             |                                  | Net cash used in operating activities               |       |                         | (25,497 | )        |     |         | (2,199 | )        |      |         | (6,479 | )
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|Cash flows from investing activities:                     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds from sale of property & equipment                                |                                             |                                  | 25                                                  |       |                         |         | 73       |     |         |        | 3,798    |     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Purchase of property & equipment                                          |                                             |                                  | (1,083                                              | )     |                         |         | (2,069   | )   |         |        | (526     | )   
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           |                                                                           |                                             |                                  | Net cash (used in) provided by investing activities |       |                         | (1,058  | )        |     |         | (1,996 | )        |      |         | 3,272  |  
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|Cash flows from financing activities:                     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Payments on note payable, banks                                           |                                             |                                  | (266,884                                            | )     |                         |         | (254,265 | )   |         |        | (205,972 | )   
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds from note payable, banks                                         |                                             |                                  | 298,777                                             |       |                         |         | 261,993  |     |         |        | 208,889  |     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Proceeds from term debt                                                   |                                             |                                  |                                                     |       |                         |         |          |     |         |        | 3,638    |     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Payments on term debt                                                     |                                             |                                  | (2,057                                              | )     |                         |         | (1,805   | )   |         |        | (3,355   | )   
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Payment of deferred financing fees                                        |                                             |                                  | (181                                                | )     |                         |         | (1,380   | )  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Payments on capital lease obligation                                      |                                             |                                  | (292                                                | )     |                         |         | (174     | )  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Common shares purchased or redeemed                                       |                                             |                                  | (207                                                | )     |                         |         | (165     | )   |         |        | 7        |     
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           |                                                                           |                                             |                                  | Net cash provided by financing activities           |       |                         | 29,156  |          |     |         | 4,204  |          |      |         | 3,207  |  
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           |                                                                           | Net change in cash and cash equivalents     |                                  |                                                     | 2,601 |                         |         |          | 9   |        
|                                                          
|                                                          
|                                                          
|                                                          
|Cash and cash equivalents, beginning of year               |                                                                           |                                             | 261                              |                                                     |       |                         | 252     |          |     |         | 252    |         
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           |                                                                           | Cash and cash equivalents, end of year      |                                  | $                                                   | 2,862 |                         |         | $        | 261 |         |        | $        | 252  |        
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|Supplemental disclosures of cash flow information:        
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Interest paid (net of amounts capitalized)                                |                                             | $                                | 1,969                                               |       |                         | $       | 792      |     |         | $      | 1,631    |     
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           | Income taxes paid                                                         |                                             | $                                | 5,839                                               |       |                         | $       | 6,636    |     |         | $      | 6,423    |     
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|Supplemental disclosures of non-cash financing activities:
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Land acquired by purchase contract or seller financing                    |                                             | $                                | 1,572                                               |       |                         |         |          |     |         | $      | 3,638    |     
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         
|                                                           | Capital lease obligations                                                 |                                             | $                                | 1,066                                               |       |                         | $       | 1,364    |    
|                                                           |                                                                           |                                             |                                  |                                                     |       |                         |         |          |     |         |        |         

The accompanying notes are an integral part of the consolidated financial statements.

31



---



Notes to the Consolidated Financial Statements

1. Business Operations and Basis of Presentation:

Dominion Homes, Inc. is a single-family homebuilder with operations in
Central Ohio and Louisville, Kentucky. The Company was incorporated in
October 1993 in anticipation of its initial public offering of common shares
in March 1994. Prior to the initial public offering, the homebuilding
operations were part of BRC Properties Inc. (BRC), formerly known as Borror
Realty Company. BRC was incorporated in 1946 and started building homes in
1976. BRC owned 4,116,500 common shares or 64.8% of the outstanding common
shares at December 31, 1999.

On November 16, 1999 Dominion Homes, Inc. formed Dominion Homes
Financial Services, Ltd. (DHFS) to provide mortgage services, primarily to
its customers. The Company expects DHFS to be operational in second quarter
2000. On December 30, 1999 Dominion Homes, Inc. formed Dominion Homes of
Kentucky, Ltd. (DHK) to own and operate the Companys homebuilding
operations in Louisville, Kentucky. DHFS is an Ohio limited liability
company and DHK is a Kentucky limited partnership. Both entities are wholly
owned by Dominion Homes, Inc. The accompanying consolidated financial
statements include the accounts of DHFS and DHK. Intercompany transactions
are eliminated in consolidation.

2. Summary of Significant Accounting Policies:

Cash and Cash Equivalents:For purposes of the consolidated statements
of cash flows, all highly liquid investments purchased with an original
maturity of three months or less are considered to be cash equivalents.

Real Estate Inventories:Real estate inventories are recorded at cost.
Land and land development costs are allocated to development phases based on
the total number of lots expected to be developed within each subdivision.
As each development phase is completed, land development costs, including
capitalized interest and real estate taxes, are then allocated to individual
lots. Homes under construction include land development costs, construction
costs, capitalized interest and indirect costs related to development and
construction activities. Indirect costs that do not relate to development
and construction activities, including general and administrative expenses,
are charged to expense as incurred. Other inventories consist primarily of
lumber and building supplies.

Management evaluates the recoverability of its real estate inventories
using several factors including, but not limited to, managements plans for
future operations, recent operating results and projected cash flows.

Property and Equipment:Depreciation and amortization are recognized on
straight-line and declining-balance methods at rates adequate to amortize
costs over the estimated useful lives of the applicable assets. The
estimated useful lives of the assets range from three to forty years.
Property and equipment includes assets subject to capital leases with a cost
of $2,421,000 and $1,364,000, net of accumulated amortizations of $476,000
and $134,000 at December 31, 1999 and 1998, respectively. Depreciation
expense was $815,000, $534,000 and $702,000 for the years ended December 31,
1999, 1998 and 1997, respectively.

Maintenance, repairs and minor renewals are charged to expense as
incurred while major renewals and betterments are capitalized and amortized.
The asset cost and accumulated depreciation is removed for assets sold or
retired, and any resulting gain or loss is reflected in operations.

32



---



Computer Software Costs:The Company capitalizes the costs of acquired
software and directly related implementation costs. All other costs related
to software obtained for internal use are expensed as incurred.

Earnings Per Share: Basic earnings per common share is computed by
dividing net income available to common shareholders by the weighted average
number of common shares outstanding during each period. Diluted earnings per
common share computations include common share equivalents, when dilutive.

Warranty Costs:The Company provides a two-year limited warranty on
materials and workmanship and a thirty-year warranty against major structural
defects. An estimated amount of warranty cost is provided for each home at
the date of closing based on actual warranty experience. Warranty expense
was $2,759,000, $2,250,000 and $2,082,000 for the years ended December 31,
1999, 1998 and 1997, respectively. Accrued warranty cost was $1,180,000 and
$1,080,000 at December 31, 1999 and 1998, respectively.

Income Taxes:The Company records income taxes on the liability method.
This method requires the recognition of deferred income taxes for the tax
effect of temporary differences between the amount of assets and liabilities
for financial reporting purposes and such amounts as determined by tax
regulations.

Revenue Recognition on Sales of Real Estate: The Company recognizes
revenues from the sale of homes at the time the deed is conveyed from the
Company to the buyer. Accounts receivable due from financial institutions
represent payments to be received on completed closings. Gains on sales of
model homes subject to leasing arrangements are deferred and recognized over
the term of the lease.

Capitalization of Interest:The Company capitalizes the cost of interest
related to construction costs incurred during the construction period of homes
and land development costs incurred while development activities on undeveloped
land are in process. The summary of total interest is as follows:

|                                                   |  |                         |            |      |  |      |            |   |  |   |            |  
|-------------------------------------------------- |  | ----------------------- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                   |  | Year Ended December 31,
|                                                   |  |                        
|                                                   |  | 1999                    |            | 1998 |  | 1997
|                                                   |  |                         |            |      |  |     
|Interest incurred                                  |  | $                       | 6,943,000  |      |  | $    | 5,069,000  |   |  | $ | 5,532,000  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Interest capitalized                               |  |                         | (4,726,000 | )    |  |      | (4,247,000 | ) |  |   | (3,453,000 | )
|                                                   |  |                         |            |      |  |      |            |   |  |   |            |  
|Interest expensed directly                         |  |                         | 2,217,000  |      |  |      | 822,000    |   |  |   | 2,079,000  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Previously capitalized interest charged
to expense |  |                         | 3,807,000  |      |  |      | 3,735,000  |   |  |   | 3,566,000  |  
|                                                   |  |                         |            |      |  |      |            |   |  |   |            |  
|Total interest expense                             |  | $                       | 6,024,000  |      |  | $    | 4,557,000  |   |  | $ | 5,645,000  |  
|                                                   |  |                         |            |      |  |      |            |   |  |   |            |  
|Capitalized interest in ending inventory           |  | $                       | 3,304,000  |      |  | $    | 2,384,000  |   |  | $ | 1,871,000  |  
|                                                   |  |                         |            |      |  |      |            |   |  |   |            |  

Deferred Costs:Fees and costs incurred in connection with financing
agreements are capitalized as other assets and amortized over the terms of the
respective agreements. Amortization expense was $385,000, $298,000 and
$148,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

Advertising Costs:The Company expenses advertising costs when incurred.
Advertising expense was $2,876,000, $2,383,000 and $1,763,000 for the years ended December 31,
1999, 1998 and 1997, respectively.

33



---



Derivative Financial Instruments:The Company has entered into interest
rate swap contracts as hedges against increasing rates on its variable rate
debt. Gains or losses related to the swap contracts are recognized as an
adjustment to interest expense over the life of the agreement.

New Accounting Standards:In June 1998, the FASB issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This standard
is effective for financial statements for fiscal quarters of fiscal years
beginning after June 15, 2000. The Company will be required to adopt SFAS No.
133 effective January 1, 2001. SFAS No. 133 standardizes the accounting for
derivative instruments by requiring that all entities recognize them as assets
and liabilities in the balance sheet and subsequently measure them at fair
market value. It also prescribes specific accounting principles to be applied
to hedging activities and hedging transactions which are significantly
different from prior accounting principles. The Company has not yet determined
the impact of SFAS No. 133.

Utilization of Estimates: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.

Reclassifications:Certain prior year information has been reclassified
to conform with the current year presentation.

3. Affiliated Entity:

During the first quarter of 1997 the Company participated in the creation
of a title insurance agency, Alliance Title Agency, that began operating on
April 1, 1997. The title insurance agency was formed to provide title
insurance to the Companys customers and third parties and to facilitate the
closing of the Companys homes. The Company owns 49.9% of the title insurance
agency and reports its investment using the equity method of accounting. The
Company recognized $454,000, $532,000 and $242,000 as its share of the earnings
from this investment for 1999, 1998 and nine months of 1997, respectively. The
Companys investment in the title insurance company was $159,998 and $170,279
at December 31, 1999 and 1998, respectively, and is included in other assets in
the accompanying balance sheets.

4. Earnings Per Share:

A reconciliation of weighted average common shares used in basic and
diluted earnings per share calculations are as follows:

|                                  |  |      |           |      |  |      |           |  |  |  |           | 
|--------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  |  | --------- | 
|                                  |  | 1999 |           | 1998 |  | 1997
|                                  |  |      |           |      |  |     
|Weighted average shares  basic   |  |      | 6,318,148 |      |  |      | 6,275,388 |  |  |  | 6,250,918 | 
|                                 
|                                 
|                                 
|                                 
|Common share equivalents          |  |      | 177,648   |      |  |      | 311,364   |  |  |  | 180,007   | 
|                                  |  |      |           |      |  |      |           |  |  |  |           | 
|Weighted average shares  diluted |  |      | 6,495,796 |      |  |      | 6,586,752 |  |  |  | 6,430,925 | 
|                                  |  |      |           |      |  |      |           |  |  |  |           | 

As of December 31, 1999, 1998 and 1997 there were 129,000, 109,500 and
zero options, respectively, which were antidilutive and have been excluded from
the respective diluted earnings per share calculations above.

34



---



5. Land Purchase Commitments:

Purchase contracts for residential lots and unimproved land at December
31, 1999 and 1998 are:

|                              |  |      |            |      |  |   |           |  
|----------------------------- |  | ---- | ---------- | ---- |  | - | --------- | -
|                              |  | 1999 |            | 1998
|                              |  |      |            |     
|Number of expected lots       |  |      | 88         |      |  |   | 341       |  
|                              |  |      |            |      |  |   |           |  
|Purchase price                |  | $    | 3,691,000  |      |  | $ | 7,886,000 |  
|                             
|                             
|                             
|                             
|Less deposits or guarantees   |  |      | (1,164,000 | )    |  |   | (309,000  | )
|                              |  |      |            |      |  |   |           |  
|Net land purchase commitments |  | $    | 2,527,000  |      |  | $ | 7,577,000 |  
|                              |  |      |            |      |  |   |           |  

The above commitments include the Central Ohio and Louisville, Kentucky
markets.

In addition, at December 31, 1999, the Company had entered into cancelable
contracts to purchase residential lots and unimproved land in both Central Ohio
and Louisville, Kentucky. Obligations under cancelable contracts are as
follows:

|           |  |            |            | 
|---------- |  | ---------- | ---------- | 
|           |  | Cancelable
|Year       |  | Contracts 
|           |  |           
|2000       |  | $          | 30,205,000 | 
|          
|          
|          
|          
|2001       |  |            | 23,038,000 | 
|          
|          
|          
|          
|2002       |  |            | 12,835,000 | 
|          
|          
|          
|          
|2003       |  |            | 3,110,000  | 
|          
|          
|          
|          
|Thereafter |  |            | 3,590,000  | 
|           |  |            |            | 
|           |  | $          | 72,778,000 | 
|           |  |            |            | 

35



---



6. Land Development Joint Ventures

The Company has equity interests ranging from 33% to 50% in joint venture
partnerships and limited liability corporations that are engaged in land
development activities. The Company accounts for these investments using the
equity method. The
Companys investment in joint ventures, which is included in land and
land development costs, was $14,703,000 and $9,376,000 at December 31, 1999 and
1998, respectively. Summary financial information representing 100% of operations
as of December 31, 1999 and 1998, are set forth below:

|                                       |  |      |            |      |  |   |            | 
|-------------------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | 
|                                       |  | 1999 |            | 1998
|                                       |  |      |            |     
|Land and land under development        |  | $    | 36,790,656 |      |  | $ | 23,841,008 | 
|                                      
|                                      
|                                      
|                                      
|Other assets                           |  |      | 458,950    |      |  |   | 752,436    | 
|                                       |  |      |            |      |  |   |            | 
|Total assets                           |  | $    | 37,249,606 |      |  | $ | 24,593,444 | 
|                                       |  |      |            |      |  |   |            | 
|Other liabilities                      |  | $    | 1,483,285  |      |  | $ | 2,888,456  | 
|                                       |  |      |            |      |  |   |            | 
|Total Liabilities                      |  |      | 1,483,285  |      |  |   | 2,888,456  | 
|                                       |  |      |            |      |  |   |            | 
|Partners equity                       |  |      | 35,766,321 |      |  |   | 21,704,988 | 
|                                       |  |      |            |      |  |   |            | 
|Total liabilities and partners equity |  | $    | 37,249,606 |      |  | $ | 24,593,444 | 
|                                       |  |      |            |      |  |   |            | 

|              |  |      |          |      |  |      |        |  |  |   |        | 
|------------- |  | ---- | -------- | ---- |  | ---- | ------ |  |  | - | ------ | 
|              |  | 1999 |          | 1998 |  | 1997
|              |  |      |          |      |  |     
|Revenues      |  | $    |          |      |  | $    | 19,879 |  |  | $ | 41,102 | 
|             
|             
|             
|             
|Expenses      |  |      | 120,966  |      |  |      | 16,809 |  |  |   | 37,806 | 
|              |  |      |          |      |  |      |        |  |  |   |        | 
|(Loss) income |  | $    | (120,966 | )    |  | $    | 3,070  |  |  | $ | 3,296  | 
|              |  |      |          |      |  |      |        |  |  |   |        | 

7. Note Payable, Banks:

On May 29, 1998 the Company entered into a Senior Unsecured Revolving
Credit Facility (the Facility) on which interest is payable monthly and that
matures on May 31, 2003. The Facility provides that aggregate borrowings and
letters of credit will not exceed the lesser of $125 million or the
availability under a borrowing base. The Facility was amended by a First
Consent Agreement August 9, 1999 to increase to $2.5 million from $500,000, the
amount of Common Shares the Company is allowed to redeem or purchase in the
aggregate through December 31, 2001. The First Consent Agreement was
incorporated into a First Amendment to the Credit Agreement along with several
other amendments to the Facility September 3, 1999. A Second Consent and
Modification to the Facility was entered into on December 30, 1999, permitting
the Company to contribute and transfer certain assets of the Companys division
operating in the metropolitan Louisville, Kentucky area to a new wholly owned
subsidiary, Dominion Homes of Kentucky Ltd. This subsidiary is a Kentucky
limited partnership and is permitted to incur indebtedness to the Company,
provided such indebtedness meets all other Facility restrictions.

The Facility contains the following provisions: (1) the Company has the
option to use any combination of the following methods to price the revolving
line of credit: (a) the banks prime rate of interest that may be adjusted
based upon the Companys ratio of EBITDA to Interest Expense (Interest
Coverage Ratio); or (b) a Eurodollar rate of interest plus a variable margin
based upon the Companys Interest Coverage Ratio; (2) the Company has agreed to
enter into interest rate contracts in the amount of fifty percent of the
outstanding

36



---



borrowings in the event the Eurodollar rate (without regard to the
variable margin) becomes 8.50% per annum or greater; (3) the Company has agreed
to the following ratios: (a) Interest Coverage Ratio of not less than 2.25 to
1.00 determined quarterly and based upon the preceding four quarters; (b) total
liabilities to tangible net worth of not greater than 2.50 to 1.00 through
December 31, 2001 and 2.25 to 1.00 from and after January 1, 2002; (4) the
Company has agreed to maintain at all times a ratio of uncommitted land
holdings to tangible net worth not greater than 2.00 to 1.00 through December
31, 2001 and not greater than 1.75 to 1.00 thereafter; (5) the Company shall
not, without lender approval, exceed the aggregate sum of $25 million for
investments in uncommitted land holdings, speculative homes, model homes and
acquisitions of companies in the homebuilding industry outside of Central Ohio
or metropolitan Louisville, Kentucky, except that the Company may not invest
more than $15 million of such amount in one or more start-up operations that
are not associated with an ongoing business acquisition or more than $20
million in the metropolitan Louisville, Kentucky area; (6) the Company must
maintain a tangible net worth of not less than $45 million plus seventy-five
percent of net income beginning with the fiscal year ending December 31, 1999;
(7) the Company shall not exceed the aggregate principal sum of $10 million for
other borrowings, additional debt or capital lease obligations, except that the
Company may borrow an additional $5 million of non-recourse indebtedness from
sellers of real estate, provided that such additional non-recourse borrowings
are fully reserved under the borrowing base; (8) the Company shall not exceed
$2 million of operating lease rentals and $1 million of model home rentals; (9)
the Company shall not purchase, without required lender approval, unzoned land
in excess of $2.5 million; (10) the Company will not permit the value of its
inventory homes to exceed $10.0 million and its model homes to exceed $6.5
million; (11) the Company may not incur a loss during any five consecutive
quarters; and (12) the Company may not pay dividends during any calendar year
in excess of twenty-five percent of the Companys net income after taxes for
such year.

Note payable, banks consisted of $92,308,000 and $60,415,000 as of
December 31, 1999 and 1998, respectively due under the Facility.

As of December 31, 1999 and 1998 the Company was in compliance with
Facility covenants and had 16.2 million and $9.2 million, respectively,
available under the Facility, after adjustment for borrowing base limitations.
However, the borrowing availability under the Facility could increase,
depending on the Companys utilization of the proceeds.

The Company has entered into interest rate swap contracts that fix the
interest rate on $30 million of borrowings under the Facility. The interest
rate swap contracts mature between October 16, 2000 and May 6, 2003 and fix
interest rates between 5.48% and 6.13%, plus a variable margin based on the
Companys Interest Coverage Ratio. The variable margin may range from 1.75% to
2.50% and is determined quarterly. Since the inception of the Facility the
variable margin has been 1.75%. The fair value of the interest rate swap
contracts was $378,000 and $(620,000) at December 31, 1999 and 1998,
respectively.

The Company had a combined $16.7 million in irrevocable letters of credit
and performance bonds outstanding at December 31, 1999. The letters of credit
and performance bonds were issued to municipalities and other individuals to
secure performance and completion of certain land development activities and as
collateral for land purchase commitments. The Company does not anticipate
incurring any liabilities with respect to the letters of credit and performance
bonds.

37



---



Information regarding the bank borrowings is summarized as follows:

|                                                     |  |      |            |      |  |      |            |   |  |   |            |  
|---------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                     |  | 1999 |            | 1998 |  | 1997
|                                                     |  |      |            |      |  |     
|Borrowings outstanding:                             
|                                                    
|                                                    
|                                                    
|                                                    
|Maximum amount                                       |  | $    | 95,865,000 |      |  | $    | 62,791,000 |   |  | $ | 70,814,000 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Average amount                                       |  | $    | 82,270,000 |      |  | $    | 56,049,000 |   |  | $ | 57,450,000 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Weighted average daily
interest rate
during the year |  |      | 7.5        | %    |  |      | 7.7        | % |  |   | 8.9        | %
|                                                    
|                                                    
|                                                    
|                                                    
|Interest rate at December 31                         |  |      | 8.0        | %    |  |      | 7.4        | % |  |   | 8.1        | %

8. Term Debt:

Term debt consisted of the following as of December 31:

|                                                                           |  |      |           |      |  |   |           | 
|-------------------------------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | 
|                                                                           |  | 1999 |           | 1998
|8.0% Mortgage note payable due in installments
through February 2000       |  | $    | 360,000   |      |  | $ | 561,000   | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|6.5% Mortgage note payable due in installments
through August 2001         |  |      | 2,425,000 |      |  |   | 2,425,000 | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Capital lease obligations due in installments
through March 2004           |  |      | 1,965,000 |      |  |   | 1,190,000 | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Prime rate mortgage notes payable due in installments
through January 1999 |  |      |           |      |  | $ | 285,000   | 
|                                                                           |  |      |           |      |  |   |           | 
|Total term debt                                                            |  | $    | 4,750,000 |      |  | $ | 4,461,000 | 
|                                                                           |  |      |           |      |  |   |           | 

Aggregate maturities of term debt in years subsequent to December 31, 1999
are as follows:

|                                   |  |      |           |               |  |       |           |   |  |   |           |  
|---------------------------------- |  | ---- | --------- | ------------- |  | ----- | --------- | - |  | - | --------- | -
|                                   |  | Term
|                                   |  | Debt |           | Capital Lease |  | Total
|                                   |  |      |           |               |  |      
|2000                               |  | $    | 1,573,000 |               |  | $     | 542,000   |   |  | $ | 2,115,000 |  
|                                  
|                                  
|                                  
|                                  
|2001                               |  |      | 1,212,000 |               |  |       | 542,000   |   |  |   | 1,754,000 |  
|                                  
|                                  
|                                  
|                                  
|2002                               |  |      |           |               |  |       | 542,000   |   |  |   | 542,000   |  
|                                  
|                                  
|                                  
|                                  
|2003                               |  |      |           |               |  |       | 542,000   |   |  |   | 542,000   |  
|                                  
|                                  
|                                  
|                                  
|2004                               |  |      |           |               |  |       | 159,000   |   |  |   | 159,000   |  
|                                   |  |      |           |               |  |       |           |   |  |   |           |  
|                                   |  |      | 2,785,000 |               |  |       | 2,327,000 |   |  |   | 5,112,000 |  
|                                  
|                                  
|                                  
|                                  
|Less amounts
representing
interest |  |      |           |               |  |       | (362,000  | ) |  |   | (362,000  | )
|                                   |  |      |           |               |  |       |           |   |  |   |           |  
|                                   |  | $    | 2,785,000 |               |  | $     | 1,965,000 |   |  | $ | 4,750,000 |  
|                                   |  |      |           |               |  |       |           |   |  |   |           |  

38



---



9. Income Taxes:

The provision for income taxes consists of the following for the years
ended December 31, 1999, 1998
and 1997.

|                   |                 |   |           |           |      |   |           |           |  |   |           |           |  
|------------------ | --------------- | - | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | -
|                   |                 |   | 1999      |           | 1998 |   | 1997     
|                   |                 |   |           |           |      |   |          
|Currently payable:
|                  
|                  
|                  
|                  
|                   | Federal         |   | $         | 4,142,000 |      |   | $         | 5,212,000 |  |   | $         | 5,061,000 |  
|                  
|                  
|                  
|                  
|                   | State and local |   |           | 1,202,000 |      |   |           | 1,408,000 |  |   |           | 1,348,000 |  
|                   |                 |   |           |           |      |   |           |           |  |   |           |          
|                   |                 |   | 5,344,000 |           |      |   | 6,620,000 |           |  |   | 6,409,000 |          
|                  
|                  
|                  
|                  
|Deferred:         
|                  
|                  
|                  
|                  
|                   | Federal         |   |           | 25,000    |      |   |           | 276,000   |  |   |           | (737,000  | )
|                  
|                  
|                  
|                  
|                   | State           |   |           | 91,000    |      |   |           | 46,000    |  |   |           | (103,000  | )
|                   |                 |   |           |           |      |   |           |           |  |   |           |          
|                   |                 |   | 116,000   |           |      |   | 322,000   |           |  |   | (840,000  | )        
|                   |                 |   |           |           |      |   |           |           |  |   |           |          
|Income tax expense |                 | $ | 5,460,000 |           |      | $ | 6,942,000 |           |  | $ | 5,569,000 |          
|                   |                 |   |           |           |      |   |           |           |  |   |           |          

The components of the net deferred tax asset at December 31 are as
follows:

|                                                           |                        |                                |           |           |           |      |           |           |           | 
|---------------------------------------------------------- | ---------------------- | ------------------------------ | --------- | --------- | --------- | ---- | --------- | --------- | --------- | 
|                                                           |                        |                                |           | 1999      |           | 1998
|                                                           |                        |                                |           |           |           |     
|Assets:                                                   
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Accrued expenses       |                                | $         | 1,737,000 |           |      | $         | 1,574,000 |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Deferred gain          |                                |           | 281,000   |           |      |           | 295,000   |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Valuation reserves     |                                |           |           |           |      |           | 15,000    |          
|                                                           |                        |                                |           |           |           |      |           |          
|                                                           |                        | Gross deferred tax assets      |           | $         | 2,018,000 |      |           |           | 1,884,000 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Liabilities:                                              
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Property and equipment |                                |           | 56,000    |           |      |           | 38,000    |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other                  |                                |           | 58,000    |           |      |           | 58,000    |          
|                                                           |                        |                                |           |           |           |      |           |          
|                                                           |                        | Gross deferred tax liabilities |           |           | 114,000   |      |           |           | 96,000    | 
|                                                          
|                                                          
|                                                          
|                                                          
|Net deferred income taxes
as recorded on the balance sheet |                        | $                              | 1,904,000 |           |           | $    | 1,788,000 |          
|                                                           |                        |                                |           |           |           |      |           |          

A reconciliation of the federal corporate income tax rate and the
effective tax rate on income taxes is summarized below for the years ended
December 31, 1999, 1998 and 1997:

|                                              |                           |  |      |      |      |  |      |      |   |  |      |      |  
|--------------------------------------------- | ------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                              |                           |  | 1999 |      | 1998 |  | 1997
|                                              |                           |  |      |      |      |  |     
|Statutory income tax rate                     |                           |  | 34.0 | %    |      |  | 34.3 | %    |   |  | 34.0 | %   
|                                             
|                                             
|                                             
|                                             
|Permanent differences                         |                           |  | .6   | %    |      |  | .4   | %    |   |  | .5   | %   
|                                             
|                                             
|                                             
|                                             
|State and local taxes, net
of federal benefit |                           |  | 5.9  | %    |      |  | 6.1  | %    |   |  | 6.7  | %   
|                                             
|                                             
|                                             
|                                             
|Other                                         |                           |  |      |      |      |  | 1.1  | %    |   |  | .8   | %   
|                                              |                           |  |      |      |      |  |      |      |   |  |      |     
|                                              | Effective income tax rate |  |      | 40.5 | %    |  |      | 41.9 | % |  |      | 42.0 | %
|                                              |                           |  |      |      |      |  |      |      |   |  |      |     

39



---



10. Operating Lease Commitments:

Rent expense charged to operations is primarily for model homes, vehicles,
equipment and office facilities, including month-to-month leases and
noncancelable commitments. Rent expense amounted to $2,177,000, $2,011,000 and
$1,128,000 for the years ended December 31, 1999, 1998 and 1997, respectively.
(See also Note 11  Related Party Transactions.)

Minimum rental commitments due under noncancelable leases are as follows:

|     |  |         |           | 
|---- |  | ------- | --------- | 
|     |  | Minimum
|Year |  | Rentals
|     |  |        
|2000 |  | $       | 1,550,000 | 
|    
|    
|    
|    
|2001 |  |         | 1,254,000 | 
|    
|    
|    
|    
|2002 |  |         | 836,000   | 
|    
|    
|    
|    
|2003 |  |         | 614,000   | 
|    
|    
|    
|    
|2004 |  |         | 505,000   | 
|     |  |         |           | 
|     |  | $       | 4,759,000 | 
|     |  |         |           | 

11. Related Party Transactions:

The Company leases its corporate offices from BRC. The lease was
effective January 1, 1998 for a term of twelve years with a rental rate of
$12.00 per square foot on a total net basis. The lease contains two options to
renew for periods of five years each at then-current market rates. The rental
rates were established by an MAI appraiser commissioned by the Affiliated
Transaction Review Committee of the Companys Board of Directors, and confirmed
in a review by a second MAI appraiser. Lease expense was $451,000 for each of
the years ended December 31, 1999 and 1998.

The Company and BRC have also entered into an operating lease agreement
under which the Company leases space in a shopping center from BRC. Lease
expense for the years ended December 31, 1999, 1998, and 1997 was $70,000,
$62,000 and $70,000, respectively.

The Company purchased finished lots, pursuant to a Land Option Agreement,
in certain communities which were developed by BRC and other homebuilders under
various joint venture agreements. Such purchases totaled $1,281,000 and
$4,789,000 for the years ended December 31, 1998 and 1997, respectively. The
Company exercised its last option to purchase lots from BRC during 1998.

Under the Model Home Lease Agreement, dated January 20, 1994, effective
with the initial public offering, the Company leased model homes from BRC.
Lease expense for the years ended December 31, 1998 and 1997 was $3,000 and
$39,000, respectively. The Model Home Lease Agreement ended in March 1998.

BRC paid the Company $25,000, $25,000, and $21,400 in 1999, 1998 and 1997,
respectively, for miscellaneous services performed by Company personnel.

The Company provides land development and management services to certain
joint ventures in which one of the partners in the joint venture is BRC. Fees
charged for the years ended December 31, 1998 and 1997 were $97,000 and
$174,000, respectively. There were no such services provided to BRC in 1999.

40



---



The Company acquired printing services from a printing company principally
owned by members of the Borror family. Such services aggregated $80,000,
$225,000 and $189,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.

12. Retirement Plan:

Through December 31, 1998, the Company maintained a defined contribution
plan which provided a base Company contribution of 2% of a qualified employees
compensation and a Company matching contribution of one-quarter of the
employees voluntary deferral not to exceed 1.5%. Effective January 1, 1999
the Company amended the Plan to eliminate the base Company contribution of 2%
and changed the matching of employees voluntary deferrals to 100% of the first
3% of compensation deferred and 50% of the next 2% of compensation deferred.
Substantially all employees are covered by the plan after one year of service.
The Companys contribution to the plan amounted to $454,000, $447,000 and
$334,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

13. Incentive Stock and Executive Deferred Compensation Plans:

In March 1994, the Company adopted the Dominion Homes, Inc. Incentive
Stock Plan (the Plan). The Plan is administered by the Compensation
Committee of the Board of Directors, and provides for grants of performance
awards of Common Shares, restricted Common Shares, incentive stock options and
non-qualified options for the purpose of attracting, motivating and retaining
key employees and eligible directors. A maximum of 850,000 Common Shares have
been reserved for issuance under the Plan. The Plan provides that grants shall
include certain terms and conditions and be subject to certain restrictions as
provided for under applicable provisions of the Internal Revenue Code and
federal securities laws. In general, grants of options are subject to vesting
schedules at twenty percent a year, set forth an exercise price that is equal
to the fair market value on the grant date (110% of the fair market value for
10% shareholders), and must be exercised within ten years of the grant date (5
years for 10% shareholders).

In December 1994, the Company adopted a non-qualified Executive Deferred
Compensation Plan for directors and certain executives. Under this plan,
participants may elect to defer a portion of their compensation (up to 20% of
total base and bonus for employees and 100% of director fees). At December 31
of each year, the Company provides a matching contribution of 25% of the amount
deferred in a given year by a participant, provided that the Companys matching
contribution will not exceed $2,500 in any year. The Companys contribution
vests in 20% increments over a five-year period. As originally adopted,
contributions were to be converted into theoretical common shares and adjusted
in future periods based on the market value of the Common Shares, similar to
stock appreciation rights. On October 29, 1997, the Board of Directors
approved an Amended and Restated Executive Deferred Compensation Plan under
which contribution and match amounts are used by the trustee to acquire Common
Shares of the Company in the open market. These Common Shares are held and
voted by the trustee pursuant to a rabbi trust agreement.

41



---



The Company applies APB Opinion 25 and related Interpretations in
accounting for its plans. The Company recognized expense for the Executive
Deferred Compensation Plan of $41,000, $48,000 and $468,000 for the plan years
ended December 31, 1999, 1998 and 1997, respectively. No compensation cost has
been recognized for its Incentive Stock Plan. Had compensation cost for the
Companys Incentive Stock Plan been determined based on the fair value of
awards at the grant dates, the Companys net income and earnings per share
would have been reduced to the pro forma amounts indicated below:

|                                                               |  |             |  |      |           |      |  |      |           |  |  |   |           | 
|-------------------------------------------------------------- |  | ----------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                               |  |             |  | 1999 |           | 1998 |  | 1997
|                                                               |  |             |  |      |           |      |  |     
|Net income                                                     |  | Pro forma   |  | $    | 7,791,000 |      |  | $    | 9,467,000 |  |  | $ | 7,619,000 | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | As Reported |  | $    | 8,018,000 |      |  | $    | 9,611,000 |  |  | $ | 7,705,000 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Diluted earnings per share                                     |  | Pro forma   |  | $    | 1.20      |      |  | $    | 1.44      |  |  | $ | 1.18      | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  | As Reported |  | $    | 1.23      |      |  | $    | 1.46      |  |  | $ | 1.20      | 
|                                                              
|                                                              
|                                                              
|                                                              
|Weighted-average fair value
of options granted during
the year |  |             |  | $    | 3.90      |      |  | $    | 7.79      |  |  | $ | 1.94      | 

In determining the pro forma amount of stock-based compensation, the fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: no dividend yield; expected volatility of 80.0%, 50.0%, and 27.0%
for 1999, 1998 and 1997, respectively; risk-free interest rates of 5.5%, 5.5%,
and 6.4% for the 1999, 1998 and 1997 Plan options, respectively; and expected
life of 6 years for the Plan options.

A summary of the status of the Companys Incentive Stock Plan as of
December 31, 1999, 1998 and 1997, respectively, and changes during the years
then ended is presented below:

|                                   |  |        |         |       |  |          |      |       |  |        |         |          |  |   |       |  |  |          |         |   |  |   |      | 
|---------------------------------- |  | ------ | ------- | ----- |  | -------- | ---- | ----- |  | ------ | ------- | -------- |  | - | ----- |  |  | -------- | ------- | - |  | - | ---- | 
|                                   |  | 1999   |         | 1998  |  | 1997    
|                                   |  |        |         |       |  |         
|                                   |  |        |         |       |  | Weighted |      |       |  |        |         | Weighted |  |   |       |  |  | Weighted
|                                   |  |        |         |       |  | Average  |      |       |  |        |         | Average  |  |   |       |  |  | Average 
|                                   |  |        |         |       |  | Exercise |      |       |  |        |         | Exercise |  |   |       |  |  | Exercise
|Fixed Options Price                |  | Shares |         | Price |  | Shares   |      | Price |  | Shares |         | Price   
|                                   |  |        |         |       |  |          |      |       |  |        |         |         
|Outstanding at beginning of
year   |  |        | 583,100 |       |  | $        | 5.89 |       |  |        | 490,500 |          |  | $ | 3.95  |  |  |          | 428,500 |   |  | $ | 3.77 | 
|                                  
|                                  
|                                  
|                                  
|Granted                            |  |        | 67,500  |       |  | $        | 7.04 |       |  |        | 113,500 |          |  | $ | 14.24 |  |  |          | 85,000  |   |  | $ | 4.75 | 
|                                  
|                                  
|                                  
|                                  
|Forfeited                          |  |        | (43,000 | )     |  | $        | 5.93 |       |  |        | (13,500 | )        |  | $ | 5.29  |  |  |          | (11,000 | ) |  | $ | 3.36 | 
|                                  
|                                  
|                                  
|                                  
|Exercised                          |  |        | (74,000 | )     |  | $        | 3.83 |       |  |        | (7,400  | )        |  | $ | 6.73  |  |  |          | (12,000 | ) |  | $ | 3.92 | 
|                                   |  |        |         |       |  |          |      |       |  |        |         |         
|Outstanding at end of year         |  |        | 533,600 |       |  | $        | 6.32 |       |  |        | 583,100 |          |  | $ | 5.89  |  |  |          | 490,500 |   |  | $ | 3.95 | 
|                                   |  |        |         |       |  |          |      |       |  |        |         |          |  |   |       |  |  |          |         |  
|Options exercisable at end
of
year |  |        | 332,280 |       |  | $        | 5.31 |       |  |        | 289,560 |          |  | $ | 4.67  |  |  |          | 177,200 |   |  | $ | 3.89 | 
|                                   |  |        |         |       |  |          |      |       |  |        |         |          |  |   |       |  |  |          |         |  

42



---



The following table summarizes information about fixed stock options
outstanding at December 31, 1999:

|       |  |                 |                |             |  |                   |         |             |  |          |         |  |  |  |         | 
|------ |  | --------------- | -------------- | ----------- |  | ----------------- | ------- | ----------- |  | -------- | ------- |  |  |  | ------- | 
|       |  |                 |                |             |  |                   |         |             |  | Weighted
|Year   |  | Range of        |                | Number      |  | Average Remaining |         | Number     
|Issued |  | Exercise Prices |                | Outstanding |  | Contractual Life  |         | Exercisable
|       |  |                 |                |             |  |                   |         |            
|1995   |  | $               | 3.88 - $4.50   |             |  |                   | 132,600 |             |  |          | 5 Years |  |  |  | 106,080 | 
|      
|      
|      
|      
|1996   |  | $               | 3.25 - $4.13   |             |  |                   | 164,500 |             |  |          | 6 Years |  |  |  | 131,600 | 
|      
|      
|      
|      
|1997   |  | $               | 4.75           |             |  |                   | 67,500  |             |  |          | 7 Years |  |  |  | 40,500  | 
|      
|      
|      
|      
|1998   |  | $               | 12.69 - $14.50 |             |  |                   | 101,500 |             |  |          | 8 Years |  |  |  | 40,600  | 
|      
|      
|      
|      
|1999   |  | $               | 5.66 - $6.00   |             |  |                   | 30,000  |             |  |          | 9 Years |  |  |  | 6,000   | 
|      
|      
|      
|      
|1999   |  | $               | 7.50 - $8.50   |             |  |                   | 37,500  |             |  |          | 9 Years |  |  |  | 7,500   | 
|       |  |                 |                |             |  |                   |         |             |  |          |         |  |  |  |         | 
|       |  |                 |                |             |  |                   | 533,600 |             |  |          |         |  |  |  | 332,280 | 
|       |  |                 |                |             |  |                   |         |             |  |          |         |  |  |  |         | 

14. Commitments and Contingencies:

The Company is involved in various legal proceedings, most of which arise
in the ordinary course of business and some of which are covered by insurance.
In the opinion of the Companys management, none of the claims relating to such
proceedings will have a material adverse effect on the financial condition or
results of operations of the Company.

15. Quarterly Financial Data (Unaudited)
(in thousands except per share amounts)

|                            |      |  |               |        |         |  |              |        |             |  |   |        |  |  |   |        | 
|--------------------------- | ---- |  | ------------- | ------ | ------- |  | ------------ | ------ | ----------- |  | - | ------ |  |  | - | ------ | 
|                            |      |  | Quarter Ended
|                            |      |  | March 31      |        | June 30 |  | September 30 |        | December 31
|                            |      |  |               |        |         |  |              |        |            
|Revenues:                  
|                           
|                           
|                           
|                           
|                            | 1999 |  | $             | 52,774 |         |  | $            | 72,795 |             |  | $ | 73,067 |  |  | $ | 78,941 | 
|                           
|                           
|                           
|                           
|                            | 1998 |  | $             | 54,458 |         |  | $            | 68,031 |             |  | $ | 67,769 |  |  | $ | 74,679 | 
|                           
|                           
|                           
|                           
|Gross profit:              
|                           
|                           
|                           
|                           
|                            | 1999 |  | $             | 9,988  |         |  | $            | 13,463 |             |  | $ | 14,215 |  |  | $ | 15,437 | 
|                           
|                           
|                           
|                           
|                            | 1998 |  | $             | 10,970 |         |  | $            | 13,001 |             |  | $ | 12,509 |  |  | $ | 13,350 | 
|                           
|                           
|                           
|                           
|Income before income taxes:
|                           
|                           
|                           
|                           
|                            | 1999 |  | $             | 1,252  |         |  | $            | 3,215  |             |  | $ | 4,544  |  |  | $ | 4,467  | 
|                           
|                           
|                           
|                           
|                            | 1998 |  | $             | 3,457  |         |  | $            | 4,619  |             |  | $ | 4,416  |  |  | $ | 4,061  | 
|                           
|                           
|                           
|                           
|Net income:                
|                           
|                           
|                           
|                           
|                            | 1999 |  | $             | 723    |         |  | $            | 1,868  |             |  | $ | 2,683  |  |  | $ | 2,744  | 
|                           
|                           
|                           
|                           
|                            | 1998 |  | $             | 2,005  |         |  | $            | 2,679  |             |  | $ | 2,561  |  |  | $ | 2,366  | 
|                           
|                           
|                           
|                           
|Diluted earnings per share:
|                           
|                           
|                           
|                           
|                            | 1999 |  | $             | 0.11   |         |  | $            | 0.29   |             |  | $ | 0.42   |  |  | $ | 0.41   | 
|                           
|                           
|                           
|                           
|                            | 1998 |  | $             | 0.30   |         |  | $            | 0.41   |             |  | $ | 0.39   |  |  | $ | 0.36   | 

43



---



Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

44



---



PART III

Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

In accordance with General Instruction G(3), the information contained
under the captions BOARD OF DIRECTORS AND MANAGEMENT and SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE in the Companys definitive Proxy
Statement for the Annual Meeting of Shareholders to be held on April 26, 2000,
to be filed with the Securities and Exchange Commission pursuant to Regulation
14A promulgated under the Securities Exchange Act of 1934, is incorporated
herein by reference.

Item 11 EXECUTIVE COMPENSATION

In accordance with General Instruction G(3), the information contained
under the captions COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS in the
Companys definitive Proxy Statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A promulgated under the Securities
Exchange Act of 1934, is incorporated herein by reference. Neither the report
of the Compensation Committee of the Companys Board of Directors on executive
compensation nor the share price performance graph included in the Companys
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
April 26, 2000, shall be deemed to be incorporated herein by reference.

Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

In accordance with General Instruction G(3), the information contained
under the caption SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT in the Companys definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on April 26, 2000, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A promulgated under the
Securities Exchange Act of 1934, is incorporated herein by reference.

Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In accordance with General Instruction G(3), the information contained
under the caption CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS in the
Companys definitive Proxy Statement for the Annual Meeting of Shareholders to
be held on April 26, 2000, to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A promulgated under the Securities Exchange
Act of 1934, is incorporated herein by reference.

45



---



PART IV

Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

|       |  |  |  |  |  |                                                                                                                                                                                                                                                                                                                                                               
|------ |  |  |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)(1) |  |  |  |  |  | Financial Statements.                                                                                                                                                                                                                                                                                                                                         
|      
|       |  |  |  |  |  | The consolidated financial statements filed as part of this Annual
Report on Form 10-K are the balance sheets of the Registrant as of
December 31, 1999 and 1998, and the related statements of operations,
changes in shareholders equity and cash flows for each of the three
years in the period ended December 31, 1999, together with the notes
thereto.
|      
|(a)(2) |  |  |  |  |  | Financial Statement Schedules.                                                                                                                                                                                                                                                                                                                                
|      
|       |  |  |  |  |  | There are no financial statement schedules required to be filed with
this Annual Report on Form 10-K.                                                                                                                                                                                                                                                         
|      
|(a)(3) |  |  |  |  |  | Exhibits.                                                                                                                                                                                                                                                                                                                                                     
|      
|       |  |  |  |  |  | Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see Index to Exhibits.                                                                                                                                                                                                                                
|      
|(b)    |  |  |  |  |  | Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                          
|      
|       |  |  |  |  |  | No reports on Form 8-K were filed by the Company in 1999.                                                                                                                                                                                                                                                                                                     
|      
|(c)    |  |  |  |  |  | Exhibits.                                                                                                                                                                                                                                                                                                                                                     
|      
|       |  |  |  |  |  | Exhibits filed with this Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see Index to Exhibits.                                                                                                                                                                                                                                
|      
|(d)    |  |  |  |  |  | Financial Statement Schedules.                                                                                                                                                                                                                                                                                                                                
|      
|       |  |  |  |  |  | There are no financial statement schedules required to be filed with
this Annual Report on Form 10-K.                                                                                                                                                                                                                                                         

46



---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

|                     |  |                                     
|-------------------- |  | ------------------------------------
|Date: March 16, 2000 |  | Dominion Homes, Inc.                
|                    
|                     |  | /s/ Douglas G. Borror               
|                    
|                    
|                    
|                    
|                     |  | By Douglas G. Borror,               
|                    
|                    
|                    
|                    
|                     |  | Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                      |  |                                         |  |                |  | 
|--------------------- |  | --------------------------------------- |  | -------------- |  | 
|Signature             |  | Capacities                              |  | Date          
|                     
|/s/ Donald A. Borror  |  | Director                                |  | March 16, 2000
|Donald A. Borror     
|                     
|/s/ Douglas G. Borror |  | Principal Executive Officer & Director  |  | March 16, 2000
|Douglas G. Borror     |  |                                        
|                     
|/s/ Jon M. Donnell    |  | Principal Operations Officer & Director |  | March 16, 2000
|Jon M. Donnell        |  |                                        
|                     
|/s/ Peter J. OHanlon |  | Principal Financial Officer             |  | March 16, 2000
|Peter J. OHanlon    
|                     
|/s/ Tad E. Lugibihl   |  | Principal Accounting Officer            |  | March 16, 2000
|Tad E. Lugibihl      
|                     
|/s/ David S. Borror   |  | Director                                |  | March 16, 2000
|David S. Borror      
|                     
|/s/ Pete A. Klisares  |  | Director                                |  | March 16, 2000
|Pete A. Klisares     
|                     
|/s/ Gerald E. Mayo    |  | Director                                |  | March 16, 2000
|Gerald E. Mayo       
|                     
|/s/ C. Ronald Tilley  |  | Director                                |  | March 16, 2000
|C. Ronald Tilley     

47



---



INDEX TO EXHIBITS

|            |  |                                                                                                                             |  |                                                                                                                                                                                                                    
|----------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                 |  | Location                                                                                                                                                                                                           
|           
|2.1         |  | Corporate Exchange and Subscription Agreement, dated January 20,
1994, between Borror Corporation and Borror Realty Company |  | Incorporated by reference to
Exhibit 2.1 to the Companys
Registration Statement on Form S-1
(File No. 33-74298) as filed with the
Commission on January 21, 1994 and as
amended on March 2, 1994 (The Form
S-1).
|           
|2.2         |  | Form of First Amendment to Corporate Exchange and Subscription
Agreement                                                    |  | Incorporated by reference to
Exhibit 2.2 to Form S-1.                                                                                                                                                              
|           
|3.1         |  | Amended and Restated Articles of Incorporation of Dominion Homes,
Inc., as amended May 7, 1997                              |  | Incorporated by reference to
Exhibit 4(a)(3) to the Companys
Registration Statement on Form S-8
(File No. 333-26817) as filed with the
Commission on May 9, 1997.                                                 
|           
|3.2         |  | Amended and Restated Code of Regulations of Borror Corporation                                                              |  | Incorporated by reference to
Exhibit 3.2 to Form S-1.                                                                                                                                                              
|           
|4.          |  | Specimen of Stock Certificate of Dominion Homes, Inc.                                                                       |  | Incorporated by reference to Exhibit 4
to the Companys March 31, 1997 Form
10-Q (File No. 0-23270).                                                                                                               
|           
|10.1        |  | Dominion Homes, Inc. Incentive Stock Plan, as amended December 5,
1995 and May 7, 1997                                      |  | Incorporated by reference to
Exhibit 4(c) to the Companys
Registration Statement on Form S-8
(File No. 333-26817) as filed with the
Commission on May 9, 1997.                                                    
|           
|10.2        |  | Shareholder Agreement, dated January 20, 1994, between Borror
Corporation and Borror Realty Company                         |  | Incorporated by reference to Exhibit
10.4 to Form S-1.                                                                                                                                                             

1



---



|       |  |                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------
|      
|10.7   |  | Decorating Center Lease Agreement, dated January 4, 1994, between
Borror Corporation and Borror Realty Company, as amended by
addendum No. 1, effective July 1, 1994                                                                                                                                                                       |  | Incorporated by reference to
Exhibit 10.12 to the Companys
December 31, 1994 Form 10-K (File No.
0-23270).     
|      
|10.8*  |  | Incentive Stock Option Agreement, dated January 4, 1995, between
Borror Corporation and Richard R. Buechler (which agreement is
substantially the same as Incentive Stock Option Agreements
entered into between the Company and other employees to whom
options were granted on January 4, 1995 under the Companys
Incentive Stock Plan) |  | Incorporated by reference to
Exhibit 10.18 to the Companys
December 31, 1995 Form 10-K(File No.
0-23270).      
|      
|10.9*  |  | Incentive Stock Option Agreement, dated July 1, 1997, between
Dominion Homes, Inc. and Richard R. Buechler (which agreement is
substantially the same as Incentive Stock Option Agreements
entered into between the Company and other employees to whom
options were granted on July 1, 1997 under the Companys Incentive
Stock Plan)     |  | Incorporated by reference to Exhibit
10.15 to the Companys September 30,
1997 Form 10-Q10-K (File No. 0-23270).
|      
|10.10* |  | Stock Option Agreement, dated May 21, 1998, between Dominion
Homes, Inc. and Pete A. Klisares (which agreement is substantially
the same as Stock Option Agreements entered into between the
Company and its other outside, independent directors, Gerald Mayo
and C. Ronald Tilley)                                                       |  | Incorporated by reference to Exhibit
10.22 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).         
|      
|10.11* |  | Stock Option Agreement, dated June 1, 1998, between Dominion
Homes, Inc. and Peter J. OHanlon                                                                                                                                                                                                                                             |  | Incorporated by reference to Exhibit
10.26 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).         
|      
|10.12* |  | Incentive Stock Option Agreement, dated July 1, 1998, between
Dominion Homes, Inc. and Jon M. Donnell                                                                                                                                                                                                                                      |  | Incorporated by reference to Exhibit
10.28 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).         
|      
|10.13* |  | Restricted Stock Agreement, dated August 1, 1995, between Borror
Corporation and Jon M. Donnell                                                                                                                                                                                                                                            |  | Incorporated by reference to Exhibit
10.19 to the Companys December 31,
1995 Form 10-K (File No.0-23270).      

2



---



|       |  |                                                                                                              |  |                                                                                                                                                                      
|------ |  | ------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14* |  | Restricted Stock Agreement, dated November 6, 1996, between Borror
Corporation and Jon M. Donnell            |  | Incorporated by reference to Exhibit
10.30 to the Companys December 31,
1996 Form 10-K (File No. 0-23270).                                                          
|      
|10.15* |  | Restricted Stock Agreement, dated August 1, 1997, between Dominion
Homes, Inc., and Jon M. Donnell           |  | Incorporated by reference to
Exhibit 10.24 to the Companys
September 30, 1997 Form 10-Q (File No.
0-23270).                                                         
|      
|10.16* |  | Restricted Stock Agreement, dated June 1, 1998, between Dominion
Homes, Inc. and Peter J. OHanlon           |  | Incorporated by reference to
Exhibit 10.25 to the Companys June
30, 1998 Form 10-Q (File No. 0-23270).                                                              
|      
|10.17* |  | Restricted Stock Agreement, dated August 1, 1998, between Dominion
Homes, Inc. and Jon M. Donnell            |  | Incorporated by reference to
Exhibit 10.27 to the Companys June
30, 1998 Form 10-Q (File No. 0-23270).                                                              
|      
|10.18* |  | Employment Agreement dated May 17, 1996, between Borror
Corporation and Jon M. Donnell                       |  | Incorporated by reference to
Exhibit 10.22 to the Companys
September 30, 1996 Form 10-Q (File No.
0-23270).                                                         
|      
|10.20* |  | Employment Agreement dated May 17, 1996, between Dominion Homes,
Inc. and Robert A. Meyer, Jr.               |  | Incorporated by reference to
Exhibit 10.13 to the Companys
December 31, 1997 Form 10-K (File No.
0-23270).                                                          
|      
|10.21* |  | Employment Agreement dated June 1, 1998, between Dominion Homes,
Inc. and Peter J. OHanlon                  |  | Incorporated by reference to
Exhibit 10.24 to the Companys June
30, 1998 Form 10-Q (File No. 0-23270).                                                              
|      
|10.22* |  | Amended and Restated Dominion Homes, Inc. Executive Deferred
Compensation Plan, effective November 15, 1997. |  | Incorporated by reference to Exhibit
4(a) to the Companys Registration
Statement on Form S-8 (File No.
333-40051) as filed with the
Commission on November 12, 1997.

3



---



|       |  |                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                            
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------
|10.23* |  | Amendment to Dominion Homes, Inc. Amended and Restated Executive
Deferred Compensation Plan, dated July 29, 1998.                                                                                                                                                                                                                                              |  | Incorporated by reference to Exhibit
10.30 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).    
|      
|10.24* |  | Amendment to Dominion Homes, Inc. Incentive stock Option Plan,
dated July 29, 1998                                                                                                                                                                                                                                                                             |  | Incorporated by reference to Exhibit
10.29 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).    
|      
|10.25  |  | Loan Agreement, dated May 29, 1998, among Dominion Homes, Inc.,
Huntington Capital Corp. as syndicating agent, Huntington National
Bank as Administrative and Issuing Agent and the lenders listed
therein.                                                                                                                                                    |  | Incorporated by reference to Exhibit
10.23 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).    
|      
|10.26  |  | First Amendment to Lease Agreement, dated March 19, 1996, between
Borror Realty Company and Borror Corporation                                                                                                                                                                                                                                                 |  | Incorporated by reference to Exhibit
10.21 to the Companys March 31, 1995
Form 10-Q (File No. 0-23270).   
|      
|10.27  |  | Lease dated December 29, 1997 as amended by Addendum dated
February 2, 1998, between Borror Realty Company and Dominion
Homes, Inc.                                                                                                                                                                                                                            |  | Incorporated by reference to
Exhibit 10.21 to the Companys
December 31, 1997 Form 10-K (File No.
0-23270).
|      
|10.28  |  | Office Sublease Agreement dated July 31, 1998, between Dominion
Homes, Inc. and Alliance Title Agency, Ltd.                                                                                                                                                                                                                                                    |  | Incorporated by reference to Exhibit
10.31 to the Companys June 30, 1998
Form 10-Q (File No. 0-23270).    
|      
|10.29* |  | Split Dollar Life Insurance Agreement dated July 11, 1999 between
Dominion Homes, Inc. and Douglas G. Borror (which agreement is
substantially the same as Split Dollar Life Insurance Agreements
entered into between the Company and other executive officers of
the Company except for life insurance values for which a
supplemental schedule is attached) |  | Incorporated by reference to
Exhibit 10.1 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).     

4



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|       |  |                                                                                                                                                                                                                                                                                    |  |                                                                                                           
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------
|      
|10.30* |  | Stock Option Agreement dated April 29, 1999 between Dominion
Homes, Inc. and Pete A. Klisares (which agreement is the same as
Stock Option Agreements entered into between the Company and its
other outside, independent directors, Gerald E. Mayo and C. Ronald
Tilley)          |  | Incorporated by reference to
Exhibit 10.2 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.31  |  | Assignment and Assumption of Lease dated June 24, 1999 by and
among Rommy K. Chung, Dominion Homes, Inc. and BRC Properties Inc.
(formerly The Borror Corporation)                                                                                                                 |  | Incorporated by reference to
Exhibit 10.3 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.32  |  | Lease dated March 1, 1994 between The Borror Corporation and Rommy
K. Chung                                                                                                                                                                                                        |  | Incorporated by reference to
Exhibit 10.4 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.33  |  | Assignment and Assumption of Lease dated June 24, 1999 by and
among Dao Q. Nguyen, Dominion Homes, Inc., and BRC Properties Inc.
(formerly Borror Realty Company)                                                                                                                  |  | Incorporated by reference to
Exhibit 10.5 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.34  |  | Lease dated November 12, 1997 between Borror Realty Company and
Thomas M. Nguyen and assigned on October 2, 1998 to Dao Q. Nguyen                                                                                                                                                  |  | Incorporated by reference to
Exhibit 10.6 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.35  |  | First Consent Agreement dated August 9, 1999 amending the Loan
Agreement dated May 29, 1998, among Dominion Homes, Inc.,
Huntington Capital Corp. as Syndicating Agent, Huntington National
Bank as Administrative and Issuing Agent and the Lenders listed
therein                |  | Incorporated by reference to
Exhibit 10.7 to the Companys June 30,
1999 Form 10-Q (File No. 0-23270).    
|      
|10.36  |  | First Amendment to Credit Agreement dated September 3, 1999
amending the Loan Agreement dated May 29, 1998, among Dominion
Homes, Inc., Huntington Capital Corp. as Syndicating Agent,
Huntington National Bank as Administrative and Issuing Agent and
the Lenders listed therein |  | Incorporated by reference to Exhibit
10.8 to the Companys September 30,
1999 Form 10-Q (File No.0-23270).

5



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|      |  |                                                                                                                                                                                                                                                     |  |                                                                                                             
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------
|     
|10.37 |  | Lease dated September 29, 1999 between BRC Properties Inc. and
Dominion Homes, Inc.                                                                                                                                                                 |  | Incorporated by reference to Exhibit
10.9 to the Companys September 30,
1999 Form 10-Q (File No. 0-23270). 
|     
|10.38 |  | Agreement For Services dated November 5, 1999 between Homebuilders
Financial Network, Inc. and Dominion Homes, Inc.                                                                                                                                 |  | Incorporated by reference to Exhibit
10.10 to the Companys September 30,
1999 Form 10-Q (File No. 0-23270).
|     
|10.39 |  | Second Consent and Modification to Credit Agreement dated December
30, 1999 among Dominion Homes, Inc., Huntington Capital Corp. as
Syndicating Agent, Huntington National Bank as Administrative and
Issuing Agent and the Lenders listed therein. |  | Filed herewith.                                                                                             
|     
|10.40 |  | Lease dated February 21, 2000 between BRC Properties Inc. and
Dominion Homes                                                                                                                                                                        |  | Filed herewith.                                                                                             
|     
|21    |  | Subsidiaries                                                                                                                                                                                                                                        |  | Filed herewith.                                                                                             
|     
|23    |  | Consent of PricewaterhouseCoopers LLP Independent Public
Accountants                                                                                                                                                                                |  | Filed herewith.                                                                                             
|     
|27    |  | Financial Data Schedule                                                                                                                                                                                                                             |  | Filed herewith.                                                                                             



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|* |  | Indicates management contracts, compensatory plans or other arrangements.
|- |  | -------------------------------------------------------------------------

6