- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997
OR
[ ] 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. 0-19633
ENGLE HOMES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2214791
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 N.W. 13TH STREET
BOCA RATON, FLORIDA 33432
--------------------------------------- ----------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 391-4012
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 $.01 PER SHARE)
---------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [X]
The aggregate market value of shares of Common Stock held by
non-affiliates of the Registrant as of November 14, 1997, was approximately
$43,485,685 based on the $14.25 closing price for the Common Stock on The
Nasdaq National Market on such date. For purposes of this computation, all
executive officers and directors of the Registrant have been deemed to be
affiliates. Such determination should not be deemed to be an admission that such
directors and officers are, in fact, affiliates of the Registrant.
The number of shares of Common Stock of the Registrant outstanding as
of November 14, 1997 was 6,931,693.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement relating to the
Registrant's 1998 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission not later than 120 days after the end of the fiscal year
covered by this report are incorporated by reference into Part III of this
report.
- -------------------------------------------------------------------------------
1
<PAGE>
Engle Homes, Inc. hereby amends and supplements the following items of its
Annual Report on Form 10-K for the year ended October 31, 1997, to read in its
entirety as set forth below. Item 8 has been amended to add Note 10 to the
consolidated financial statements setting forth summarized financial information
for the Company's subsidiary guarantors. Item 14 has been amended in order to
file Exhibit 21.1, "List of Registrant's Subsidiaries."
2
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Report of Independent Certified Public Accountants..................... 4
Consolidated Balance Sheets
as of October 31, 1997 and 1996...................................... 5
Consolidated Statements of Income
For the Years Ended October 31, 1997, 1996 and 1995.................. 6
Consolidated Statements of Shareholders' Equity
For the Years Ended October 31, 1997, 1996 and 1995.................. 7
Consolidated Statements of Cash Flows
For the Years Ended October 31, 1997, 1996 and 1995.................. 8
Notes to Consolidated Financial Statements............................. 9
Consolidated Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts............... 22
Schedules other than those listed above are omitted because of the conditions
under which they are required, or because the information required therein is
set forth in the consolidated financial statements or the notes thereto.
3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders' and Board of Directors
Engle Homes, Inc.
Boca Raton, Florida
We have audited the accompanying consolidated balance sheets of Engle Homes,
Inc., and subsidiaries as of October 31, 1997 and 1996 and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended October 31, 1997. We have also audited
the schedule listed in the accompanying index. These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
the schedule. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and the schedule. 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 Engle Homes, Inc.
and subsidiaries at October 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 1997 in conformity with generally accepted accounting principles.
Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.
Miami, Florida BDO SEIDMAN, LLP
November 10, 1997
4
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------
1997 1996
---------- ---------
<S> <C> <C>
ASSETS
CASH
Unrestricted ......................................................... $ 15,565 $ 18,262
Restricted ............................................................ 981 3,438
INVENTORIES ............................................................ 230,108 220,564
PROPERTY AND EQUIPMENT, net .......................................... 2,623 3,599
OTHER ASSETS ......................................................... 15,803 19,406
GOODWILL, net of accumulated amortization
of $1,149 and $813, respectively .................................... 5,627 5,964
DEFERRED TAX ASSET ................................................... 3,176 550
MORTGAGE LOANS HELD FOR SALE .......................................... 14,529 13,006
-------- --------
TOTAL ASSETS ...................................................... $288,412 $284,789
======== ========
LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES .............................. $ 21,167 $ 26,170
CUSTOMER DEPOSITS ...................................................... 7,472 12,004
BORROWINGS ............................................................ 82,064 82,117
SENIOR NOTES PAYABLE, including $5,390 to related parties ............ 40,000 40,000
CONVERTIBLE SUBORDINATED NOTES ....................................... 30,000 30,000
FINANCIAL SERVICE BORROWINGS .......................................... 14,529 13,006
-------- --------
TOTAL LIABILITIES ................................................ 195,232 203,297
-------- --------
SHAREHOLDERS' EQUITY
PREFERRED STOCK, $.01 par, shares authorized 1,000,000; none issued ...
COMMON STOCK, $.01 par shares authorized 25,000,000;
issued and outstanding 6,931,693 and 6,929,200 respectively ......... 69 69
ADDITIONAL PAID-IN CAPITAL ............................................. 47,852 48,523
RETAINED EARNINGS ...................................................... 45,259 32,900
-------- --------
TOTAL SHAREHOLDERS' EQUITY ....................................... 93,180 81,492
-------- --------
$288,412 $284,789
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
REVENUES
Sales of homes ....................................... $404,407 $303,972 $216,059
Sales of land ....................................... 7,685 17,571 20,964
Rent and other ....................................... 1,513 1,485 1,573
Financial services ................................. 11,690 9,060 5,932
-------- -------- --------
425,295 332,088 244,528
-------- -------- --------
COSTS AND EXPENSES
Cost of sales-homes ................................. 345,295 260,651 184,888
Cost of sales-land ................................. 7,095 15,589 17,332
Selling, marketing, general and administrative ...... 39,620 31,906 24,466
Depreciation and amortization ........................ 2,374 2,977 3,532
Financial services ................................. 9,012 7,264 4,774
-------- -------- --------
403,396 318,387 234,992
-------- -------- --------
INCOME BEFORE INCOME TAXES ........................... 21,899 13,701 9,536
Provision for income taxes ........................... 8,431 5,206 3,624
-------- -------- --------
NET INCOME .......................................... $ 13,468 $ 8,495 $ 5,912
======== ======== ========
Net income per share
Primary ............................................. $ 1.94 $ 1.20 $ 0.85
======== ======== ========
Fully diluted ....................................... $ 1.58 $ 1.03 $ 0.74
======== ======== ========
Shares used in earnings per share calculations
Primary ............................................. 6,951 7,108 6,989
Fully diluted ....................................... 9,246 9,251 9,132
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL RETAINED
SHARES AMOUNT PAID-IN CAPITAL EARNINGS TOTAL
----------- -------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Amounts at October 31, 1994 ......... 6,679,200 $ 67 $45,525 $20,711 $66,303
Net income ........................ 5,912 5,912
Dividends to shareholders ......... (1,109 ) (1,109 )
Common Stock issued in connection
with acquisition of land ......... 250,000 2 2,998 3,000
--------- ---- ------- ------- --------
Amounts at October 31, 1995 ......... 6,929,200 $ 69 $48,523 $25,514 $74,106
Net income ........................ 8,495 8,495
Dividends to shareholders ......... (1,109) (1,109)
-------- --------
Amounts at October 31, 1996 ......... 6,929,200 $ 69 $48,523 $32,900 $81,492
Net income ........................ 13,468 13,468
Dividends to shareholders ......... (1,109) (1,109)
Distribution in connection with
land purchase ..................... (694) (694)
Common Stock issued in connection with
employee stock bonus plan ......... 2,493 23 23
--------- ---- ------- -------- --------
Amounts at October 31, 1997 ......... 6,931,693 $ 69 $47,852 $45,259 $93,180
========= ==== ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................................... $ 13,468 $ 8,495 $ 5,912
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................... 2,374 2,977 3,532
Impairment loss ................................................... 2,156 1,948
Deferred tax (benefit) provision ................................. (2,626) (1,508) 154
Employee stock compensation ....................................... 24
Change in assets and liabilities:
Decrease in restricted cash ....................................... 2,457 819 221
Increase in inventories .......................................... (11,700) (23,848) (56,957)
Decrease (increase) in other assets .............................. 3,231 (5,396) (822)
Increase in mortgages held for sale .............................. (1,523) (6,533) (3,910)
(Decrease) increase in accounts payable and accrued expenses ...... (5,003) 12,462 2,181
(Decrease) increase in deposits .................................... (4,532) 2,785 929
Increase in financial service borrowings ........................... 1,523 6,533 3,910
--------- -------- ---------
Net cash required by operating activities ..................... (151) (1,266) (44,850)
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment .............................. (1,282) (707) (1,567)
Proceeds from sale of property .................................... 592 7,538
--------- -------- ---------
Net cash (required) provided by investing activities ............ (690) 6,831 (1,567)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings ............................................. 47,510 94,872 105,955
Repayment of borrowings ............................................. (47,563) (90,209) (57,929)
Distribution to shareholders ....................................... (1,803) (1,109) (1,109)
--------- -------- ---------
Net cash (required) provided by financing activities ............ (1,856) 3,554 46,917
--------- -------- ---------
NET (DECREASE) INCREASE IN CASH .................................... (2,697) 9,119 500
CASH AT BEGINNING OF PERIOD .......................................... 18,262 9,143 8,643
--------- -------- ---------
CASH AT END OF PERIOD ................................................ $ 15,565 $ 18,262 $ 9,143
========= ======== =========
Supplemental disclosure of cash flow information
Interest paid ...................................................... $ 15,623 $ 15,293 $ 14,915
========= ======== =========
Income taxes paid ................................................... $ 10,324 $ 4,902 $ 3,407
========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND BUSINESS:
Engle Homes, Inc. and subsidiaries ("the Company") is engaged principally
in the construction and sale of residential homes and land development. The
Company's primary market is Florida with divisions in Dallas, Texas; Denver,
Colorado; Virginia and Maryland; Raleigh, North Carolina; Phoenix, Arizona and
Atlanta, Georgia. Ancillary products and services to its residential home
building include land sales to other builders, origination and sale of mortgage
loans and title services. The consolidated financial statements include the
accounts of the Company and all subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
ASSET IMPAIRMENTS:
During fiscal 1996, the Company adopted Financial Accounting Standard
Statement No. 121 entitled "Accounting for the Impairment of Long-Lived Assets
to be Disposed of" which was not significantly different from the Company's
previous asset impairment accounting policy. The Company periodically reviews
the carrying value of certain of its assets in relation to historical results,
current business conditions and trends to identify potential situations in
which carrying value of assets may not be recoverable. If such reviews indicate
that the carrying value of such assets may not be recoverable, the Company
would estimate the undiscounted sum of the expected cash flows of such assets
to determine if such sum is less than the carrying value of such assets to
ascertain if a permanent impairment exists. If a permanent impairment exists,
the Company would determine the fair value by using quoted market prices, if
available for such assets, or if quoted market prices are not available, the
Company would discount the expected future cash flows of such assets.
CASH:
Unrestricted cash includes amounts in transit from title companies for
home closings and highly liquid investments with an initial maturity of three
months or less.
Restricted cash consists of amounts held in escrow as required by purchase
contracts or by law for rental security deposits and compensating balances for
various letters of credit.
INVENTORIES:
Inventories are stated at the lower of cost or fair value. Inventories
under development or held for development are stated at an accumulated cost
unless such cost would not be recovered from the cash flows generated by future
disposition. In this instance, such inventories are measured at fair value.
Interest, real estate taxes and similar development costs are capitalized
to land and construction costs during the development and construction period
and are amortized to costs of sales as closings occur.
9
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
PROPERTY AND EQUIPMENT, DEPRECIATION AND AMORTIZATION:
Property and equipment are stated at cost. Depreciation and amortization
are provided over the assets' estimated useful lives ranging from 18 months to
30 years, primarily on the straight-line method. Loan costs are deferred and
amortized over the term of the outstanding borrowings.
GOODWILL:
The Company has classified as goodwill, the excess of cost over the fair
value of the net assets of companies acquired in purchase transactions.
Goodwill is being amortized on a straight line method over 20 years.
Amortization charged to operations annually amounted to $336,550 in fiscal
1997, 1996, and 1995 respectively.
REVENUE RECOGNITION:
Revenues and profits from sales of commercial and residential real estate
and related activities are recognized when closings have occurred and the
purchaser has made a minimum down payment and other criteria for sale and
profit recognition are satisfied in accordance with generally accepted
accounting principles governing profit recognition for real estate
transactions.
SELLING AND MARKETING:
Certain selling and marketing costs associated with residential projects
are deferred and amortized as closings related to those sales occur and revenue
is recognized. The deferred selling and marketing amount was $1,300,000 at
October 31, 1997. The Company amortized selling and marketing costs of
$27,800,000, $22,100,000 and $15,600,000 in 1997, 1996 and 1995, respectively.
INCOME TAXES:
The Company accounts for income taxes under the asset and liability method
in accordance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes."
EARNINGS PER SHARE:
Net income per share is based on the weighted average number of shares of
Common Stock outstanding during each year, after giving effect to the stock
splits, convertible debt and stock options described in Notes 5 and 6. Such
computations are further adjusted for fully diluted purposes by assuming
conversion of the $30,000,000 7% Convertible Subordinated Notes and elimination
of related interest amortized net of taxes during the period, resulting in an
increase in net income of $1,114,000, $1,071,000 and $854,905 for the years
ended October 31, 1997, 1996 and 1995 respectively.
FINANCIAL INSTRUMENTS:
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques as appropriate, unless
otherwise disclosed, the fair values of financial instruments approximate their
recorded values.
10
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
STOCK BASED COMPENSATION:
On October 23, 1995, the Financial Accounting Standards Board issued a
SFAS No. 123, "Accounting for Stock-Based Compensation," which is effective for
financial statements for fiscal years beginning after December 15, 1995.
Statement No. 123 provides a fair value method of accounting for stock-based
compensation arrangements rather than the intrinsic value based method
contained in APB Opinion No. 25. The Statement does not require an entity to
adopt the new fair value based method for the purpose of preparing its basic
financial statements. Entities that retain the APB Opinion No. 25 method of
accounting will be required to display in the footnotes pro forma net income
and earnings per share information as if the fair value based method had been
adopted. The Company currently does not intend to adopt the Fair-Value Method
provided in Statement No. 123.
NEW ACCOUNTING PRONOUNCEMENTS:
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," issued in February 1997, replaces the current methodology for
calculating and presenting earnings per share. Under SFAS No. 128, primary
earnings per share will be replaced with a presentation of basic earnings per
share and fully diluted earnings per share will be replaced with diluted
earnings per share. Basic earnings per share excludes dilution and is computed
by dividing income available to common shares outstanding for the period by the
weighted average number of shares of common stock outstanding. Diluted earnings
per share is computed similarly to fully diluted earnings per share in
accordance with APB Opinion No. 15. The Statement will be effective for
financial statements issued by the Company after December 15, 1997. The impact
of SFAS No. 128 is not expected to be material.
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distributions to owners.
Among other disclosures, SFAS No. 130 requires that all items that are required
to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which supersedes SFAS No. 14, Financial Reporting for Segments of
a Business Enterprise, establishes standards for the way that public
enterprises report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate the resources and in assessing performance.
Both SFAS No. 130 and No. 131, issued in June 1997, are effective for
financial statements for periods beginning after December 15, 1997 and require
comparative information for earlier years to be restated. Due to the recent
issuance of these standards, management has been unable to fully evaluate the
impact, if any, they may have on future financial statement disclosures.
11
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FINANCIAL STATEMENT RECLASSIFICATIONS:
Certain amounts reflected in the consolidated financial statements for the
years ended October 31, 1996 and 1995 have been reclassified to conform to the
presentation for the year ended October 31, 1997.
NOTE 2--INVENTORIES
Inventories consist of (dollars in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------
1997 1996
---------- ---------
<S> <C> <C>
Land and improvements for residential homes under
development .................................... $180,899 $161,590
Residential homes under construction ............ 46,049 55,715
Land zoned for commercial development ............ 1,780 1,780
Investment in unconsolidated joint ventures ...... 1,380 1,479
-------- --------
................................................... $230,108 $220,564
======== ========
</TABLE>
The investment in the unconsolidated joint venture consists of land
purchased in connection with a joint venture with US Home. Each company
maintains a fifty percent (50%) interest in the venture. The land is being
developed by the joint venture and then transferred to each joint venture
partner at the venture's cost. The Company and US Home separately market and
build the homes.
Included in inventory is the following (dollars in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------------
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Interest capitalized, beginning of period ...... $ 16,821 $ 13,092 $ 6,246
Interest incurred and capitalized ............... 15,623 15,272 13,750
Interest amortized to cost of sales ............ (16,066) (11,543) (6,904)
--------- --------- --------
Interest capitalized, end of period ............ $ 16,378 $ 16,821 $ 13,092
========= ========= ========
</TABLE>
Included in the cost of sales-homes during the years ended October 31,
1997 and 1996, are impairment losses of $2.2 million and $1.9 million,
respectively, to reduce certain projects under development to fair value.
NOTE 3--PROPERTY AND EQUIPMENT (dollars in thousands)
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
Commercial properties ............... $ 1,041 $ 1,825
Other property and equipment ......... 3,835 4,756
-------- --------
4,876 6,581
Less: accumulated depreciation ...... (2,253) (2,982)
-------- --------
$ 2,623 $ 3,599
======== ========
</TABLE>
During fiscal 1996, the Company sold three commercial properties, a 38,000
square foot shopping plaza and a 60,000 square foot mixed use office building,
both located in Boca Raton, Florida, and a 95 unit rental apartment complex in
Orlando, Florida.
12
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--FINANCIAL SERVICES
The Company operates two financial services subsidiaries: a full service
mortgage company and a title company.
The mortgage company's activities include the origination, sale and
servicing of residential mortgages. The mortgage company has established an
$18.0 million line of credit at prime minus .25% (8.25% at October 31, 1997),
expiring April 1998, to finance mortgage originations. As of October 31, 1997,
the balance outstanding under the line of credit was approximately $14.5
million. Management does not anticipate that such expanded operations will
significantly impact the Company's liquidity because the originated mortgages
are sold within a short period of time after their origination to qualified
investors. The following is a summary of the mortgage company's results of
operations and financial position:
PREFERRED HOME MORTGAGE COMPANY
INCOME STATEMENT INFORMATION
(dollars in thousands)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER
31,
-----------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
REVENUES
Loan origination fees ............ $3,556 $3,041 $1,551
Interest ........................... 577 494 134
------ ------ ------
TOTAL REVENUES ..................... 4,133 3,535 1,685
------ ------ ------
COSTS AND EXPENSES ..................
General and administrative ......... 1,724 1,716 982
Interest ........................... 570 514 174
Application processing costs ...... 566 512 208
------ ------ ------
TOTAL EXPENSES ..................... 2,860 2,742 1,364
------ ------ ------
INCOME BEFORE TAXES ............... $1,273 $ 793 $ 321
====== ====== ======
</TABLE>
13
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--FINANCIAL SERVICES--(CONTINUED)
PREFERRED HOME MORTGAGE COMPANY
BALANCE SHEET INFORMATION
(dollars in thousands)
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------
1997 1996
--------- --------
<S> <C> <C>
ASSETS
CASH ............................................. $ 102 $ 106
MORTGAGE LOANS HELD FOR SALE ..................... 14,529 13,006
MORTGAGE LOANS RECEIVABLE ........................ 171 360
OTHER .......................................... 559 655
ADVANCES TO PARENT (a) ........................... 1,877 331
------- -------
TOTAL ASSETS ................................. $17,238 $14,458
======= =======
LIABILITIES AND EQUITY
ACCOUNTS PAYABLE ................................. $ 66 $ 82
NOTES PAYABLE .................................... 14,529 13,006
------- -------
TOTAL LIABILITIES .............................. 14,595 13,088
SHAREHOLDERS' EQUITY ........................... 2,643 1,370
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...... $17,238 $14,458
======= =======
</TABLE>
- ----------------
(a) Certain intercompany transactions and balances are eliminated in
consolidation and have no effect on consolidated earnings or equity.
NOTE 5--BORROWINGS (dollars in thousands)
Borrowings consist of:
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------
1997 1996
---------- ---------
<S> <C> <C>
Acquisition and development loans from banks, payable through
1999, with interest at floating rates (8.75% at October 31, 1997),
collateralized by inventories .................................... $ 13,357 $ 24,907
Purchase money mortgages, collateralized by inventories ......... 1,624
Revolving construction loans from banks, payable through 2000
with interest at floating rates (8.15% to 9.00% at October 31,
1997), collateralized by inventories ........................... 68,622 55,541
Other ............................................................ 85 45
-------- --------
Borrowings ...................................................... $ 82,064 82,117
Senior Notes due December 15, 2000 with interest at a fixed rate
of 11 3/4% payable semi-annually ................................. $ 40,000 $ 40,000
Convertible Subordinated Notes due March 1, 2003 with interest
at a fixed rate of 7% payable semi-annually ..................... $ 30,000 $ 30,000
-------- --------
$152,064 $152,117
======== ========
</TABLE>
On February 22, 1993, the Company sold $30,000,000 of 7% Convertible
Subordinated Notes Due 2003 (the "Notes"). The Notes are convertible into
Common Stock at a conversion price of $14.00 per share and are redeemable in
whole or in part, at the option of the Company on or after April 1, 1996.
14
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--BORROWINGS--(CONTINUED)
In October 1997, the Company announced the early redemption of $15 million
of the Notes. The redemption is anticipated to be completed in November 1997 at
a redemption price of $1,042.50 per $1,000 (face value) of Notes.
The Company's loan agreements include covenants, including restrictions on
the Company's ability to pay dividends (no more than 50% of net income after
taxes for each fiscal year). Certain of such loans also require that the
principal shareholders continue to beneficially own a majority of the Company's
outstanding Common Stock and provide that the lender may, at its option,
accelerate such loans as a result of, among other things, mergers with other
entities. In addition, the Convertible Subordinated Notes and the Senior Notes
are guaranteed by all of the Company's subsidiaries on a full, unconditional,
joint and several basis. The financial statements of the subsidiary guarantors
are omitted as management has determined that they would not be material to
investors.
Maturities of borrowings are as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
- ----------------------------------
<S> <C>
1998 ........................... 4,424
1999 ........................... 42,004
2000 ........................... 74,173
2001 ........................... --
Thereafter ..................... 31,463
------
$152,064
========
</TABLE>
The Company has approximately $18,921,000 available for future borrowings
under various acquisition and development related borrowing arrangements at
October 31, 1997.
As of October 31, 1997, the outstanding principal amount of 7% Convertible
Subordinated Notes and 113/4% Senior Notes were $30,000,000 and $40,000,000,
respectively. The aggregate fair market value of the notes, based upon their
quoted market price as of October 31, 1997, was approximately $75,610,000. All
other borrowings, due to their relative short-term maturity, approximate fair
market value as of October 31, 1997.
NOTE 6--STOCK-BASED COMPENSATION
At October 31, 1997, the Company has a fixed stock option plan which is
described below. The Company applies APB Opinion 25, Accounting for Stock
Issued to Employees, and related interpretations in accounting for the plan.
Under APB Opinion 25, if the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of grant,
no compensation is recognized.
Under the plan, options were authorized to be granted to purchase 850,000
common shares at not less than the fair market value at the date of grant.
Options expire ten years from the date of grant.
FASB Statement 123, Accounting for Stock-Based Compensation, requires the
Company to provide proforma information regarding net income and net income per
share as if compensation cost for the Company's stock option plan had been
determined in accordance with the fair-value based method prescribed in FASB
Statement 123. There were no options granted during the year ended October 31,
1997 and options to purchase 5,000 shares were granted during the year ended
October 31, 1996. The Company's pro forma net income and income per share under
the accounting provisions of FASB Statement 123 did not materially differ from
the reported amounts.
15
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--STOCK-BASED COMPENSATION--(CONTINUED)
A summary of the status of the Company's fixed stock option plan as of
October 31, 1997 and 1996, and changes during the years then ended on those
dates are presented below:
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1997 AS OF OCTOBER 31, 1996
------------------------------ --------------------------------
WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- ------------------ ------------ -----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year ...... 606,500 $10.76 624,000 $ 10.80
Granted .............................. -- -- 5,000 $ 9.00
Exercised .............................. -- -- -- --
Forfeited .............................. -- -- (22,500) $ 11.50
Outstanding at end of year ............ 606,500 $10.76 606,500 $ 10.76
------- ------ ------- -------
Options exercisable at year-end ...... 502,000 $11.10 387,200 $ 11.20
Weighted average fair value of options
granted during the year ............... -- -- 5,000 $ 9.00
</TABLE>
The following table summarizes information about fixed stock options
outstanding at October 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- -------------------------------------------------------------------------- -------------------------------
NUMBER WEIGHTED AVERAGE WEIGHTED NUMBER WEIGHTED
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 10/31/97 CONTRACTUAL LIFE EXERCISE PRICE AT 10/31/97 EXERCISE PRICE
- ------------------ ------------- ------------------ ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
$9.00 - $11.50 606,500 5 years $10.76 502,000 $11.10
</TABLE>
During fiscal 1997 the Company established the 1997 Performance Bonus Plan
(the "Bonus Plan"). The Bonus Plan provides for the issuance of up to 25,000
shares at "Fair Market Value" to certain management employees. The Company
issued 2,493 shares valued at approximately $24,000 during fiscal 1997.
NOTE 7--INCOME TAXES
The income tax provision in the consolidated statements of income consists
of the following components (dollars in thousands) :
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------
1997 1996 1995
----------- ----------- -------
<S> <C> <C> <C>
Current:
Federal ...... $ 9,467 $ 5,734 $2,952
State ......... 1,589 981 518
-------- -------- ------
$ 11,056 $ 6,715 $3,470
-------- -------- ------
Deferred:
Federal ...... (2,250) (1,288) 132
State ......... (375) (221) 22
-------- -------- ------
(2,625) (1,509) 154
-------- -------- ------
Total ...... $ 8,431 $ 5,206 $3,624
======== ======== ======
</TABLE>
The provision for income taxes was different from the amount computed by
applying the statutory rate due to the effect of state income taxes.
16
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--INCOME TAXES--(CONTINUED)
Temporary differences which gave rise to deferred income tax assets and
liabilities at October 31, 1997 and 1996 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Deferred tax liabilities:
Differences in reporting selling and marketing costs for tax
purposes. ................................................... $ 818 $ 1,185
Other ...................................................... 97 68
-------- -------
Gross deferred tax liabilities .............................. $ 915 $ 1,253
Deferred tax assets:
Inventory ................................................... 2,822 913
Property and equipment .................................... 384 534
Income recognized for tax purposes and deferred for financial
reporting purposes ....................................... 885 356
-------- -------
Gross deferred tax assets .................................... 4,091 1,803
-------- -------
Net deferred tax asset ....................................... $ (3,176) $ (550)
======== =======
</TABLE>
NOTE 8--COMMITMENTS AND CONTINGENCIES
The Company is subject to the normal obligations associated with entering
into contracts for the purchase, development and sale of real estate in the
routine conduct of its business. The Company is committed under various letters
of credit to perform certain development activities, deposits on land and lot
purchase contract deposits. Outstanding letters of credit and performance bonds
under these arrangements totaled approximately $29.2 million at October 31,
1997.
During fiscal 1996, the Company entered into an agreement for the sale and
leaseback of the Company's office/retail complex located at the Company's
headquarters in Boca Raton, Florida. The sales price was $8,000,000, which
approximated the carrying amount. The lease is classified as an operating lease
in accordance with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases."
The Company and its subsidiaries occupy certain facilities under lease
arrangements. Rent expense, net of sublease income, amounted to $293,541,
$302,582, and $202,888 in fiscal 1997, 1996, and 1995, respectively. Future
minimum rental commitments for operating leases with non-cancelable terms in
excess of one year are $800,000 per year through 2006. Sublease income is
derived primarily from tenants occupying space under month-to-month and annual
leases.
The Internal Revenue Service is in the process of reviewing the Company's
tax returns for the years 1994 through 1996. While the Company cannot be
certain of the results of these audits, it believes that adjustments, if any,
will not be material.
The Company is involved, from time to time, in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company's consolidated financial position or results of
operations.
The Company, as well as the homebuilding industry in general, may be
adversely affected during periods of high inflation, primarily because of
higher land and construction costs. In addition, higher
17
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--COMMITMENTS AND CONTINGENCIES--(CONTINUED)
mortgage interest rates may significantly affect the affordability of permanent
mortgage financing to prospective purchasers. Inflation also increases the
Company's interest costs and costs of labor and materials. The Company attempts
to pass through to its customers any increases 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's operations are interest rate sensitive. Overall housing
demand is adversely affected by increases in interest costs. If mortgage
interest rates increase significantly, this may negatively impact the ability
of a home buyer to secure adequate financing and may adversely affect the
carrying value of inventory. Such results of higher interest rates may result
in adversely affecting the Company's revenues, gross margins and net income.
NOTE 9--DEFERRED COMPENSATION PLAN
The Company has a defined contribution plan established pursuant to
Section 401(k) of the Internal Revenue Code. Employees contribute to the plan a
percentage of their salaries, subject to certain dollar limitations, and the
Company matches a portion of the employees' contributions. The Company's
contribution to the plan for the years ended October 31, 1997, 1996, and 1995
amounted to $93,000, $61,000 and $66,000, respectively.
NOTE 10--SUMMARIZED FINANCIAL INFORMATION
The securities that may be issued under a debt offering contemplated by
the Company will be guaranteed by all of the Company's subsidiaries on a full,
unconditional, joint and several basis. The financial statements of the
subsidiary guarantors are omitted as management has determined that separate
financial statements and other disclosures concerning the subsidiaries are not
material to investors.
Summarized financial information of guarantor subsidiaries are as follows
(dollars in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Inventory ....................................... $194,847 $204,200 $178,407
Total assets .................................... 247,966 239,402 215,204
Borrowings .................................... 51,346 50,098 50,563
Total liabilities .............................. 146,817 155,045 154,241
Revenues from the sales of homes and land ...... 339,198 282,773 198,598
Total revenues ................................. 378,996 293,103 205,209
Cost of sales homes and land .................. 293,884 241,518 167,955
Net income .................................... 10,230 11,341 8,861
</TABLE>
18
<PAGE>
ENGLE HOMES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--QUARTERLY RESULTS FOR 1997 AND 1996 (UNAUDITED)
Quarterly results for the years ended October 31, 1997 and 1996 follow:
(dollars in thousands, except per share data):
<TABLE>
<CAPTION>
1997 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
- --------------------------------------------------------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues ................................................... $100,108 $105,120 $107,125 $112,942
Income before income taxes ................................. 4,618 4,999 5,856 6,426
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 2,840 3,074 3,602 3,952
Net income per share
Primary ................................................... 0.41 0.44 0.52 0.56
Fully diluted ............................................. 0.34 0.36 0.43 0.46
Shares used in earnings per share
calculation:
Primary ................................................... 6,989 6,962 6,963 7,047
Fully diluted ............................................. 9,132 9,105 9,106 9,246
1996
- -------
Revenues ................................................... $ 60,050 $ 76,034 $ 90,393 $105,611
Income before income taxes ................................. 1,306 3,304 3,990 5,101
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 810 2,048 2,474 3,163
Net income per share
Primary ................................................... 0.12 0.29 0.35 0.44
Fully diluted ............................................. 0.11 0.25 0.30 0.38
Shares used in earnings per share
calculation:
Primary ................................................... 6,989 7,037 7,120 7,108
Fully Diluted ............................................. 9,132 9,180 9,263 9,251
</TABLE>
Quarterly and year-to-date computation of per share amounts are made
independently. Therefore, the sum of per share amounts for the quarters may not
agree with per share amounts for the year.
NOTE 12--NON-CASH INVESTING AND FINANCING ACTIVITIES
During fiscal 1996 the Company sold certain commercial properties in
exchange for cash of $7.5 million and notes receivable of $3.9 million.
During fiscal 1995 the Company purchased land valued at $3.0 million in
exchange for 250,000 restricted shares of Common Stock with a minimum
guaranteed price of $12.00 a share. In connection with this transaction, the
Company recorded a deferred tax liability of $280,000 representing the
differential in the basis of the land for financial reporting and tax reporting
purposes. During fiscal 1997, the Company paid the seller approximately
$694,000 in connection with the guarantee. The guarantee expired during fiscal
1997.
19
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
Reference is made to the index set forth on page 3 of this Annual Report
on Form 10-K/A.
2. FINANCIAL STATEMENT SCHEDULES:
Reference is made to the index set forth on page 3 of this Annual Report
on Form 10-K/A.
3. EXHIBITS:
EXHIBIT
NO. DESCRIPTION
3.1 Registrant's Amended and Restated Articles of Incorporation(1)
3.2 Registrant's Amended and Restated Bylaws(2)
4.1 Specimen Stock Certificate for Registrant's Common Stock(2)
4.2 Registration Rights Agreement among the Registrant, Alec Engelstein,
Sheila Engelstein and Harry Engelstein(2)
4.3 Indenture dated as of February 12, 1993, among the Registrant, its
subsidiaries and The First National Bank of Boston, relating to the
Convertible Subordinated Notes(1)
4.4 Specimen form of original Convertible Subordinated Note(1)
4.6 Purchase Agreement, dated as of February 12, 1993, among the
Registrant, its subsidiaries and the purchasers of the Convertible
Subordinated Notes(1)
4.7 Registration Rights Agreement, dated as of February 12, 1993, among
the Registrant and the purchasers of the Convertible Subordinated
Notes(1)
4.8 Specimen Form of New Convertible Subordinated Note(1)
4.9 Indenture, dated as of March 15, 1994, relating to the Company's 11
3/4% Senior Notes due 2000(3)
4.10 Specimen form of 11 3/4% Senior Notes due 2000(3)
4.11 Registration Rights Agreement, dated March 17, 1994, between the
Company and PaineWebber Incorporated Relating to the Company's 11
3/4% Senior Notes due 2000(3)
4.12 Purchase Agreement, dated March 10, 1994, between the Company and
PaineWebber Incorporated relating to the sale of the Company's 11
3/4% Senior Notes due 2000(3)
10.1 Registrant's 1991 Stock Option Plan (Compensatory Plan)(7)
10.2 Indemnification Agreement between the Registrant and each of its
directors and certain executive officers(1)
10.3 Asset Purchase Agreement, dated May 13, 1994, among Engle Homes,
Inc., Park Homes West, Inc. and David H. Feinberg, and Amendment No.
1 thereto, dated June 14, 1994(6)
10.6 Stock Bonus Plan(4)
11.1 Statement Regarding Computation of Per Share Earnings(5)
21.1 List of Registrant's Subsidiaries(8)
23.1 Consent of BDO Seidman, LLP(8)
--------------------
(1) Incorporated by reference to the exhibit with the same number filed with
the Registrant's Registration Statement on Form S-1 (File No. 33-58678).
(2) Incorporated by reference to the exhibit with the same number filed with
the Registrant's Registration Statement on Form S-1 (File No. 33-43305).
(3) Incorporated by reference to the exhibit with the same number filed with
the Registrant's current Report on Form 8-K, dated March 24, 1994.
(4) Incorporated by reference to exhibit 10.1 of the Registrant's
Registration Statement on Form S-8 (File No. 333-39223).
(5) Previously filed.
(6) Incorporated by reference to exhibit 2.1 with the same number filed with
the Registrant's Current Report on Form 8-K, dated June 28, 1994.
(7) Incorporated by reference from the Company's registration statement on
Form S-8 filed on November 30, 1995.
(8) Filed herewith.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
20
<PAGE>
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.
ENGLE HOMES, INC.
By /s/ DAVID SHAPIRO
-------------------------------
David Shapiro, Vice President - Finance
Dated: December 16, 1997 and Chief Financial Officer
21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
ENGLE HOMES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended October 31, 1997, 1996 and 1995
(amounts in thousands)
BALANCE AT CHARGES TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTION YEAR EXPENSES DEDUCTIONS END OF YEAR
- ---------------------------- ------------ ----------------- ------------------ -----------
<S> <C> <C> <C> <C>
Year ended October 31, 1997
Inventory Valuation allowance 1,948 2,156 3,186 918
Year ended October 31, 1996
Inventory Valuation allowance 1,948 1,948
Year ended October 31, 1995
Inventory Valuation allowance
</TABLE>
22
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO DISCRIPTION
- ------- -----------
21.1 List of Registrant's Subsidiaries
23.1 Consent of BDO Seidman, LLP
EXHIBIT 21.1
LIST OF REGISTRANT'S SUBSIDIARIES
STATE OR OTHER
JURISDICTION OF
NAME INCORPORATION
- ---------------------------------------- -----------------
Banyan Trails, Inc. Florida
Engle Homes/Arizona, Inc. Florida
Engle Homes/Atlanta, Inc. Florida
Engle Homes/Broward, Inc. Florida
Engle Homes/Colorado, Inc. Florida
Engle Homes/Gulf Coast, Inc. Florida
Engle Homes/Lake Bernadette, Inc. Florida
Engle Homes/North Carolina, Inc. Florida
Engle Homes/Orlando, Inc. Florida
Engle Homes/Palm Beach, Inc. Florida
Engle Homes/Pembroke, Inc. Florida
Engle Homes/Southwest Florida, Inc. Florida
Engle Homes/Texas, Inc. Florida
Engle Homes/Virginia, Inc. Florida
Greenleaf Homes, Inc. Florida
Pembroke Falls Realty, Inc. Florida
Preferred Builders Realty, Inc. Florida
Preferred Home Mortgage Company Florida
St. Tropez At Boca Golf, Inc. Florida
Universal Land Title, Inc. Florida
Engle Homes/Arizona Construction, Inc. Arizona
Universal Land Title of Colorado, Inc. Colorado
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Engle Homes, Inc.
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Nos. 33-74358 and 333-39223) of Engle Homes, Inc.
(the "Company"), of our report dated November 10, 1997, relating to the
consolidated financial statements of the Company, appearing in the Company's
Annual Report on Form 10-K/A for the fiscal year ended October 31, 1997.
/s/ BDO SEIDMAN, LLP
--------------------
BDO SEIDMAN, LLP
Miami, Florida
December 22, 1997
