SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
____________________ FORM 10-K (Mark One) x      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year
ended March 31, 2001 OR o      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition
period from                    to Commission File
No.  0-20614  THE ROTTLUND COMPANY, INC.(Exact
name of registrant as specified in its charter) Minnesota
  41-1228259(State or other jurisdiction ofincorporation
  or organization)
  (I.R.S. 
  Employer Identification No.) 3065 Centre Pointe Road
Roseville, Minnesota 55113(Address of principal executive offices) (Zip Code) Registrants
telephone number, including area code: 
(651) 638-0500 Securities
registered pursuant to Section 12(b) of the Act:  None Securities
registered pursuant to Section 12(g) of the Act:  Common Stock, par value $.10 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, and (2) has been subject to such filing requirements for
the past 90 days.  YesxNo ̈ 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 The aggregate
market value of voting stock held by nonaffiliates of the registrant as of June
5, 2001 was approximately $7,907,966. As of June 5,
2001, there were 5,851,572 shares of Common Stock of the registrant issued and
outstanding. Documents
Incorporated By Reference Certain
portions of the documents listed below have been incorporated by reference into
the indicated part of this Form 10-K. Document Incorporated
  Part of Form 10-KProxy
  Statement for 2001 Annual Meeting of Shareholders
  Part III
 
 
 FORM10-K INDEX

PART IItem 1.
  BUSINESSItem 2.
  PROPERTIESItem 3.
  LEGAL PROCEEDINGSItem 4.
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERS DURING FOURTH QUARTER OF FISCAL YEARPART IIItem 5.
  MARKET FOR
REGISTRANTS COMMON STOCK AND
  RELATED STOCKHOLDER MATTERSItem 6.
  SELECTED FINANCIAL DATA AND STATISTICAL
  COMPARISONItem 7.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF
  RESULTS OF OPERATIONS AND FINANCIAL CONDITIONItem 7A.
  QUANTITATIVE AND QUALITATIVE DISCLOSURES
  ABOUT MARKET RISKItem 8.
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAItem 9.
  CHANGES IN
AND DISAGREEMENTS WITH
  ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESPART IIIItem 10.
  DIRECTORS AND EXECUTIVE OFFICERS OF THE
  REGISTRANTItem 11.
  EXECUTIVE COMPENSATIONItem 12.
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
  OWNERS AND MANAGEMENTItem 13.
  CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONSPART IVItem 14.
  EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND
  REPORTS ON FORM 8–K

PART I

Item 1.BUSINESS

General

The Rottlund
Company, Inc. (Rottlund or the Company), through its subsidiaries, designs,
builds and markets attached and detached townhomes and condominiums, and
detached single family homes in the metropolitan areas of Minneapolis-St. Paul,
Minnesota; Des Moines, Iowa; southern New Jersey; and Tampa, Florida.

Rottlund was
organized under the laws of the State of Minnesota in 1973, and until 1993, all
of the Companys developments were located in the Minneapolis-St. Paul market
where Rottlund has maintained the largest market share of any builder in nine
of the last ten years.  Nationally,
Rottlund ranks as the ninth largest attached, for sale, homebuilder and has
been ranked among the top 100 homebuilders since 1991.  During the year ended March 31, 1994, the
Company began home building operations in Des Moines, Iowa; during the year
ended March 31, 1995, the Company began home building operations in Tampa,
Florida; and during the year ended March 31, 1996, the Company acquired certain
assets and assumed certain liabilities of Kevin Scarborough, Inc., a
residential homebuilder operating in southern New Jersey.  During the year ended March 31, 2001, the
Company exited the Indianapolis, Indiana market, which it had first entered in
fiscal 1995.  All references to the
Company contained herein, unless the context indicates otherwise, include its
wholly owned subsidiaries Rottlund Homes of Iowa, Inc., Rottlund Homes of
Florida, Inc., Rottlund Homes of Indiana, Inc., Rottlund Homes of New Jersey,
Inc., and Rottlund Homes of Indiana Limited Partnership.

As of March
31, 2001, the Company owned or controlled through options over 3,900 home sites
in communities under development, and land for the development of over 2,200
additional planned home sites in proposed communities.

The
Companys homes are sold primarily through its own staff of sales
personnel.  The Company markets its
homes to a wide range of buyers, emphasizing high quality construction and
customer satisfaction.  Its promotional
efforts include advertisements in newspapers and other printed media, radio and
television, illustrated brochures, billboards, on-site displays and model
homes.  Purchasers of the Companys
homes are given the opportunity to select, at additional cost, various optional
amenities such as upgraded carpet, fireplaces, varied exterior color schemes,
lighting and upgraded appliances.  The
Company offers a diverse product line ranging from townhomes to single-family
homes at prices generally ranging from $90,000 to $450,000.  The average price of the Companys homes
delivered in fiscal 2001 was approximately $187,000.

The Company
has focused on the implementation of a Product Leadership Strategy, as
reflected by the diversity of its product offerings.  This strategy has been paramount in its quest to maintain its No.
1 market leadership position in the Minneapolis-St. Paul market.  Management believes that the Companys
Product Leadership Strategy has also provided a competitive advantage in its
other markets.  Rottlunds Product
Leadership Strategy emphasizes the Companys design capabilities, enabling it
to offer quality homes at all price levels at which the Company competes.  The Company markets its homes to a wide
range of buyers including entry level, first and second time move-up, active
adults and retirees.  Furthermore,
management believes the Company has been particularly effective marketing to
the growing number of non-traditional families, such as singles and single parent
households.  Product offerings such as
attached villas and townhomes have been designed with specific amenities to
fill the needs of these unique market niches while maintaining affordability.

The Company
in its Minneapolis-St. Paul market builds under the name David Bernard Builders
and Developers (David Bernard), as well as Rottlund Homes.  The David Bernard brand has been developed
to focus on in-fill redevelopment opportunities which exist in the downtown
metropolitan areas and fully developed suburbs.  Product offerings by David Bernard are typically site specific in
architectural design and are marketed at a higher price range than Rottlund
Homes.



Operating Strategy

Set forth
below are the major elements of the Companys operating strategy:

Markets. 
The Minneapolis-St. Paul metropolitan area has been the Companys
primary market and has accounted for the majority of revenues since the
Companys inception.  The Company has
built and delivered more homes in this market over the last five years than any
other homebuilder.  The Companys
management believes that its marketing strategy of establishing itself as a
name brand builder in the Minneapolis-St. Paul market has helped the Company to
achieve its success.  The Company
presently accounts for approximately 4.5% of all new homes sold in this market.
The Company intends to increase its share of the Minneapolis-St. Paul market
and expand its operations in the Des Moines, Iowa and Tampa, Florida
markets.  In 1997, the Company began
marketing certain communities in Minneapolis-St. Paul under the David Bernard
name.  The marketing strategy is to have
a point of differentiation for higher-end communities.

Products. 
The Company markets its homes to a wide range of buyers, including entry
level, move-up and retirees. 
Accordingly, the Company offers a number of home styles and price ranges
at various locations.  The Companys
product offerings include villas, townhomes and detached single-family
homes.  Sales prices presently range
from approximately $90,000 to $450,000, and the average sales price of homes
being delivered during fiscal 2001 was approximately $187,000.  Management believes the Companys ability
and willingness to build homes in accordance with homebuyers requirements
enables the Company to continue to grow. 
Management further believes that the Companys long-standing strategy of
product diversification enables it to respond rapidly to changing market
conditions and the cyclical nature of the home-building industry.

Cost Control. 
The Company controls the cost of construction through the efficient
design of its homes and favorable pricing from subcontractors due to the high
volume of work performed for the Company. 
Rottlund uses an industry-specific management information system to control
construction costs.  This system allows
the Company to monitor subcontractor performance and expenditures for each home
built.  All subcontracted work is
authorized through the generation of purchase orders, which are approved for
payment by the Companys on-site construction supervisors upon completion of
work.  Any additional costs require
authorization through the issuance of variance purchase orders, which require
reporting of the reason for the variance and measures taken to eliminate
further variances.  This strategy
permits the Company to monitor gross margins on each individual home from the
time a purchase agreement is signed through the building process to
closing.  The Company requires all
subcontractors to perform all home construction and site improvement work on a
fixed price basis.  In addition,
management continually monitors selling, general and administrative expenses in
an effort to control overhead and improve efficiency.

Inventory Management.  Two of the major risks in the home-building
industry are excessive home site inventory and inventory of completed
homes.  The Company attempts to reduce
its vulnerability to these risks by (i) acquiring control of improved home
sites through option contracts that allow the Company to build homes with
relatively minimal initial capital expenditures and limited risks, (ii)
acquiring land for development with seller financing, (iii) acquiring land
through purchase agreements on a nonrecourse basis that enables the Company to
obtain necessary governmental approvals before the acquisition of the land
(generally, the down payment on a land purchase or option agreement will be
returned to the Company if all approvals are not obtained, although
pre-development costs may not be recoverable), (iv) beginning construction of a
single-family home only after execution of a sales contract, receipt of
satisfactory earnest money and, where applicable, a tentative mortgage
approval, and (v) controlling the number of finished homes held in inventory.

Land
Acquisition and Development

The Company
generally follows a policy of acquiring options to purchase land for future
community developments.  The Company
attempts to acquire land with minimum cash investment and the maximum degree of
purchase money financing that the Company is able to obtain from sellers.  The purchase money financing and purchase
agreements are generally on a nonrecourse basis, thereby limiting the Companys
financial exposure to the amounts invested in property and predevelopment
costs.  This policy may raise the cost
of land the Company acquires, but it also significantly reduces risk to the
Company.  Furthermore, this policy
allows the Company to obtain necessary development approvals prior to
acquisition of land.

The
Companys land purchase agreements are typically subject to numerous conditions
including, but not limited to, the Companys ability to obtain necessary zoning
and other governmental approvals for the proposed development.  The Company believes it has been successful
in obtaining local governmental approvals through proactive interaction with
neighborhood and citizen groups.  The
Company maintains a policy of holding neighborhood meetings to gain support for
its development activities.  During the
initial municipal approval process, the Company confirms the availability of
utilities, conducts environmental reviews, arranges acquisition development and
financing, and completes its marketing construction feasibility studies.  As a result, the Company is generally able
to begin marketing immediately after closing the land purchase.  This results in reduced carrying costs and
increased liquidity for future development opportunities.

To minimize
the business risk associated with developing land and to maximize the use of
the Companys available capital, the Company has been able to acquire a
substantial amount of its developments and lots by means of option
contracts.  Option contracts generally
require the payment of a cash deposit or issuance of a letter of credit for the
right to acquire lots during a specified period of time at a certain
price.  The Companys option contracts
have expiration periods ranging from 30 to 60 months.  As of March 31, 2001, the Company had option contracts for
approximately 1,500 lots aggregating $56,500,000 in purchase price.

Under option
contracts with specific performance obligations, the Company is generally
required to purchase specific numbers of lots on fixed dates pursuant to an
established schedule.  Under such option
contracts with specific performance obligations, the party granting the option
is required to maintain and/or develop the property pursuant to certain
standards specified in the contract. 
Such parties are required to deliver lots which are free of any liens
and are appropriate for residential building pursuant to a specified schedule.  If the Company fails to purchase the
required number of lots on the date fixed for purchase pursuant to such option
contracts and the party granting the option has fulfilled its obligations under
the contract, the party granting the option generally has the right to
terminate the option granted pursuant to the option contract and retain the
option deposit.  If the party granting
the option fails to meet its obligations under such option contracts, the Company
generally may, at its option, delay the purchase of the required number of lots
under the option, complete any improvements not completed by the party granting
the option and offset any costs incurred against the option purchase price, or
cancel the option and receive a refund of all option deposits paid.

Under option
contracts without specific performance obligations, the Companys liability is
limited to forfeiture of deposits, which aggregated approximately $5 million at
March 31, 2001 and are included in other assets on the Companys balance sheet.

AVAILABLE HOME SITE INVENTORY (ALL CITIES)

The
following table sets forth information with respect to the Companys available
lot inventory (including lot options) by state as of March 31, 2001.



Market
  Total
  Available
  Homes Under Construction
  Unsold Sites Available
  for Future
  ConstructionSold (1)
  Models
  Inventory (2)Minnesota
  2,437
  358
  13
  97
  1,969Florida
  615
  83
  6
  81
  445Iowa
  492
  60
  7
  52
  373New Jersey
  369
  45
  -
  27
  297Total
  3,913
  546
  26
  257
  3,084______________________

(1)
  Under contract and under construction but
  not yet closed.(2)
  Inventory consists of unsold homes that are
  completed or in various stages of construction.Although the Company does not purchase land for speculation, the
Company has purchased and will continue to purchase land with the intent of
selling home sites within developments to other builders.  Additionally, the Company has attempted to
manage the risk of home building in particular areas through cooperation with
other builders by building in the same subdivision.  This arrangement provides for diversity in the types of homes in
the Companys communities and the advantages of joint marketing.

Rottlund
strives to maintain a supply of developed home sites to meet anticipated
homebuilding requirements for not more than 24 months.  As of March 31, 2001 the Company had an
aggregate of 3,084 home sites available for future construction, including home
sites owned or under option.  The
Company believes there is an adequate supply of undeveloped land in all
metropolitan areas where it conducts business to maintain adequate home site
inventories.

Detached
single family homes sold by the Company are marketed to move-up and entry-level
buyers.  Move-up homes are sold in the
$170,000 to $300,000 price range, while entry level homes are sold in the
$120,000 to $160,000 price range.  The
Company offers detached single family homes in a variety of floor plans and
exterior styles with two, three and four bedrooms, two or more bathrooms and a
two-car attached garage.

The Company
also offers attached product lines that offer a variety of floor plans and
provide for certain options. 
Entry-level townhomes are sold in the $90,000 to $150,000 price range,
and the balance of townhome sales are sold in the $150,000 to $450,000 price
range.  The Company believes that the
fastest growing segments of the home buying market are single persons and
couples without children.  The Company
has adopted a strategy to capture these segments by developing expertise in the
design, marketing, financing and construction of alternative or attached
housing types that appeal to these segments.

Contracts
for the sale of homes are at fixed retail prices.  The offered prices of homes have generally increased from time to
time during the sellout period for each community and in response to cost
increases; however, there can be no assurance that sales prices will increase
in the future.

All of the
attached home communities are governed by a homeowners association (the
Association).  The Company, acting as
declarant, is responsible generally for the management of the Association until
75% of the homes within the Association are closed.

The
Companys line of homes is designed to promote efficient use of space and
materials to minimize construction costs and time, thereby maximizing the value
of the homes in the marketplace.  The
Company is continually developing new home designs to replace or augment
existing home designs in an effort to assure that the Companys homes are
responsive to current consumer preferences and are unique in the
marketplace.  In order to respond to
consumer preferences, the Company analyzes information gathered from buyer
profiles and demographic databases. 
With new designs, the Company engages a number of unaffiliated
architectural firms, in addition to its in-house architectural staff.  The Company copyrights all home designs.

The Company
expends considerable effort in developing a design and marketing concept for
each of its communities.  This includes
determination of product line, layout of streets, layout of individual home
sites or structures and overall community design.  The communities have attractive entrances with distinctive
signage and landscaping.  The Company
recognizes the importance of the sense of neighborhood and strives to create
this feeling within its communities to preserve and enhance the investment of
its homebuyers.

Construction

Rottlund
acts as the general contractor for the construction of its residential
communities.  The Companys construction
supervisors monitor the construction of each home, participate in design and
building decisions, coordinate the activities of subcontractors and suppliers,
maintain quality and cost controls and monitor compliance with zoning and
building codes.

The Company
maintains a strategy of subcontracting all home construction on a fixed cost
basis.  The Company believes this
strategy limits its financial exposure during downturns in the housing market.  All subcontracted work is authorized by
purchase orders that require approval for payment by the construction
supervisor upon completion.  Any
additional costs require authorization through the issuance of variance
purchase orders.  All variances require
reporting of the reason therefor, and measures taken to eliminate further
variances.

The Company
typically retains subcontractors for a specific time period or project pursuant
to a contract that obligates the subcontractor to complete its duties at a
fixed price.  Contracts with the
Companys subcontractors and material suppliers are entered into after
competitive bidding during predetermined time periods or on a project by
project basis.

The
construction of detached single family homes is generally tied to homebuyer
sales contracts to minimize the costs and risks of completed but unsold
inventory.

Construction
time for each home is tied to a construction schedule established for each of
the Companys home types.  Variances
from the schedule are infrequent but may occur due to weather conditions or availability
of labor, materials and supplies.  The
Companys line of homes is designed to promote efficient use of space and
materials to minimize construction costs and time.  The Companys construction schedules are typically from three to
six months.

Personnel at
the Companys corporate headquarters are responsible for architectural design,
home site planning, and accounting and closing, among other
responsibilities.  The Companys
management information system is designed to monitor the progress of each home
built by the Company, from acceptance of a sales contract to delivery of a
completed home to the buyer.  At any
time after contract acceptance, the Company can provide the homebuyer with the
construction status of its home and the anticipated delivery date.

The Company
historically has maintained its construction schedule throughout the entire
year, despite seasonal climate changes in the Minneapolis-St.Paul and Des Moines metropolitan areas.Additional winter construction charges
are incurred, in connection with propane heating costs, frost ripping charges,
utility construction charges and special footing designs.  Further, the Company is required, at
closing, to put into escrow amounts to cover items that cannot be installed in
the winter, including driveways, sidewalks and air conditioning.

Marketing
and Sales

In
Minnesota, New Jersey and Florida, the Company sells its homes through
commissioned employees who work from sales offices in model homes or sales
trailers located in each Rottlund community. 
In addition, the Company cooperates with outside independent brokers on
approximately one third of all of its sales. 
The Company utilizes independent realtors for home sales in Iowa.  In all instances, Company sales employees
assist prospective buyers through the home buying process by providing
information on the Companys line of homes, pricing, options and upgrades,
mortgage financing, warranties and construction, as well as information
regarding the Company itself.  The
Company provides a Home Buyers Guide to all prospective customers.  The Home Buyers Guide highlights the steps
involved in buying a new home in an effort to accurately set the expectations
of the Companys customers.  Sales
personnel are trained by the Company and attend periodic meetings where they
are updated on current financing plans, construction schedules and marketing
and advertising plans.

Rottlund has
adopted a strategy of becoming a name brand builder in its markets.  In addition, in 1997, the Company began
marketing certain communities under the David Bernard name.  The marketing strategy is to have a point of
differentiation for higher-end communities. 
In fiscal 2001, approximately, 11% of the revenue of homes sold in
Minneapolis-St. Paul were in David Bernard communities.  Rottlund also advertises through newspaper,
radio, television and a billboard campaign. 
The Company also has an Internet site, www.Rottlundhomes.com, where
prospective customers can view the Companys home offerings.  In its expansion into new markets, the
Company will, over time, attempt to utilize this same strategy of advertising
to increase customer awareness of the Companys products.  In order to respond to consumer preferences,
the Company relies upon its internal marketing department to analyze
information that is gathered from buyer profiles, focus groups, exit interviews
at model sites, telephone surveys, and demographic data bases.  The Companys comprehensive marketing
program also includes direct mail, participation in home tour events and use of
fully merchandised model homes. 
Management believes model homes play an important role in demonstrating
the functional use of space in the Companys homes and allowing prospective
buyers to experience the emotional aspects of the home buying process.  The Company attempts to create attractive
model homes and chooses interior merchandising for each type of home based upon
the lifestyles of targeted customers.

The Company
builds a portion of its homes under the guidelines and specifications of the
Federal Housing Administration (FHA) and the Veterans Administration (VA),
thereby providing eligible prospective buyers the added benefit of the
availability of FHA/VA-insured mortgages. 
The Company may also from time to time help its customers secure below
market interest rates by contributing points to buy-down the existing mortgage
rates.

Customer
Financing

In fiscal
2001, the Company entered into a joint venture agreement with Firstar National
Account Services, LLC to provide customer financing in the Minneapolis-St. Paul
market.  The joint venture company,
which is 60% owned by Rottlund, is named Firstar Advantage, LLC.  Firstar Advantage, LLC provides mortgage
origination services only, and does not retain or service the mortgages that it
originates.  These mortgages are
generally funded by Firstar Bank, N.A. 
Firstar Advantage, LLC can provide qualified homebuyers with numerous
financing options, including a wide variety of conventional, FHA and VA
financing programs.  In markets outside
of Minneapolis-St. Paul, the Company will seek to assist the Companys
homebuyers in obtaining financing from outside mortgage lenders.  Because substantially, all homebuyers
utilize long-term mortgage financing to purchase a home, adverse economic
conditions, increases in unemployment and high mortgage interest rates may
deter and eliminate a substantial number of potential homebuyers from the
Companys markets in the future.

Customer
Service and Quality Control

Rottlund is
committed to providing a high level of customer service as an important
component of its competitive strategy. 
The Company, through its on-site team of a sales representative and
construction supervisor, maintains personalized contact with its customers.

The
Companys construction supervisors follow an inspection process on each home
the Company builds.  This process is
designed to ensure that each home meets or exceeds the Companys performance
standards for its homes.

Upon
completion of construction of each home, and prior to closing, an employee of
the Companys Customer Care Department conducts a quality control inspection of
the completed home.  From this
inspection, the contract builder creates a list that sets forth those areas
that do not meet the Company's performance standards, and therefore, require
correction.  Also prior to closing, the
Customer Care Department accompanies the buyer on a customer orientation of his
or her home to demonstrate the proper use and care of the home, including the
mechanical equipment and other components of the home.  At the customer orientation, the buyer is
also familiarized with the service warranty process following closing on the
home.

The
Companys Customer Care Department handles all service and warranty requests
following the closing of each home. 
Management believes the participation of Customer Care Department
personnel both prior to and after closing reduces post-closing service costs,
fosters the Companys reputation for service, and ultimately leads to the
building of a referral base of business. 
To improve the Companys processes the Company surveys all buyers 60
days following closing.  This survey
provides the Company with invaluable information regarding the various
functional areas of the Company and its processes including sales, construction,
mortgage applications, closing and customer orientation.

The Company
provides all homeowners with a one-year comprehensive warranty and a two-year
warranty on all mechanical systems, and further provides, from an unaffiliated
insurance company, a ten to fifteen year structural warranty.

Competition and Market Factors

The
development and sale of residential properties is highly competitive and
fragmented.  The Company competes with a
number of national home builders and numerous local builders on the basis of a
number of interrelated factors, including: location, product design, perceived
value, price and reputation in the marketplace.  The Companys homes must also compete with resale of existing
homes and available rental housing. 
Management believes Rottlunds primary competitive advantages are based
upon the following strengths:  (i)
product innovation, (ii) offering homes with the highest perceived value, (iii)
product diversification, enabling the Company to offer homes to all segments of
the population, (iv) marketing programs that have established Rottlund as a
name brand builder in its markets, (v) the location of its communities, and
(vi) its reputation for superior customer service and quality.

Rottlund
maintains a strong position in its markets due in part to product
innovation.  The Companys ability to
respond to the changing needs of homebuyers has allowed continued growth
despite declining demand for previously popular products.  The Company continuously examines its
markets to determine whether housing needs for certain segments of the
population are being met, and attempts to respond by designing and building
homes to meet such needs if they are not being met.  Management believes this is one of the primary reasons for its
long-term success.  The Companys years
of experience provide it with expertise in the area of design, construction and
financing in the home building industry. 
The Company believes that this experience is especially important in the
attached home market, which is subject to stricter regulation than the detached
home market.

The housing
industry is cyclical and is affected by consumer confidence levels, prevailing
economic conditions and interest rate levels. 
Other factors affecting the industry include increases in construction
costs; increases in costs associated with home ownership, such as property
taxes, changes in consumer preferences and demographic trends.  The Company believes that its experience
provides a sound understanding of the nature of the industry, and therefore, it
is able to base its strategic planning on such cyclical conditions.

Employees

As of March
31, 2001, the Company employed 233 persons, 45 as on-site sales personnel, 65
involved in construction, 26 as customer care personnel, 21 as product
development personnel and 76 as executive, administrative and clerical
personnel.  The Companys employees are
not covered by a collective bargaining agreement and the Company believes it
has good relationships with its employees.

Governmental
Regulation

The
Companys business is subject to regulation by a variety of local, state and
federal laws and regulations relating to, among other things, advertising,
charging, collection of state sales and use taxes, zoning and product safety.  While the Company believes it is presently
in material compliance with such regulations, in the event that it should be
determined that the Company is not in compliance with all such laws and
regulations, the Company could become subject to cease and desist orders, injunctive
proceedings, civil fines and other penalties.

Item 2.PROPERTIES

The
Companys principal offices are located at 3065 Centre Pointe Road, Roseville,
Minnesota 55113.  The offices total
10,000 square feet, and are leased from an unrelated party through March 31,
2006, at a base annual rent of $127,000. 
The Company also leases office space in New Jersey, Iowa and
Florida.  The Company also leases
various computer equipment and office furniture.

Item 3.LEGAL PROCEEDINGS

The Company
is not currently a party to any material pending legal proceedings.  From time to time the Company may become
involved in routine litigation incidental to its business.

Item 4.

  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERS DURING FOURTH QUARTER OF FISCAL YEAR

There were
no matters submitted to a vote of the Companys shareholders during the
three-month period ended March 31, 2001.

PART II

Item 5.

  MARKET FOR REGISTRANTS COMMON STOCK AND
  RELATED STOCKHOLDER MATTERS

The
Companys common stock is listed on the American Stock Exchange (AMEX) under
the symbol RH.

The following table sets forth the range of high and low sale
prices for the Companys common stock for each of the fiscal quarters of the
two years ended March 31, 2001 and 2000.

Stock Quotations

High
  LowFiscal year 2001First
  quarter
  $3.438
  $2.250Second
  quarter
  $3.500
  $2.750Third
  quarter
  $5.875
  $3.375Fourth quarter
  $6.750
  $5.400Fiscal year 2000First quarter
  $5.750
  $3.750Second quarter
  $4.938
  $2.625Third quarter
  $3.375
  $2.375Fourth quarter
  $3.250
  $2.313

As of June
5, 2001, the Company had approximately 158 holders of record of its common
stock.

The transfer
agent for the Companys common stock is Wells Fargo Bank Minnesota, N.A.
Shareowner Services, 161 North Concord Exchange, South St. Paul, Minnesota
55075-0738, telephone: (651) 450-4064.

Dividends

The Company
has not paid any dividends on its common stock since its initial public
offering in October 1992 and expects that for the foreseeable future it will
follow a policy of retaining earnings in order to finance the continued
development of its business.  Payment of
dividends is within the discretion of the Companys Board of Directors and will
depend upon the earnings, capital requirements and operating and financial
condition of the Company, among other factors. 
In addition, the terms of the Companys revolving credit line contain
restrictions on the ability of the Company to pay dividends.  The Company has not made any sales of
restricted stock during the previous three fiscal years.

Item 6.SELECTED FINANCIAL DATA
AND STATISTICAL COMPARISON

The
following table sets forth selected financial data with respect to the Company
for the periods indicated.  This
information should be read in conjunction with the Financial Statements and
related notes appearing elsewhere herein and Managements Discussion and
Analysis of Results of Operations and Financial Conditions.  The Companys Statement of Operations and
Balance Sheet data as of and for each of the years set forth below have been
derived from financial statements that have been audited by Arthur Andersen
LLP, independent public accountants.



2001
  2000
  1999
  1998
  1997(In thousands, except per share amounts and
  unit data)Statement of Operations Data:Net sales
  $260,374
  $260,834
  $252,675
  $160,830
  $180,457Cost of sales
  215,793
  222,488
  215,074
  139,284
  156,332Gross profit
  44,581
  38,346
  37,601
  21,546
  24,125Selling, general and administrative expenses
  28,581
  26,409
  26,112
  20,541
  19,569Impairment of land value (1)
  1,050
  ---
  ---
  ---
  1,500Operating income
  15,150
  11,937
  11,489
  1,005
  3,056Interest expense
  1,151
  2,685
  2, 714
  2,018
  958Income (loss) before provision (benefit) for income taxes and
  extraordinary charge
  13,999
  9,252
  8,775
  (1,013)
  2,098Provision (benefit) for income taxes
  5,601
  3,793
  3,598
  (415)
  862Net income (loss) before extraordinary charge
  8,398
  5,459
  5,177
  (598)
  1,236Extraordinary charge, net of taxes (2)
  612
  -
  -
  -
  -Net income (loss)
  $7,786
  $5,459
  $5,177
  $(598)
  $1,236Basic and diluted earnings (loss) per share
  $1.33
  $0.94
  $0.90
  $(0.10)
  $0.22Weighted average shares outstanding
  5,855
  5,804
  5,773
  5,745
  5,735Operating Data:Number of home sales closed
  1,344
  1,495
  1,624
  1,092
  1,346Average sales price
  $187
  $164
  $156
  $146
  $134Balance Sheet Data:Inventories and properties held for development or sale
  $84,675
  $77,455
  $70,042
  $74,379
  $81,825Total assets
  $103,747
  $98,766
  $89,365
  $88,281
  $96,234Credit facility and notes payable
  $29,950
  $44,204
  $38,467
  $47,907
  $54,137Shareholders equity
  $44,946
  $37,160
  $31,598
  $26,315
  $26,819________________________

(1)
  The Company recorded a noncash impairment
  of land development costs and finished lots at development sites in New
  Jersey and Minneapolis in fiscal 2001 and in Florida and Indiana in fiscal
  1997.  See Note 1 of the Notes to
  Consolidated Financial Statements.(2)
  The Company incurred a charge in connection
  with the early extinguishment of debt in fiscal 2001.  See Note 2 of the Notes to Consolidated
  Financial Statements.

Item 7.

  MANAGEMENTS DISCUSSION AND ANALYSIS OF
  RESULTS OF OPERATIONS AND FINANCIAL CONDITIONGeneral

The Company,
through its subsidiaries, designs, builds and markets attached and detached
townhomes and condominiums, and detached single family homes in the
metropolitan areas of Minneapolis-St. Paul, Minnesota; Des Moines, Iowa;
southern New Jersey and Tampa, Florida.

Rottlund was
organized under the laws of the State of Minnesota in 1973, and until 1993, all
of the Companys developments were located in the Minneapolis-St. Paul market
where Rottlund has maintained the largest market share of any builder in nine
of the last ten years.  Nationally,
Rottlund ranks as the ninth largest attached, for sale, homebuilder and has
been ranked among the top 100 homebuilders since 1991.  During the year ended March 31, 1994, the
Company began home building operations in Des Moines, Iowa; during the year
ended March 31, 1995, the Company began home building operations in Tampa,
Florida; and during the year ended March 31, 1996, the Company acquired certain
assets and assumed certain liabilities of Kevin Scarborough, Inc., a
residential homebuilder operating in Southern New Jersey.  During the year ended March 31, 2001, the
Company exited the Indianapolis, Indiana market, which it had first entered in
fiscal 1995.

As of March 31, 2001, the Company owned or
controlled through options over 3,900 home sites in communities under
development, and land for the development of over 2,200 additional planned home
sites in proposed communities.

The
following table sets forth, for the periods indicated, unit activity, average
sales price and revenue from home sales:

2001
  2000
  1999Homes closed:Single family
  478
  526
  688Multi-family
  866
  969
  936Average sales price:Single family
  $226,000
  $197,000
  $180,000Multi-family
  165,000
  146,000
  138,000Home sales:Single family
  $108,105,000
  $103,514,000
  $123,700,000Multi-family
  142,945,000
  141,926,000
  128,975,000Total home sales
  $251,050,000
  $245,440,000
  $252,675,000

The
following table sets forth the Companys backlog (homes under contract but not
closed):

March 31
  Number
  of Homes
  Sales
  Value2001
  546
  $122,000,0002000
  563
  $110,000,0001999
  567
  $100,000,000

The Company
estimates that the period between receipt of sales contracts and delivery of
completed homes to the purchasers is generally three to six months.  The Companys backlog historically tends to
increase between January and April. 
Trends in the Companys backlog are subject to change from period to
period based upon economic conditions including consumer confidence levels,
interest rates and the availability of mortgages.



Results of Operations

Year ended March 31,
2001 compared to year ended March 31, 2000

Net sales
were $260 million during fiscal 2001 as compared to $261 million in fiscal
2000.  Sales of homes account for 96.4%
and 94.1% of the Companys net sales in fiscal 2001 and 2000,
respectively.  The Companys home sales
increased $5.6 million or 2.3% during fiscal 2001 as compared to fiscal 2000,
as a result of a 14.0% increase in the average sales price of homes closed
despite a 10.1% decrease in the number of homes closed.  The decrease in the number of homes sold is
directly related to the Companys exiting the Orlando, Fort Myers and
Indianapolis markets.  On a remaining
market basis, homes closed increased 2.8% in fiscal 2001.  The average sales price increase was due to
an overall increase in prices for homes sold by the Company and the Company
selling a new higher priced product line in Minneapolis.  The ratio of single family homes closed
compared with multi-family remained constant at 35% single family and 65%
multi-family between fiscal 2001 and 2000. 
The Companys primary business is building homes on land that it has
purchased and developed.  From time to time
an opportunity to sell certain land holdings may arise.  The Company had land sales of $9.3 million
during fiscal 2001 as compared to $15.4 million during fiscal 2000.

Gross profit
on home sales increased by $7.0 million or 18.9% during fiscal 2001 as compared
to fiscal 2000.  The gross profit margin
on home sales increased to 17.5% during fiscal 2001 as compared to 15.1% in
fiscal 2000.  The increased gross profit
margin on home sales was primarily due to strength in the overall homebuilding
industry which combined with higher average selling prices and decreased direct
costs led to the improvement.  In
addition to these home sales, the Company had land sales which accounted for
$.6 million in gross profit in fiscal 2001. 
The gross profit margin on these land sales was 6.6%.

Selling,
general and administrative expenses increased by $2.0 million to $28.4 million
in fiscal 2001 from $26.4 million in fiscal 2000.  As a percentage of net sales, selling, general and administrative
expenses for home sales increased to 11.3% in fiscal 2001 from 10.8% in fiscal
2000.  Included in selling general and
administrative expenses in fiscal 2001 is an impairment loss of approximately
$750,000, resulting from the Company periodically evaluating whether events and
circumstances have occurred which may affect the recoverability of its other
assets.  If such events or circumstances
indicate that the carrying amount of other assets may not be recoverable, the
Company estimates the future cash flows expected to result from the use of the
assets and their eventual disposition. 
As the sum of the expected future cash flows (undiscounted and without
interest charges) was less than the carrying amount of the other assets, the
Company recognized an impairment loss. 
Other areas of significant increase in selling, general and
administrative expenses from fiscal 2000 are model home rentals of $400,000 as
the Company entered into new model home sale leaseback agreements, more fully
described in the Liquidity and Capital Resources section below; an increase of
approximately $940,000 in insurance costs of which approximately $600,000 was a
one time cost related to workers compensation and an increase of approximately
$585,000 in staff and management bonuses due to increased profitability.

The Company
periodically evaluates whether events and circumstances have occurred which may
affect the recoverability of its land. 
If such events or circumstances indicate that the carrying amount of
land may not be recoverable, the Company estimates the future cash flows
expected to result from the use of the assets and their eventual
disposition.  If the sum of the expected
future cash flows (undiscounted and without interest charges) is less than the
carrying amount of the land, the Company will determine the fair value of the
assets and recognize an impairment loss. 
Approximately $1,050,000 in impairment losses related to land was
recognized in the year ended March 31, 2001.

Total
interest incurred by the Company was approximately $3.9 million in fiscal 2001
and $5.1 million in fiscal 2000. The Company capitalizes certain interest costs
for land development and includes such capitalized interest in cost of sales
when the related homes are delivered to purchasers. Interest expense, net of
interest capitalization, was $1.2 million in fiscal 2001 as compared to $2.7
million in fiscal 2000.  The Senior
Notes were retired in April 2000 and replaced with the revolving credit
line.  In connection with the retirement
of the senior debt, the Company incurred an extraordinary charge of $612,000,
net of tax of $410,000.

The
Companys tax rate was approximately 40% in fiscal 2001, compared to 41% in
fiscal 2000 which reflects the federal statutory rate plus the effect of state
taxes, net of federal income tax benefit.

As a result
of the above, net income increased to $7,786,000 ($1.33 per share basic and
diluted) in fiscal 2001 from $5,459,000 ($.94 per share basic and diluted) in
fiscal 2000.

Year ended March 31,
2000 compared to year ended March 31, 1999

The
Companys home sales decreased $7.2 million or 2.9% during fiscal 2000 as
compared to fiscal 1999, despite a 5.5% increase in the average sales price of
homes closed, due to a 7.9% decrease in the number of homes closed.  This average sales price increase was due to
an overall increase in prices for homes sold by the Company.  In addition to these home sales, the Company
had land sales of $15.4 million during fiscal 2000 as compared to fiscal 1999
when there were no land sales.

Gross profit
on home sales increased by $0.6 million or 1.6% during fiscal 2000 as compared
to fiscal 1999.  The gross profit margin
on home sales increased to 15.1% during fiscal 2000 as compared to 14.9% in
fiscal 1999.  The increased gross profit
margin on home sales was primarily due to strength in the overall homebuilding
industry which combined with higher average selling prices decreased fixed
costs as a percentage of revenue.  In
addition to these home sales, the Company had land sales which accounted for
$1.4 million in gross profit.  The gross
profit margin on these land sales was 9.1%.

Selling,
general and administrative expenses increased by $0.3 million to $26.4 million
in fiscal 2000 from $26.1 million in fiscal 1999.  As a percentage of net sales, selling, general and administrative
expenses for home sales increased to 10.8% in fiscal 2000 from 10.3% in fiscal
1999.  The increase was due primarily to
the increased number of projects started in fiscal 2000.

Interest
expense was $2.7 million in fiscal 2000 and in fiscal 1999.  Interest expense for the revolving credit
facility increased due to the increased level of new business activity.  Interest expense on Senior Notes decreased
due to lower principal balances.  The
Company capitalizes certain interest costs for land development and includes
such capitalized interest in cost of sales when the related homes are delivered
to purchasers.  Total interest incurred
by the Company was approximately $5.1 million in fiscal 2000 and $5.2 million
in fiscal 1999.

The
Companys tax rate was approximately 41% in fiscal 2000 and 1999 which reflects
the federal statutory rate plus the effect of state taxes, net of federal
benefit.

Net income
increased from $5,177,000 ($.90 per share) in fiscal 1999 to $5,459,000 ($.94
per share) in fiscal 2000.  This
increase was partially due to the sale of land in fiscal 2000.

Liquidity
and Capital Resources

At
March 31, 2001, the Company had cash and cash equivalents of $7.1 million
compared to $8.1 million at March 31, 2000. 
The net cash provided by or used in the operating, investing and
financing activities for the years ended March 31, 2001, 2000 and 1999 is
summarized below (dollars in thousands).

2001
  2000
  1999Net cash provided by (used in)Operating activities
  $13,708
  $(3,734)
  $12,015Investing activities
  (462)
  (577)
  (370)Financing activities
  (14,254)
  5,840
  (9,334)Net increase (decrease) in cash
  $(1,008)
  $1,529
  $2,311

For
the year ended March 31, 2001 cash was provided by operations and increases in
the amounts borrowed under the revolving line of credit offset by repayment of
the senior notes payable and the purchase of property and equipment.

Funding
for the Companys operations has been principally provided by cash flows from
operations, sale and leaseback of model homes and bank borrowings.  In addition the Company has utilized and
will continue to utilize land options as a method of controlling and
subsequently acquiring land.  The
Companys financing needs depend primarily upon sales volume, asset turnover,
land acquisition and inventory balances.

The Company
has an unsecured revolving credit agreement, which expires December 31, 2003
and provides for borrowings of up to $50 million, of which $5 million may be
used for letters of credit.  Borrowings under
this agreement are subject to a borrowing base calculation based on a defined
percentage of land, development costs, finished lots and the working capital of
the Company.  As of March 31, 2001,
borrowings under the facilitys line of credit totaled approximately $30
million, and approximately $15.4 million was available for additional
borrowings under the calculations described above.  On July 7, 2000, the Company entered into an interest rate swap
on $15 million of the above credit arrangement which fixes the interest rate at
9.96% for a period of two years.  To
date, the impact of this transaction on the income statement has been
immaterial.  The Company believes the
amounts available under its existing borrowing arrangements and amounts
generated from operations will provide funds adequate for its homebuilding
activities and debt service for the foreseeable future.

The
revolving credit facility contains various restrictive covenants including,
among others, certain financial covenants relating to minimum consolidated
tangible net worth and earnings levels, as well as funding, borrowing base
requirements, payment of dividends and maximum land and construction
limitations.  The Company was in
compliance with all financial covenants as of March 31, 2001.

During
fiscal 2001, the Company sold 38 model homes with a sales value of $7.9 million
and leased them back under month to month leases.  Lease payments are calculated at the prime rate plus 225 to 275
basis points based on the sales value of homes remaining at the start of each
month.  This transaction resulted in a
gain of approximately $1.5 million that is being deferred over the estimated
lease term.  At the date of the transaction,
revenues of $6.4 million were recognized, which were equal to costs of the
homes sold.  As the gain is recognized
in future periods, it will be treated as additional revenue and gross profit
with no associated costs thereby increasing the gross profit percentage over
the deferral period.  $700,000 of the
gain related to this transaction was recognized in the year ended March 31,
2001.

The
Companys land purchase agreements are typically subject to numerous conditions
including, but not limited to, the Companys ability to obtain necessary zoning
and other governmental approvals for the proposed developments.  The Company believes it has been successful
in obtaining local governmental approvals through proactive interaction with
neighborhood and citizen groups.  The
Company maintains a policy of holding neighborhood meetings to gain support for
its development activities.  During the
initial municipal approval process, the Company confirms the availability of
utilities, conducts environmental reviews, arranges acquisition development and
financing, and completes its marketing construction feasibility studies.  As a result, the Company is generally able
to begin marketing immediately after closing the land purchase.  This results in reduced carrying costs and
increased liquidity for future development opportunities.

To minimize
the business risk associated with developing land and to maximize the use of
the Companys available capital, the Company has been able to acquire a
substantial amount of its developments and lots by means of option contracts.  Option contracts generally require the
payment of a cash deposit or issuance of a letter of credit for the right to
acquire lots during a specified period of time at a certain price.  Our option contracts have expiration periods
ranging from 30 to 60 months.  As of
March 31, 2001, the Company had option contracts for approximately 1,500 lots
aggregating $56,500,000.

The Company
has generally been able to secure financing for its acquisition, development
and construction activities, and management believes such arrangements will continue
to be available on terms satisfactory to the Company.  There can be no assurance, however, that continued financing for
land acquisitions will be available or, if available, will be on the terms
satisfactory to the Company.

Inflation
and Effects of Changing Prices

The Company,
as well as the homebuilding industry in general, may be adversely affected
during periods of high inflation, primarily because of higher land, material
and labor costs.  In addition, higher
mortgage interest rates may significantly affect the affordability of permanent
mortgage financing to prospective purchasers. 
The Company attempts to pass through to its customers any increase in
its costs through increased selling prices, and to date, inflation has not had
a material adverse effect on the Companys results of operations.  However, there is no assurance that
inflation will not have a material adverse impact on the Companys future
results of operations.

The company
adopted Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, as of April 1,
2001.  SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument,
including certain derivative instruments embedded in other contracts, be
recorded in the balance sheet as either an asset or liability measured at its
fair value.  SFAS No. 133 requires that
changes in the derivatives fair value be recognized currently in earnings unless
specific hedge criteria are met and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting.  The Company has
designated its interest rate swap as a hedge; upon adoption of SFAS No. 133, a
liability of approximately $467,000 was recorded for the fair market value of
the interest rate swap.  Changes in its
fair market value will be reflected in other comprehensive income in future
periods.

Item 7A.QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys
exposure to market risk for a change in interest rates relates primarily to the
Companys short-term borrowings and long-term debt obligations.

The
Companys credit facility carries interest rate risk that is generally related
to the prime rate (8% on March 31, 2001). 
If that rate were to change while the Company was borrowing under the
facility, interest expense would increase or decrease accordingly.  As of March 31, 2001, the Company had $29.5
million outstanding under this facility. 
In fiscal 2000, the Company entered into an interest rate swap hedging
transaction for $15 million of its revolving credit facility at a fixed rate of
9.96% through July 2002.



Item 8.FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

The
financial statements of the Company as of March 31, 2001, 2000 and 1999, and
for the years then ended together with the Report of Independent Public
Accountants are included in this Form 10-K on the pages indicated in the
following Index to Consolidated Financial Statements.

THE ROTTLUND COMPANY,
INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Public Accountants

Consolidated Balance Sheets as of March 31,
2001 and 2000

Consolidated Statements of Operations for the
years ended March 31, 2001, 2000 and 1999

Consolidated Statements of Shareholders
Equity for the years ended March 31, 2001, 2000 and 1999

Consolidated Statements of Cash Flows for the
years ended March 31, 2001, 2000 and 1999

Notes to Consolidated Financial Statements

Report of Independent Public Accountants





To The Rottlund Company, Inc.:

We
have audited the accompanying consolidated balance sheets of The Rottlund
Company, Inc. (a Minnesota corporation) and Subsidiaries as of March 31,
2001 and 2000, and the related consolidated statements of operations,
shareholders equity and cash flows for each of the three years in the period
ended March 31, 2001.  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 in accordance with auditing standards generally accepted
in the United States.  Those standards
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.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Rottlund
Company, Inc. and Subsidiaries as of March 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended March 31, 2001, in conformity with accounting principles
generally accepted in the United States.



Arthur Andersen LLP

Minneapolis, Minnesota,
May 11, 2001

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Consolidated balance sheets
As of March 31
(In thousands, except per share data)



2001
  2000ASSETSCASH AND CASH EQUIVALENTS
  $7,079
  $8,087ESCROW AND OTHER RECEIVABLES
  2,444
  2,447LAND, DEVELOPMENT COSTS AND FINISHED LOTS
  55,254
  47,224RESIDENTIAL HOUSING COMPLETED AND
  UNDER CONSTRUCTION
  29,421
  30,231PROPERTY AND EQUIPMENT, net
  634
  867DEFERRED INCOME TAX BENEFIT
  3,499
  1,796OTHER ASSETS, net
  5,416
  8,114$103,747
  $98,766LIABILITIES
  AND SHAREHOLDERS EQUITYLIABILITIES:Revolving credit facility
  $29,950
  $21,135Notes payable
  -
  23,069Accounts payable
  15,823
  10,785Accrued expenses
  9,535
  6,459Income taxes payable
  3,493
  158Total liabilities
  58,801
  61,606COMMITMENTS AND CONTINGENCIES (Notes 4, 5
  and 6)SHAREHOLDERS EQUITY:Preferred stock, $.10 par value,
  10,000 shares authorized; no shares issued 
  and outstandingCommon stock, $.10 par value, 40,000
  shares authorized; 5,852 and 5,804 shares issued and outstanding
  585
  580Paid-in capital
  11,512
  11,517Retained earnings
  32,849
  25,063Total
  shareholders equity
  44,946
  37,160$103,747
  $98,766The
accompanying notes are an integral part of these consolidated financial
statements.THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Consolidated statements of operations

For the years ended March 31
(In thousands, except per share data)

2001
  2000
  1999NET SALES:Homes
  $251,050
  $245,440
  $252,675Land
  9,324
  15,394
  ----Total net sales
  260,374
  260,834
  252,675COST OF SALES:Homes
  207,086
  208,449
  215,074Land
  8,707
  14,039
  ----Gross margin
  44,581
  38,346
  37,601SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES
  28,381
  26,409
  26,112IMPAIRMENT
  OF LAND VALUE
  1,050
  -
  -Operating income
  15,150
  11,937
  11,489INTEREST EXPENSE
  1,151
  2,685
  2,714Income (loss)
  before income taxes and extraordinary charge
  13,999
  9,252
  8,775INCOME TAX PROVISION
  5,601
  3,793
  3,598Net income before
  extraordinary charge
  8,398
  5,459
  5,177Extraordinary charge, net of taxes of $410,
  Note 2
  612
  -
  -Net income
  $7,786
  $5,459
  $5,177BASIC AND DILUTED EARNINGS PER SHAREIncome before extraordinary charge
  $1.43
  $.94
  $.90Extraordinary charge
  (.10)
  -
  -Net income
  $1.33
  $0.94
  $0.90The accompanying notes are an
integral part of these consolidated financial statements.THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Consolidated statements of shareholders equity

For the years ended March 31
(In thousands)



Common stockShares
  Amount
  Paid-in
  Capital
  Retained
  Earnings
  TotalBALANCE, March 31, 1998
  5,745
  $574
  $11,314
  $14,427
  $26,315Net income
  ----
  ----
  ----
  5,177
  5,177Stock issued under employee stock
  purchase plan
  28
  3
  103
  ----
  106BALANCE, March 31, 1999
  5,773
  577
  11,417
  19,604
  31,598Net income
  ----
  ----
  ----
  5,459
  5,459Stock issued under employee stock
  purchase plan
  31
  3
  100
  ----
  103BALANCE, March 31, 2000
  5,804
  580
  11,517
  25,063
  37,160Net income
  ----
  ----
  ----
  7,786
  7,786Stock issued under employee stock
  purchase plan
  48
  5
  (5)
  ----
  ----BALANCE,
  March 31, 2001
  5,852
  $585
  $11,512
  $32,849
  $44,946

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

THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Consolidated statements of cash flows

For the years ended March 31
(In thousands)

2001
  2000
  1999OPERATING
  ACTIVITIES:Net income
  $7,786
  $5,459
  $5,177Adjustments to reconcile net income to net cash provided by
  (used for) operating activities-Depreciation and amortization
  1,519
  724
  790Impairment of land value
  1,050
  -
  -Deferred income taxes
  (1,703)
  (191)
  (441)Change in operating items:Escrow and other receivables
  3
  160
  (87)Land, development costs and
  finished lots
  (9,080)
  (909)
  932Residential housing completed
  and under construction
  810
  (6,504)
  3,405Other assets
  1,874
  (575)
  (3,002)Accounts payable
  5,038
  1,880
  (2,648)Accrued expenses
  3,076
  327
  3,626Income taxes payable
  3,335
  (4,105)
  4,263Net cash provided by (used
  for) operating activities
  13,708
  (3,734)
  12,015INVESTING
  ACTIVITIES:Purchase of property and equipment, net
  (462)
  (577)
  (370)FINANCING
  ACTIVITIES:Proceeds from (repayments of) revolving
  credit facility, net
  8,815
  10,850
  (4,725)Repayments of notes payable
  (23,069)
  (5,897)
  (5,809)Proceeds from issuance of mortgage
  notes payable
  -
  784
  1,094Proceeds from stock issued under
  employee stock purchase plan
  -
  103
  106Net cash provided by (used for)
  financing activities
  (14,254)
  5,840
  (9,334)NET
  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
  (1,008)
  1,529
  2,311CASH
  AND CASH EQUIVALENTS:Beginning of year
  8,087
  6,558
  4,247End of year
  $7,079
  $8,087
  $6,558SUPPLEMENTAL
  CASH FLOW INFORMATION:Cash paid for interest, net of amounts
  capitalized
  $1,151
  $2,685
  $2,714Cash paid for income taxes
  $3,559
  $8,095
  $-The accompanying notes are an
integral part of these consolidated financial statements.The accompanying notes are an integral part of these consolidated
financial statements.THE ROTTLUND COMPANY, INC. AND SUBSIDIARIES

Notes to
consolidated financial statements
March 31, 2001, 2000 and 1999

1.       Business
description and summary of significant accounting policies

Nature of business

The
Rottlund Company, Inc. (a Minnesota corporation) and its subsidiaries,
collectively referred to as the Company, are engaged in the design,
construction, marketing and sale of residential real estate. The Companys
primary developments are in Minnesota, with additional development sites in
Iowa, Florida and New Jersey; accordingly, the Companys operations can be
impacted significantly by the residential real estate market conditions in each
of these geographic areas.

During
fiscal year 2001 the Company exited the Indiana market.  The Company sold land, finished lots,
residential housing under construction and various models for carrying value of
approximately $5,700,000.   During
fiscal year 2000 the Company substantially exited the Orlando and Ft. Myers,
Florida, markets. The Company sold land, finished lots, residential housing
under construction and various models with a carrying value of approximately
$10,835,000 for $12,090,000. Certain of the sales were made to the former vice
presidents of the Company. In managements opinion, such transactions were
negotiated at terms equivalent to those used in transacting business with
unrelated parties.

The
Company has generally been able to secure financing for its acquisition,
development and construction activities, and management believes that such
arrangements will continue to be available on terms satisfactory to the
Company. However, there can be no assurance that continued financing for land
acquisitions will be available or, if available, will be on terms satisfactory
to the Company.

Principles of
consolidation

The
accompanying consolidated financial statements include the accounts of The
Rottlund Company, Inc. and its wholly owned subsidiaries, including a 60%
ownership in Firstar Advantage, LLC. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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. Ultimate results could differ from those estimates.

The
estimation process involved in determining if assets have been impaired and in
determining fair value is inherently uncertain since it requires estimates of
current market yields, as well as future events and conditions.  Such future events and conditions include
economic and market conditions.  The
realization of the estimates applied to the Companys real estate projects is
dependent upon future uncertain events and conditions and, accordingly, the
actual timing and amounts realized by the Company may differ materially from
estimated fair values.

Revenue recognition

Revenue
from sales of properties is recognized upon a formal closing and conveyance of
title to the buyer. Escrow receivables represent funds held in escrow because
the Company is obligated to perform minor activities subsequent to a formal
closing. Customer earnest money deposits received under binding purchase
agreements are reflected as accrued expenses until a formal closing.

Fair values of
financial instruments

The
estimated fair values of financial instruments were determined by management
using available market information and appropriate valuation
methodologies.  Considerable judgement is
necessary to interpret the market data and develop the estimated fair
value.  Accordingly, the estimates
presented are not necessarily indicative of the amounts the Company could
realize on disposition of the financial instruments.  The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

The
carrying amounts of cash and cash equivalents approximate their fair value due
to their short-term nature.

The
fair value of the Companys interest rate swap is the settlement amount, based
on an estimate obtained from its financial institution.  Based on the estimate, if the Company was to
terminate its swap agreement, it would have to pay approximately $467,000 as of
March 31, 2001.

It is estimated that the carrying values of
the Companys other financial instruments are not materially different from
their recorded amounts as of March 31, 2001 and 2000.

Cash and cash
equivalents

The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

Land, development
costs and finished lots

Direct
costs related to land development, including land acquisition costs,
improvement and construction costs for clearing and grading, roads and utility
systems, architectural, surveying, engineering and legal fees, and real estate
taxes, are capitalized as costs of land. The Company also capitalizes interest
incurred in connection with land held for development; interest of
approximately $2,700,000, $2,400,000 and $2,400,000 was capitalized in fiscal
years 2001, 2000 and 1999, respectively. Aggregate development costs are
allocated to finished lots and charged to cost of sales upon a formal closing
and conveyance of title to the buyer.

During
2001, the Company recorded a noncash write-down of land, development costs and
finished lots at development sites in Minneapolis and New Jersey of
$1,050,000.  The impairment was
determined by the Companys management based on decreases in the market value
of the sites as well as development costs in excess of amounts to be
realized.  Management determined the
fair value of these development sites based on various methods, including
undiscounted cash flow projections and evaluations of comparable market prices
of land.  The write-down for impairment
of long-lived assets was calculated in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.

Residential housing
completed and under construction

Residential
housing completed and under construction represents the direct costs of
construction of single-family and multi-family home projects, excluding land
costs. Residential housing is valued at the lower of cost or estimated fair
value.



Property and
equipment

Property
and equipment are stated at cost. Additions and major renewals are capitalized,
while maintenance and repairs are charged to expense as incurred. Depreciation
is provided using accelerated methods; principally over three to five years for
model home furnishings and five to seven years for furniture and equipment.
Accumulated depreciation totaled $541,000 and $807,000 as of March 31,
2001 and 2000, respectively.

Other assets

Other assets consists primarily of the excess
of the purchase price paid for business acquisitions over the net assets
acquired, deferred financing costs and deposits for the option to acquire land.
The excess of the purchase price paid for business acquisitions over the net
assets acquired was being amortized over 20 years, with accumulated
amortization of $0 and $294,000 as of March 31, 2001 and 2000,
respectively.

The
Company periodically evaluates whether events and circumstances have occurred
which may affect the recoverability of its other assets.  If such events or circumstances indicate
that the carrying amount of other assets may not be recoverable, the Company
estimates the future cash flows expected to result from the use of the assets
and their eventual disposition.  If the
sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the other assets, the Company will
determine the fair value of the assets and recognize an impairment loss.  Approximately $750,000 in impairment losses
were recognized in the year ending March 31, 2001 related to the excess of
purchase price paid over the net assets acquired.  No such losses were recorded for the year ended March 31, 2000.

Deferred financing costs are amortized over
the lives of the respective financing agreements, with accumulated amortization
of $29,000 and $201,000 as of March 31, 2001 and 2000, respectively.
Deposits for the option to acquire land are capitalized as land, development
costs and finished lots at the time of exercise or are charged to expense upon
expiration.

Income taxes

The
Company recognizes deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax
bases of assets and liabilities using currently enacted tax rates.

Product warranty

The
Company warrants its residential housing for periods from 10 to 15 years. The
Company purchases insurance coverage for periods after two years. Warranty
costs are estimated at the time of sale and adjusted annually to reflect
ultimate experience. Product warranty costs of $2,165,000 and $1,558,000 are
included in accrued liabilities and $1,822,000 and $1,234,000 are included in
cost of sales in the accompanying consolidated financial statements.

Derivatives

The
company adopted SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as of April 1, 2001. 
SFAS No. 133 establishes accounting and reporting standards requiring
that every derivative instrument, including certain derivative instruments embedded
in other contracts, be recorded in the balance sheet as either an asset or
liability measured at fair value.  SFAS
No. 133 requires that changes in the derivatives fair value be recognized
currently in earnings unless specific hedge criteria are met and requires that
a company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. The Company has designated its
interest rate swap as a hedge; upon adoption of SFAS No. 133 a liability of
approximately $467,000 was recorded for the fair market value of the interest
rate swap.  Changes in its fair market
value will be reflected in other comprehensive income in future periods.



Customer Deposits

Deposits are received from customers upon
execution of a purchase contract.  In
most instances the Company can use the deposit to partially finance the working
capital requirements of the home construction. 
As of March 31, 2001 and 2000, the Company had deposits of approximately
$2,872,000 and $2,197,000, respectively included in accrued liabilities in the
consolidated balance sheet.

Advertising

The
Companys advertising expense amounted to $1,953,000, $2,038,000 and $1,848,000
in fiscal years 2001, 2000 and 1999, respectively.  Advertising costs are expensed as incurred.

Net earnings per
share

Basic earnings per share is computed by
dividing net income available to common shareholders by the weighted average
number of common shares outstanding during the year. Diluted earnings per share
is computed under the treasury stock method and is calculated to reflect the
dilutive effect of the Companys stock option plans. A reconciliation of these
amounts is as follows (in thousands, except per share and antidilutive stock
options data):

2001
  2000
  1999Net
  income
  $7,786
  $5,459
  $5,177Weighted average number of common
  shares outstanding:Basic
  5,852
  5,804
  5,773Dilutive effect of stock options
  3
  ----
  ----Common and potential common shares
  outstanding:
  5,855
  5,804
  5,773Basic and diluted earnings per share
  $1.33
  $0.94
  $0.90Diluted earnings per share
  $1.33
  $0.94
  $0.90Antidilutive stock options
  383,691
  713,378
  844,102

Stock
options were antidilutive because they had an exercise price greater than the
average market price during the year.

2.       Debt

Revolving credit
facility

The
Company has an unsecured revolving credit agreement (the Credit Facility)
that provides for borrowings of up to $50 million, of which
$5 million may be used for letters of credit. Borrowings under the Credit
Facility are subject to a borrowing base calculation based on a defined
percentage of land, development costs, finished lots and the working capital of
the Company. Borrowings under the Credit Facility bear interest at the prime
rate (8.0 percent as of March 31, 2001). As of March 31, 2001,
borrowings outstanding under the Credit Facilitys line of credit totaled
$29,950,000, and $15,374,000 was available for additional borrowing under the
calculation described above. The Credit Facility expires on December 31, 2003.

During
fiscal years 2001, 2000 and 1999, the maximum balance outstanding under current
and former revolving credit facilities was $49,235,000, $32,815,000 and
$21,835,000, and the average balance was $36,912,000, $23,818,000 and
$18,151,000, respectively. The weighted average interest rate during such years
was 9.4 percent, 8.9 percent and 8.7 percent, respectively. The carrying amount
of borrowings outstanding under the Credit Facility as of March 31, 2001 and
2000 approximates their fair value due to their current maturities and/or
variable interest rates.

The Credit Facility contains various
restrictive covenants including, among others, certain financial covenants
relating to minimum consolidated tangible net worth and earnings levels, as
well as
funding, borrowing base requirements, payment of dividends and maximum land and
construction limitations. The Company was in compliance with all financial
covenants as of March 31, 2001.

Senior notes payable

In
December 1994, the Company issued $25 million of 12.1 percent senior notes
payable, and in February 1996, the Company issued an additional $10
million of 9.4 percent senior notes payable (collectively, the Senior Notes).
Proceeds were used to retire certain mortgage notes payable and for working capital
purposes.

In
fiscal year 2001, the Company paid, in full, the obligations associated with
the Senior Notes, including $900,000 in early extinguishment penalties.  Additionally, the Company expensed the
remaining debt issuance costs of $122,000. 
These are reflected as an extraordinary charge in the accompanying
statement of operations.

3.       Income taxes

The following summarizes the income tax
provision (benefit) for the years ended March 31 (in thousands):

2001
  2000
  1999Current:Federal
  $6,409
  $3,568
  $3,575State
  895
  416
  464Deferred
  (1,703)
  (191)
  (441)Provision for income taxes
  $5,601
  $3,793
  $3,598The components of deferred income taxes
consist of the following as of March 31 (in thousands):

2001
  2000Reserves
  and accruals
  $1,418
  $624Land and development
  1,434
  891Amortization
  322
  11Gain on the sale leaseback of model homes
  315
  -Other
  10
  270Deferred income tax asset
  $3,499
  $1,796A reconciliation of the Companys statutory
federal income tax rate to the effective tax rate is as follows for the years
ended March 31:

2001
  2000
  1999Statutory federal rate
  35.0%
  34.0%
  34.0%State
  income taxes, net of federal benefit
  5.0
  6.0
  6.0Other
  -
  1.0
  1.0Effective tax rate
  40.0%
  41.0%
  41.0%



4.       Employee stock plans

Stock option plans

The
Company has a stock option plan (the Plan) which provides for the granting of
options to designated employees, nonemployees and consultants of the Company to
purchase up to an aggregate of 1,300,000 shares of common stock at an exercise
price not less than the fair market value of the common stock on the dates the
options are granted. The options become exercisable in equal amounts over a
five-year period from the date of grant and expire ten years from the date of
grant. Certain options granted during fiscal year 1999 have a vesting period of
seven years, but are accelerated if certain financial targets are met each
year.

The
Company also has a director stock option plan (DSOP), pursuant to which
100,000 shares of common stock have been reserved for the granting of stock
options to the Companys outside directors. Under the DSOP, the Company granted
initial options for the purchase of 1,000 shares to each of the two outside
directors and thereafter will grant stock options for the purchase of 1,000
additional shares of common stock annually for each year of continued service
on the board. Each option is granted at fair market value on the date of grant
and is exercisable for a period of four years, commencing one year after the
date of grant.

The following table summarizes activity in
the stock option plans:

Number of shares
  Weighted
  average
  exercise
  priceThe Plan
  DSOPBalance, March 31, 1998
  535,102
  4,000
  $5.55Granted
  303,000
  2,000
  4.56Balance, March 31, 1999
  838,102
  6,000
  5.31Granted
  100,675
  2,000
  6.05Canceled
  (233,399)
  ----
  4.67Balance, March 31, 2000
  705,378
  8,000
  5.74Granted
  21,500
  2,000
  4.24Canceled
  (350,166)
  (1,000)
  6.15Balance, March 31, 2001
  376,212
  9,000
  $5.32Options exercisable as of March 31, 2001
  277,212
  7,000
  $5.56Shares
  available for future grants
  923,288
  91,000Shares
outstanding under the stock option plans as of March 31, 2001 have
exercise prices ranging from $2.50 to $7.75 and a weighted average remaining
contractual life of 6.3 years.

The
Company follows the provisions of SFAS No. 123, Accounting for
Stock-Based Compensation.  As permitted
by SFAS No. 123, the Company has elected to continue to account for its
stock option plans under the provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, under which no compensation
costs have been recognized. Because the measurement provisions of SFAS
No. 123 have not been applied to options granted prior to April 1, 1995,
the resulting pro forma compensation costs may not be representative of those
to be expected in future years. Had compensation costs for these plans been recorded
at fair value consistent with the provisions of SFAS No. 123, the Companys net
income and earnings per share would have been as follows:

2001
  2000
  1999Net
  income (in thousands):As reported
  $7,786
  $5,459
  $5,177Pro forma
  7,619
  5,238
  4,959Basic and diluted earnings (loss) per
  share:As reported
  $1.33
  $0.94
  $0.90Pro forma
  1.30
  0.90
  0.86The
weighted average fair value of stock options granted in fiscal years 2001, 2000
and 1999 was $1.00, $0.05 and $1.72 respectively.

The fair value of each option is estimated on the date of grant using
the Black-Scholes option pricing model. The following assumptions were used to
estimate the fair value of options granted in the fiscal years:

2001
  
  2000
  
  1999Risk-free
  interest rate
  4.55%
  
  5.84%6.38%
  
  4.33%6.74%Expected life
  4
  years
  
  14
  years
  
  510
  yearsExpected volatility
  44%
  
  43%
  
  42%Expected dividend yield
  None
  
  None
  
  None5.       Retirement savings plan

The
Company sponsors a 401(k) profit-sharing plan which covers all employees over
the age of 201⁄2 years who elect to participate. The Company may, at its
discretion, make contributions to the 401(k) plan. All plan contributions vest
in equal installments over a five-year period. The Company contributed
$214,000, $197,000 and $191,000 to the 401(k) plan in fiscal years 2001, 2000
and 1999, respectively.

6.       Commitments and contingencies

Letters of credit
and performance bonds

Letters
of credit and bonds are issued on behalf of the Company during the ordinary
course of business, as required by certain development agreements with
municipalities. As of March 31, 2001, the Company had outstanding letters
of credit totaling $4,676,000 and outstanding performance bonds approximating
$12 million.

Land Options

The Company has option contracts for the
acquisition of certain developments and lots. 
Option contracts generally require the payment of a cash deposit or
issuance of a letter of credit for the right to acquire lots during a specified
period of time at a certain price.  The
Companys option contracts have expiration periods ranging from 30 to 60
months.  As of March 31, 2001, the
Company had option contracts for approximately 1,500 lots aggregating
$56,500,000.

Litigation

The
Company is party to certain claims arising in the ordinary course of business.
In the opinion of management, based upon the advice of legal counsel, the
outcomes of such claims are not expected to be material to the Companys
financial position, results of operations or cash flows.

Leases

The
Company is obligated under various noncancelable operating leases for office
facilities and certain equipment.  Under
office leases, the Company is also required to pay real estate taxes, utilities
and common area maintenance costs. Rental expense under these agreements,
excluding leaseback of model homes, was approximately $679,000, $817,000 and
$728,000 in fiscal years 2001, 2000 and 1999, respectively.

Future minimum lease payments required under
noncancelable operating lease agreements are as follows 
(in thousands):

Fiscal year2002
  $3862003
  3552004
  2782005
  1542006
  135$1,308Sale and leaseback
of model homes

During fiscal year 1999, the Company entered
into three agreements for the sale and leaseback of 21 of its model homes in
Minnesota and New Jersey for approximately $3,602,000, which resulted in the
recognition of a gain of  $518,000 in
fiscal year 1999. The lease term on the individual model homes is
month-to-month, and rental expense for fiscal years 2001 and 2000 was approximately
$855,000 and $453,000 respectively.

During fiscal year 2001 the Company sold 38
model homes with a sales value of $7.9 million and leased them back under a
month to month lease.  Lease payments
are calculated at the prime rate plus 225 to 275 basis points based on the
sales value of homes remaining at the start of each month.  This transaction resulted in a gain of
approximately $1.5 million that is being deferred over the estimated lease
term.  Revenues of $6.4 million were
recognized which were equal to the costs of the homes sold.  As the gain is recognized, it will be
treated as additional revenue and gross profit with no associated costs thereby
increasing the gross profit percentage over the deferral period.  $700,000 of the gain related to this
transaction was recognized in the year ended March 31, 2001.

7.       Quarterly financial information
(unaudited)

The following is a condensed summary of
quarterly results of operations for fiscal years 2001 and 2000 (in thousands,
except per share data):

Net sales
  Gross
  margin
  Net
  income
  Earnings per
  share
  (Basic)
  Earnings per
  share
  (Diluted)Fiscal year 2001:First quarter
  $49,605
  $7,512
  $253
  $0.04
  $0.04Second quarter
  75,766
  12,672
  3,037
  0.52
  0.52Third quarter
  64,299
  11,082
  2,169
  0.37
  0.37Fourth quarter
  70,704
  13,315
  2,327
  0.40
  0.39$260,374
  $44,581
  $7,786
  $1.33
  $1.33Fiscal year 2000:First quarter
  $49,587
  $7,143
  $316
  $0.05
  $0.05Second quarter
  62,813
  9,213
  1,148
  0.20
  0.20Third quarter
  60,777
  8,648
  1,078
  0.19
  0.19Fourth quarter
  87,657
  13,342
  2,917
  0.50
  0.50$260,834
  $38,346
  $5,459
  $0.94
  $0.94Item 9.

  CHANGES IN AND DISAGREEMENTS WITH
  ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None

PART III

Item 10.

  DIRECTORS AND EXECUTIVE OFFICERS OF THE
  REGISTRANT

Information
regarding the directors of the Company is incorporated herein by reference to
the descriptions set forth under the caption Election of Directors in the
Proxy Statement for Annual Meeting of Shareholders to be held September 20,
2001 (the 2001 Proxy Statement).  Set
forth below are the names, ages and positions of the executive officers of the
Company.

David H. Rotter
  54
  President, Secretary and DirectorBernard J. Rotter
  58
  Vice President, Treasurer and DirectorTodd M. Stutz
  43
  Executive Vice President and DirectorSteven A. Kahn
  52
  Chief Financial OfficerTimothy M. Whitten
  50
  Executive Vice PresidentThe officers
of the Company are elected annually and serve at the discretion of the Board of
Directors. Todd M. Stutz is employed pursuant to written employment agreements.

Background
of Executive Officers

David H. Rotteris a founder of the Company and has been
a member of its Board of Directors since its inception.  He served as the Companys Vice President
from 1973 through March 1990, and has served as President from April 1990, to
the present.  He has also served as the
Companys Secretary since its inception. 
He is the brother of Bernard J. Rotter.

Bernard J. Rotterhas served
as a Director, Vice President and Treasurer of the Company since July
1984.  He is the brother of David H.
Rotter.

Todd M. Stutzwas elected a Director of the Company in
August 1992, and has served as Executive Vice President of the Company and
President of its Minnesota division since June 1991.  He joined the Company in April 1989, and served as its Land
Development Manager until June1991.  Between
April 1980, and March 1989, he was employed by the Housing and Redevelopment
Authority of the City of Columbia Heights, Minnesota, as Executive Director.

Steven A. Kahnwas elected Chief Financial Officer of
the Company in November 2000.  Prior to
that time, he was the Vice President and Chief Financial Officer of K-Tel
International, Inc. (January 1999-June 2000), a music marketing company and ACI
Telecentrics (June 1996-December 1998), a teleservices company.

Timothy M. Whittenwas elected
Executive Vice President of the Company in January 2001.  Prior to that time, he was Vice President of
Architecture of the Company.  Mr.
Whitten joined the Company in July 1995.

Item 11.

  EXECUTIVE COMPENSATION

Information
regarding executive compensation is incorporated herein by reference to the
information set forth under the caption Executive Compensation in the 2001
Proxy Statement.

Item 12.

  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
  OWNERS AND MANAGEMENT

Information
regarding security ownership of certain beneficial owners and management of the
Company is incorporated herein by reference to the information set forth under
the caption Security Ownership of Certain Beneficial Owners and Management in
the 2001 Proxy Statement.

Item 13.CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS

Information
regarding certain relationships and related transactions with the Company is
incorporated herein by reference to the information set forth under the caption
Certain Transactions in the 2001 Proxy Statement.

PART IV

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

(a)
  Documents filed
  with this report.(1)
  See index to consolidated financial
  statements.(2)
  All supplemental schedules are omitted
  because of the absence of conditions under which they are required or because
  the information is shown in the Consolidated Financial Statements or notes
  thereto.(b)
  Reports on Form 8–K.  During the quarter ended March 31, 2001,
  the Company filed no reports on Form 8–K with the Securities and
  Exchange Commission.(c)
  ExhibitsExhibitNumber
  Description3.1
  The Companys Restated Articles of
  Incorporation.(1)3.2
  The Companys Bylaws.(1)10.1
  The Rottlund Company, Inc. 1992 Stock Option
  Plan.(1)10.2
  The Rottlund Company, Inc. 1992 Director
  Stock Option Plan.(1)10.3
  The Rottlund Company, Inc. Employee Stock
  Purchase Plan.(1)10.4
  Form of Shareholders Agreement.(1)10.5
  Second Amended and Restated Credit
  Agreement with BankBoston, N.A., dated November 30, 1999.(3)10.6
  First Modification of Second Amended and
  Restated Credit Agreement with Fleet National Bank and Bank United, dated
  April 21, 2000.(3)10.11
  Third Modification of Second Amended and
  Restated Credit Agreement and loan documents(2)23
  Consent of Arthur Andersen LLP.




(1)
  Incorporated by reference to the Companys
  Registration Statement on Form S-1, Registration No. 33-51726.(2)
  Incorporated by reference to the Companys
  filing on Form 10-Q for the quarter ended December 31, 2000.(3)
  Incorporated by reference to the Companys
  filing on Form 10-K for the year ended March 31, 2000.



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.



THE ROTTLUND COMPANY.  INC.Dated: 
  June 12, 2001By
  /s/ David H. RotterDavid H. RotterPresident, Chief
  Executive Officer and DirectorPursuant 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
  Title
  Date/s/ David H. Rotter
  President, Chief Executive Officer and
  Director
  June 12, 2001David H. Rotter/s/ Bernard J. Rotter
  Vice President, Treasurer and Chairman of
  the Board
  June 12, 2001Bernard J. Rotter/s/ Steven A. Kahn
  Chief Financial Officer
  (Principal Financial and Accounting Officer)
  June 12, 2001Steven A. Kahn/s/ Todd M. Stutz
  Executive Vice President and Director
  June 12, 2001Todd M. Stutz/s/ Dennis J. Doyle
  Director
  June 12, 2001Dennis Doyle/s/ Scott D. Rued
  Director
  June 12, 2001Scott D. Rued