Dear Lyon Stockholder,

It is with a great deal of pride that we dedicate this year's Annual Report to the employees of William Lyon Homes and its subsidiaries, whose dedication and hard work have made 2000 a truly exceptional year. We are pleased to report that, on a combined basis with our unconsolidated joint ventures, we established record highs in new home deliveries, revenue from sales of homes, gross profit and income before taxes and extraordinary item.

2000 was our first full year of operation following the acquisition of substantially all the assets of William Lyon Homes, Inc. by the former Presley Companies. We spent the past year combining operations of these two great homebuilding companies, realizing significant operating efficiencies resulting from the excellent geographic fit of our projects.

One such efficiency occurred in our combined sales, marketing and general and administrative costs, which totaled a very low 8.1% of revenue.

The new William Lyon Homes now commands a significant market share in California, which has allowed us to expand our relationships with land sellers, material suppliers, subcontractors and the lending community - thereby allowing us to compete more effectively in the highly competitive California market.

Compass Pointe at Forster Highlands, Plan 1and Plan 2, in San Clemente, CA.