Continental Homes Holding Corp – ‘10-K’ for 5/31/94

As of:  Tuesday, 8/23/94   ·   For:  5/31/94   ·   Accession #:  950147-94-91   ·   File #:  1-10700

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         17±    87K 
 5: EX-10.10    Promissory Note                                        7±    27K 
 2: EX-10.1B    Third Amendment to Lease                               6±    23K 
 3: EX-10.5C    Second Modification Agreement                          4±    17K 
 4: EX-10.9     Mortgage Warehousing Credit & Security Agreement      37±   148K 
 6: EX-11       Computation of Earnings Per Share                      1      6K 
 7: EX-13       Inside Cover + Pages 9-23 of Annual Report            23±   110K 
 8: EX-21       List of Subsidiaries                                   1      6K 
 9: EX-23       Consent of Independent Public Accountants              1      5K 

10-K   —   Annual Report
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________

FORM 10-K 
(Mark One)                                                                      
[X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF               
THE SECURITIES EXCHANGE ACT OF 1934 
For the fiscal year ended May 31, 1994

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 Number 0-14830

CONTINENTAL HOMES HOLDING CORP. 

(Exact name of registrant as specified in its charter)
______________________

Delaware                                                          
(State or other jurisdiction of                            86-0554624           
incorporation or organization)           (I.R.S. Employer Identification Number)

7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona 85253 
(Address of principal executive offices)

Registrant's telephone number, including area code: (602) 483-0006
Securities registered pursuant to Section 12(b) of the Act: 

                                             Name of Each Exchange
  Title of Each Class                        on Which Registered
   -------------------                       ---------------------
Common Stock, par value $.01 per share            New York Stock Exchange     

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

     Indicate by check mark whether 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       
amendments to this Form 10-K. [X]                                               

       The aggregate market value of the voting stock held by non-affiliates
of the registrant as of July 29, 1994 was $82,192,570. (This calculation assumes
that all officers and directors of the Company are affiliates.)                 

      The number of shares of Common Stock outstanding as of July 29, 1994
was 6,962,770.                                                                  

DOCUMENTS INCORPORATED BY REFERENCE 

         Portions of the registrant's Annual Report to Stockholders for the year
ended May 31, 1994 are incorporated herein by reference into Part II and        
portions of the registrant's Proxy Statement for the Annual Meeting of          
Stockholders to be held August 30, 1994 are incorporated herein by reference    
into Part III.                                                                  

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CONTINENTAL HOMES HOLDING CORP. 
FORM 10-K ANNUAL REPORT 
For the Fiscal Year Ended 
May 31, 1994

TABLE OF CONTENTS 

PART I

                                                                          Page
Item 1.  Business                                                               

      General............................................................1
      Land Acquisition and Development...................................1
      Product Lines......................................................2
      Contract Backlog...................................................4
      Marketing..........................................................4
      Construction and Customer Service..................................4
      Mortgage Banking...................................................6
      Competition........................................................6
      Regulation.........................................................7
      Employees..........................................................7

Item 2.  Properties.........................................................8   

Item 3.  Legal Proceedings..................................................8   

Item 4.  Submission of Matters to a Vote of                                     
      Security Holders...................................................8

Part II 

Item 5.  Market for the Registrant's Common Equity                              
       and Related Stockholder Matters...................................8

Item 6.  Selected Financial Data............................................9   

Item 7.  Management's Discussion and Analysis of                                
      Financial Condition and Results of Operations......................9

Item 8.  Financial Statements and Supplementary Data........................9   

Item 9.  Changes in and Disagreements with Accountants                          
      on Accounting and Financial Disclosure.............................9

PART III

Item 10. Directors and Executive Officers of the Registrant................10   

Item 11.  Executive Compensation...........................................10   

Item 12. Security Ownership of Certain Beneficial                               
      Owners and Management.............................................10

Item 13. Certain Relationships and Related Transactions....................10   

PART IV 

Item 14. Exhibits, Financial Statements Schedules and                           
      Reports on Form 8-K...............................................11

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Part I

Item 1.  Business                                                               

GENERAL                                                                         

Continental Homes Holding Corp. (the "Company"), a Delaware corporation, was    
formed in June 1986. The Company designs, constructs and sells single-family    
homes for the entry-level and move-up buyer in Phoenix, Arizona; Austin and San 
Antonio, Texas; Denver, Colorado and Southern California. The Company entered   
the Austin, Texas market in July 1993 through the acquisition of Milburn        
Investments, Inc., a Texas Corporation, and its related entities (collectively, 
"Milburn"). In January 1994, the Company acquired the operations of Aspen Homes 
("Aspen"), a single family homebuilder in San Antonio, Texas. The Company also  
offers mortgage banking services in Arizona to its homebuyers and in Texas to   
its homebuyers and to third parties.                                            

LAND ACQUISITION AND DEVELOPMENT                                                

As of May 31, 1994, the Company operated 14 subdivisions in Phoenix, 13         
subdivisions in Austin, four subdivisions in Denver, six subdivisions in San    
Antonio and two subdivisions in Southern California. The following table        
summarizes the Company's available lot inventory at May 31, 1994 by location:   

AVAILABLE LOT INVENTORY 

                                                         Sites
                                                         Available
                                     Homes Under        for Future
                     Total Lots       Construction        Construction
                                 -----------------------  ------------
                     Available   Sold   Specs(1)  Models  Unsold  Sold
                     ---------   ----   -------   ------  ------  ----

Phoenix ..................  3,501      559     228      54     2,560   100      

Texas.....................  3,593      328     219      26     3,000    20      

Denver....................  1,212       87      21       8     1,083    13      

California ...............    234       27      35       6       164     2      
                      -----    -----     ---      --     -----   ---

    Total...........  8,540    1,001     503      94     6,807   135
                      =====    =====     ===      ==     =====   ===

(1)      Speculative units are unsold homes under construction.                 

The Company's objective is to maintain a supply of land to meet anticipated     
homebuilding requirements for approximately two years. At May 31, 1993 and 1994,
the Company had an aggregate of 2,563 and 6,807 unsold lots, respectively, which
represents an average of approximately a twenty-nine month inventory based on   
actual deliveries in fiscal 1994. The Company believes that an adequate supply  
of undeveloped land is available in Phoenix, Austin and Denver to maintain      
current levels of homebuilding. The Company employs experienced supervisory     
personnel who deal directly with independent engineers and contractors in the   
development process, including land and site planning and constructing site     
facilities (such as roads, sewers, water and other public facilities and        
amenities). See "Management's Discussion and Analysis of Results of Operations  
and Financial Condition -- Liquidity and Capital Resources."                    

As of May 31, 1994, the Company also owned 417 acres in Carlsbad, California,   
located in San Diego County. The master plan for this project, which will result
in approximately 780 single- family homes, was approved by the Carlsbad City    
Council in July 1993. The Company is currently working with various governmental
agencies regarding environmental issues with regard to the property. The Company
is unable to predict the date on which all additional approvals necessary to    
commence development will be received, but it is currently actively seeking     
these additional approvals and will commence development as soon as permissible.

PRODUCT LINES                                                                   

As of May 31, 1994 the Company had active sales programs in 14 subdivisions in  
Phoenix, in 13 subdivisions in Austin, in four subdivisions in Denver, in six   
subdivisions in San Antonio, and in two subdivisions in Southern California. The
product line constructed by the Company in a particular subdivision is dependent
upon many factors, including the housing generally available in the area, the   
needs of the particular market and the Company's cost of lots in the            
subdivision. The Company typically offers between three and twelve floorplans   
within the same product line in each subdivision and often offers the same      
models in similar subdivisions. Models are periodically reviewed and updated to 
reflect changing homebuyer preferences. Both new models and design modifications
are developed by Company employees.                                             

Homes sold by the Company typically have three to five bedrooms, two or more    
bathrooms and at least a two car garage. The Company offers a variety of options
and upgrades, including the placement of certain walls, the style of kitchen and
bathroom cabinetry, a selection of floor coverings and light fixtures, patios,  
decks, french doors and fireplaces, which allow homebuyers to customize their   
homes. Options and upgrades are generally priced to have a positive effect on   
profit margins.                                                                 

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PRODUCT LINES 

                                       Living Area          Base Price Range
                                      (Square Feet)          at May 31, 1994
                                      -------------         ----------------
Phoenix                                                                         
Move-up                                                                     
  single-family......................... 1,636-3,514         $107,300-$182,700
Entry-level                                                                 
  single-family......................... 1,287-2,472         $ 87,650-$136,400

Texas                                                                           
Move-up                                                                     
  single-family......................... 1,800-3,428         $119,500-$175,900
Entry-level                                                                 
  single-family......................... 1,190-2,576         $ 65,000-$133,300

Denver                                                                          
Move-up                                                                     
  single-family......................... 1,820-2,524         $152,500-$181,600

California                                                                      
Move-up                                                                     
  single-family......................... 2,824-3,713         $335,000-$450,000
Entry-level                                                                 
  single-family......................... 2,029-2,909         $159,900-$208,900

HOMES DELIVERED 

                                               Years ended May 31,
                                          --------------------------------
                                          1994        1993        1992
                                          ----        ----        ----
Move-up single-family                                                           
Revenues (000's)........................   $128,494    $ 56,293    $ 46,833 
Units ..................................        811         350         282 
Average sales price.....................   $158,400    $160,800    $166,100 
Entry-level single-family                                                       
Revenues (000's)........................   $206,615    $143,719    $117,934 
Units ..................................      1,976       1,419       1,187 
Average sales price.....................   $104,600    $101,300    $ 99,400 
Townhomes and duplex homes(1)                                                   
Revenues (000's)........................   $  4,922    $   --      $     48 
Units ..................................         44    $   --      $      1 
Average sales price.....................   $111,900    $   --      $ 48,000 
Total                                                                           
Revenues (000's)........................   $340,031    $200,012    $164,815 
Units ..................................      2,831       1,769       1,470 
Average sale price......................   $120,100    $113,100    $112,100 

______________________                                                          

(1)      The Company currently is not building any townhomes or duplex homes    
and has no plans to do so in the future.                      

Fluctuations in the number of homes delivered by product type are generally     
related to product availability or the introduction of a new product.           

CONTRACT BACKLOG                                                                

Sales of the Company's homes are made pursuant to standard sales contracts which
require a $500 to $2,500 deposit upon signing. The contract is generally        
cancelable if the customer is unable to obtain a mortgage commitment, usually   
within 60 days. A sale becomes part of backlog only upon receipt of a signed    
contract and a deposit.  See "Business -- Construction and Customer Service."   

As of May 31, 1994, the Company's contract backlog had an aggregate sales value 
of $147,242,000 and consisted of 1,136 homes. The contract backlog as of May 31,
1993 had an aggregate sales value of $107,499,000 and consisted of 900 homes.   
The Company anticipates that substantially all of the homes in backlog at May   
31, 1994 will close by the end of calendar 1994.                                

MARKETING                                                                       

The Company markets its homes to first-time and move-up buyers. Although the    
Company utilizes the services of independent brokers, approximately 41% of its  
homes sold in fiscal 1994 were sold by Company commissioned personnel (without  
the assistance of independent brokers) from sales offices located in furnished  
model homes in the subdivisions. Even when independent brokers are involved,    
Company personnel are available to assist prospective buyers by providing them  
with floorplans, price information, tours of model homes and selection of       
options. Sales personnel are trained by the Company and attend weekly meetings  
to be updated on financing availability, construction schedules and marketing   
and advertising plans. Company sales personnel and independent brokers are      
generally paid a commission at the time of closing equal to 1 1/2% (2% in       
Austin) and 3%, respectively, of the sales price of the home. The Company uses  
radio, newspaper, magazine, billboard displays, special promotional events and, 
occasionally, television in its marketing program.                              

The Company builds its homes under the guidelines and specifications of the     
Federal Housing Administration ("FHA") and the Veterans Administration ("VA"),  
thereby providing prospective buyers the added benefits of FHA-insured and      
VA-guaranteed mortgages.                                                        

CONSTRUCTION AND CUSTOMER SERVICE                                               

The Company designs and supervises the development and building of its projects.
Its homes generally are designed to promote efficient use of space and building 
materials and to minimize construction costs and time. The construction period  
for the Company's homes during fiscal 1994 ranged from 100 to 180 days in       
Phoenix, from 75 to 120 days in Texas, from 120 to 180 days in Denver and from  
100 to 150 days in Southern California.                                         

The actual construction is performed for a fixed price by independent           
subcontractors, who are generally selected on a competitive basis. All stages of
construction are supervised by the Company's on-site superintendents who        
coordinate the activities of subcontractors, subject their work to quality and  
cost controls and monitor compliance with zoning and building codes. The        
Company's management information systems also assist the Company in controlling 
the costs of construction by making information available which allows the      
Company to monitor subcontractor performance and expenditures. The Company      
believes its relationships with its subcontractors are good. The Company is not,
and does not anticipate, experiencing a significant shortage of either          
subcontractors or building materials.                                           

After a home is completed, but prior to closing, a Company employee accompanies 
the buyer on a home orientation and inspection tour and if any repairs are      
necessary, they are undertaken by the Company or its subcontractors. The Company
provides homebuyers with a one-year warranty on its homes for non-structural    
defects and a two-year warranty with respect to structural defects. In addition,
the Company purchases, in certain locations, builder's liability insurance      
protection for major structural defects in the third through tenth year.        

In Phoenix, Denver and Southern California, the Company constructs homes        
principally against orders which are evidenced by written contracts and modest  
escrow deposits. In fiscal 1994, approximately 18% of such contracts have been  
cancelled, a majority of such cancellations being attributable to the inability 
of the prospective purchaser to qualify for financing. The Company attempts to  
limit cancellations by training its sales force to determine the qualification  
of potential homebuyers at the sales office. The Company classifies a unit as   
speculative when construction commences on a unit that does not have a written  
contract. The Company may construct speculative units in order to maintain an   
inventory for quick delivery or to continue the construction sequence. The      
majority of the Company's speculative units are less than 50% complete. In order
to take advantage of an opportunity in the Phoenix market created by a shortage 
of homes for quick delivery in that market, the Company has recently increased  
the number of speculative units under construction in Phoenix. Historically, the
Texas market constructs a proportionately larger number of speculative units    
than the Company's other markets. As a result of such cancellations and         
construction procedures, at May 31, 1993 and May 31, 1994, the Company had      
respectively, 184 and 503 (including 219 in Texas) speculative units under      
construction.                                                                   

MORTGAGE BANKING                                                                

The Company commenced mortgage banking operations in 1986 and all mortgage      
operations of the Company are currently conducted by American Western Mortgage  
Company ("AWMC") and Miltex Management, Inc. ("MMI"), which are approved by the 
FHA and VA as qualified mortgage lenders. For the year ended May 31, 1994, AWMC 
and MMI provided mortgage financing for more than 59% and 77% of the Company's  
customers in Phoenix and Austin, respectively.                                  

As mortgage bankers, AWMC and MMI complete the processing of loan applications, 
perform credit checks, submit applications to mortgage lenders for approval, and
originate and sell mortgage loans. AWMC and MMI have $15,000,000 and $10,000,000
warehouse lines of credit, respectively to fund the mortgage loans on an interim
basis. AWMC and MMI bear the interest expense and receive the interest income   
while mortgages are warehoused. Accordingly, depending upon the relative        
interest rates of such loans and the related mortgages and the extent to which  
mortgages are financed, AWMC and MMI may have net interest income or expense    
during the warehouse period.                                                    

AWMC and MMI establish their interest rates and terms to facilitate the sale of 
the Company's homes through the origination of first mortgage loans utilizing   
programs established by the FHA, VA, GNMA and FNMA. Interest rates are generally
established by prevailing market rates, although lower rates may be offered from
time to time to remain competitive in certain markets.                          

Each mortgage originated by AWMC and MMI contains the provision for a servicing 
fee (which is included as a part of the monthly payment made by the mortgagor)  
to be paid for the collection of, and accounting for, mortgage payments. This   
servicing fee provision is a separate interest in the mortgage that may be sold 
independently of, or together with, the mortgage itself. AWMC began retaining a 
portion of the servicing portfolio in fiscal 1991 and has continued to do so,   
although this is not expected to become a material part of the Company's        
business.                                                                       

COMPETITION                                                                     

The single-family residential housing industry is highly competitive, and the   
Company competes in each of its markets with numerous other national, regional  
and local homebuilders, some of which have greater resources than the Company.  
The Company's homes compete on the basis of quality, price, design, mortgage    
financing terms and location. See "Business -- Operating Strategy." The Company 
also competes with developers of rental housing units and, to a lesser extent,  
condominiums.                                                                   

REGULATION                                                                      

The housing and mortgage banking industries are subject to extensive and complex
regulations. The Company and its subcontractors must comply with various        
federal, state and local laws and regulations including zoning and density      
requirements, building, environmental, advertising and consumer credit rules and
regulations as well as other rules and regulations in connection with its       
homebuilding and sales activities. These include requirements as to building    
materials to be used, building designs and minimum elevation of properties. The 
Company's homes are inspected by local authorities where required, and homes    
eligible for insurance or guarantees provided by the FHA and VA, respectively,  
are subject to inspection by the FHA or VA.                                     

The Company is also subject to a variety of local, state and federal statutes,  
ordinances, rules and regulations concerning protection of health and the       
environment ("environmental laws"), as well as effects of environmental factors.
The particular environmental laws which apply to any given homebuilding site    
vary greatly according to the site's location, the site's environmental         
conditions and the present and former uses of the site. These environmental laws
may result in delays, may cause the Company to incur substantial compliance and 
other costs, and can prohibit or severely restrict homebuilding activity in     
certain environmentally sensitive regions or areas.                             

The Company's mortgage banking subsidiaries must also comply with various       
federal and state laws and consumer credit rules and regulations as well as     
rules and regulations in connection with its mortgage lending activities.       
Additionally, mortgage loans originated under the FHA, VA, FNMA and GNMA are    
subject to rules and regulations imposed by such agencies.                      

EMPLOYEES                                                                       

At May 31, 1994, the Company and its subsidiaries employed approximately 356    
persons, including corporate staff, sales personnel, construction personnel and 
mortgage and title staff. None of the Company's employees is covered by any     
collective bargaining agreement. The Company believes that its relations with   
its employees are good.                                                         

Item 2.  PROPERTIES                                                             

       The Company's principal offices are located at 7001 North Scottsdale,
         Road, Suite 2050, Scottsdale, Arizona 85253. The offices, which include
        approximately 22,000 square feet, are leased for a term expiring March
2001.                                                         

Item 3.  LEGAL PROCEEDINGS                                                      

        The Company is not involved in any legal proceedings which it believes
     would have a material effect on the Company's financial position or
operating results.                                            

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

None                                                          

PART II 

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER      
MATTERS                                                       

Price Range of Common Stock                                   

Since December 15, 1993 the Company's Common Stock has traded on the New York   
Stock Exchange (Symbol: CON). Prior to that date, the Company's Common Stock was
traded on the American Stock Exchange. The following table sets forth for each  
period indicated the high and low closing sales prices of the Company's Common  
Stock and cash dividends paid:                                                  
                                                                   Dividends
                                          High          Low        Per Share
                                          ----          ---        ---------
Year Ended May 31, 1993:                                                        
    First Quarter..................  $ 13.50      $ 10.00       $  .05
    Second Quarter.................    15.00        10.25          .05
    Third Quarter..................    18.00        13.00          .05
    Fourth Quarter.................    16.75        12.50          .05

Year Ended May 31, 1994:                                                        
    First Quarter..................  $ 22.50      $ 13.38       $  .05
    Second Quarter.................    23.75        20.63          .05
    Third Quarter..................    23.88        18.50          .05
    Fourth Quarter.................    21.38        13.88          .05

DIVIDEND POLICY                                                                 

Declarations of dividends are within the discretion of the Board of Directors   
and are dependent upon various factors, including the earnings, cash flow,      
capital requirements and operating and financial condition of the Company. In   
addition, the Company's ability to pay dividends in excess of current levels is 
restricted by certain of its loan agreements and its 12% Senior Notes. See Note 
F of "Notes to Consolidated Financial Statements" of the Company. At August 11, 
1994, there were 155 holders of record of the Company's Common Stock.           

Item 6.  SELECTED FINANCIAL DATA                                                

        Information relating to this item appears under the caption "Financial
     Highlights" on the inside cover page of the Annual Report, and such
    information is incorporated herein by reference in accordance with
        General Instruction G(3) of Form 10-K. This information should be read
         in conjunction with "Management's Discussion and Analysis of Results of
    Operations and Financial Condition" and the Company's Consolidated
Financial Statements and the Notes thereto.                   

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

Information relating to this item appears under the caption   
    "Management's Discussion and Analysis of Results of Operations and
      Financial Condition" on pages 9 through 12 of the Annual Report, and
         such information is incorporated herein by reference in accordance with
General Instruction G(3) of Form 10-K.                        

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

         Information relating to this item appears on pages 13 through 23 of the
         Annual Report, and such information is incorporated herein by reference
 in accordance with General Instruction G(3) of Form 10-K. Other
  financial statements and schedules required under Regulation S-X
        promulgated under the Securities Act of 1933 are identified in Item 14
hereof and are incorporated herein by reference.              

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

Not applicable.                                               

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                     

  Information relating to this item appears in the definitiveProxy
       Statement for the Company's Annual Meeting of Stockholders to be held
    on August 30, 1994, and such information is incorporated herein by
     reference in accordance with General Instruction G(3) of Form 10-K.

Item 11. EXECUTIVE COMPENSATION                                                 

       Information relating to this item is contained in thedefinitive Proxy
 Statement referred to above in "Item 10.Directors and Executive
   Officers of the Registrant," and such information is incorporated
         herein by reference in accordance with General Instruction G(3) of Form
10-K.                                                         

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

       Information relating to this item is contained in thedefinitive Proxy
  Statement referred to above in "Item 10. Directors and Executive
   Officers of the Registrant," and such information is incorporated
         herein by reference in accordance with General Instruction G(3) of Form
10-K.                                                         

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

        Information relating to this item is contained in the definitive Proxy
        Statement referred to above in "Item 10. Directors and Officers of the
       Registrant," and such information is incorporated herein by reference
in accordance with General Instruction G(3) of Form 10-K.     

PART IV 

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

(a) 1.   Financial Statement                                                    

      The following consolidated financial statements of Continental Homes
  Holding Corp. and Subsidiaries, included in the Annual Report to
   Shareholders for the year ended May 31, 1994, are incorporated by
reference in Item 8:                                          

Report of Independent Public Accountants.                     

Consolidated Balance Sheets - May 31, 1994 and 1993.          

        Consolidated Statements of Income - years ended May 31, 1994, 1993 and
1992.                                                         

       Consolidated Statements of Stockholders' Equity - years ended May 31,
1994, 1993 and 1992.                                          

        Consolidated Statements of Cash Flows - years ended May 31, 1994, 1993
and 1992.                                                     

Notes to Consolidated Financial Statements.                   

(a) 2.   Financial Statement Schedules (filed herewith)                         

        Report of Independent Public Accountants on Schedules              S-1

        Schedule IX - Short-Term Borrowings                                S-2

        Schedule X - Supplementary Income Statement Information            S-3

      Schedules not listed above have been omitted because they are either
       not applicable, immaterial or the required information has been given
in the financial statements or notes thereto.                 

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(a) 3.       Exhibits                                                           

2.1          Stock Purchase Agreement between William O. Milburn and the Company
          dated July 28, 1993.  Incorporated by reference to the Company's
report on Form 8-K dated July 29, 1993.               

3.1 (a)      Certificate of Incorporation of the Company.  Incorporated  by     
            reference to Exhibit 3.1(a) to Registration Statement No. 33-6797,
as filed on June 25, 1986.                            

3.1 (b)      Amendment to Certificate of Incorporation of the Company.          
           Incorporated by reference to Exhibit 3.1(b) to Amendment No. 2 to
           Registration Statement No. 33-6797, as filed on January 30, 1987.

3.1 (c)      Certificate of Second Amendment of the Certificate of              
      Incorporation. Incorporated by reference to Exhibit 3 to the
        Company's report on Form 10-Q for the quarter ended August 31,
1993.                                                 

3.2          By-laws of the Company.  Incorporated by reference to Exhibit 3.2  
            to  Registration Statement No. 33-6797, as filed on June 25, 1986.

4.1          Indenture dated as of March 15, 1992 between the Company and       
            Manufacturers and Traders Trust Company, as Trustee.  Incorporated
          by reference to Exhibit 4.1 to the Company's report on Form 10-K
for the year ended May 31, 1992.                      

4.2          Indenture dated as of August 1, 1992 between the Company and       
            Fidelity Bank, National Association, as Trustee.  Incorporated  by
           reference to Exhibit 4.1 to the Company's report on Form 10-Q for
the quarter ended August 31, 1992.                    

4.3          First Supplemental Indenture dated as of March 22, 1994 to the     
         Indenture dated August 1, 1992, between CHHC and First Fidelity
       Bank, National Association, (formerly Fidelity Bank, National
             Association), as Trustee.  Incorporated by reference to Exhibit 4.1
             to the Company's report on Form 10-Q for the quarter ended February
28, 1994.                                             

10.1 (a)     Lease Agreement dated August 1, 1990, as amended, for the Company's
          principal office located at 7001 N. Scottsdale Road, Suite 2050,
             Scottsdale,  Arizona.  Incorporated by reference to Exhibit 10.1 to
            the Company's report on Form 10-K for the year ended May 31, 1991.

10.1 (b)*    Third Amendment to Lease Agreement dated June 27, 1994 for the     
        Company's principal office located at 7001 N. Scottsdale Road,
Suite 2050, Scottsdale, Arizona.                      

10.2 (a)     The Company's Restated 1986 Stock Incentive Plan.  Incorporated by 
      reference to Exhibit 10.3 to Amendment No. 2 to Registration
Statement No.  33-6797, as filed on January 30, 1987. 

10.2 (b)     The Company's 1988 Stock Incentive Plan (As amended and restated   
        July 23, 1992).  Incorporated by reference to Exhibit A to the
      Company's Notice of Annual Meeting and Proxy Statement dated
August 3, 1992.                                       

10.3 (a)     Amended and Restated Warehousing Credit and Security Agreement     
            dated as of September 26, 1991 between the Valley National Bank of
          Arizona  ("VNB") and AWMC.  Incorporated by reference to Exhibit
           10.9 to Registration Statement No. 33-45281, filed on January 24,
1992.                                                 

10.3 (b)     Modification Agreement dated as of November 27, 1992  between  VNB 
             and AWMC. Incorporated by reference to Exhibit 4.1 to the Company's
      report on Form 10-Q for the quarter ended November 30, 1992.

10.3 (c)     Modification and Extension Agreement dated as of November 22, 1993 
             between Bank One, Arizona NA (formerly  VNB) and AWMC. Incorporated
             by reference to Exhibit 10 to the Company's report on Form 10-Q for
the quarter ended November 30, 1993.                  

10.3 (d)     Modification and Extension Agreement dated as of January 31, 1994  
             between Bank One, Arizona, NA (formerly VNB) and AWMC. Incorporated
           by reference to Exhibit 10.2 to the Company's report on Form 10-Q
for the quarter ended February 28, 1994.              

10.4         Promissory Note dated November 27, 1992 by AWMC in favor of VNB in 
      the principal amount of up to $15,000,000.  Incorporated  by
            reference to Exhibit 4.2 to the Company's  report on Form 10-Q for
the quarter ended November 30, 1992.                  

10.5 (a)     Loan Agreement dated as of February 25, 1993 between VNB and the   
    Company.  Incorporated by reference to Exhibit 10.1 to the
      Company's report on Form 10-Q for the quarter ended February

10.5 (b)     First Modification Agreement dated as of February  25, 1994 between
           Bank One,  Arizona NA (formerly  VNB) and CHHC.  Incorporated  by
            reference to Exhibit 10.1 to the Company's report on Form 10-Q for
the quarter ended February 28, 1994.                  

10.5 (c)*    Second Modification Agreement dated as of March 31, 1994 between   
Bank One, Arizona NA (formerly VNB) and CHHC.         

10.6         Promissory Note dated February 25, 1993 by the Company in favor of 
      VNB in the principal amount of $10,000,000.  Incorporated by
        reference to Exhibit 10.2 to the Company's report on Form 10-Q
for the quarter ended February 28, 1993.              

10.7         Loan Agreement dated July 28, 1993 between Bank One, Arizona  N.A. 
           ("BOAZ") and Milburn Investments, Inc.  Incorporated by reference
   to the Company's  report on Form 8-K dated July 29, 1993.

10.8         Promissory Note dated July 28, 1993 by Milburn Investments, Inc.   
  in favor of BOAZ in the principal amount of $25,000,000.
       Incorporated by reference to the Company's report on Form 8-K
dated July 29, 1993.                                  

10.9*        Mortgage Warehousing Credit and Security Agreement dated May 27,   
             1994 between Bank One, Arizona NA and Miltex Mortgage of Texas L.P.

10.10*       Promissory Note dated May 27, 1994 by Miltex Mortgage of Texas L.P.
           in favor of Bank One, Arizona NA in the principal amount of up to
$10,000,000.                                          

11.*         Statement Re Computation of Per Share Earnings.                    

13.*        Inside cover page and pages 9 through 23 of the Annual Report to    
Stockholders for the year ended May 31, 1994.         

21.*         Subsidiaries of the Company.                                       

23.*         Consent of Arthur Andersen & Co.                                   

_________________________                                                       
* Filed herewith.                                                               

(b)          Reports on Form 8-K                                                
            There were no reports filed on Form 8-K during the last quarter of
             the year ended May 31, 1994. The Company filed a report on Form 8-K
dated July 29, 1993.                                  

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<AUDIT-REPORT>                                                                  

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES 

To Continental Homes Holding Corp.:                                             

We have audited in accordance with generally accepted auditing standards, the   
consolidated financial statements included in Continental Homes Holding Corp.'s 
annual report to shareholders incorporated by reference in this Form 10-K, and  
have issued our report thereon dated June 17, 1994. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The         
schedules listed in the accompanying index on page 11 of this Form 10-K are the 
responsibility of the Company's management and are presented for purposes of    
complying with the Securities and Exchange Commission's rules and are not part  
of the basic consolidated financial statements. These schedules have been       
subjected to the auditing procedures applied in the audit of the basic          
consolidated financial statements and, in our opinion, fairly state in all      
material respects the financial data required to be set forth therein in        
relation to the basic consolidated financial statements taken as a whole.       

Arthur Andersen & Co.                                                           

Phoenix, Arizona                                                                
June 17, 1994.                                                              

</AUDIT-REPORT>                                                                 

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CONTINENTAL HOMES HOLDING CORP. 
SCHEDULE IX - SHORT-TERM BORROWINGS 
(dollars in thousands)

                                         During the Period
                                         -------------------------------------
Category of                                                            Weighted 
Aggregate       Balance  Weighted Average   Maximum       Average      Average  
Short-Term      at End    Iterest Rate at   Amount        Amount       Interest 
Borrowings(1)  of Period   End of Period  Outstanding  Outstanding(2)  Rate(3)  
-------------  ---------   -------------  -----------  --------------  -------- 

May 31, 1994                                                                    
Banks           $0          (4)           $20,416        $5,464        6.9% 

May 31, 1993                                                                    
Banks           $0          (4)           $ 2,847        $  302        6.6% 

May 31, 1992                                                                    
Banks           $0          (4)           $ 7,662        $3,045        8.0% 

(1)       Consists of secured and unsecured lines of credit with banks. See Note
         F to the financial statements on page 20 of the 1994 Annual Report to
stockholders, included as Exhibit 13.                       

(2)       Average amount outstanding was computed by averaging total monthly    
outstanding short-term borrowings.                          

(3)       Monthly weighted average interest rate was computed by averaging the  
        total weighted average interest rates calculated on a monthly basis.

(4)       Amount not calculated due to no amounts outstanding at end of period. 

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CONTINENTAL HOMES HOLDING CORP. 
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION 

                                   Years ended May 31,
                                  ------------------------------------
                                  1994          1993          1992
                                  ----          ----          ----
                                        (in thousands)
Maintenance and repairs                     (1)           (1)           (1)     
Amortization of intangible assets           (1)           (1)           (1)     
Taxes other than income taxes                                                   
State sales tax                      $ 3,951       $ 3,379       $ 2,703    
Other taxes                            3,107         2,428         2,038    
                                 -------       -------       -------
                                 $ 7,058       $ 5,807       $ 4,741

Royalties                                 None          None          None      
Advertising                                 (1)           (1)           (1)     

______________________                                                          

(1)      Amounts are not presented as such amounts are less than 1% of total    
sales and revenues.                                           

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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.                       

Dated:    August 22, 1994                  CONTINENTAL HOMES HOLDING CORP.      

                               By:  /s/ Kathleen R. Wade
                                          --------------------------
                              Kathleen R. Wade
                                        Co-Chief Executive Officer

                               By:  /s/ Donald R. Loback
                                          --------------------------
                                Donald R. Loback
                                          Co-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
and in the capacities and on the dates indicated.                               

/s/ Donald R. Loback                                      August 22, 1994       
----------------------------                              ----------------      
Donald R. Loback                                          Date                  
Co-Chief Executive                                                              
Officer and Director                                                            

/s/ Kathleen R. Wade                                      August 22, 1994       
----------------------------                              ----------------      
Kathleen R. Wade                                          Date                  
Co-Chief Executive                                                              
Officer and Director                                                            

/s/ Robert J. Wade                                        August 22, 1994       
----------------------------                              ----------------      
Robert J. Wade                                            Date                  
President and Director                                                          

/s/ Kenda B. Gonzales                                     August 22, 1994       
----------------------------                              ----------------      
Kenda B. Gonzales                                         Date                  
Secretary and Treasurer                                                         
Principal Financial                                                             
and Accounting Officer                                                          

/s/ W. Thomas Hickcox                                     August 22, 1994       
----------------------------                              ----------------      
W. Thomas Hickcox                                         Date                  
Director                                                                        

/s/ Bradley S. Anderson                                   August 22, 1994       
----------------------------                              ----------------      
Bradley S. Anderson                                       Date                  
Director                                                                        

/s/ Jo Ann Rudd                                           August 22, 1994       
----------------------------                              ----------------      
Jo Ann Rudd                                               Date                  
Director                                                                        

/s/ William Steinberg                                     August 22, 1994       
----------------------------                              ----------------      
William Steinberg                                         Date                  
Director                                                                        

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		8/30/94		1		4
Filed on:		8/23/94
		8/22/94		9
		8/11/94		4
		7/29/94		1
		6/27/94		5
		6/17/94		6
For Period End:		5/31/94		1		7
		5/27/94		5
		3/31/94		5
		3/22/94		5
		2/28/94		5					10-Q
		2/25/94		5
		1/31/94		5
		12/15/93		4
		11/30/93		5					10-Q,  10-Q/A
		11/22/93		5
		8/31/93		5					10-Q/A
		7/29/93		5
		7/28/93		5
		5/31/93		3		7
		2/28/93		5
		2/25/93		5
		11/30/92		5
		11/27/92		5
		8/31/92		5
		8/3/92		5
		8/1/92		5
		7/23/92		5
		5/31/92		4		7
		3/15/92		5
		1/24/92		5
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