-------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

           [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>


                                     PART I

ITEM 1.  BUSINESS

GENERAL

      Engle Homes, Inc. (the "Company" or "Engle" ), a Florida Corporation
formed in 1986, commenced business operations through predecessor entities in
1978. The Company designs, constructs, markets and sells single-family
residences, townhomes, patio homes and condominiums to entry level and move-up
buyers, retirees and second-home, seasonal buyers. Engle operates in nine
geographic markets: Broward County, Palm Beach County and Martin County in South
Florida; Orlando in Central Florida; Tampa, Sarasota, Naples and Fort Meyers on
the west coast of Florida; Denver, Colorado; Dallas, Texas; Virginia and
Maryland; Raleigh, North Carolina; Phoenix, Arizona; and Atlanta, Georgia. The
Company offers a variety of home styles at prices ranging from approximately
$80,000 to over $400,000 with an average sales price in fiscal 1997 of
approximately $203,000. In addition, the Company operates a mortgage company
which provides mortgages primarily to its home buyers in all of its geographic
markets and a title company which provides services to its home buyers and third
parties in Florida and Denver, Colorado.

      Engle is a leading Florida homebuilder. The Company believes that is the
number two and number four builder of single- family homes in South Florida and
Central Florida, respectively, based on revenues from unit closings for the
twelve months ended June 30, 1997. Florida is the number one homebuilding state
in the United States in terms of total housing starts. In addition, Florida is
currently the fourth largest state based upon total population and has
consistently ranked among the top four states in population growth over the past
seven decades. Since 1993, Engle has expanded into eight of the top 20 markets
in the nation through both start-up operations and the acquisition on a
homebuilder in Denver, Colorado. In fiscal 1997, approximately 32% of the
Company's revenues from home sales were generated outside the Florida markets as
compared to none in fiscal 1993. Most recently, in fiscal 1997, Engle entered
both the Phoenix, Arizona and Atlanta, Georgia markets through start-up
operations.

   Over the past five years, the Company's revenues have grown from $137.4
million in fiscal 1993 to $425.3 million in fiscal 1997, with net income growing
from $6.3 million to $13.5 million over the same period, representing compound
annual growth rates of 33% and 21% respectively. The number of homes delivered
increased from 797 in fiscal 1993 to 1,992 in fiscal 1997. The Company's total
revenues of $425.3 million and net income from all revenue sources of $13.5
million for fiscal 1997 were the highest in the Company's history. At the end of
fiscal 1997, Engle was marketing homes in 68 communities.

BUSINESS STRATEGY

      Engle believes that its success has been due to its market oriented
approach which it applies to each of the following: (i) identifying new markets;
(ii) acquiring land; and (iii) diversifying its product offerings and price
ranges to appeal to most segments of the home buying public. Engle believes that
this strategy enables it to respond more rapidly to changing market conditions.

      EXPAND IN EXISTING AND NEW MARKETS. The Company has successfully expanded
its operations through both start-up operations in new and existing markets and
the acquisition of a homebuilder in Denver, Colorado. By increasing the number
of residential projects within its existing markets, the Company believes that
it is able to gain greater market share, leverage its existing management
structure and enhance profitability through economies of scale. As part of its
strategy to further diversify geographically, the Company continually seeks and
evaluates market expansion opportunities, including potential acquisitions of
homebuilding companies. The Company seeks to expand into geographic markets with
significant single-family home permit activity, substantial job growth, a
diversified economy and an availability of strong management with local market
expertise. Since its initial public offering in January 1992, the Company has
expanded into eight new geographic markets.

      OFFER A BROAD SELECTION OF PRODUCTS. The Company designs its homes to
appeal to a wide variety of home buyers, including entry level and move-up
buyers, retirees and second-home, seasonal buyers. Accordingly, the Company
offers a number of home styles and price ranges at various locations in each
market, including golf and waterfront communities in certain markets. Engle's
product offerings include semi-custom estate homes, detached single-family
residences, townhomes, and semi-detached patio homes/duplexes. Management
believes that the Company's long-standing policy of product diversification
enables it to respond more rapidly to changing market conditions.


                                       3

<PAGE>


      SELECTIVELY ACQUIRE LAND. The Company maintains a land acquisition policy
designed to enhance profitability and return on capital while minimizing the
risks associated with investments in land. Engle seeks to identify and acquire
superior locations in each market and offer a number of communities with diverse
products and sales prices. The Company prefers to acquire improved residential
lots ready for construction by entering into option contracts, whenever
possible, or outright purchases. The Company also acquires tracts of land that
require site improvements prior to the start of home construction. Occasionally,
Engle purchases larger parcels of undeveloped land suited for master planned
communities primarily in South Florida. When acquiring larger parcels, the
Company typically contracts to sell portions of improved or unimproved land to
other builders as a source of additional revenue thereby reducing the Company's
investment. In addition, when economically advantageous to the Company, Engle
enters into partnership or joint venture agreements with other major
homebuilders to purchase and develop well located parcels of land. The Company
generally purchases land only after required zoning entitlements have been
obtained.

      MAINTAIN STRINGENT COST CONTROLS. The Company believes that maintaining
stringent cost controls is a key factor in ensuring profitability. The Company
seeks to reduce its costs and risks by (i) obtaining required zoning
entitlements prior to most acquisitions of land, (ii) using subcontractors to
perform home construction and site improvement work on a fixed price basis and
(iii) minimizing inventory of unsold homes, (iv) improving construction cycle
time for new homes and (v) obtaining volume discounts on construction materials
and favorable pricing from subcontractors.

      COMMITMENT TO CUSTOMER SATISFACTION. The Company is dedicated to providing
customer satisfaction through quality construction and customer service.
Divisional managers are responsible for the quality of construction and the
level of customer satisfaction in their respective divisions.

      EXPERIENCED MANAGEMENT WITH DECENTRALIZED OPERATING STRUCTURE. In order to
serve the needs of each of its regional markets, the Company relies upon the
expertise of its divisional managers, each of whom have significant experience
in the homebuilding industry. Divisional managers benefit from Engle's corporate
expertise in sales and marketing, land acquisition and financial services and
its centralized accounting department. The Company believes that this
interaction between the divisional managers and corporate management provides
enhanced operating results.

LAND ACQUISITION AND DEVELOPMENT

      The Company prefers to acquire improved residential lots ready for
construction by entering into option contracts, whenever possible, or outright
purchases. The Company also acquires tracts of land that require site
improvements prior to the start of home construction. Occasionally, the Company
purchases larger tracts of land with the intention of reselling portions of the
tracts to other builders as a source of additional revenue. Specifically, the
Company purchased larger tracts of land and sold parcels to other builders in
connection with the development of its master planned communities, including
Embassy Lakes, North Passage, Lakeside Green and currently, Pembroke Falls.
Unlike the Company's more typical subdivision projects, the Company's
master-planned communities have involved significantly larger tracts of land,
greater planning and site improvement activities and the development of more
extensive recreational facilities and related amenities. The Company's
master-planned communities normally take five or more years to complete
depending on the project's size, economic conditions prevailing at the time and
the Company's strategy for the particular project. Engle's more traditional
residential developments usually take two to three years to complete.

      Management believes that the Company's Pembroke Falls project exemplifies
the opportunities available to the Company when developing master-planned
communities. In February 1994, the Company acquired this approximately 1,500
acre parcel located in southwest Broward County, Florida, a rapidly developing
housing market. The purchase price for the Pembroke Falls parcel was $25.7
million, or approximately $17,100 per acre. The Company expects to build
approximately 2,000 single-family housing units and has sold most of the
approximately 222 acres of land zoned for commercial and multi-family use.
Through October 31, 1997, approximately $45.4 million in land sales contracts
had been written, of which $34.5 million closed through fiscal 1997. Of the
remaining $10.9 million in contracts, $8.3 million are binding contracts, and
$2.6 million are contingent upon completion of an inspection period during the
next ninety days. Management believes that the purchase of this relatively large
parcel enabled the Company to obtain desirable land inventory in its South
Florida division for future development at a lower cost than if the Company had
purchased smaller parcels available for immediate construction of homes.

      The Company's land purchase agreements are typically subject to numerous
conditions, including, but not 


                                       4

<PAGE>


limited to, the Company's ability to obtain necessary zoning and other
governmental approvals for the proposed subdivision. During the contingency
period, the Company also confirms the availability of utilities, conducts
hazardous waste and other environmental analysis, and completes its marketing
feasibility studies.

      The Company expends considerable effort in developing a design and
marketing concept for each of its subdivisions, which includes determination of
size, style and price range of the homes and, in certain projects, layout of
streets, layout of individual lots and overall community design. The product
line offered in a particular subdivision depends upon many factors, including
housing generally available in the area, the needs of the particular market and
the Company's costs of lots in the subdivision. The Company, where necessary,
undertakes development activities which include government approvals, site
planning, engineering, as well as constructing roads, sewer, water and drainage
facilities and, where applicable for recreational facilities and other
amenities.

      At October 31, 1997, the Company was marketing 14 subdivisions in South
Florida; 12 in Central Florida; 10 on Florida's west coast; 9 in Denver, CO; 8
in Dallas, TX; 8 in Virginia and Maryland; 3 in Raleigh, North Carolina; and 4
in Phoenix, Arizona . The Company anticipates that it will begin acquiring land
for its Atlanta division in November 1997. The Company's residential real estate
inventory at October 31, 1997 was as follows:
<TABLE>
<CAPTION>

                                                    HOMES UNDER                    LOTS AVAILABLE
                                                   CONSTRUCTION              FOR FUTURE CONSTRUCTION(3)
                                          ------------------------------     ---------------------------
                             TOTAL LOTS
DIVISION                      AVAILABLE   SOLD(1)  SPECULATIVE(2) MODELS     SOLD(1)   UNSOLD    OPTIONS
                             ---------    ------   ------------   ------     -------  ---------  -------
<S>                          <C>          <C>      <C>            <C>        <C>       <C>       <C>
South Florida (3)..........   2,544(4)       182             56        9         158      2,062       77
Central Florida (5)........   1,017           61             41       11          83        637      184
Florida's west coast (6)...   1,706(7)        39             15        7          69       1179      397
Denver, CO.................     999           54             50        1          46        405      443
Dallas, TX.................     816           25             24        4          38        197      528
Virginia/Maryland..........     291           26             12        7          15        129      102
Raleigh, NC................     270           12              9        1           4        244       --
Phoenix, AZ................     225           18              4       --          39         67       97
                             ------       ------   ------------   ------     -------  ---------  -------
   Total                      7,868          417            211       40         452      4,920    1,828

<FN>
------------------

(1)  Under contract, but not delivered. See the discussion of the Company's
     backlog under "Management's Discussion and Analysis of Financial Condition
     and Results of Operations."
(2)  Speculative units are unsold homes that are completed or under
     construction.
(3)  South Florida refers to Broward County, Palm Beach County and Martin
     County.
(4)  Includes 1,713 remaining lots in Pembroke Falls.
(5)  Central Florida refers to Orlando
(6)  Florida's West Coast refers to Tampa, Sarasota, Naples and Ft. Meyers
(7)  Includes 906 lots in Lake Bernadette in Tampa.
</FN>
</TABLE>

CONSTRUCTION

      The Company acts as the general contractor for the construction of its
residential developments. Company employees monitor the construction of each
project, participate in all material design and building decisions, coordinate
the activities of subcontractors and suppliers, subject their work to quality
and cost controls and monitor compliance with zoning and building codes.
Subcontractors typically are retained for a specified project pursuant to a
contract which obligates the subcontractor to complete construction at a fixed
price.

      The Company does not maintain significant inventories of construction
materials except for work in process, materials for homes under construction and
a limited amount of other construction materials. Generally, the construction
materials used in the Company's operations are readily available from numerous
sources.

MARKETING AND SALES

      The Company sells its homes primarily through commissioned employees, who
typically work from sales offices located at the model homes in each Engle
subdivision, as well as through cooperating independent brokers. In all
instances, Company personnel are available to assist prospective buyers by
providing them with floor plans, price information, tours of model homes and the
selection of options and upgrades. Options and upgrades are generally 


                                       5

<PAGE>


priced to have a positive effect on profit margins. Sales personnel are trained
by the Company and attend periodic meetings to be updated on the availability of
financing, construction schedules, marketing and advertising plans.

      The Company advertises in newspapers, magazines and on billboards. Engle
also uses out-of-state home shows, radio, video tapes, direct mail advertising,
special promotional events, illustrated brochures and model homes in its
comprehensive marketing program. In addition, Engle maintains a web site on the
Internet. The Company also uses a cross-referral program that encourages Company
personnel to direct customers to other Engle subdivisions based on the
customers' needs.

CUSTOMER SERVICE AND QUALITY CONTROL

      The Company's customer service department is responsible for pre-closing
and post-closing customer needs. Prior to closing, a Company employee
accompanies the buyer on a home orientation and inspection tour. The Company is
continuing with its objective to provide quality construction through on going
training programs to maintain its high quality construction standards. The
Company also provides home buyers with a limited warranty program which, in
general, provides a home buyer with a one-year warranty on workmanship and
building materials and a ten-year structural warranty. In addition, the Company
purchases, when required by local or state ordinances, builder liability
insurance for major structural defects.

FINANCIAL SERVICES

      The Company's financial services subsidiaries provide mortgage banking and
title insurance services. For fiscal 1997, the financial services subsidiaries
increased their profitability to $2.7 million, an increase of 49% compared to
fiscal 1996.

      MORTGAGE BANKING. In April 1992, the Company established Preferred Home
Mortgage Company ("PHMC"). PHMC is a full service mortgage banker which arranges
financing through the origination of mortgage loans to the Company's home buyers
and to a lesser extent third party loans that are not associated with homes
built by the Company. PHMC is an approved lender by the Federal National
Mortgage Association ("FNMA") to deliver loan origination to FNMA and to other
investors and to service such loans.

      During fiscal 1997, PHMC originated and sold approximately $138.0 million
in mortgage loans (including servicing rights), representing a significant
portion of the Company's home buyers that requested mortgage financing.
Substantially all of PHMC's revenues are derived from mortgages on homes built
by Engle. At October 31, 1997, PHMC was originating mortgages in substantially
all Engle homebuilding divisions.

      PHMC must comply with various federal and state laws and consumer credit
rules and regulations in connection with its mortgage lending activities. In
addition, the mortgage banking industry in the United States is highly
competitive. PHMC competes with other mortgage companies and financial
institutions to provide mortgage financing to both the Company's customers as
well as the general public.

      TITLE SERVICES. In September 1992, the Company purchased all the
outstanding common stock of the Title Store, Inc. In May 1994, the Company
acquired all the capital stock of Universal Land Title, Inc. ("ULT"), a company
that sells, but does not underwrite, title policies and simultaneously merged
with the Title Store, Inc. to form one company. ULT currently provides title
services to the Company's home buyers in Florida and Denver, Colorado, as well
as third parties. At October 31, 1997, ULT was operating 15 offices in Florida
and 4 offices in Denver, Colorado.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

      In developing housing communities, the Company must obtain the approval of
numerous government authorities regulating such matters as permitted land uses
and levels of density, the installation of utility services such as water and
waste disposal and the dedication of acreage for open space, parks, schools and
other community purposes. Several authorities in Florida and other states have
imposed impact fees as a means of defraying the cost of providing certain
governmental services to developing areas and the amount of these fees has
increased significantly during recent years. Many state laws require the use of
specific construction materials which reduce the need for energy-consuming
heating and cooling systems. Local governments also, at times, declared
moratoriums on the issuance of building permits and imposed other restrictions
in areas where sewage treatment facilities and other public facilities 


                                       6

<PAGE>


do not reach minimum standards. To date, the governmental approval processes and
the restrictive zoning and moratoriums discussed above have not had a material
adverse effect on the Company's development activities. However, there is no
assurance that these and other restrictions will not adversely affect the
Company in the future. The Company is also subject to a variety of Federal,
State and local statutes, ordinances, rules and regulations concerning
protection of health and the environment. The particular environmental laws
which apply to any given community vary greatly according to the community site,
the site's environmental conditions and the present and former uses of the site.
These environmental laws may result in delays, cause the Company to incur
substantial compliance and other costs and prohibit or severely restrict
development in certain environmentally sensitive regions or areas. Prior to
consummating the purchase of land, the Company engages independent environmental
engineers to evaluate such land for the presences of hazardous or toxic
materials, wastes or substances. The Company has not been materially affected to
date by the presence or potential presence of such materials.

      To varying degrees, certain permits and approvals will be required to
complete the residential developments currently being planned by the Company.
The ability of the Company to obtain necessary approvals and permits for these
projects is often beyond the Company's control, and could restrict or prevent
the development of otherwise desirable property. The length of time necessary to
obtain permits and approvals increases the carrying costs of unimproved property
acquired for the purpose of development and construction. In addition, the
continued effectiveness of permits already granted is subject to factors such as
changes in policies, rules and regulations and their interpretation and
application. To minimize these risks, the Company generally restricts land
purchases to tracts that have zoning entitlements.

      In recent years, regulation by Federal and state authorities relating to
the sale and advertising of residential real estate has also become more
restrictive. In order to advertise and sell condominiums and other residential
real estate in many jurisdictions, the Company has been required to prepare
registration statements or other disclosure documents and, in some cases, to
file such materials with designated regulatory agencies.

COMPETITION AND MARKET FACTORS

      The development and sale of residential properties is highly competitive
and fragmented. The Company competes in each of its markets with numerous
national, regional and local builders, including some builders with greater
financial resources. Builders of new homes compete not only for home buyers, but
also for desirable properties, raw materials and skilled subcontractors. The
Company also competes for residential sales with individual sales of existing
homes and available rental housing.

      The housing industry is cyclical and affected by consumer confidence
levels, prevailing economic conditions generally and, in particular, by interest
rate levels. A variety of other factors affect the housing industry and demand
for new homes, including the availability of labor and materials and increases
in the costs thereof, changes in costs associated with home ownership such as
increases in property taxes and energy costs, changes in consumer preferences,
demographic trends and the availability of and changes in mortgage financing
programs.

EMPLOYEES

      At October 31, 1997, the Company employed approximately 544 persons,
including sales and marketing personnel, executive, administrative and clerical
personnel, construction employees and financial services personnel.

      Although none of the Company's employees are covered by collective
bargaining agreements, certain of the subcontractors which the Company engages
are represented by labor unions or are subject to collective bargaining
agreements. The Company believes that its relations with its employees and
subcontractors are good.

ITEM 2.  PROPERTIES

      The Company's corporate office is located at 123 N.W. 13th Street, Suite
300, Boca Raton, Florida 33432, where the Company leases 9,356 square feet of
office space for a term expiring in August 2006. Engle's building divisions,
PHMC and ULT branch operations lease additional office space at various
locations for their day-to-day operations. Management believes that the current
leased offices are adequate for its needs for the foreseeable future. See Note 3
of Notes to Consolidated Financial Statements for discussion of sale of
commercial properties.

ITEM 3.  LEGAL PROCEEDINGS


                                       7

<PAGE>


      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.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the Company's 1997 fiscal year.


                                       8

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND
         RELATED STOCKHOLDER MATTERS

      The Common Stock is traded on The Nasdaq National Market under the symbol
"ENGL." The following table sets forth, for the periods indicated, the high and
low closing sales price for the Common Stock, as reported on The Nasdaq National
Market. As of November 7, 1997 there were approximately 75 shareholders of
record. The closing sale price of the Company's Common Stock as reported on The
Nasdaq National Market on November 14, 1997, was $14.25.

                              YEAR ENDED OCTOBER 31,
                        -----------------------------------
                            1997                 1996
                        -------------        --------------
                        HIGH    LOW          HIGH      LOW
                        -----  ------        -----     ----
First Quarter            9.00    8.50        11.00     8.25
Second Quarter          10.75    8.25        10.25     7.63
Third Quarter           11.88    9.13         9.25     5.50
Fourth Quarter          15.50   11.75         8.50     6.88

      The Company has declared per share quarterly dividends as set forth in the
following table.

                                    CASH DIVIDEND
                                  ----------------
                                  1997        1996
                                  ----        ----
First Quarter                     $.04        $.04
Second Quarter                    $.04        $.04
Third Quarter                     $.04        $.04
Fourth Quarter(a)                 $.04        $.04

         --------------

         (a) Dividend declared in November of 1996 and 1997.

      The Company has declared $.04 per share quarterly cash dividends in each
fiscal quarter since the fiscal quarter ended April 30, 1992. The Company
presently intends to continue to declare and pay quarterly cash dividends equal
to $.04 per share of Common Stock. The payment of cash dividends will be at the
discretion of the Board of Directors of the Company and will depend upon, among
other things, results of operations, capital requirements, the Company's
financial condition and such other factors as the Board of Directors may
consider. There can be no assurance as to the amount, if any, or timing of cash
dividends.

      The Company's loan agreements currently limit the amount of dividends that
the Company may pay in any year to no more than 50% of the Company's net income
for such year. Generally, the indenture for the Senior Notes provides that the
Company may not declare or pay any dividend or make certain other payments or
take certain other actions (collectively, "Restricted Payments") unless the
aggregate amount of all Restricted Payments declared or made after January 31,
1994 does not exceed the sum of (i) 50% of the Company's cumulative Consolidated
Net Income (as defined in the indenture) since January 31, 1994 plus (ii) cash
proceeds to the Company from certain issuances of capital stock of the Company
plus (iii) $1.0 million.

                                       9


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

      The following selected financial data as of and for the years ended
October 31, 1997, 1996, 1995, 1994 and 1993 have been derived from the
consolidated financial statements of the Company which have been audited by BDO
Seidman, LLP independent certified public accountants. The data should be read
in conjunction with the Company's Consolidated Financial Statements, related
notes and other financial information included elsewhere herein.
<TABLE>
<CAPTION>

                             SELECTED FINANCIAL DATA
                  (In thousands, except share and unit amounts)

                                                                      YEARS ENDED OCTOBER 31,
                                                  ---------------------------------------------------------------
                                                     1997         1996         1995          1994         1993
                                                  ----------   ----------    ---------    ----------    ---------
<S>                                               <C>          <C>           <C>          <C>           <C>
INCOME STATEMENT DATA:
Total revenues.................................   $  425,295   $  332,088    $ 244,528    $  224,459   $  137,386
Income before income taxes.....................       21,899       13,701        9,536        12,179       10,118
Provision for income taxes.....................        8,431        5,206        3,624         4,604        3,820
Income before cumulative effect of change
  in accounting for income taxes...............                                                7,575
Cumulative effect of change in accounting
  for income taxes.............................                                                1,332
Net income.....................................   $   13,468   $    8,495    $   5,912    $    8,907    $   6,298
                                                  ==========   ==========    =========    ==========    =========


Income per share before cumulative effect of
change in accounting for income taxes

  Primary......................................                                           $    1.13
  Fully diluted................................                                           $     .96
Income per share from cumulative effect
 of change in accounting for income taxes

  Primary......................................                                           $     .20
  Fully diluted................................                                           $     .15
Net income per share

  Primary......................................   $     1.94   $    1.20     $     .85    $     1.33    $     .95
  Fully diluted................................   $     1.58   $    1.03     $     .74    $     1.11    $     .81
Cash dividends ................................   $    1,109   $   1,109     $   1,109    $    1,066    $   1,064
                                                  ==========   ==========    =========    ==========    =========
Weighted average number of
  outstanding shares

    Primary....................................        6,951       7,108         6,989         6,674        6,650
    Fully diluted (a)..........................        9,246       9,251         9,132         8,817        8,131

SELECTED OPERATING DATA:

Deliveries (in units)..........................        1,992       1,567         1,137         1,225          797
Backlog at end of period (b)
    Units......................................          869       1,016           804           560          687
    Aggregate sales  value.....................    $ 174,000   $ 210,300     $ 161,900     $ 108,200    $ 119,491


                                       10

<PAGE>


                      SELECTED FINANCIAL DATA--(CONTINUED)

                                                                            OCTOBER 31,
                                                   --------------------------------------------------------------
                                                     1997         1996          1995         1994          1993
                                                   ---------   ----------    ---------    ----------    ---------
BALANCE SHEET DATA:
Inventories (c)................................    $ 230,108   $ 220,564     $ 198,664     $ 138,428    $  88,902
Total assets...................................      288,412     284,789       251,918       188,913      143,991
Borrowings.....................................      152,064     152,117       147,454        99,428       63,794
Total shareholders' equity.....................       93,180      81,492        74,106        66,303       58,102

<FN>
-------------------------------------

(a)  Fully diluted net income per share assumes conversion of the Company's 7%
     Convertible Subordinated Notes due 2003 and elimination of amortization of
     capitalized interest related to such Notes, resulting in an increase in net
     income and weighted average number of Common Shares outstanding.

(b)  See Item 7--Management's Discussion and Analysis of Financial Condition and
     Operations--Overview.

(c)  See--Note 2 of Notes to the Company's Consolidated Financial Statements.
</FN>
</TABLE>


                                       11

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     GENERAL. The following table sets forth for the years indicated, certain
items of the Company's Consolidated Financial Statements expressed as
percentages of the Company's total revenues:
<TABLE>
<CAPTION>
                                                                   PERCENTAGE OF TOTAL REVENUES
                                                                      YEAR ENDED OCTOBER 31,
                                                                   -----------------------------

                                                                   1997        1996       1995
                                                                   ----        ----       ----

<S>                                                                <C>         <C>        <C>  
Sales of homes................................................     95.1%       91.5%      88.4%
Sales of land.................................................      1.8         5.3        8.6
Rent and other................................................       .4          .5         .6
Financial services income.....................................      2.7         2.7        2.4
                                                                   ----        ----       ---
     Total ...................................................     100%        100%       100%
                                                                   ====        ===        ===
Cost of sales-homes...........................................     81.2        78.5       75.6
Cost of sales-land............................................      1.7         4.7        7.0
Selling, marketing, general and administrative expenses.......      9.3         9.6       10.0
Income before income taxes....................................      5.1         4.1        3.9
Net income ...................................................      3.2         2.6        2.4
</TABLE>

The following tables set forth information relating to homes closed, new sales
contracts and sales backlog by operating division for fiscal years 1997, 1996
and 1995.

<TABLE>
<CAPTION>
                                                     YEAR ENDED OCTOBER 31,
                            -----------------------------------------------------------------------
                                   1997                       1996                     1995
                            -------------------       ---------------------      ------------------
HOMES CLOSED                CLOSED      PERCENT       CLOSED       PERCENT       CLOSED     PERCENT
------------                ------      -------       ------       -------       ------     -------
<S>                         <C>         <C>           <C>          <C>           <C>        <C>  
South Florida                 847         42.4%         624          39.8%         513        45.1%
Central Florida               386         19.4          343          21.9          244        21.5
West Coast Florida             84          4.2           66           4.2           56         4.9
Texas                         173          8.7          107           6.8           57         5.0
Colorado                      334         16.8          269          17.2          243        21.4
Virginia/Maryland             103          5.2          102           6.5           18         1.6
North Carolina                 64          3.2           56           3.6            6          .5
Arizona                         1           .1            -             -            -           -
                            -----       ------       ------        ------       ------       -----
Total                       1,992          100%       1,567           100%       1,137         100%
                            =====       ======       ======        ======       ======       =====


                                              YEAR ENDED OCTOBER 31,
                                              (dollars in thousands)

                                   1997                       1996                     1995
                             ------------------       --------------------      -------------------
NEW SALES CONTRACTS          SOLD       DOLLARS       SOLD         DOLLARS       SOLD     DOLLARS
-------------------          ----      --------       -----        -------      ------    ---------
South Florida                 628      $135,100         643        $141,200        698     $139,000
Central Florida               365        69,200         378          70,500        268       48,700
West Coast Florida            153        25,400          81          12,200         60       11,700
Texas                         148        23,800         179          30,200         62       12,500
Colorado                      346        67,800         318          59,600        217       40,500
Virginia/Maryland             110        27,600         111          24,700         41       10,400
North Carolina                 37         7,700          69          14,000         35        7,000
Arizona                        58        11,500          -               -          -            -
                            -----      --------       -----        --------      -----     ---------
Total                       1,845      $368,100       1,779        $352,400      1,381     $269,800
                            =====      ========       =====        ========      =====     ========


                                       12

<PAGE>


                             YEAR ENDED OCTOBER 31,
                             (dollars in thousands)

                                 1997                      1996                         1995
                           ------------------        ------------------           ------------------

SALES BACKLOG              HOMES     DOLLARS          HOMES     DOLLARS           HOMES     DOLLARS
-------------              -----     --------         -----     --------          -----     --------
South Florida               340      $ 72,600          559      $126,500            540     $110,800
Central Florida             144        28,400          165        31,000            130       23,500
West Coast Florida          108        18,000           39         5,800             25        4,900
Texas                        63         9,900           90        14,500             18        3,600
Colorado                    100        19,400           86        15,700             37        7,300
Virginia/Maryland            41        10,900           34         8,000             25        6,100
North Carolina               16         3,400           43         8,800             29        5,700
Arizona                      57        11,400            -             -              -            -
                          -----      --------        -----      --------           ----     --------
Total                       869      $174,000        1,016      $210,300            804     $161,900
                          =====      ========        =====      ========           ====     ========
</TABLE>


     BACKLOG. Sales of the Company's homes are generally made pursuant to a
standard contract which requires a down payment. The contract includes a
financing contingency which permits the customer to cancel in the event mortgage
financing at prevailing interest rates (including financing arranged by the
Company) is unobtainable within a specified period, typically four to six weeks.
The Company includes an undelivered home sale in its backlog upon execution of
the sales contract and receipt of the down payment. Revenue is recognized only
upon the closing and delivery of a home. The Company estimates that the average
period between the execution of a purchase agreement for a home and delivery is
approximately four to six months.

      As of October 31, 1997, the Company's backlog was $174.0 million or 869
contracts as compared to $210.3 million or 1,016 contracts as of October 31,
1996. Excluding South Florida, the Company's backlog increased to $101.4 million
or 529 contracts as of October 31, 1997 from $83.8 million or 457 contracts as
of October 31, 1996, an increase of 21% and 16% respectively. The Company
believes that as a result of its focus on improving cycle times, it expects to
deliver a higher percentage of backlog in the subsequent quarters.

      The Company believes that the decline in South Florida backlog can be
attributed to two primary factors: (i) timing differences between recently
completed subdivisions and the opening of new subdivisions, and (ii) the success
of its pre-sale contract activity at Pembroke Falls prior to October 31, 1996.
As is common practice for large projects, the Company began pre-sale activity at
Pembroke Falls prior to October 31, 1996 so that it could begin home
construction on that project immediately upon completion of site development.

Results of Operations

YEAR ENDED OCTOBER 31, 1997 COMPARED TO YEAR ENDED OCTOBER 31, 1996.

     The Company's revenues from home sales during fiscal 1997 increased $100.4
million (or 33.0 %) compared to fiscal 1996. The number of homes delivered by
the Company increased 27.1% (to 1,992 from 1,567) and the average selling price
of homes delivered increased 4.6% (to $203,000 from $194,000). The increase
of revenues and homes delivered is primarily attributable to a higher percentage
of backlog being delivered during fiscal 1997. Management believes that changes
in the average selling price of homes delivered from period to period are
attributable to discrete factors at each of its subdivisions, including product
mix and premium lot availability, and cannot be predicted for future periods
with any degree of certainty.

      The Company's revenues from land sales decreased approximately $9.9
million (or 56.3%) during fiscal 1997 as compared to fiscal 1996 primarily as a
result of a decrease in commercial and multi-family land sales at Pembroke
Falls.


                                       13

<PAGE>


      Cost of home sales increased approximately $84.6 million (or 32.5%)
compared to fiscal 1996, primarily due to the related increase in home sales
revenues. Cost of home sales as a percentage of home sales decreased to 85.4%
from 85.7% as a result of the product mix of homes delivered.

                                       14


<PAGE>


      Cost of land sales decreased approximately $8.5 million (or 54.5%) during
fiscal 1997 as compared to fiscal 1996, primarily as a result of the decrease in
land sales. Costs of land sales as a percentage of land sales increased to 92.3%
from 88.7%, which was primarily attributable to lower margin single family lots
available for sale. Margins from land sales at Pembroke Falls in fiscal 1997
were comparable to fiscal 1996.

      The Company's selling, marketing, general and administrative ("S,G&A")
expenses increased approximately $7.7 million (or 24.2%) during fiscal 1997 as
compared to fiscal 1996, primarily as a result of variable selling costs
associated with the greater number of homes closed and an increase in selling
expenditures related to an increase in the number of residential subdivisions.
S,G&A expenses as a percentage of total revenues decreased from 9.6% in fiscal
1996 to 9.3% in fiscal 1997, primarily due to certain economies of scale.

      Fiscal 1997 income before income taxes increased $8.2 million (or 59.8%)
as compared to fiscal 1996, primarily due to the increase in home sales
revenues.

YEAR ENDED OCTOBER 31, 1996 COMPARED TO YEAR ENDED OCTOBER 31, 1995.

     The Company's revenues from home sales during fiscal 1996 increased $87.9
million (or 40.7 %) compared to fiscal 1995. The number of homes delivered by
the Company increased 37.8% (to 1,567 from 1,137) and the average selling price
of homes delivered increased 2.1% (to $194,000 from $190,000). The increase of
revenues and homes delivered is primarily attributable to the record backlog of
homes under contract at the beginning of fiscal 1996 and improved sales activity
in all homebuilding divisions as compared to fiscal 1995. Management believes
that changes in the average selling price of homes delivered from period to
period are attributable to discrete factors at each of its subdivisions,
including product mix and premium lot availability, and cannot be predicted for
future periods with any degree of certainty.

         The Company's revenues from land sales decreased approximately $3.4
million (or 16.2%) during fiscal 1996 as compared to fiscal 1995 primarily as a
result of a decrease in commercial and multi-family land sales at Pembroke
Falls.

     Cost of home sales increased approximately $75.7 million (or 40.9%)
compared to fiscal 1995, primarily due to the related increase in home sales
revenues. Cost of home sales as a percentage of home sales was consistent with
fiscal 1995.

     Cost of land sales decreased approximately $1.7 million (or 10.1%) during
fiscal 1996 as compared to fiscal 1995, primarily as a result of the decrease in
land sales. Costs of land sales as a percentage of land sales increased to 88.7%
from 82.7%, which was primarily attributable to lower margin single family lots
available for sale. Margins from land sales at Pembroke falls in fiscal 1996
were comparable to fiscal 1995.

     The Company's selling, marketing, general and administrative ("S,G&A")
expenses increased approximately $7.4 million (or 30.4%) during fiscal 1996 as
compared to fiscal 1995, primarily as a result of selling costs associated with
the greater number of homes closed and an increase in selling expenditures
related to an increase in the number of residential subdivisions. S,G & A
expenses as a percentage of total revenues decreased from 10.0% in fiscal 1995
to 9.6% in fiscal 1996, primarily due to economies of scale.

      Fiscal 1996 income before income taxes increased $4.2 million (or 43.7%)
as compared to fiscal 1995, primarily due to the increase in home sales
revenues.

LIQUIDITY AND CAPITAL RESOURCES

     GENERAL. The Company's financing needs depend upon its construction volume,
asset turnover and land acquisitions. Prior to the Company's initial public
offering, the Company's most significant source of funds were acquisition,
development and revolving construction loans provided by financial institutions
and seller financing for land purchases. In January 1992, the Company completed
an initial public offering of its Common Stock and received net proceeds of
approximately $27.3 million. In February 1993, the Company issued an aggregate
of $30.0 million


                                       14

<PAGE>
principal amount of 7% Convertible Subordinated Notes due 2003 and received net
proceeds of approximately $28.7 million. In March 1994, the Company issued an
aggregate of $40 million principal amount of 11 3/4% Senior Notes due 2000 and
received net proceeds of approximately $38.6 million. The proceeds from these
offerings were generally used for repayment of debt, land acquisition and
general corporate purposes.

      The Company has two credit agreements (the "Agreements") with various
lending institutions which at November 13, 1997, provided for a combined $130.0
million collateralized revolving line of credit. Borrowings under these
Agreements bear interest at rates ranging from LIBOR plus 2.50% to prime plus
 .25% at the Company's election. Available borrowings under the Agreements are
limited to certain percentages of finished lots, construction costs, land and
land under development. The Company is currently in discussions with a group of
banks to obtain an unsecured revolving credit facility to be used for working
capital and general corporate purposes. If obtained, the new facility would be
used to replace all of the Company's existing lines of credit, other than its
warehouse line of credit.

      At October 31, 1997 the Company had outstanding borrowings of
approximately $152.1 million, and aggregate available funds of approximately
$18.9 million pursuant to various credit lines including the Agreements. The
Company believes that funds generated from operations and expected borrowing
availability under existing and future bank credit facilities will be sufficient
to fund the Company's working capital requirements during fiscal 1998, with the
exception of major land acquisitions, if any. For a further description of the
Company's borrowings, see Note 5 of the Company's Consolidated Financial
Statements.

      On October 17, 1997, the Company announced the early redemption of $15.0
million of its 7% Convertible Subordinated Debentures due 2003. Such redemption
will occur on November 18, 1997. In order to fund this redemption, the Company
has established a $15.0 million short term unsecured credit facility.

      In addition, PHMC has a warehouse line of credit of $18.0 million which is
guaranteed by the Company. At October 31, 1997 the outstanding balance was $14.5
million to service origination of mortgage loans. The Company expects to
increase the warehouse line of credit to $25.0 million to accommodate the
potential growth of its mortgage banking operations in fiscal year 1998.

      LAND ACQUISITION AND CONSTRUCTION FINANCING. The Company is continually
exploring opportunities to purchase parcels of land for its homebuilding
operations and is, at any given time, in various stages of proposing, making
offers for, and negotiating the acquisition of various parcels, whether outright
or through options. The Company has continued to increase its land development
and construction activities in response to current and anticipated demand and
expects to pursue additional land acquisition and development opportunities in
the future.

      DEBT SERVICE. Scheduled and estimated maturities of the Company's
borrowings aggregate approximately $4.4 million during fiscal 1998 and
approximately $42.0 million in fiscal 1999. The Company anticipates that it will
fund the maturities of its debt and required expenditures relating to its
developments primarily with cash flow from operations and existing credit lines,
new or renewed credit lines or term loans or selling of equity or debt. See Note
5 of Notes to the Company's Consolidated Financial Statements.

      CASH FLOWS. The Company has experienced negative cash flows of $2.7
million during fiscal 1997. This is primarily the result of increasing land
inventory to meet expected sales demand and site development costs associated
with Pembroke Falls. Cash flows required by operating activities were $151,000
in 1997 compared to $1.3 million in 1996 primarily due to increased pace of home
deliveries. Cash flows from investing activities decreased by $7.5 million in
1997 primarily due to a reduction in the sales of commercial property. Cash
flows from financing activities decreased by $5.4 million primarily due to a
decrease in borrowings.

     Management does not anticipate that PHMC's expansion of its operations will
significantly impact the Company's liquidity because the mortgages are generally
sold within a short period of time after their origination to the Federal
National Mortgage Association (FNMA) or other qualified investors. PHMC has
established the capability to retain the servicing of loans, however, during
fiscal 1997 all servicing rights were sold.

INFLATION

      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 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.

                                       15
<PAGE>


INTEREST RATES

     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. Such results of higher interest rates
may adversely affect the Company's revenues, gross margins and net income.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     Except for the historical information contained herein, the matters
discussed in this annual report and Form 10-K are forward-looking statements
which involve risks and uncertainties, including but not limited to economic,
competitive and governmental factors affecting the Company's markets, prices and
other facets of its operations.

NEW FASB 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 common shares outstanding. Diluted earnings per share
is computed similarly to fully diluted earnings per share in accordance with the
Accounting Principles Board (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
that 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.


                                       16

<PAGE>


Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                        PAGE
                                                                        ----

Report of Independent Certified Public Accountants.....................  18

Consolidated Balance Sheets
  as of October 31, 1997 and 1996......................................  19

Consolidated Statements of Income
  For the Years Ended October 31, 1997, 1996 and 1995..................  20

Consolidated Statements of Shareholders' Equity
  For the Years Ended October 31, 1997, 1996 and 1995..................  21

Consolidated Statements of Cash Flows
  For the Years Ended October 31, 1997, 1996 and 1995..................  22

Notes to Consolidated Financial Statements.............................  23

Consolidated Financial Statement Schedules:

         Schedule II - Valuation and Qualifying Accounts...............  36

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.


                                       17

<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 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 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

                                       18


<PAGE>
<TABLE>
<CAPTION>


                       ENGLE HOMES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                                                                      OCTOBER 31,
                                                                            ------------------------------
                                                                                1997              1996
                                                                            ------------      ------------
                                  ASSETS
<S>                                                                         <C>               <C>
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.

                                       19

<PAGE>
<TABLE>
<CAPTION>

                       ENGLE HOMES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands, except per share data)

                                                     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.

                                       20

<PAGE>
<TABLE>
<CAPTION>

                                        ENGLE HOMES, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                         (in thousands, except share data)

                                               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>

                                       21

          See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>



                       ENGLE HOMES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

                                                                     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 ....       (5,003)       12,462         2,181
         expenses
     (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>


                                       22

          See accompanying notes to consolidated financial statements.

<PAGE>


                       ENGLE HOMES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED 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.

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 month to 30
years, primarily on the straight-line method. Loan costs are deferred and
amortized over the term of the outstanding borrowings.


                                       23

<PAGE>


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.

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 


                                       24

<PAGE>


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.

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>
                                                   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.


                                       25

<PAGE>


NOTE 3--PROPERTY AND EQUIPMENT (dollars in thousands)

                                       OCTOBER 31,
                                   -------------------
                                     1997         1996
                                   -------     -------
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
                                   =======     =======

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.

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)

                                 FOR THE YEAR ENDED OCTOBER 31,
                                 ------------------------------
                                    1997      1996      1995
                                   ------    ------    ------
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
                                   ======    ======    ======


                                       26

<PAGE>


PREFERRED HOME MORTGAGE COMPANY
BALANCE SHEET INFORMATION
(dollars in thousands)
                                       OCTOBER 31,
                                   ------------------
                                     1997       1996
                                   -------    -------
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
                                   =======    =======

(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 2,000
  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.

     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.


                                       27

<PAGE>


      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, and as a result, the financial statements of the
subsidiary guarantors are omitted.

     Maturities of borrowings are as follows:

      YEAR ENDED OCTOBER 31,
      ----------------------

               1998................       4,424
               1999................      42,004
               2000................      74,173
               2001................           -
                 Thereafter........      31,463
                                       --------
                                       $152,064
                                       ========

     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 11 3/4% 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 proforma net income and income per share under
the accounting provisions of FASB Statement 123 did not materially differ from
the reported amounts.

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                   WEIGHTED
                                                      AVERAGE                    AVERAGE
                                                      EXERCISE                   EXERCISE
                                          SHARES       PRICE        SHARES        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
                                        --------      --------      -------      -------


                                       28

<PAGE>
                                         AS OF OCTOBER 31, 1997    AS OF OCTOBER 31, 1996
                                         ----------------------    ----------------------
                                                       WEIGHTED                  WEIGHTED 
                                                       AVERAGE                   AVERAGE 
                                                       EXERCISE                  EXERCISE 
                                         SHARES         PRICE      SHARES         PRICE 
                                        --------      ---------    -------      ---------
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
  ----------------------------------------------------------------       -----------------------------------
                                           WEIGHTED
                                           AVERAGE       WEIGHTED
                          NUMBER          REMAINING      AVERAGE             NUMBER              WEIGHTED
     RANGE OF           OUTSTANDING      CONTRACTUAL     EXERCISE        EXERCISABLE AT           AVERAGE
  EXERCISE PRICES       AT 10/31/97          LIFE         PRICE             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 8--INCOME TAXES

     The income tax provision in the consolidated statements of income consists
        of the following components (dollars in thousands):

                       FOR THE YEAR ENDED OCTOBER 31,
                      ----------------------------------
                       1997         1996         1995
                     --------     --------     --------
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
                     ========     ========     ========


     The provision for income taxes was different from the amount computed by
applying the statutory rate due to the effect of state income taxes.

      Temporary differences which gave rise to deferred income tax assets and
liabilities at October 31, 1997 and 1996 were as follows (dollars in thousands):


                                       29

<PAGE>


                                                              OCTOBER 31,
                                                         -------------------
                                                           1997       1996
                                                         -------     -------
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)
                                                         =======     =======


NOTE 9--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 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 operation.

      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


                                       30

<PAGE>


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 10--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 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.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE


       None.


                                       31

<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND OFFICERS OF REGISTRANT

       The information required by this Item 10 will be contained in the
company's definitive proxy materials to be filed with the Securities and
Exchange Commission and is incorporated in this Annual Report on Form 10-K by
this reference.

ITEM 11.  EXECUTIVE COMPENSATION

       The information required by this Item 11 will be contained in the
Company's definitive proxy materials to be filed with the Securities and
Exchange Commission and is incorporated in this Annual Report on Form 10-K by
this reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The information required by this Item 12 will be contained in the
Company's definitive proxy materials to be filed with the Securities and
Exchange Commission and is incorporated in this Annual Report on Form 10-K by
this reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The information required by this Item 13 will be contained in the
Company's definitive proxy materials to be filed with the Securities and
Exchange Commission and is incorporated in this Annual Report on Form 10-K by
this reference.


                                       32

<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 15 of this Annual Report
       on Form 10-K.

    2. FINANCIAL STATEMENT SCHEDULES:

       Reference is made to the index set forth on page 15 of this Annual Report
       on Form 10-K.

    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)
       22.1 Subsidiaries of the Registrant(5)
       23.1 Consent of BDO Seidman, LLP(5)

                  --------------------

   (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-3 (File No. 333-39223).

                                       33

<PAGE>


   (4) Previously filed.
   (5) Filed herewith.
   (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.

(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.

                                       34


<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/ ALEC ENGELSTEIN
                                     -------------------------------
                                     Alec Engelstein, Chairman of the Board
Dated: November 17, 1997               President and Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>

        SIGNATURES                               TITLE                                 DATE
        ----------                               -----                                 ----
<S>                                  <C>                                         <C>

/s/ ALEC ENGELSTEIN                  Chairman of the Board, President            November 17, 1997
---------------------------          and Chief Executive Officer
    Alec Engelstein                  (Principal Executive Officer)

/s/ DAVID SHAPIRO                    Vice President-Finance and Chief            November 17, 1997
-----------------------------        Financial Officer
    David Shapiro                    (Principal Financial Officer)

/s/ PAUL LEIKERT                     Vice President-Chief Accounting             November 17, 1997
-------------------------------      Officer
    Paul Leikert                     (Principal Accounting Officer)

/s/ HARRY ENGELSTEIN                 Executive Vice President, Chief             November 17, 1997
------------------------             Construction Officer and Director
    Harry Engelstein               

/s/ JOHN A. KRAYNICK                 Senior Vice President and Director          November 17, 1997
---------------------------
    John A. Kraynick

/s/ HENRY H. FISHKIND                Director                                    November 17, 1997
---------------------------
    Henry H. Fishkind

/s/ RONALD J. KORN                   Director                                    November 17, 1997
----------------------------
    Ronald J. Korn
</TABLE>

                                       35

<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>


                                       36

<PAGE>


                                 EXHIBIT INDEX
EXHIBIT
  NO                          DISCRIPTION
-------                       -----------

 11.1               Computation of Per Share Earning
 23.1               Consent of BDO Seidman, LLP
 27                 Financial Data Schedule