<PAGE> 1
Rule 424(b)(5)
File No. 33-60089
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 21, 1995
2,350,000 SHARES
DEL WEBB CORPORATION
COMMON STOCK
The 2,350,000 shares of common stock (the "Common Stock") offered hereby
are being offered by Del Webb Corporation (the "Company"). The Common Stock is
listed on the New York Stock Exchange and Pacific Stock Exchange under the
symbol "WBB." On August 10, 1995 the closing sale price of the Common Stock on
the New York Stock Exchange was $19 5/8 per share. See "Price Range of Common
Stock and Dividend Policy."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" AT PAGE S-8.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS* COMPANY+
<S> <C> <C> <C>
Per Share.......................... $19.50 $1.02 $18.48
Total++............................ $45,825,000 $2,397,000 $43,428,000
</TABLE>
- ---------------
* The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
+ Before deducting expenses of the offering payable by the Company estimated to
be $250,000.
++ The Company has granted the Underwriters a 30-day option to purchase up to
352,500 additional shares of Common Stock on the same terms per share solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public will be $52,698,750, the total underwriting discounts
and commissions will be $2,756,550 and the total proceeds to Company will be
$49,942,200. See "Underwriting."
------------------------
The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of certificates therefor
will be made at the offices of Dillon, Read & Co. Inc., New York, New York, on
or about August 16, 1995, against payment therefor in New York funds. The
Underwriters include:
DILLON, READ & CO. INC. MONTGOMERY SECURITIES
The date of this Prospectus Supplement is August 10, 1995
<PAGE> 2
[DESCRIPTION OF INSIDE FRONT COVER PHOTOS]
Top Photo: A photo showing one of the golf holes at Highland Falls Golf Club
at Sun City Las Vegas
Second Row: The first photo is the Woodworking Studio at Sun City West. The
second photo shows the biking trail at Sun City Las Vegas.
Third Row: The first photo shows one of the models at Sun City Roseville. The
second photo shows one of the models at Sun City Palm Springs.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE
PACIFIC STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary should be read in conjunction with and is qualified
in its entirety by the information and financial statements (including the notes
thereto) appearing elsewhere or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus. As used in this Prospectus
Supplement, the "Company" means Del Webb Corporation and its subsidiaries unless
the context requires otherwise. Statements in this Prospectus Supplement as to
acreage, mileage, square feet, number and years supply of future home sites and
number of residents are approximations.
THE COMPANY
Del Webb Corporation is one of the nation's leading developers of
age-restricted active adult communities. The Company has extensive experience in
the active adult community business, having built and sold more than 50,000
homes at its Sun City communities over the past 35 years. The Company is also
delivering homes at Terravita, a gate-guarded, amenity-rich, master-planned
residential community in north Scottsdale, Arizona, that is not age-restricted.
The Company designs, develops and markets these large-scale, master-planned
residential communities, primarily for active adults age 55 and over,
controlling all phases of the master plan development process from land
selection through the construction and sale of homes. Within its communities,
the Company is the exclusive developer of homes. The Company also has
significant conventional subdivision homebuilding operations, which it conducts
under the name "Coventry Homes," in the Phoenix, Tucson and Las Vegas areas and
southern California.
BUSINESS STRATEGY AND GROWTH
The Company has achieved significant growth in recent years and believes
that the strong demographics of its target market, adults age 55 and over, will
continue to present attractive future opportunities. The Company believes its
growth is attributable in large part to its business strategy of providing an
attractive lifestyle to residents through the development and sale of
high-quality homes in communities that offer a physically active and socially
rewarding environment. Key elements of this strategy include:
- Engaging in extensive research on potential sites and related demographic
characteristics to identify community locations with significant growth
potential;
- Designing and developing attractive, amenity-rich, large-scale,
master-planned communities in each of its markets;
- Making significant investments to create substantial amenities in the
early stage of community development so as to enhance marketing efforts
and resident satisfaction;
- Providing active and continuing support of community residents to ensure
lifestyle satisfaction and promote referrals of potential new homebuyers;
- Focusing growth opportunities by expanding in markets where the Company
has successful communities and into new areas where the Company's
research indicates significant potential and opportunity to be the market
leader; and
- Building on its market knowledge and organizational resources in existing
markets to take advantage of conventional subdivision homebuilding
opportunities.
COMMUNITY DEVELOPMENT
The Company's communities feature extensive amenities, including one or
more golf courses and large recreation centers that contain activity rooms,
athletic facilities, swimming pools and tennis
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<PAGE> 4
courts. At its active adult communities, the Company builds numerous styles of
contemporary homes (primarily detached, single-family residences) tailored to
the preferences of the active adult market and offered in a wide range of
prices.
The Company currently offers homes for sale at eight communities. Selected
information with respect to these communities is shown below:
<TABLE>
<CAPTION>
BACKLOG
HOMES (HOMES UNDER
DELIVERED CONTRACT) AT
APPROXIMATE FIRST HOME HOMES AT AT JUNE 30, JUNE 30,
COMMUNITY LOCATION CLOSING COMPLETION 1995 1995
- -------------------- ----------------------- -------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Sun City West Phoenix, Arizona January 1978 16,500 14,247 502
Sun City Tucson Tucson, Arizona February 1987 2,500 2,092 149
Sun City Las Vegas Las Vegas, Nevada March 1989 7,700 4,994 402
Sun City Palm Palm Springs, October 1992 4,800 885 147
Springs California
Terravita Scottsdale, Arizona July 1994 1,400 425 298
Sun City Roseville Sacramento, California February 1995 3,000 293 571
Sun City Hilton Head Hilton Head Island, Scheduled 8,000 -- 149
South Carolina Summer 1995
Sun City Austin, Texas Anticipated 9,500 -- 122
Georgetown........ Spring 1996
</TABLE>
The Company is developing Sun City MacDonald Ranch, which is planned for
2,300 homes on 600 acres in Henderson, Nevada (near Las Vegas). The Company
currently anticipates taking home sale orders at Sun City MacDonald Ranch
beginning in the Fall of 1995.
The Company is also developing Sun City Grand, which is planned for 9,500
homes on 4,000 acres adjacent to Sun City West. Development of Sun City Grand
will be coordinated with the build out of Sun City West, the Company's most
mature community, to maximize the combined home closings of both communities and
minimize duplicative expenses of operating two adjacent communities.
In 1992, the Company acquired 5,600 acres located 25 miles north of
downtown Phoenix as the site for a possible master-planned community. In April
1995 the Company received a general plan amendment and development master plan
approval for 16,500 homes on this property. Development of this property,
however, is subject to a number of uncertainties and the planning, entitlement
and permitting process is in a relatively early stage.
CONVENTIONAL HOMEBUILDING
The Company has conventional subdivision homebuilding operations, primarily
in those geographic market areas in which it is developing active adult
communities. To date, the Company has generally targeted first-time and move-up
buyers. The Company expects homes in this price range to be its main target
segment in the future, but it intends to remain flexible when reviewing
potential sites in order to pursue attractive opportunities. For the year ended
June 30, 1995, conventional homebuilding operations represented 18 percent of
the Company's revenues.
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THE OFFERING
<TABLE>
<S> <C>
Common Stock(1)........................... 2,350,000 shares
Common Stock to be outstanding after the
Offering(1)(2).......................... 17,270,921 shares
Listing................................... New York Stock Exchange and Pacific Stock
Exchange
New York Stock Exchange and Pacific Stock
Exchange Symbol......................... WBB
Use of Proceeds........................... To repay a portion of the indebtedness
outstanding under the Company's senior unsecured
revolving credit agreement and short-term lines
of credit. After completion of the offering made
hereby (the "Offering"), the Company intends to
reborrow under its senior unsecured revolving
credit agreement and short-term lines of credit
as necessary from time to time to fund
development of existing and new projects and for
other general corporate purposes. See "Use of
Proceeds" and "Capitalization."
</TABLE>
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(1) Assumes that the Underwriters' over-allotment option is not exercised.
(2) Represents the number of shares of Common Stock outstanding at June 30,
1995, as adjusted to give effect to the Offering. Excludes 1,440,570 shares
subject to options outstanding under the Company's stock option plans as of
June 30, 1995.
S-5
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
In the fiscal year ended June 30, 1995 the Company achieved record high
revenues, earnings from continuing operations, net earnings, earnings per share
from continuing operations and net earnings per share. In addition, the
Company's 4,534 net new orders, its 4,316 home closings and its backlog of 2,880
homes ($565 million) were each also record highs. Summary consolidated financial
and operating data, including such data for the fiscal year ended June 30, 1995,
are set forth below. For a discussion of certain factors that may affect
reported earnings for the 1996 fiscal year, see "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Results of Operations -- Fiscal Years Ended June 30, 1994 and
1995" and "-- Liquidity and Financial Condition of the Company."
SUMMARY CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenues..................................... $228,062 $260,872 $390,586 $510,061 $803,119
Earnings from continuing operations(1)............. 7,111 14,068 16,863 17,021 28,491
Net earnings(1).................................... 12,117 17,107 24,511 17,021 28,491
Earnings per share from continuing operations...... .75 1.09 1.05 1.13 1.87
Net earnings per share............................. $ 1.28 $ 1.33 $ 1.53 $ 1.13 $ 1.87
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1995
------------------------
AS
ACTUAL ADJUSTED(2)
-------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets................................................................ $925,050 $ 925,050
Notes payable, senior and subordinated debt:
Revolving credit facility and short-term lines............................ 160,200 117,022
Other..................................................................... 331,058 331,058
--------
-----------
Total.............................................................. $491,258 $ 448,080
Shareholders' equity........................................................ $229,342 $ 272,520
</TABLE>
- ---------------
(1) In fiscal 1993 the Company recognized a $20 million increase in net earnings
as a result of a cumulative effect of an accounting change resulting from
its adoption of Statement of Financial Accounting Standards No. 109.
Earnings from continuing operations and net earnings for fiscal 1991 were
reduced by a $5 million pre-tax valuation allowance related to the Company's
residential land development project. Included in net earnings for fiscal
1993 are losses from discontinued operations, primarily consisting of
additional loss provisions related to the Company's discontinued land
development projects. Also included in net earnings for fiscal 1991, 1992
and 1993 are extraordinary gains resulting from the extinguishment of debt
on discounted bases.
(2) As adjusted to give effect to the sale of the shares of Common Stock offered
hereby and the anticipated use of the estimated net proceeds, assuming no
exercise of the Underwriters' over-allotment option. See "Use of Proceeds."
S-6
<PAGE> 7
SUMMARY CONSOLIDATED OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
OPERATING DATA:
Net new orders(1)....................................................... 3,001 4,145 4,534
Home closings........................................................... 2,564 3,183 4,316
Homes under contract at period end (backlog)(2)......................... 1,700 2,662 2,880
Dollar amount of backlog (in millions)(2)............................... $ 260 $ 471 $ 565
Average revenue per home closing (in thousands)......................... $ 144 $ 152 $ 177
Cost of sales as a percentage of revenue................................ 77.4% 79.2% 80.3%
Selling, general and administrative expenses as a percentage of
revenues.............................................................. 16.0% 15.6% 14.3%
Earnings from continuing operations before income taxes as a percentage
of revenues........................................................... 6.3% 5.1% 5.5%
</TABLE>
- ---------------
(1) Net new orders are reduced by cancellations. The Company recognizes revenues
at close of escrow.
(2) See footnote (4) under "Selected Consolidated Financial and Operating
Data -- Selected Consolidated Operating Data."
S-7
<PAGE> 8
RISK FACTORS
Set forth below is a brief discussion of certain matters that should be
considered by prospective investors.
FUTURE COMMUNITIES
The Company's communities will be built out over time. Therefore, the
medium- and long-term future of the Company will be dependent on the Company's
ability to develop and market future communities successfully.
Acquiring land and committing the financial and managerial resources to
develop a community on that land involve significant risks. Before these
communities generate any revenues, they require material expenditures for, among
other things, acquiring land, obtaining development approvals and constructing
project infrastructure (such as roads and utilities), recreation centers, model
homes and sales facilities. It generally takes several years for communities to
achieve cumulative positive cash flow.
The Company believes that the development of Sun City Hilton Head presents
significant new development and marketing challenges, including acquiring the
necessary construction materials and labor in sufficient amounts and on
acceptable terms, adapting the Company's construction methods to a different
geography and climate, and attracting potential customers from areas and to a
market in which the Company has not had significant experience. See
"Business--Master Planned Communities --New Communities Taking Home Sales
Orders--Sun City Hilton Head."
The Company will incur additional risks to the extent it develops
communities in climates or other geographic areas in which it does not have
experience developing communities or develops a different size or style of
community. Among other things, the Company believes that a significant portion
of the home sales at its active adult communities is attributable to referrals
from, or sales to, residents of those communities. The extent of such referrals
or sales at new communities, including communities developed in other areas of
the country, may be less than the Company has enjoyed at the active adult
communities where it currently sells homes. See "Business--Master Planned
Communities-- Communities in Earlier Stages of Development--Sun City MacDonald
Ranch," "--Potential Future Communities" and "--Sales Activities."
The Company currently is managing the development of a greater number of
projects in a wider geographical area than it has previously developed at any
given time.
LONG-TERM NATURE OF PROJECTS; REAL ESTATE, ECONOMIC
AND OTHER CONDITIONS; GEOGRAPHIC CONCENTRATION
The Company's communities are long-term projects. Sales activity at the
Company's communities varies from period to period, and the ultimate success of
any community cannot necessarily be judged by results in any particular period
or periods. A community may generate significantly higher sales levels at
inception (whether because of local pent-up demand in the area or other reasons)
than it does during later periods over the life of the community.
The Company's communities and its other real estate operations are subject
to substantial existing and potential competition, real estate market conditions
(both where its communities, conventional homebuilding operations and other
projects are located and in areas where its potential customers reside), the
cyclical nature of the real estate business, general national economic
conditions and changing demographic conditions. See "Business--Competition".
Company data indicate that, for the past several years, a significant
number of the home purchasers at its active adult communities in Arizona, Nevada
and southern California, particularly Sun City Palm Springs, were from southern
California. Four of the Company's conventional homebuilding subdivisions are
located in California, including two in Orange County. Any of those communities,
particularly Sun
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<PAGE> 9
City Palm Springs, as well as the Company's southern California conventional
homebuilding subdivisions, may be affected by the continuing adverse conditions
in the southern California real estate market and the southern California
economy generally, including the financial difficulties of certain southern
California municipalities.
The Company's primary business operations are concentrated in a limited
number of communities in Arizona, California and Nevada. The Company's
geographic concentration and limited number of projects may create increased
vulnerability to regional economic downturns or other adverse project-specific
matters.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS
The Company's business is subject to extensive federal, state and local
regulatory requirements, the broad discretion that governmental agencies have in
administering those requirements and "no growth" or "slow growth" political
policies, all of which can prevent, delay, make uneconomic or significantly
increase the cost of its developments. In addition, environmental concerns and
related governmental requirements have affected and will continue to affect all
the Company's community development operations.
In connection with the development of the Company's communities and other
real estate projects, particularly those located in California, numerous
governmental approvals and permits are required throughout the development
process and no assurance can be given as to the receipt (or timing of receipt)
of these approvals or permits. In addition, third parties can file lawsuits
challenging approvals or permits received, which could cause substantial
uncertainties and material delays for the project and, if successful, could
result in approvals or permits being voided.
FINANCING; LEVERAGE
Real estate development is dependent on the availability and cost of
financing. It generally takes several years for new communities to achieve
positive cumulative cash flow. In periods of significant growth, therefore, the
Company will require significant additional capital resources, whether from
issuances of equity or by incurring additional indebtedness. The Company's
principal credit facility and the indentures for its publicly-held debt restrict
the indebtedness the Company may incur. The availability of debt financing is
also dependent on governmental policies and other factors outside the control of
the Company. If the Company is at any time not successful in obtaining
sufficient capital to fund its development and expansion expenditures, some or
all of its projects may be significantly delayed, resulting in cost increases
and adverse effects on the Company's results of operations. No assurance can be
given as to the availability or cost of any future financing. In addition, the
Company's degree of leverage from time to time will affect its interest incurred
and may limit funds available for operations. As a result, the Company may be
more vulnerable to economic downturns, which could limit its ability to
withstand adverse changes or to capitalize on business opportunities. If the
Company is at any time unable to generate sufficient cash flow from operations
to service its debt, refinancing of all or a portion of that debt or obtaining
additional financing may be required to avoid defaults (including cross
defaults) on some or all of its indebtedness. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained, or obtained on terms that are favorable or acceptable to the Company.
The Company's real estate operations are also dependent upon the
availability and cost of mortgage financing for potential customers, to the
extent they finance their purchase, and for buyers of the potential customers'
existing homes.
CONSTRUCTION
The Company has from time to time experienced shortages of materials or
qualified tradespeople or volatile increases in the cost of certain materials
(particularly increases in the price of lumber and framing, which are
significant components of home construction costs), resulting in longer than
normal
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<PAGE> 10
construction periods and increased costs not reflected in the prices of homes
for which home sale contracts had been entered into up to one year in advance of
scheduled closing. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations-- Fiscal Years Ended
June 30, 1993 and 1994--Cost of Sales." Generally, the Company's home sale
contracts do not contain, or contain limited, provisions for price increases if
the Company's costs of construction increase.
The Company relies heavily on local contractors, who may be inadequately
capitalized or understaffed. The inability or failure of one or more local
contractors to perform may result in construction delays, increased costs and
loss of some home sale contracts.
NATURAL RISKS
Sun City Roseville and Sun City Hilton Head are subject to significant
seasonal rainfall that can cause delays in construction and development and
increase costs. Both of these communities were adversely affected by
significantly higher than normal rainfall in fiscal 1995.
Earthquake faults, including the San Andreas fault, run through the
Coachella Valley, which includes Sun City Palm Springs and the communities of
Palm Springs, Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A
portion of Sun City Palm Springs is also located in a flood plain. The Coachella
Valley Water District has approved the Company's conceptual flood control plan
for Sun City Palm Springs and has approved the Company's specific flood control
plan for the first phase of this project. A major earthquake or flood could have
a material adverse impact on the development of and results of operations for
Sun City Palm Springs. Sun City Hilton Head is located in an area which may be
subject to hurricanes. A major hurricane could have a material adverse impact on
the development of and results of operations for Sun City Hilton Head.
S-10
<PAGE> 11
USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock offered
hereby, which are estimated at approximately $43.2 million ($49.7 million if the
Underwriter's over-allotment option is exercised in full) will be used to repay
indebtedness outstanding under the Company's $300 million senior unsecured
revolving credit agreement and $10 million of short-term lines of credit. See
"Capitalization." These borrowings were incurred to fund development of existing
and new projects and for other general corporate purposes, or to refinance
indebtedness incurred for those purposes. After completion of this Offering, the
Company intends to reborrow under its senior unsecured revolving credit
agreement and short-term lines of credit from time to time as necessary for
similar purposes.
Because the Company capitalizes interest and amortizes capitalized interest
as closings occur over the lives of its projects and the Company has several
communities at which closings have not yet begun, a significant portion of the
reduction in interest costs resulting from the use of proceeds to repay
indebtedness will not be reflected in reported earnings for the Company's fiscal
year ended June 30, 1996 and some portion will not be reflected in the following
year.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1995 and as adjusted to give effect to the sale of the
Common Stock offered hereby and the anticipated use of the estimated net
proceeds therefrom, assuming no exercise of the Underwriters' over-allotment
option.
<TABLE>
<CAPTION>
JUNE 30, 1995
-----------------------
AS
ACTUAL ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Notes payable, senior and subordinated debt:
Revolving credit facility and short-term lines(1)................ $160,200 $117,022
Other............................................................ 331,058 331,058
-------- --------
Total.................................................... $491,258 $448,080
Shareholders' equity:
Common stock and additional paid-in capital...................... $121,076 $164,254
Retained earnings................................................ 122,152 122,152
Treasury stock and deferred compensation......................... (13,886) (13,886)
-------- --------
Total shareholders' equity............................... $229,342 $272,520
-------- --------
Total capitalization........................... $720,600 $720,600
======== ========
</TABLE>
- ---------------
(1) For interest rates and maturities, see Note 5 of Notes to Consolidated
Financial Statements of the Company included in its Annual Report on Form
10-K for the year ended June 30, 1994, which is incorporated in the
accompanying Prospectus by reference. See "Available Information" and
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
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<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed on the New York Stock Exchange and Pacific Stock
Exchange under the trading symbol WBB. The following table sets forth the high
and low prices of the Common Stock on the New York Stock Exchange for the
periods shown.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1993 Quarter Ended
September 30.............................................. 16 11 3/4
December 31............................................... 16 1/2 11 5/8
1994 Quarter Ended
March 31.................................................. 18 3/8 14 1/2
June 30................................................... 17 1/2 14 1/2
September 30.............................................. 17 3/8 13 5/8
December 31............................................... 17 5/8 14 1/4
1995 Quarter Ended
March 31.................................................. 20 17
June 30................................................... 23 5/8 16 5/8
September 30 (through August 10).......................... 25 18 7/8
</TABLE>
On August 10, 1995 the closing sale price of the Common Stock on the New York
Stock Exchange was $19 5/8.
The Company has paid regular quarterly dividends of $.05 per share for the
last five fiscal years. The amount and timing of any future dividends is subject
to the discretion of the Board of Directors. Among the factors the Board of
Directors may consider in determining the amount and timing of dividends include
the earnings, cash needs and capital resources of the Company. In addition, the
Company is party to a loan agreement and various indentures that contain
covenants restricting the Company's ability to pay dividends and acquire its
Common Stock. Under the most restrictive of these covenants, at June 30, 1995
approximately $16.9 million of the Company's retained earnings were available
for payment of cash dividends on the Common Stock and for the acquisition by the
Company of its Common Stock.
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following tables set forth selected consolidated financial data of the
Company as of June 30, 1994 and 1995 and for each of the years in the five-year
period ended June 30, 1995 and selected consolidated operating data of the
Company as of and for each of the years in the three-year period ended June 30,
1995. They should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto in the Company's annual report on Form
10-K for its year ended June 30, 1994, which is incorporated by reference in the
accompanying Prospectus, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The selected consolidated financial data for each of the years in the
three-year period ended June 30, 1994 and as of June 30, 1994 set forth below
are derived from the Consolidated Financial Statements of the Company
incorporated by reference in the accompanying Prospectus, which statements have
been audited by KPMG Peat Marwick LLP, independent certified public accountants.
The selected consolidated financial data for the year ended June 30, 1991 set
forth below has been derived from audited consolidated financial statements of
the Company, which were also audited by KPMG Peat Marwick LLP.
The selected consolidated financial data as of and for the year ended June
30, 1995 set forth below are derived from unaudited consolidated financial
statements and in the opinion of the management of the Company contains all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the information therein.
The fiscal 1995 financial data set forth below represent preliminary
unaudited results. The audit of 1995 financial results is not yet complete, and
changes could occur.
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<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Revenues:
Home sales-communities.............................. $220,294 $226,014 $324,817 $405,462 $620,012
Home sales-conventional homebuilding................ 4,795 27,097 44,456 79,992 144,469
Land sales and other................................ 2,973 7,761 21,313 24,607 38,638
-------- -------- -------- -------- --------
Total revenues................................. 228,062 260,872 390,586 510,061 803,119
Cost of sales......................................... 177,728 201,427 302,300 404,202 646,052
Selling, general and administrative expenses.......... 37,816 45,583 62,566 79,673 113,235
Equity in loss of unconsolidated affiliates........... 5,686 -- -- -- --
Other expense, net.................................... -- -- 922 -- --
-------- -------- -------- -------- --------
Earnings from continuing operations before
income taxes................................. 6,832 13,862 24,798 26,186 43,832
Income taxes(1)....................................... (279) (206) 7,935 9,165 15,341
-------- -------- -------- -------- --------
Earnings from continuing operations(1)......... 7,111 14,068 16,863 17,021 28,491
Discontinued operations(2)............................ -- -- (12,810) -- --
Extraordinary gain(3)................................. 5,006 3,039 458 -- --
Cumulative effect of accounting change(1)............. -- -- 20,000 -- --
-------- -------- -------- -------- --------
Net earnings(1)................................ $ 12,117 $ 17,107 $ 24,511 $ 17,021 $ 28,491
========= ========= ========= ========= =========
Net earnings per share:
Continuing operations............................... $ .75 $ 1.09 $ 1.05 $ 1.13 $ 1.87
========= ========= ========= ========= =========
Total............................................... $ 1.28 $ 1.33 $ 1.53 $ 1.13 $ 1.87
========= ========= ========= ========= =========
Weighted average shares outstanding................... 9,456 12,907 16,049 15,036 15,209
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
---------------------
BALANCE SHEET DATA: 1994 1995
-------- --------
<S> <C> <C>
Total assets............................................ $758,424 $925,050
Notes payable, senior and subordinated debt:
Revolving credit facility and short-term lines........ 18,000 160,200
Other................................................. 377,676 331,058
-------- --------
Total............................................ $395,676 $491,258
Shareholders' equity.................................... $201,324 $229,342
Total debt divided by total debt and shareholders'
equity................................................ 66.3% 68.2%
</TABLE>
- ---------------
(1) Earnings from continuing operations for fiscal 1993, 1994 and 1995 reflect a
higher income tax rate (a rate more closely approximating the statutory
rate) than for previous years as a result of the Company's adoption of
Statement of Financial Accounting Standards No. 109 effective July 1, 1992.
In fiscal 1993 the Company recognized a $20 million increase in net earnings
as a result of a cumulative effect of an accounting change from the adoption
of Statement of Financial Accounting Standards No. 109. Earnings from
continuing operations and net earnings for fiscal 1991 were reduced by a $5
million pre-tax valuation allowance related to the Company's residential
land development project.
(2) The loss from discontinued operations for fiscal 1993 primarily consisted of
additional loss provisions related to the Company's discontinued land
development projects.
(3) The extraordinary gains recognized by the Company in fiscal 1991, 1992 and
1993 resulted from the extinguishment of debt on discounted bases.
S-13
<PAGE> 14
SELECTED CONSOLIDATED OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
NUMBER OF NET NEW ORDERS(1):
Sun City West.................................................... 1,031 1,156 946
Sun City Tucson.................................................. 305 357 310
Sun City Las Vegas............................................... 801 863 770
Sun City Palm Springs(2)......................................... 450 315 267
Sun City Roseville(3)............................................ -- 349 515
Sun City Hilton Head(3).......................................... -- -- 149
Sun City Georgetown(3)........................................... -- -- 122
Terravita(3)..................................................... -- 331 392
Coventry Homes................................................... 414 774 1,063
------ ------ ------
Total net new orders.......................................... 3,001 4,145 4,534
====== ====== ======
NUMBER OF HOME CLOSINGS:
Sun City West.................................................... 850 1,161 1,104
Sun City Tucson.................................................. 263 342 444
Sun City Las Vegas............................................... 710 815 847
Sun City Palm Springs(2)......................................... 325 278 282
Sun City Roseville(3)............................................ -- -- 293
Sun City Hilton Head(3).......................................... -- -- --
Sun City Georgetown(3)........................................... -- -- --
Terravita(3)..................................................... -- -- 425
Coventry Homes................................................... 416 587 921
------ ------ ------
Total home closings........................................... 2,564 3,183 4,316
====== ====== ======
BACKLOG (HOMES UNDER CONTRACT) AT END OF PERIOD:
Sun City West.................................................... 665 660 502
Sun City Tucson.................................................. 268 283 149
Sun City Las Vegas............................................... 431 479 402
Sun City Palm Springs(2)......................................... 125 162 147
Sun City Roseville(3)............................................ -- 349 571
Sun City Hilton Head(3).......................................... -- -- 149
Sun City Georgetown(3)........................................... -- -- 122
Terravita(3)..................................................... -- 331 298
Coventry Homes................................................... 211 398 540
------ ------ ------
Total homes under contract(4)................................. 1,700 2,662 2,880
====== ====== ======
Aggregate contract sales amount (in millions)(4)................. $ 260 $ 471 $ 565
Average contract sales amount per home (in thousands)............ $ 153 $ 177 $ 196
OPERATING STATISTICS:
Cost of sales as a percentage of revenues........................ 77.4% 79.2% 80.4%
Selling, general and administrative expenses as a percentage of
revenues...................................................... 16.0% 15.6% 14.1%
Earnings from continuing operations before income taxes as a
percentage of revenues........................................ 6.3% 5.1% 5.5%
</TABLE>
- ---------------
(1) Net of cancellations. The Company recognizes revenue at close of escrow.
(2) New home sales orders began at Sun City Palm Springs in July 1992. Of the
450 orders taken in fiscal 1993, 235 were taken from customers who had made
non-binding reservations prior to July 1, 1992. Closings began in October
1992.
(3) New home sales orders began at Sun City Roseville in May 1994, at Sun City
Hilton Head in November 1994, at Sun City Georgetown in June 1995 and at
Terravita in November 1993. Closings at Sun City Roseville began in February
1995 and at Terravita in July 1994.
(4) A majority of backlog at June 30, 1995 is expected to result in revenues in
fiscal 1996. A majority of the backlog, however, is contingent upon the
availability of financing for the customer, sale of the customer's existing
residence or other factors. Also, the Company's ability to obtain damages
for breach of contract by a potential home buyer is, practically, limited to
retaining all or a portion of the deposit received. In the years ended June
30, 1993, 1994 and 1995, cancellations of homes sales orders as a percentage
of new home sales orders were 14.1%, 15.6% and 18.3%, respectively.
S-14
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FISCAL 1995 FINANCIAL DATA DISCUSSED BELOW REPRESENT PRELIMINARY
UNAUDITED RESULTS. THE AUDIT OF 1995 FINANCIAL RESULTS IS NOT YET COMPLETE, AND
CHANGES COULD OCCUR.
RESULTS OF OPERATIONS
FISCAL YEARS ENDED JUNE 30, 1994 AND 1995
Revenues increased 57.5 percent for the fiscal year ended June 30, 1995
compared to the fiscal year ended June 30, 1994, primarily due to home closings
at Terravita and Sun City Roseville (at which the Company had not yet begun
delivering homes in fiscal 1994) and the expansion of Coventry Homes'
conventional subdivision homebuilding operations. Total home closings increased
35.6 percent.
Net earnings increased 67.4 percent for fiscal 1995 compared to fiscal
1994, primarily due to the increase in revenues. Since a significant portion of
selling, general and administrative expenses are fixed, the increase in revenues
also resulted in a decrease in these expenses as a percentage of revenues from
15.6 percent in fiscal 1994 to 14.1 percent in fiscal 1995. Cost of sales as a
percentage of revenues increased from 79.2 percent in fiscal 1994 to 80.4
percent in fiscal 1995. The increase was the result of a variety of factors,
including changes in the mix of contributions by various communities and
Coventry Homes, increased amortization of capitalized interest to cost of sales
and decreased base housing margins at Sun City Tucson. Management anticipates
that (i) continued increases in the amortization of capitalized interest to cost
of sales resulting from higher levels of indebtedness and increases in land held
for longer-term development (with respect to which land the Company cannot
allocate capitalized interest) and (ii) changes in estimates on which the
amortization of other common costs is based will result in a greater percentage
of capitalized interest and other common costs being amortized to cost of sales
in the next fiscal year than in prior years. For a discussion of the anticipated
effect on earnings in fiscal 1996 of the repayment of indebtedness with the
proceeds of the Offering, see "Use of Proceeds."
Net new orders increased 9.4 percent in fiscal 1995 compared to fiscal
1994. This increase was primarily attributable to new sales orders at Sun City
Roseville, Sun City Hilton Head and Sun City Georgetown and the expansion of
Coventry Homes' conventional subdivision homebuilding operations. The Company
did not have a full year of sales activity at Sun City Roseville in fiscal 1994
and began home sales activity at Sun City Hilton Head and Sun City Georgetown in
fiscal 1995. At the mature communities of Sun City West, Sun City Las Vegas, Sun
City Tucson and Sun City Palm Springs, net new orders decreased by 14.8 percent,
due primarily to exceptionally high new order activity at Sun City West and Sun
City Las Vegas in the prior year, the winding down of new order activity at Sun
City Tucson and the impact on Sun City Palm Springs of continued adverse
conditions in the southern California economy.
The number of homes in backlog at June 30, 1995 was 8.2 percent higher than
at June 30, 1994. This increase is primarily attributable to the inclusion of
homes under contract at Sun City Hilton Head and Sun City Georgetown and
increases in backlog at Sun City Roseville and Coventry Homes, partially offset
by declines in homes under contract at the Company's more mature communities.
FISCAL YEARS ENDED JUNE 30, 1993 AND 1994
REVENUES.
(Dollars in Millions)
----------------------------------------------
Fiscal Fiscal
1993 Change 1994
------ ------ ------
$390.6 30.6% $510.1
The Company believes that its home closings and net new orders in recent
periods through June 30, 1994 may have been stimulated by low home mortgage
interest rates in those periods and, except for
S-15
<PAGE> 16
Sun City Palm Springs, healthy housing markets in all geographic areas in which
the Company operates.
Increased home closings at the Company's active adult communities and
Coventry Homes accounted for $60.3 million and $18.3 million, respectively, of
the increase in revenues for the fiscal year ended June 30, 1994 compared to the
fiscal year ended June 30, 1993. Increases in the average revenue per home
closing at the Company's active adult communities and Coventry Homes accounted
for $20.2 million and $17.3 million, respectively, of the increase in revenues.
These increases in average revenue per home closing were partially due to sales
price increases implemented by the Company (see "--Cost of Sales") and partially
due to a greater percentage of sales of larger active adult community homes or
at more expensive conventional homebuilding subdivisions. The Company
experienced decreased home closings and average revenue per home closing at Sun
City Palm Springs for fiscal 1994 compared to fiscal 1993, primarily due to a
decrease in net new orders and a greater percentage of sales of smaller homes.
COST OF SALES. The increase in cost of sales in fiscal 1994 compared to
fiscal 1993 was primarily due to increased home closings at all locations other
than Sun City Palm Springs. The Company also experienced an increase in its cost
of sales as a percentage of revenues from 77.4 percent in fiscal 1993 to 79.2
percent in fiscal 1994, primarily reflecting the impact of higher lumber costs.
Average framing lumber composite prices were 22 percent higher for the 12 months
ended June 30, 1994 than for the 12 months ended June 30, 1993. For the Company,
framing costs represented 14.8 percent of total cost of sales for fiscal 1994
compared to 12.1 percent for fiscal 1993. These lumber cost increases adversely
impacted the Company because homes with fixed sales prices established in sales
contracts entered into up to a year earlier were constructed and delivered at
higher than anticipated costs. In an effort to reduce the effects of rising
costs, the Company implemented sales price increases and entered into fixed
price framing contracts for a significant portion of its homes scheduled to be
constructed through December 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Since a significant portion
of selling, general and administrative expenses are fixed, the increase in
revenues for fiscal 1994 resulted in a decrease in these expenses as a
percentage of revenues as compared to fiscal 1993. Of the increase in total
selling, general and administrative expenses in fiscal 1994 compared to fiscal
1993, $3.0 million was attributable to higher sales and marketing expenses and
$3.8 million was attributable to higher commissions on the higher revenues.
OTHER EXPENSE, NET. Included in other expense, net in fiscal 1993 was $2
million of previously capitalized costs related to an option the Company had to
purchase land near Austin, Texas, as the site of a potential active adult
community, partially offset by $1.1 million of other income.
INCOME TAXES. For financial reporting purposes, income taxes reflect a 35
percent effective tax rate for fiscal 1994 compared to a 32 percent effective
tax rate for fiscal 1993. For financial reporting and cash flow purposes, a
recent tax law change could result in the Company's effective tax rate being
less in future periods than it would have been without the tax law change.
LOSS FROM DISCONTINUED OPERATIONS. The non-cash provision for discontinued
operations recorded by the Company in fiscal 1993 was attributable to the change
in carrying values of the Company's two commercial land development projects
from net realizable values to market values, net of anticipated holding and
disposal costs, and to the settlement of other matters.
EXTRAORDINARY GAIN. The extraordinary gains recognized by the Company in
fiscal 1993 resulted from the extinguishment of portions of notes payable on
discounted bases.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. The $20 million cumulative effect
of accounting change in fiscal 1993 resulted from the Company's adoption of
Statement of Financial Accounting Standards ("SFAS") No. 109 effective July 1,
1992.
S-16
<PAGE> 17
NET EARNINGS. The fiscal 1993 loss from discontinued operations,
extraordinary gain, and cumulative benefit of an accounting change complicate
year-to-year comparisons of net earnings.
The decrease of $7.5 million in net earnings from fiscal 1993 to fiscal
1994 was primarily attributable to the $20 million cumulative effect of
accounting change in fiscal 1993, the increase in cost of sales as a percentage
of revenues and the increase in selling, general and administrative expenses,
partially offset by the increase in revenues in fiscal 1994 and the loss from
discontinued operations recognized in fiscal 1993.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 38 percent in
fiscal 1994 as compared to fiscal 1993, primarily reflecting increased sales
orders for Coventry Homes (resulting from a larger number of subdivisions than
in fiscal 1993), new sales orders at Sun City Roseville (at which the Company
began taking new sales orders in May 1994) and new sales orders at Terravita (at
which the Company began taking new sales orders in November 1993). The Company
also experienced increased sales orders at all operating active adult
communities except Sun City Palm Springs, where net new orders were adversely
affected, and may continue to be adversely affected, by the current southern
California real estate market and the southern California economy generally and
by the effects of other events in southern California.
The number of homes under contract at June 30, 1994 was 57 percent higher
than at June 30, 1993. This increase was primarily attributable to the initial
sales orders at Sun City Roseville (where home closings began in the third
quarter of fiscal 1995) and Terravita (where home closings began in July 1994)
and to an 89 percent increase for Coventry Homes.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
In November 1994 the Company negotiated an amendment to its senior
unsecured revolving credit facility to increase the amount of the facility from
$125 million to $175 million. In June 1995 the senior unsecured revolving credit
facility was amended to increase the amount of the facility to $300 million,
which will provide greater flexibility in the nature and timing of future
development expenditures. In connection with this amendment, the Company repaid
its secured Coventry Homes bank debt and reduced the amount of its short-term
lines of credit from $20 million to $10 million. At June 30, 1995 the Company
had $18.9 million of cash and short-term investments and $141.5 million and $8.3
million of unused borrowing capacity under its $300 million senior unsecured
revolving credit facility and $10 million of short-term lines of credit,
respectively.
Management believes that the Company's current borrowing capacity, when
combined with existing cash and short-term investments and currently anticipated
cash flows from the Company's operating communities, conventional homebuilding
activities and residential land development project, will provide the Company
with adequate capital resources to fund the Company's currently anticipated
operating requirements for the next 12 months. Cash flows from the Company's
operating communities, however, are expected to be negatively impacted by the
decline in net new order activity and backlog at the Company's more mature
active adult communities.
The Company's senior unsecured revolving credit facility and the indentures
for the Company's publicly-held debt contain restrictions which could, depending
on the circumstances, affect the Company's ability to borrow in the future. If
the Company at any time is not successful in obtaining sufficient capital to
fund its then planned development and expansion expenditures, some or all of its
projects may be significantly delayed. Any such delay could result in cost
increases and may adversely affect the Company's results of operations.
The cash flow for each of the Company's communities can differ
substantially from reported earnings, depending on the status of the development
cycle. The initial years of development or expansion require significant cash
outlays for, among other things, land acquisition, obtaining master plan and
other approvals, construction of amenities (including golf courses and
recreation centers), model homes, sales and administration facilities, major
roads, utilities, general landscaping and
S-17
<PAGE> 18
interest. Since these costs are capitalized, this can result in income reported
for financial statement purposes during those initial years significantly
exceeding cash flow. However, after the initial years of development or
expansion, when these expenditures are made, cash flow can significantly exceed
income reported for financial statement purposes, as costs of sales includes
amortization of charges for substantial amounts of previously expended costs.
During fiscal 1995 the Company generated $212.4 million of net cash from
community sales activities, used $100.3 million of cash for land and lot and
amenity development at operating communities, paid $98.2 million for costs
related to communities in the pre-operating stage, used $6.5 million of net cash
for conventional homebuilding operations and used $65.0 million of cash for
other operating activities.
The Company believes that, of the $820.4 million of cash spent by the
Company during fiscal 1995 for land acquisitions, lot and amenity development,
home construction and other operating activities, approximately $135.9 million
was to some extent discretionary as to timing and precedes the actual
construction of homes from which cash can be generated upon closing of home sale
contracts. This $135.9 million was comprised of $98.2 million related to
projects in the pre-operating stage and $37.7 million for land acquisitions and
amenity development at operating communities.
At June 30, 1995, under the most restrictive of the covenants in the
Company's debt agreements, $16.9 million of the Company's retained earnings was
available for payment of cash dividends and for the acquisition by the Company
of its Common Stock.
IMPACT OF INFLATION
Operations of the Company can be impacted by inflation. Home and land sales
prices can increase, but inflation can also cause increases in interest costs
and the costs of land, raw materials and subcontracted labor. Unless such
increased costs are recovered through higher sales prices, operating margins
will decrease. (See "--Results of Operations--Fiscal Years Ended June 30, 1993
and 1994-- Cost of Sales.") High mortgage interest rates may also make it more
difficult for the Company's potential customers to sell their existing homes in
order to move to one of the Company's communities or to finance the purchases of
their new homes.
ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY
The Financial Accounting Standards Board recently issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which the Company will be required to implement effective for
the fiscal year ending June 30, 1997.
This statement requires that long-lived assets must be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If the sum of the expected
future cash flows (undiscounted and without interest charges) from an asset to
be held and used is less than the carrying value of the asset, an impairment
loss must be recognized in the amount of the difference between the carrying
value and fair value. Assets to be disposed of must be valued at the lower of
carrying value or fair value less costs to sell.
Management believes that if this standard were to be implemented currently,
there would not be an impairment loss; however, until it is implemented,
management will periodically reassess the Company's situation in relation to
SFAS 121.
S-18
<PAGE> 19
BUSINESS
Del Webb Corporation is one of the nation's leading developers of
age-restricted active adult communities. The Company has extensive experience in
the active adult community business, having built and sold more than 50,000
homes at its Sun City communities over the past 35 years. The Company is also
delivering homes at Terravita, a gate-guarded, amenity-rich, master-planned
residential community in north Scottsdale, Arizona, that is not age-restricted.
The Company designs, develops and markets these large-scale, master-planned
residential communities, primarily for active adults age 55 and over,
controlling all phases of the master plan development process from land
selection through the construction and sale of homes. Within its communities,
the Company is the exclusive developer of homes. The Company also has
conventional subdivision homebuilding operations in the Phoenix, Tucson and Las
Vegas areas and southern California.
MASTER-PLANNED COMMUNITIES
At June 30, 1995 the Company had six master-planned communities at which
home closings were taking place, two master-planned communities at which it was
taking home sales orders, but at which closings had not yet commenced, and two
master-planned communities in earlier stages of development.
COMMUNITIES DELIVERING HOMES
The following table shows certain information concerning the six
communities at which the Company was delivering homes at June 30, 1995.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
SUN CITY SUN CITY SUN CITY SUN CITY SUN CITY
WEST TUCSON LAS VEGAS PALM SPRINGS TERRAVITA ROSEVILLE
-------- -------- --------- ------------ --------- ---------
First home closing...... 1978 1987 1989 1992 1994 1995
Total acres............. 7,000 1,000 2,500 1,600 800 1,200
Homes at completion..... 16,500 2,500 7,700 4,800 1,400 3,000
Home closings through
June 30, 1995......... 14,247 2,092 4,994 885 425 293
Future home sites
(including backlog)... 2,253 408 2,706 3,915 975 2,707
Years supply of future
homes based on current
or estimated
absorption............ 2-3 1-2 3-4 9-15 2-3 3-5
Base price range of
homes
at June 30, 1995
(in thousands)........ $93-$240 $91-$224 $95-$271 $105-$291 $170-$380 $126-$272
------------------------------------------------------------------------------------------------------------
</TABLE>
Sun City West
First home closing: January 1978
Estimated homes at completion: 16,500
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
- -----------------------------------------------------------------------------------------------------------------------
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home
closings...422 1,924 678 374 759 355 901 798 727 962 708 586 649 617 672 850 1,161 1,104
</TABLE>
Sun City West is a self-contained active adult community located 25 miles
northwest of downtown Phoenix, Arizona. The focal point of Sun City West is its
central activities area, including a very large recreation center, the Sundome
(a 7,000-seat indoor theater owned by Arizona State University), a library, a
bowling alley, tennis courts, lawn bowling greens and a Company-owned 18-hole
championship golf course. Sun City West also has eight other 18-hole golf
courses (seven of which are owned by the residents' community association and
one of which is owned by a private club owned by residents) and three smaller
recreation centers. In addition, Sun City West has over 200 civic and social
organizations and clubs. Sun City West had a population of 27,000 at June 30,
1995.
S-19
<PAGE> 20
Sun City Tucson
First home closing: June 1987
Estimated homes at completion: 2,500
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
------------------------------------------------------------
1987 1989 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home closings......................... 9 286 163 148 202 235 263 342 444
</TABLE>
Sun City Tucson is located 20 miles north of downtown Tucson, Arizona. It
is developed around an 18-hole championship golf course. This active adult
community's 45,000-square foot primary recreation center includes a social hall,
arts and crafts rooms, a large kitchen and a sports and exercise facility. Its
outdoor recreational facilities include tennis courts, a swimming pool,
shuffleboard courts, bocci ball courts and a miniature golf course. Sun City
Tucson also has a smaller recreation facility (including a swimming pool, tennis
courts and activity rooms). Another smaller recreation center is under
construction. Sun City Tucson has numerous civic and social organizations and
clubs and had a population of 4,000 at June 30, 1995.
Sun City Las Vegas
First home closing: March 1989
Estimated homes at completion: 7,700
<TABLE>
<CAPTION>
Fiscal Years Ended June 30,
----------------------------------------------
1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Home closings.................................... 127 994 800 701 710 815 847
</TABLE>
Sun City Las Vegas is located eight miles northwest of downtown Las Vegas,
Nevada. It has two 18-hole championship golf courses, with a third, executive
course scheduled to become operational in late 1995. Other amenities in this
active adult community include 100,000 total square feet of recreation
facilities at two large and one smaller recreation centers. Together, these
facilities include meeting halls, arts and crafts rooms and tennis,
shuffleboard, bocci ball and horseshoe courts, as well as sports and exercise
complexes that include indoor and outdoor swimming pools, saunas, weight
training and exercise rooms and a racquetball court. An additional 40,000 square
feet of similar facilities are being designed and are currently anticipated to
become operational in the Summer of 1996. Sun City Las Vegas has approximately
65 civic and social organizations and clubs and had a population of 9,000 at
June 30, 1995.
Sun City Palm Springs
First home closing: October 1992
Estimated homes at completion: 4,800
<TABLE>
<CAPTION>
Fiscal Years
Ended June 30,
------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Home closings......................................................... 325 278 282
</TABLE>
Sun City Palm Springs is located 20 miles from Palm Springs and 130 miles
from downtown Los Angeles. It is a gate-guarded active adult community that has
an 18-hole championship golf course and a 62,000-square foot recreation center
with indoor and outdoor swimming pools and therapy spas, tennis courts, bocci
ball courts, a fitness and exercise center, arts and crafts studios, a
6,300-square foot ballroom and a full-service restaurant and lounge. Sun City
Palm Springs had a population of 1,600 at June 30, 1995.
Terravita
First home closing: July 1994
Estimated homes at completion: 1,400
<TABLE>
<CAPTION>
Fiscal Year
Ended June 30, 1995
-------------------
<S> <C>
Home closings......................................................... 425
</TABLE>
Terravita is a gate-guarded, amenity-rich, master-planned residential
community located in north Scottsdale, Arizona, that is not age-restricted. It
has an 18-hole championship golf course, a 32,000-
S-20
<PAGE> 21
square foot clubhouse and fitness center, a swimming pool, tennis courts and
other recreational amenities. The Company began delivering homes at Terravita in
July 1994. Terravita had a population of 1,000 at June 30, 1995.
Sun City Roseville
First home closing: February 1995
Estimated homes at completion: 3,000
<TABLE>
<CAPTION>
Fiscal Year
Ended June 30, 1995
-------------------
<S> <C>
Home closings......................................................... 293
</TABLE>
Sun City Roseville is located 20 miles northeast of downtown Sacramento,
California. This active adult community is planned to include 27 holes of
championship golf, nine holes of which are open and nine holes of which are
currently under construction, 40 acres of parks and a 52,000-square foot
recreation center with indoor and outdoor swimming pools and therapy spas,
tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts
studios, a ballroom and a full-service restaurant and lounge. Sun City Roseville
began home closings in February 1995 and had a population of 500 at June 30,
1995.
NEW COMMUNITIES TAKING HOME SALES ORDERS
The following table shows information concerning the two communities at
which the Company was taking home sale orders at June 30, 1995, but at which
home deliveries have not commenced.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUN CITY SUN CITY
HILTON HEAD GEORGETOWN
------------- -----------
<S> <C> <C>
Total acres.............................. 5,600 5,300
Homes at completion...................... 8,000 9,500
New orders first taken................... November 1994 June 1995
Net new orders through June 30, 1995..... 149 122
Anticipated first home closing........... Summer 1995 Spring 1996
Base price range of homes at June 30,
1995 (in thousands).................... $96-245 $101-235
</TABLE>
- --------------------------------------------------------------------------------
Sun City Hilton Head
Sun City Hilton Head is located inland 13 miles from Hilton Head Island,
South Carolina. It is a gate-guarded active adult community which is currently
planned for 8,000 homes, several golf courses, a complex of recreational
buildings and other amenities on 5,600 acres, of which 1,920 acres are owned by
the Company and 3,680 acres are subject to options expiring in various years
through 2000. The Company broke ground at Sun City Hilton Head in May 1994 and
began taking home sales orders in November 1994. In part because Sun City Hilton
Head is located on the East Coast, distant from the Company's other communities,
and because of the location of Sun City Hilton Head in relation to major
metropolitan areas, there is not the same local pent-up demand for initial home
sales orders at this community as has existed with certain of the Company's
other communities. In addition, rains and flooding severely hampered development
and marketing at this community in fiscal 1995. At June 30, 1995 the Company had
a backlog of 149 home sale contracts at Sun City Hilton Head. Home closings at
Sun City Hilton Head are scheduled to begin in the Summer of 1995. See "--Sales
Activities."
Sun City Georgetown
Sun City Georgetown is an active adult community being developed 30 miles
north of downtown Austin, Texas. It is currently planned for 9,500 homes on
5,300 acres, of which 1,850 acres are owned by the Company and 3,450 acres are
subject to options expiring in various years through April 1999. The Company
broke ground at Sun City Georgetown in the Spring of 1995 and began taking home
sales
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<PAGE> 22
orders at this community on June 15, 1995. At June 30, 1995 the Company had a
backlog of 122 home sale contracts at Sun City Georgetown. The Company believes
that this level of initial home sales activity is attributable to local pent-up
demand and will not continue in the future. Delivery of the first homes at Sun
City Georgetown is currently anticipated in the Spring of 1996.
COMMUNITIES IN EARLIER STAGES OF DEVELOPMENT
The following table shows information concerning the two communities in
earlier stages of development at June 30, 1995.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUN CITY
MACDONALD SUN CITY
RANCH GRAND
--------- --------
<S> <C> <C>
Total acres............................... 600 4,000
Homes at completion....................... 2,300 9,500
</TABLE>
- --------------------------------------------------------------------------------
Sun City MacDonald Ranch
Sun City MacDonald Ranch is located in Henderson, Nevada, near Las Vegas.
It is being developed as an active adult community with fewer amenities (for
example, an executive golf course instead of a championship golf course) and
higher density than the Company's other active adult communities. This community
is currently planned for 2,300 homes on 600 acres. The Company broke ground at
Sun City MacDonald Ranch in the Spring of 1995 and plans to begin to take home
sales orders at this community in the Fall of 1995. Home closings at Sun City
MacDonald Ranch are not currently anticipated to begin before the Spring of
1996.
Sun City Grand
Sun City Grand is located on 4,000 acres adjacent to Sun City West. It is
currently planned for 9,500 homes, several golf courses and amenities similar to
those in other Sun Cities. Development began in the Spring of 1995 and is being
coordinated with the build-out of Sun City West. The Company does not currently
anticipate that home sales activity will begin in fiscal 1996.
POTENTIAL FUTURE COMMUNITIES
The Company believes that the demographic attributes of its active adult
target market segment of people age 55 and over present significant
opportunities for carefully selected future active adult communities. The
Company's plan is to capitalize on those opportunities and its experience,
expertise and reputation by developing active adult communities in strategically
selected locations. The current business strategy of the Company includes
conducting extensive market research on prospective areas, including consumer
surveys and supply and demand analyses, in connection with its evaluation of
sites for future active adult communities. At any given time, the Company may
have a number of land acquisitions for potential communities under study and in
various stages of investigation or negotiation. The Company is currently
considering acquiring the land for communities to be located both in areas of
the Country where the Company has active adult communities and in other areas,
including full four-season areas (i.e., areas which experience cold winters),
where it does not have experience in developing communities.
In making significant land acquisitions, the Company generally endeavors to
acquire options on the land to mitigate the risk of holding the land during the
detailed feasibility and entitlement process. However, under certain
circumstances, the Company acquires such property directly.
In 1992 the Company purchased for $11 million, 5,600 acres of land north of
Phoenix as the site for a possible master-planned community. In April 1995 the
Company received a general plan amendment and development master plan approval
(the initial governmental planning approvals required) for
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<PAGE> 23
16,500 homes on this property. However, development of this property remains
subject to a number of uncertainties and the planning, entitlement and
permitting process is still in a relatively early stage.
CONVENTIONAL HOMEBUILDING
The Company began its conventional subdivision homebuilding operations in
the Phoenix area in 1991. The Company expanded its conventional homebuilding
operations to Tucson in fiscal 1994 and to Las Vegas and southern California in
fiscal 1995. At June 30, 1995 the Company had a backlog of home sales orders at
26 subdivisions, 18 in the Phoenix area, three in Tucson, two in Las Vegas and
three in southern California.
In order to capitalize on its market knowledge and organizational
structure, the Company's conventional homebuilding activities are primarily
conducted in those metropolitan or market areas in which the Company is
developing an active adult community. Through June 30, 1995 the Company's
conventional homebuilding operations have generally targeted first-time and
move-up buyers, with the base price of homes offered for sale at June 30, 1995
ranging from $80,000 to $316,000. The Company expects homes in this price range
to be its main target segment in the future, but it intends to remain flexible
when reviewing potential sites in order to pursue attractive opportunities.
The Company currently expects that community development will continue to
be its primary business activity. For the year ended June 30, 1995, conventional
homebuilding operations represented 18 percent of the Company's revenues.
PRODUCT DESIGN
The Company designs homes to suit its market and endeavors to conform to
the popular home design characteristics in the particular geographic market
involved. Home designs are periodically reviewed and refined or changed to
reflect changing homebuyer tastes in each market.
Homes at the Company's communities generally range in size from 1,000
square feet to 3,900 square feet and include two to five (predominantly two and
three) bedrooms, two or more baths, kitchen, living/dining area, family room or
nook, two-car garages and golf cart space. Built-in appliances are included. The
Company offers a program of interior and exterior upgrades, including different
styles of cabinetry and floor coverings and, at its communities, a program for
architectural changes to allow home buyers to further modify their homes.
CONSTRUCTION
The Company generally functions as its own general contractor. At all
stages of production, the Company's management personnel and on-site
superintendents coordinate the activities of subcontractors, consultants and
suppliers and subject their work to quality and cost controls. Consulting firms
assist in project planning and independent contractors are employed to perform
almost all of the site development and construction work. Within its active
adult communities and, generally, its conventional subdivisions, the Company is
the exclusive developer of homes and does not sell vacant lots to others for
residential construction purposes. The time required for construction of the
Company's homes depends on the weather, time of year, local labor situations,
availability of materials and supplies and other factors.
The Company strives to coordinate the construction of homes with home sales
orders to control the costs and risks associated with completed but unsold
inventory. An inventory of unsold homes under construction is maintained for
immediate sale to customers. At June 30, 1995 the Company had 366 completed
homes (excluding models and vacation homes) and 388 homes under construction
that were not subject to a sales contract. At June 30, 1995 these homes
represented $26.3 million and $10.3 million of the Company's $142.4 million of
home construction costs, which are a component of its $828.8 million of real
estate inventories at that date.
S-23
<PAGE> 24
SALES ACTIVITIES
At each of its communities the Company establishes a large and
well-appointed sales pavilion and an extensive complex of furnished model homes.
These models include a wide variety of single family homes, each of which is
generally available in several exterior styles.
The Company's homes are sold by its commissioned sales personnel, who are
available to provide prospective home buyers with floor plans, price
information, option selections and tours of models and lots. All communities
have co-brokerage programs with independent real estate brokers. Homes are sold
through sales contracts, some of which allow customers to purchase homes for
delivery up to one year or more in the future. The sales contracts generally
require an initial deposit and an additional deposit prior to commencement of
construction. The Company provides to all home buyers standardized warranties
subject to specified limitations.
While more than one factor may contribute to a given home sale, the
Company's experience indicates that a substantial portion of its home sales at
its communities are attributable to follow-ups on referrals from residents of
its communities and, at active adult communities, to the Company's "Vacation
Getaway" program. This program enables prospective purchasers to visit an active
adult community and stay (for a modest charge) in vacation homes for up to one
week to experience the Sun City lifestyle prior to deciding whether to purchase
a home.
The Company's information is that most homebuyers at its active adult
communities generally visit the community in which they purchase on more than
one occasion before buying. This may affect the success or initial success of
the sales effort at those communities at which a higher proportion of the
potential customers do not live within a several-hour driving distance from the
community.
The Company also markets its communities through billboards, television and
radio commercials, local and national print advertising, direct mailings and
telemarketing.
The Company offers mortgage financing for the purchasers of homes at its
communities and conventional subdivisions. The Company sells the mortgages it
generates to third parties.
OTHER REAL ESTATE ACTIVITIES
The Company is completing the development of The Foothills, a 4,140-acre
master-planned residential land development project located in Phoenix in which
individual land parcels and lots are being sold to other builder/developers for
conventional housing and related commercial developments. At June 30, 1995, 424
acres remained to be sold at The Foothills. Of these acres, 401 are zoned for
conventional housing and 23 are zoned for commercial development. At June 30,
1995 the Company's investment in The Foothills was $25.9 million.
COMPETITION
The Company believes that it maintains a leading position within the active
adult community market in each of the metropolitan areas in which it has a
community that is currently generating revenues. The Company believes the major
competitive factors in active adult community home purchases include location,
lifestyle, price, value, recreational facilities and other amenities and
builder/developer reputation. The Company believes its reputation, established
by building and selling more than 50,000 homes over 35 years and providing an
attractive lifestyle for adults age 55 and over, enhances the Company's active
adult community marketing position.
All of the Company's real estate operations are subject to a high degree of
competition. The Company competes with numerous homebuilders and developers,
certain of which have greater financial resources than the Company. The Company
also competes generally with most homebuilders and residential developers in its
geographic markets and with resales of homes in the general resale market for
such housing, including in its own communities.
For the Company's active adult communities, there are varying degrees of
direct and increasing competition from businesses engaged exclusively or
primarily in the sale of homes to buyers age 55 and older and from
non-age-restricted, master-planned communities in these areas. The Company
competes
S-24
<PAGE> 25
with new home sales and resales at these other communities. Sun City Hilton Head
competes with numerous homebuilders and community developers in the eastern
seaboard, including in the Hilton Head area and Florida. A large homebuilder
recently commenced developing a 1,300-home, age-restricted community in Indio,
California, which is near Sun City Palm Springs.
The Company believes there may be significant additional future competition
in active adult community development, including competition from conventional
community developers.
MANAGEMENT
BOARD OF DIRECTORS
Set forth below is certain information with respect to the Directors of the
Company.
<TABLE>
<CAPTION>
YEARS AS
NAME AGE POSITION A DIRECTOR
- ----------------------------------- --- ------------------------------------------ ----------
<S> <C> <C> <C>
Philip J. Dion..................... 50 Chairman of the Board and Chief Executive 8
Officer, Member of the Executive Committee
and Ex-Officio Member of the Nominating
Committee
D. Kent Anderson................... 54 Member of the Finance Committee 1
Robert Bennett..................... 70 Member of the Finance Committee and the 10
Nominating Committee
Hugh F. Culverhouse, Jr............ 46 Chairman of the Finance Committee and 5
Member of the Executive Committee
Kenny C. Guinn..................... 58 Member of the Human Resources Committee 1
J. Russell Nelson.................. 65 Chairman of the Nominating Committee and 12
Member of the Audit Committee
Peter A. Nelson.................... 63 Chairman of the Executive Committee and 11
Chairman of the Human Resources Committee
Michael E. Rossi................... 51 Member of the Audit Committee 1
C. Anthony Wainwright.............. 61 Member of the Human Resources Committee 7
and the Nominating Committee
Sam Yellen......................... 64 Chairman of the Audit Committee and Member 4
of the Nominating Committee
</TABLE>
Mr. Dion has been the Company's Chairman of the Board and Chief Executive
Officer since November 1987. Mr. Dion joined the Company in 1982 and held
various positions in the Company until his appointment as Chairman of the Board
and Chief Executive Officer.
Mr. Anderson has served as the Chairman of the Board and Chief Executive
Officer of Post Oak Bank in Houston, Texas, since 1991. Mr. Anderson previously
served as Chairman of the Board and held other executive positions with First
Interstate Bank of Texas, N.A. from 1988 to 1991.
Mr. Bennett has been Executive Vice President with Daiwa Securities
America, Inc., an investment banking firm, since July 1995 and was Senior Vice
President of Daiwa Securities America, Inc. from January 1987 to July 1995.
Mr. Culverhouse has been a partner in the law firm of Hugh F. Culverhouse,
P.A. and its predecessor firm since 1987.
Dr. Guinn served as interim President of the University of Nevada, Las
Vegas, from May 1994 to May 1995 and has served as Chairman of the Boards of
Directors of Southwest Gas Corporation and PriMerit Bank since 1988 and 1987,
respectively. Dr. Guinn also served as Chief Executive Officer of Southwest Gas
Corporation from October 1988 to May 1993 and Chief Executive Officer of
PriMerit
S-25
<PAGE> 26
Bank from 1985 to 1992. Dr. Guinn is a director of Boyd Gaming Corporation and
Oasis Residential, Inc.
Dr. Nelson was Dean of Business and Administration of the University of
Colorado from 1989 until his retirement in 1992 and was President of Arizona
State University from 1981 to 1989.
Mr. Nelson was Senior Vice President of Marketing with McDonald's
Corporation from 1984 until his retirement in 1990.
Mr. Rossi has been Vice Chairman of BankAmerica Corporation since 1993. Mr.
Rossi has held various positions with BankAmerica Corporation since 1986,
including Chief Credit Officer from 1990 to 1993 and Executive Vice President,
Commercial Banking Division from 1988 to 1990.
Mr. Wainwright has been the Chairman of the advertising agency of Harris,
Drury, Cohen, Inc. since May 1995. From 1989 until April 1995 Mr. Wainwright was
the Vice Chairman of the advertising agency of Campbell-Mithun-Esty. Mr.
Wainwright is a director of All-Comm Media, Inc., American Woodmark Co., Gibson
Greeting Cards Co. and Specialty Retail Group, Inc.
Mr. Yellen was a partner with KPMG Peat Marwick LLP from 1968 until his
retirement in 1990. Mr. Yellen is a director of Beverly Funding Corporation,
Wedbush Corporation, Downey Savings and Loan Association and LTC Properties,
Inc.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers of
the Company.
<TABLE>
<CAPTION>
YEARS AS AN YEARS EMPLOYED
NAME AGE POSITION EXECUTIVE OFFICER BY THE COMPANY
- --------------------------- --- ------------------------------ ----------------- --------------
<S> <C> <C> <C> <C>
Philip J. Dion............. 50 Chairman of the Board and 13 13
Chief Executive Officer
Joseph F. Contadino........ 53 Senior Vice President and 3 4
President of Coventry Homes
John H. Gleason............ 53 Senior Vice President, Project 5 7
Planning and Development
LeRoy C. Hanneman, Jr...... 48 Senior Vice President and 6 23
General Manager -- Sun City
Las Vegas
Frank D. Pankratz.......... 45 Senior Vice President and 7 8
General Manager -- Sun City
Palm Springs
Charles T. Roach........... 48 Senior Vice President and 6 16
General Manager -- Sun City
West
John A. Spencer............ 46 Senior Vice President and 10 16
Chief Financial Officer
J. Dennis Wilkins.......... 50 Senior Vice President and 6 6
General Manager -- Sun City
Hilton Head
Robertson C. Jones......... 50 Vice President and General 3 3
Counsel
Anne L. Mariucci........... 38 Vice President and General 9 11
Manager -- Terravita
Donald V. Mickus........... 49 Vice President, Treasurer and 9 12
Secretary
David E. Rau............... 38 Vice President and Controller 9 10
David G. Schreiner......... 42 Vice President, Marketing 2 4
M. Lynn Schuttenberg....... 52 Vice President, Human 2 9
Resources
Robert R. Wagoner.......... 54 Vice President, Land 1 3
Development
</TABLE>
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<PAGE> 27
For information concerning Mr. Dion, see "-- Board of Directors."
Mr. Contadino has served as Senior Vice President since January 1994. Prior
to that time he served as Vice President from November 1991 to January 1994. He
became President of Coventry Homes in January 1991. From 1981 to January 1991
Mr. Contadino was the owner, Chief Executive Officer and President of Coventry
Financial, Inc. ("CFI"), a Phoenix-based homebuilder. In January 1991 the
Company purchased certain assets of CFI.
Mr. Gleason has served as Senior Vice President, Project Planning and
Development, since January 1994. Prior to that time he served as Vice President,
Project Planning and Development, from June 1993 to January 1994. He became a
Vice President of the Company in January 1990.
Mr. Hanneman has served as a Senior Vice President of the Company since
January 1994. Prior to that time he served as Vice President of the Company from
January 1989 to January 1994. Since August 1987 he has served as General Manager
of Sun City Las Vegas.
Mr. Pankratz became General Manager of Sun City Palm Springs in February
1990. Since September 1988 he has served as Senior Vice President of the
Company.
Mr. Roach has served as a Senior Vice President of the Company since
January 1994. Prior to that time he served as Vice President of the Company from
January 1989 to January 1994. Since August 1987 he has served as General Manager
of Sun City West.
Mr. Spencer became Chief Financial Officer of the Company in April 1993.
Since February 1991 he has served as Senior Vice President of the Company. Prior
to that time he served as Vice President and Controller of the Company from
January 1985 to February 1991.
Mr. Wilkins has served as a Senior Vice President of the Company and
General Manager of Sun City Hilton Head since January 1994. Prior to that time
he served as a Vice President of the Company and General Manager of Sun City
Tucson from July 1989 to January 1994.
Mr. Jones became Vice President and General Counsel of the Company in
January 1992. From March 1990 to November 1991 he was a partner with the law
firm of Gaston & Snow.
Ms. Mariucci has served as Vice President of the Company since June 1986,
when she began serving as Vice President, Corporate Planning and Development.
She became General Manager of Terravita in December 1992.
Mr. Mickus has served as Vice President and Treasurer since November 1985
and as Secretary commencing in June 1991.
Mr. Rau became Vice President and Controller in February 1991. Prior to
that time he served as Vice President, Taxes and Human Resources, from May 1990
to February 1991.
Mr. Schreiner became Vice President, Marketing, in December 1992. Prior to
that time he served as Senior Vice President, Marketing and Operations, of
Coventry Homes from October 1992 to December 1992 and Vice President, Marketing
and Operations, of Coventry Homes from January 1991 to October 1992. Mr.
Schreiner was employed by CFI from April 1987 to January 1991.
Ms. Schuttenberg became Vice President, Human Resources, in April 1993.
Prior to that time she served as Director of Human Resources from March 1992 to
April 1993 and as Director of Taxes from April 1989 to March 1992.
Mr. Wagoner became Vice President, Land Development, in January 1994. Prior
to that time he served as Director of Land Development from January 1992 to
January 1994. From 1959 to January 1992 Mr. Wagoner was employed by Collar,
Williams and White Engineering in Phoenix, where he held various positions,
including President.
S-27
<PAGE> 28
UNDERWRITING
The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares which each has severally agreed to purchase
from the Company (subject to the terms and conditions specified in the
Underwriting Agreement) are as follows:
<TABLE>
<CAPTION>
<S> <C>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------------------ ----------
Dillon, Read & Co. Inc. ........................ 690,000
Montgomery Securities........................... 690,000
Alex. Brown & Sons Incorporated................. 45,000
Auerbach Pollak & Richardson Inc. .............. 15,000
Bear, Stearns & Co. Inc. ....................... 45,000
CS First Boston Corporation..................... 45,000
Crowell, Weedon & Co. .......................... 25,000
Dean Witter Reynolds Inc. ...................... 45,000
A.G. Edwards & Sons, Inc. ...................... 45,000
Furman Selz Incorporated ....................... 25,000
Janney Montgomery Scott Inc. ................... 25,000
Edward D. Jones & Co. .......................... 25,000
Ladenburg, Thalmann & Co. Inc. ................. 25,000
Lazard Freres & Co. LLC ........................ 45,000
Legg Mason Wood Walker, Incorporated............ 25,000
Lehman Brothers Inc. ........................... 45,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................. 45,000
Morgan Stanley & Co. Incorporated............... 45,000
David A. Noyes & Company........................ 15,000
Oppenheimer & Co., Inc. ........................ 45,000
PaineWebber Incorporated........................ 45,000
Peacock, Hislop, Staley & Given................. 15,000
Pennsylvania Merchant Group Ltd................. 15,000
Piper Jaffray Inc. ............................. 25,000
Principal Financial Securities, Inc. ........... 25,000
Prudential Securities Incorporated.............. 45,000
Rauscher Pierce Refsnes, Inc. .................. 25,000
The Robinson-Humphrey Company, Inc. ............ 25,000
Salomon Brothers Inc ........................... 45,000
Schroder Wertheim & Co. Incorporated............ 45,000
The Seidler Companies Incorporated.............. 15,000
Wellington (H.G.) & Co. Inc. ................... 15,000
---------
Total....................................... 2,350,000
=========
</TABLE>
The Managing Underwriters are Dillon, Read & Co. Inc. and Montgomery
Securities.
If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby if any Underwriter defaults in its
obligation to purchase such shares and if the aggregate obligations of the
Underwriters so defaulting do not exceed 10% of the shares offered hereby, the
remaining Underwriters, or some of them, must assume such obligations.
The shares of Common Stock offered hereby are being offered severally by
the Underwriters for sale at the price set forth on the cover page hereof, or at
such price less a concession not to exceed $0.60 per share on sales to certain
dealers. The Underwriters may allow, and such dealers may reallow, a concession
not to exceed $0.10 per share on sales to certain dealers. The offering of the
shares of Common Stock is made for delivery when, as, and if accepted by the
Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offer without notice. The Underwriters reserve the right to
reject any order for the purchase of the shares. After the shares are released
for sale to the public, the public offering price, the concession and the
reallowance may be changed by the Underwriters.
The Company has granted to the Underwriters an option to purchase up to an
additional 352,500 shares of Common Stock on the same terms per share. If the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase approximately the same
proportion of the aggregate shares so purchased as the number of shares to be
purchased by it shown in the above table bears to the total number of shares in
such table. The Underwriters may exercise such option on or before the thirtieth
day from the date of the public offering of the shares offered hereby and only
to cover overallotments made of the shares in connection with this Offering.
The Company and certain of its directors and executive officers have agreed
not to offer, sell or otherwise dispose of any shares of Common Stock of the
Company for a period of 90 days after the date of this Prospectus Supplement
without the prior written consent of Dillon, Read & Co. Inc., except that the
Company may, without that consent, issue shares of Common Stock pursuant to its
existing stock and benefit plans.
The Company has agreed in the Underwriting Agreement to indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.
CERTAIN LEGAL MATTERS
Certain legal matters with respect to the Common Stock will be passed upon
for the Underwriters by Latham & Watkins. See "Certain Legal Matters" in the
accompanying Prospectus.
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<PAGE> 29
PROSPECTUS
$200,000,000
DEL WEBB CORPORATION
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND STOCK PURCHASE WARRANTS
------------------------
Del Webb Corporation (the "Company") may offer and issue from time to time
its: debt securities (the "Debt Securities") in one or more series, consisting
of debentures, notes or other evidences of indebtedness and having such prices
and terms as are determined at the time of sale; preferred stock, which may be
issued in one or more series (the "Preferred Stock"); common stock (the "Common
Stock"); and Stock Purchase Warrants to purchase Preferred Stock or Common Stock
(the "Warrants" and, together with the Debt Securities, Preferred Stock and
Common Stock, the "Securities"). The Securities may be issued as Units (the
"Units") and in any combination, the Debt Securities may or may not be
convertible into Preferred Stock or Common Stock and the Preferred Stock may or
may not be convertible into Common Stock or exchangeable for Debt Securities.
The accompanying Prospectus Supplement sets forth: the ranking of the Debt
Securities covered thereby as senior, senior subordinated or subordinated
(including junior subordinated) and the specific designation, aggregate
principal amount, purchase price, maturity, interest rate (or manner of
calculation thereof), time of payment of interest (if any), right to defer
interest (if any), convertibility (if any) and, if applicable, Securities into
which convertible and conversion price and any other specific terms of the Debt
Securities; the rights, privileges and preferences of the Preferred Stock
covered thereby, including whether and on what terms such Preferred Stock may be
convertible into Common Stock or exchangeable for Debt Securities, and whether
the Company has elected to offer any Preferred Stock in the form of depositary
shares; the Preferred Stock or Common Stock for which any Warrants covered
thereby will be exercisable and the exercise price; whether the Securities
covered thereby will be issued in Units and, if so, the Securities which are
part thereof; whether the Securities covered thereby are listed on a securities
exchange; and the name of and compensation to each dealer, underwriter or agent
(if any) involved in the sale of the Securities covered thereby.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
------------------------
Prior to issuance there will have been no market for the Debt Securities,
Preferred Stock or Warrants, and there can be no assurance that a secondary
market for the Debt Securities, Preferred Stock or Warrants will develop. This
Prospectus may not be used to consummate sales of Securities unless accompanied
by a Prospectus Supplement. The Securities may be offered through one or more
different plans of distribution, including offerings through underwriters. See
"Plan of Distribution."
------------------------
The date of this Prospectus is July 21, 1995
<PAGE> 30
IN CONNECTION WITH THE OFFERINGS OF THE DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK OR WARRANTS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES, PREFERRED
STOCK, COMMON STOCK OR WARRANTS, OR ANY OF THEM, AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities,
Preferred Stock, Common Stock and Warrants. This Prospectus, which constitutes
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission. For further
information with respect to the Company, reference is made to the Registration
Statement.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, as well as such reports, proxy
statements and other information filed by the Company, may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the Commission's Regional Offices located at Northwestern Atrium Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade
Center, 13th Floor, New York, New York 10048. In addition, such reports, proxy
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005 and the Pacific Stock Exchange, 115 Sansome Street, Suite 1104, San
Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended June 30,
1994 and its Quarterly Reports on Form 10-Q for the Quarters ended September 30,
1994, December 31, 1994 and March 31, 1995, which have been filed with the
Commission, are incorporated in this Prospectus by reference. Pages 15-21 of the
Company's proxy statement for the annual meeting of its shareholders held on
November 2, 1994, which is incorporated by reference in, and Exhibit 99.0 (the
Company's Amended and Restated Certificate of Incorporation) to, the Company's
Quarterly Report on Form 10-Q for the Quarter ended December 31, 1994, are both
also specifically incorporated herein by reference. They contain a description
of and provisions with respect to the Common Stock and Preferred Stock of the
Company. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby are incorporated by
reference in this Prospectus and made a part hereof from the date such documents
are filed.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in the Prospectus Supplement or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of each document incorporated herein by reference (not including the
exhibits to those documents, unless the exhibits are specifically incorporated
by reference therein or herein). Requests for such copies should be directed to:
Del Webb Corporation, 6001 North 24th Street, Phoenix, Arizona 85016, Attention:
Secretary. Telephone requests may be directed to (602) 808-8000.
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<PAGE> 31
THE COMPANY
Del Webb Corporation is one of the nation's leading developers of
age-restricted (age 55 and over) active adult communities, having built and sold
approximately 50,000 homes at its active adult Sun City communities over the
past 35 years. The Company currently offers homes for sale at eight communities,
each of which, except Terravita, is an active adult community: Sun City West
(near Phoenix), Sun City Tucson and Terravita (in Scottsdale) in Arizona; Sun
City Las Vegas in Nevada; Sun City Palm Springs and Sun City Roseville (near
Sacramento) in California; Sun City Hilton Head in South Carolina; and Sun City
Georgetown (near Austin), in Texas. The Company is in various stages of
developing two other Sun City active adult communities: Sun City McDonald Ranch
(near Las Vegas) in Nevada, and Sun City Grand, near Sun City West, in Arizona.
The Company designs, develops and markets these large-scale, master-planned
residential communities, controlling all phases of the master plan development
process from land selection through construction and selling homes. Within its
active adult communities, the Company is the exclusive developer of homes.
The Company also conducts conventional subdivision homebuilding operations
in the Phoenix, Tucson and Las Vegas areas and Southern California. The Company
is also in the preliminary development process for a potential master-planned
development near Phoenix, Arizona, located on approximately 5,600 acres.
However, development of this project remains subject to a number of
uncertainties and the planning, entitlement and permitting processing is still
in a relatively early stage.
The Company was incorporated in 1946 under Arizona law and reincorporated
in Delaware in 1994. The Company's principal executive offices are located at
6001 North 24th Street, Phoenix, Arizona 85016 and its telephone number is (602)
808-8000. The Company conducts substantially all of its activities through
subsidiaries and, as used in this Prospectus and the accompanying Prospectus
Supplement, the term the "Company" includes Del Webb Corporation and its
subsidiaries, unless the context indicates otherwise.
USE OF PROCEEDS
Unless otherwise set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities will be used to reduce outstanding
balances under the Company's senior unsecured revolving credit facility, to fund
land acquisitions and development of new projects and for general corporate
purposes. Amounts so repaid under the revolving credit facility may be
reborrowed in the future.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges of the Company for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH
FISCAL YEAR ENDED JUNE 30, 31,
------------------------------------ ------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (unaudited)........................ 1.81x 1.38x 1.59x 1.63x 1.30x 1.19x 1.44x
</TABLE>
The ratio of earnings to fixed charges is calculated by dividing earnings
by fixed charges. For this purpose "earnings" means earnings (loss) from
continuing operations before income taxes plus (a) fixed charges and interest
amortized to cost of sales (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations) minus (b) capitalized
interest (including the proportionate share thereof of unconsolidated affiliates
and discontinued operations). "Fixed charges" means total interest, whether
capitalized or expensed (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations and the portion of rent
expense representative of interest costs), plus (i) debt-related fees and (ii)
amortization of deferred financing costs.
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<PAGE> 32
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior, senior subordinated or
subordinated (including, if applicable, junior subordinated) debt of the Company
and will be issued under a Senior Debt Securities Indenture (the "Senior Debt
Indenture"), a Senior Subordinated Debt Securities Indenture (the "Senior
Subordinated Debt Indenture") or a Subordinated Debt Securities Indenture (the
"Subordinated Debt Indenture"), in each case between the Company and a Trustee
(the "Trustee"). The Senior Debt Indenture, Senior Subordinated Debt Indenture
and the Subordinated Debt Indenture are sometimes referred to below individually
as an "Indenture" and collectively as the "Indentures." Unless otherwise stated
in the Prospectus Supplement, the Trustee under the first Indenture under which
Debt Securities will be issued will be The First National Bank of Boston. Unless
otherwise stated in the applicable Prospectus Supplement, The First National
Bank of Boston may also be the Trustee under more than one of the other
Indentures. (See "Concerning the Trustee.") The Debt Securities offered by this
Prospectus and the accompanying Prospectus Supplement are referred to below as
the "Offered Debt Securities." If and to the extent set forth in the
accompanying Prospectus Supplement, the Offered Debt Securities will be
convertible into Preferred or Common Stock of the Company or issued as part of
Units of Offered Debt Securities and other Securities. If the Offered Debt
Securities are to be issued as part of Units of Debt Securities and other
Securities or may be issued in exchange for Preferred Stock, the Prospectus
Supplement will describe any applicable material federal income tax
consequences.
The following summaries of certain provisions of the Indentures and the
Debt Securities do not purport to be complete. Except to the extent set forth in
the Prospectus Supplement with respect to a particular issue of Debt Securities,
the Indentures are substantially identical, except for the provisions relating
to subordination, including the fact that senior subordinated Debt Securities
will rank senior to the subordinated Debt Securities.
GENERAL
The Indenture for the Offered Debt Securities will not limit the amount of
additional indebtedness the Company or any of its subsidiaries may incur, except
as may be provided in the accompanying Prospectus Supplement. The Debt
Securities will be unsecured senior, senior subordinated or subordinated
obligations of the Company, as set forth in the accompanying Prospectus
Supplement.
The Company is a holding company, which currently conducts its operations
through subsidiaries. In addition to the subordination described under
"Subordination of Senior Subordinated and Subordinated Debt Securities" below
and as may be described in the accompanying Prospectus Supplement, this
effectively subordinates the Debt Securities to all indebtedness (including
trade payables) of the Company's subsidiaries. Therefore, the Company's rights
and the rights of its creditors, including holders of Debt Securities, to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors (including third persons who have the benefit of guarantees given by
the subsidiary), except to the extent that the Company may itself be a creditor
with recognized claims against the subsidiary. However, in that case the claims
of the Company would still be effectively junior to any indebtedness of the
subsidiary to the extent the holders of that indebtedness are entitled to the
benefit of security interests in the assets of the subsidiary, as well as to any
indebtedness of that subsidiary which is senior to any debt or other claims held
by the Company. In addition, the Company's $100 million of Senior Notes due 2000
and amounts which may from time to time be outstanding under the Company's $300
million principal debt facility are guaranteed by subsidiaries of the Company
that hold substantially all of its consolidated assets. The Debt Securities,
including any senior Debt Securities, will not be so guaranteed. As a result,
the holders of that other debt may have a claim against the assets of the
Company's subsidiaries before those assets are available to make payments due on
the Debt Securities.
Also, because the Company is a holding company, it is dependent on
dividends or other distributions from its subsidiaries to make payments on its
indebtedness, including the Debt Securities. Such dividends or other
distributions to the Company may be subject to state law, which can restrict the
ability of a corporation to pay dividends or make other distributions to its
shareholders and which protect the rights of creditors of a corporation,
including third persons who have the benefit of
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<PAGE> 33
guarantees given by the corporation, in the event of improperly made dividends
or distributions, as well as to present or future contractual or regulatory
restrictions that could materially restrict the ability of the subsidiaries to
make such payments to the Company. The accompanying Prospectus Supplement
discloses, to the extent material to the Company, any contractual restrictions
on the ability of the subsidiaries of the Company to make dividends, loans or
advances to the Company that exist at the date of that Prospectus Supplement.
Except as may be described in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities will not restrict the Company's
ability to enter into contracts in the future that limit the ability of the
Company's subsidiaries to make dividends, loans or advances to it. Payments to
the Company from its subsidiaries also are contingent upon the earnings of such
subsidiaries and are subject to various business considerations, such as the
working capital needs of the subsidiaries.
Reference is made to the accompanying Prospectus Supplement for the
following terms of and information relating to the Offered Debt Securities (to
the extent such terms are applicable to such Debt Securities): (a) the specific
designation, aggregate principal amount, purchase price and denomination; (b)
the date of maturity; (c) the interest rate or rates (or the method by which
such rate will be determined), if any; (d) the date from which interest will
accrue and dates on which any such interest will be payable; (e) the rights of
the Company to defer interest, if any; (f) the place or places where the
principal of, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable; (g) whether the Offered Debt Securities are senior,
senior subordinated or subordinated (including junior subordinated) Debt
Securities; (h) any redemption, repayment or sinking fund provisions; (i) any
obligation of the Company to offer to purchase the Offered Debt Securities in
the event of a Change of Control (as defined) of the Company; (j) whether the
Offered Debt Securities are convertible into Preferred Stock or Common Stock
and, if so, the terms of the security into which they are convertible (see
"Description of Capital Stock"), the conversion price, other terms related to
conversion and any anti-dilution protections; (k) whether the Offered Debt
Securities will be sold as part of Units consisting of Offered Debt Securities
and other Securities; (l) any applicable material federal income tax
consequences; and (m) any other material specific terms of the Offered Debt
Securities, including any material additional events of default or covenants
provided for with respect to the Offered Debt Securities and any material terms
that may be required by or advisable under applicable laws or regulations.
Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate or as part of Units consisting of
Debt Securities and other Securities may be sold or deemed to be sold at a
discount below their stated principal amount. With respect to any Debt
Securities as to which the Company has the right to defer interest, the holders
of such Debt Securities may be allocated interest income for federal and state
income tax purposes without receiving equivalent, or any, interest payments. The
material federal income tax considerations applicable to any such discounted
Debt Securities or to certain Debt Securities issued at par that are treated as
having been issued at a discount for federal income tax purposes will be
described in the Prospectus Supplement.
GLOBAL DEBT SECURITIES
If any Debt Securities are represented by one or more Global Securities,
the applicable Prospectus Supplement will describe the terms of the depositary
arrangement with respect to such Global Securities.
SUBORDINATION OF SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES
The senior subordinated and subordinated Debt Securities will be
subordinate and junior in right of payment, to the extent and in the manner to
be set forth in the Indenture, to all "Senior Debt" of the Company. Except to
the extent set forth in the accompanying Prospectus Supplement, the Indenture
for the Offered Debt Securities that are senior subordinated or subordinated
Debt Securities will define "Senior Debt" as all present or future
"Indebtedness" (defined below) created, incurred, assumed or, to the extent
described below, guaranteed by the Company (and all renewals, extensions or
refundings thereof), unless the instrument under which such Indebtedness is
created, incurred, assumed or guaranteed provides that such Indebtedness is not
senior or superior in right of payment to the Offered
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<PAGE> 34
Debt Securities in question; provided, however, that Senior Debt shall not
include (a) any Indebtedness of the Company to any of its subsidiaries, (b) any
trade payables of the Company or (c) except to the extent set forth or referred
to in the accompanying Prospectus Supplement, guarantees by the Company of
Indebtedness outstanding at the date hereof or that may be outstanding in the
future.
Each Senior Subordinated Debt Indenture will provide that the Company will
not issue any Indebtedness that is subordinated in right of payment to any
Senior Debt of the Company and is senior in right of payment to the Debt
Securities covered by the Senior Subordinated Debt Indenture. No Subordinated
Debt Indenture will contain a similar provision. Except as may otherwise be
provided in the accompanying Prospectus Supplement, "Indebtedness" will be
defined in the Indenture for the Offered Debt Securities to mean any
indebtedness of a person, contingent or otherwise, in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
person or only to a portion thereof), evidenced by bonds, notes, debentures or
similar instruments or letters of credit or representing the balance deferred
and unpaid of the purchase price of any property or interest therein (except any
such balance that constitutes a trade payable), all capitalized lease
obligations and all direct or indirect obligations that arise as a result of
claims under or drawings pursuant to surety, performance, completion or
maintenance bonds.
By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceedings, upon any distribution of assets: (a)
holders of Senior Debt will be entitled to be paid in full before payments may
be made on senior subordinated and subordinated Debt Securities and the holders
of senior subordinated and subordinated Debt Securities will be required to pay
over their share of such distributions to the holders of Senior Debt until such
Senior Debt is paid in full (except to the extent, if at all, that holders of
senior subordinated and subordinated Debt Securities may receive securities that
are subordinated to the same extent the senior subordinated and subordinated
Debt Securities are subordinated to Senior Debt); (b) in addition, holders of
senior subordinated debt will be entitled to be paid in full before payments may
be made on subordinated Debt Securities and holders of subordinated Debt
Securities will be required to pay over their share of such distributions to the
holders of senior subordinated debt until such senior subordinated debt is paid
in full (except to the extent, if at all, that holders of subordinated Debt
Securities may receive securities that are subordinated to the same extent the
subordinated Debt Securities are subordinated to senior subordinated debt); and
(c) creditors of the Company who are not holders of senior subordinated or
subordinated Debt Securities may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the holders of the senior subordinated
or subordinated Debt Securities, and creditors of the Company who are not
holders of subordinated Debt Securities may recover less, ratably, than holders
of Senior Debt and may recover more, ratably, than holders of subordinated Debt
Securities. Accordingly, such subordination may result in a reduction or
elimination of payments to the holders of all senior subordinated and
subordinated Debt Securities or all subordinated Debt Securities.
Except as may otherwise be described in the accompanying Prospectus
Supplement, no payment of principal or interest with respect to any of the
Offered Debt Securities that are senior subordinated or subordinated Debt
Securities may be made, nor may the Company acquire any Offered Debt Securities
that are senior subordinated or subordinated Debt Securities, in each case
except as set forth in the Indenture for such Offered Debt Securities, if any
default with respect to Senior Debt that permits the acceleration of the
maturity of any Senior Debt occurs and is continuing and such default is either
the subject of judicial proceedings or the Company receives notice (a "Default
Notice") of the default from a holder of Senior Debt entitled to give such a
notice. By reason of these provisions, in the event of a default on any Senior
Debt of the Company that is presently existing or may be incurred in the future,
payments of principal of and interest and premium, if any, on the Offered Debt
Securities that are senior subordinated or subordinated Debt Securities may not
be permitted until such Senior Debt is paid in full. However, except as may
otherwise be described in the accompanying Prospectus Supplement, the Company
may resume payments in respect of the Offered Debt Securities that are senior
subordinated or subordinated Debt Securities and may acquire such senior
subordinated or subordinated Debt Securities if (a) 179 days pass after the
Default Notice is given, if the default with respect to such Senior Debt is not
then the subject of judicial proceedings, or (b) the default with respect to
such Senior Debt is cured or waived and, in each case described in the foregoing
clauses (a) and (b), the terms of the Indenture otherwise permit the payment or
acquisition of such Offered Debt
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<PAGE> 35
Securities at the time in question. The Indenture for the Company's $100 million
of 10 7/8% Senior Notes and the Company's $300 million senior unsecured
revolving credit agreement restrict the acquisition by the Company of its
subordinated indebtedness, including any senior subordinated or subordinated
Debt Securities, prior to April 1, 2000 (for the Indenture for the Senior Notes)
and the term of the principal credit facility as it may be extended from time to
time, respectively, and the Indentures for the Company's $100 million of 9 3/4%
Senior Subordinated Debentures and $100 million of 9% Senior Subordinated
Debentures restrict the acquisition, prior to March 1, 2003 and February 15,
2006, respectively, of subordinated Debt Securities issued pursuant to the
Subordinated Debt Indenture. The Prospectus Supplement for the Offered Debt
Securities or the information incorporated herein by reference sets forth the
approximate amount of Senior Debt and Senior Subordinated Debt outstanding as of
the end of the most recent fiscal quarter of the Company.
CERTAIN COVENANTS OF THE COMPANY
AFFIRMATIVE COVENANTS. In addition to such other covenants, if any, as may
be described in the accompanying Prospectus Supplement and except as may
otherwise be set forth therein, the Indenture for the Offered Debt Securities
will require the Company, subject to certain limitations described therein, to,
among other things, do the following: (a) deliver to the Trustee copies of all
reports filed with the Commission; (b) deliver to the Trustee annual officers'
certificates with respect to the Company's compliance with its obligations under
that Indenture; (c) maintain its corporate existence subject to the provisions
described below relating to mergers and consolidations; and (d) pay its taxes
when due except where such taxes are being contested in good faith. Except as
may be set forth in the accompanying Prospectus Supplement, the Indentures will
not restrict the business or operations of the Company or its subsidiaries,
limit their indebtedness or prohibit any liens, charges or other encumbrances on
any properties or other assets they may have from time to time.
DIVIDENDS AND OTHER PAYMENTS. Except as may otherwise be provided in the
accompanying Prospectus Supplement and except as may otherwise be set forth in
the Indenture for the Offered Debt Securities, that Indenture will generally
prohibit the Company from making a "Restricted Payment" (defined below) if, at
the time of the Restricted Payment, (a) an Event of Default (as defined) has
occurred under the Indenture and is continuing or would occur as a consequence
of the Restricted Payment or (b) if, upon giving effect to the Restricted
Payment, the aggregate amount expended for all Restricted Payments exceeds the
sum of (i) a specified percentage of the aggregate consolidated net earnings of
the Company accrued during certain fiscal quarters, (ii) the aggregate net
proceeds received by the Company from the issuance or sale of capital stock of
the Company, (iii) the amount expended by the Company for the purchase,
redemption or other acquisition or retirement for value of any preferred stock
of the Company plus (iv) the amount set forth in the accompanying Prospectus
Supplement. Except as may be otherwise provided in the accompanying Prospectus
Supplement, a "Restricted Payment" will be defined as any of the following: (1)
declaring or paying any dividend on, or making any distribution to the holders
of, any shares of the Company's capital stock, other than dividends or
distributions payable in "Equity Interests" (defined as equity securities or
securities with a right to acquire equity securities (other than convertible
debt securities) of the Company) or (2) purchasing, redeeming or otherwise
acquiring or retiring for value any Equity Interests.
CHANGE OF CONTROL. Except as may otherwise be set forth in the accompanying
Prospectus Supplement, the Indenture for the Offered Debt Securities will
provide that, if a Change of Control occurs, the Company will be obligated to
offer to purchase all outstanding Offered Debt Securities at a purchase price
equal to 100 percent of the aggregate principal amount of the Debt Securities,
plus accrued and unpaid interest to the date of purchase. Any offer to purchase
Offered Debt Securities upon a Change of Control will be conducted in compliance
with applicable regulations under the federal securities laws, including
Exchange Act Rule 14e-1. Any limitations on the Company's financial ability to
purchase Offered Debt Securities upon a Change of Control will be described in
the accompanying Prospectus Supplement. Except as may be otherwise provided in
the accompanying Prospectus Supplement, a "Change of Control" will be defined in
the Indenture for the Offered Debt Securities as any of the following: (a) all
or substantially all of the Company's assets are sold as an entirety to any
person or it engages in any merger, consolidation, sale of capital stock, sale
of beneficial ownership interests or any other transactions as a result of which
its shareholders immediately prior to such
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<PAGE> 36
transactions own, directly or indirectly, in the aggregate less than 50 percent
of the total voting power entitled to vote in the election of (i) its directors,
if it is the surviving entity, or (ii) the directors, managers or trustees of
(1) the surviving entity or (2) the purchaser of all or substantially all of its
assets; or (b) any person acquires more than 50 percent of the total voting
power entitled to vote for directors of the Company. Except as may otherwise be
set forth in the accompanying Prospectus Supplement, the Company's failure to
comply with the Change of Control covenant as to the Offered Debt Securities
will be an Event of Default under the Indenture for the Offered Debt Securities,
as specified in the accompanying Prospectus Supplement. See "Events of Default"
below. The meaning of the term "all or substantially all of the assets" has not
been definitely established and is likely to be interpreted by reference to
applicable state law if and at the time the issue arises and will be dependent
on the facts and circumstances existing at the time. Accordingly, there may be
uncertainty as to whether a holder of Offered Debt Securities can determine
whether a Change of Control has occurred and exercise any remedies such holder
may have upon a Change of Control. Except as described above with respect to a
Change of Control or as described in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities will not afford holders of the Debt
Securities protection in the event of a highly leveraged transaction, takeover,
reorganization, restructuring, recapitalization, merger or similar transaction
involving the Company that may adversely affect holders of the Debt Securities.
MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE. Except as may otherwise
be provided in the accompanying Prospectus Supplement, the Indenture for the
Offered Debt Securities will provide that the Company will not merge or
consolidate with or into any other person and will not sell, lease or convey all
or substantially all of its assets to any person, unless it is the continuing
corporation, or the successor corporation or person that acquires all or
substantially all of its assets is a corporation organized and existing under
the laws of the United States or a State thereof or the District of Columbia and
expressly assumes all of the Company's obligations under the Offered Debt
Securities and the Indenture for the Offered Debt Securities and, immediately
after such merger, consolidation, sale, lease or conveyance, such person or such
successor corporation is not in default in the performance of the covenants and
conditions in the Indenture for the Offered Debt Securities. With respect to
possible uncertainties concerning the meaning of the term "all or substantially
all of the assets", the possible lack of protection in a highly leveraged merger
or other transaction and related possible effects on holders of the Debt
Securities, see "Change of Control" above.
REDEMPTION
If and to the extent set forth in the accompanying Prospectus Supplement,
the Company will have the right to redeem the Offered Debt Securities, in whole
or from time to time in part, after the date and at the redemption prices set
forth in the accompanying Prospectus Supplement.
EVENTS OF DEFAULT
Except as may be described in the accompanying Prospectus Supplement, an
"Event of Default" will be defined under the Indenture for the Offered Debt
Securities as being: (a) default for 30 days in payment of any interest on the
Offered Debt Securities; (b) default in payment of any principal of the Offered
Debt Securities, either at maturity (or upon any redemption), by declaration or
otherwise; (c) default for 60 days after written notice in the performance of
any other agreements or covenants in, or provisions of, the Offered Debt
Securities or the Indenture for the Offered Debt Securities; (d) an event of
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company and certain of its subsidiaries (or the payment of which
is guaranteed by the Company), other than non-recourse Indebtedness, if (i)
either (1) such event of default results from the failure to pay any such
Indebtedness at maturity or (2) as a result of such event of default, the
maturity of such Indebtedness has been accelerated prior to its expressed
maturity and such default has not been cured or such acceleration rescinded and
(ii) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
maturity or the maturity of which has been so accelerated and the acceleration
of which has not been rescinded, equals or exceeds the amount specified in the
accompanying Prospectus Supplement; (e) failure for 60 days to discharge
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<PAGE> 37
final judgments against the Company and certain of its subsidiaries for the
payment of money aggregating the amount specified in the accompanying Prospectus
Supplement or more; and (f) certain events of bankruptcy, insolvency or
reorganization.
The Indenture for the Offered Debt Securities will provide that if an Event
of Default (other than an Event of Default due to certain events of bankruptcy,
insolvency or reorganization) has occurred and is continuing, either the Trustee
or the holders of not less than 25 percent in principal amount of the Offered
Debt Securities outstanding under the Indenture for the Offered Debt Securities,
or such other amount as may be specified in the Prospectus Supplement, may then
declare the principal of all Offered Debt Securities under that Indenture and
interest accrued thereon to be due and payable immediately.
Except to the extent otherwise stated in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will contain a
provision entitling the Trustee, subject to the duty of the Trustee during a
default to act with the required standard of care, to be indemnified by the
holders of Offered Debt Securities before proceeding to exercise any right or
power under that Indenture at the request of such holders. Subject to such
provisions in the Indenture for the Offered Debt Securities for the
indemnification of the Trustee and certain other limitations, the holders of a
majority in principal amount of the Offered Debt Securities then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
Except to the extent otherwise stated in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that no
holder of Offered Debt Securities may institute any action against the Company
under the Indenture (except actions for payment of overdue principal or
interest) unless (a) such holder previously has given the Trustee written notice
of the default and continuance thereof, (b) the holders of not less than 25
percent in principal amount of the Offered Debt Securities then outstanding have
requested the Trustee to institute such action and offered the Trustee
reasonable indemnity, (c) the Trustee has not instituted such action within 60
days of the request and (d) the Trustee has not received direction inconsistent
with such written request from the holders of a majority in principal amount of
the Offered Debt Securities then outstanding under the Indenture.
The Indentures and the Debt Securities will provide that no director,
officer, employee or shareholder of the Company, as such, will have any
liability for any obligations of the Company under the Debt Securities or the
Indentures. The Indentures and the Debt Securities will also each provide that
each holder of the Debt Securities, by accepting the Debt securities, waives and
releases all such liability.
DEFEASANCE AND DISCHARGE
Except as may otherwise be provided in the accompanying Prospectus
Supplement, the Company can discharge or defease its obligations under the
Indenture for the Offered Debt Securities as set forth below.
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of the Offered Debt Securities that have not already been
delivered to the Trustee for cancellation and that have either become due and
payable or are by their terms due and payable within one year (or scheduled for
redemption within one year) by irrevocably depositing with the Trustee cash or
United States Government Obligations (as defined in the Indenture for the
Offered Debt Securities), or a combination thereof, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the principal
of and interest on such Offered Debt Securities.
The Company may also discharge any and all of its obligations to holders of
the Offered Debt Securities at any time ("defeasance"), but may not thereby
avoid its duty to register the transfer or exchange of the Offered Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen
Offered Debt Securities or to maintain an office or agency in respect of such
Offered Debt Securities and certain other obligations. Alternatively, the
Company may be released with respect to the Offered Debt Securities from the
obligations imposed by specific portions of the Indenture for the Offered Debt
Securities (including the covenant described above limiting consolidations,
mergers, asset sales and leases) and omit to comply with such provisions without
creating an Event of Default ("covenant
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<PAGE> 38
defeasance"). Defeasance or covenant defeasance may be effected only if, among
other things: (a) the Company irrevocably deposits with the Trustee cash or
United States Government Obligations, or a combination thereof, as trust funds
in an amount certified to be sufficient to pay at maturity the principal of and
interest on all outstanding Offered Debt Securities; (b) no Event of Default
under the Indenture for the Offered Debt Securities has occurred and is then
continuing; (c) the defeasance or covenant defeasance will not result in an
event of default under any agreement to which the Company is a party or by which
it is bound; and (d) the Company delivers to the Trustee an opinion of counsel
to the effect that the holders of Debt Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance or
covenant defeasance and that such defeasance or covenant defeasance will not
otherwise alter such holders' federal income tax treatment of principal and
interest payments on the Offered Debt Securities.
MODIFICATIONS TO THE INDENTURES
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of Offered Debt Securities to, among other things: (a)
add covenants, conditions and restrictions for the protection of the holders of
Offered Debt Securities or to surrender any right of the Company; (b) cure any
ambiguity or correct any inconsistency in the Indenture for the Offered Debt
Securities; (c) make any change that does not adversely affect the legal rights
of holders of Offered Debt Securities; (d) modify, eliminate or add to the
provisions of the Indenture for the Offered Debt Securities to the extent
necessary to qualify that Indenture under applicable federal statutes; or (e)
make any other changes in the Indenture before Offered Debt Securities are
issued thereunder, provided that such changes are not prohibited by the Trust
Indenture Act of 1939, as amended.
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities also will contain
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of Offered Debt
Securities outstanding, to add any provision to, change in any manner or
eliminate any of the provisions of the Indenture for the Offered Debt Securities
or modify in any manner the rights of the holders of the Offered Debt Securities
so affected; provided that the Company and the Trustee may not, without the
consent of the holder of each outstanding Offered Debt Security affected
thereby, do, among other things, any of the following: (a) reduce the amount of
Offered Debt Securities whose holders must consent to an amendment, supplement
or waiver with respect to the Indenture; (b) reduce the rate of or change the
time for payment of interest on any Offered Debt Security; (c) reduce the
principal of or change the fixed maturity of any Offered Debt Security; or (d)
waive a default in the payment of the principal of, or interest on, any Offered
Debt Security.
The Indentures for senior subordinated or subordinated Offered Debt
Securities may not be amended to alter the subordination of any outstanding
senior subordinated or subordinated Debt Securities without the consent of each
holder of Senior Debt and, as to subordinated Debt Securities, also senior
subordinated debt then outstanding that would be adversely affected thereby.
CONCERNING THE TRUSTEE
An affiliate of The First National Bank of Boston is a lender to the
Company under the Company's principal credit facility, and it or any other
Trustee, or their respective affiliates, may from time to time have lender or
other business arrangements with the Company. The Indenture will contain certain
limitations on the rights of the Trustee, should it or its affiliates then be
creditors of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee and its affiliates will be permitted to engage in other
transactions; however, if they acquire any conflicting interest, the conflict
must be eliminated or the Trustee must resign.
The Holders of a majority in principal amount of the then outstanding Debt
Securities issued under any Indenture will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee under that Indenture, subject to certain exceptions.
Unless otherwise stated in the applicable Prospectus Supplement, the Indentures
will provide that in
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<PAGE> 39
case an Event of Default occurs and is not cured, the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent person in
similar circumstances in the conduct of his, her or its affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under any Indenture at the request of any Holder, unless such
Holder has offered the Trustee security and indemnity satisfactory to the
Trustee.
GOVERNING LAW
Unless otherwise specified in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities and the Offered Debt Securities will
be governed by New York law.
DESCRIPTION OF WARRANTS
GENERAL
The Warrants will be issued in fully registered form under a Warrant
Agreement between the Company and the Warrant Agent named in the accompanying
Prospectus Supplement (the "Warrant Agent"). The statements in this Prospectus
relating to the Warrants and the Warrant Agreement are summaries and do not
purport to be complete.
Each Warrant will entitle the registered owner (the "Warrantholder") to
purchase one share of Preferred or Common Stock, as set forth in the
accompanying Prospectus Supplement, subject to the call provisions referred to
below, from the time the Warrants are separately transferable until the date set
forth in the accompanying Prospectus Supplement. The initial per share exercise
price of the Warrants and the date on which the Warrants become separately
transferable will be set forth in the applicable Prospectus Supplement.
The Warrants can be exercised by surrendering to the Warrant Agent a
Warrant certificate signed by the Warrantholder or his, her or its duly
authorized agent indicating the Warrantholder's election to exercise all or a
portion of the Warrants evidenced by the certificate. Surrendered Warrant
certificates must be accompanied by payment of the aggregate exercise price of
the Warrants to be exercised (the "Warrant Price"), which payment may be made in
the form of cash or a cashier's check equal to the exercise price or, if and to
the extent set forth in the accompanying Prospectus Supplement, the surrender of
Debt Securities in denominations at least equal to the aggregate Warrant Prices
or, if applicable, any combination of cash and such denominations of Debt
Securities. If the principal amount of Debt Securities surrendered is in excess
of the aggregate Warrant Price so paid, only a portion of such surrendered
principal amount shall be accepted against payment of the Warrant Price and new
Debt Securities shall be issued in the principal amount not so applied against
the aggregate Warrant Price, provided that the amount of such excess is $1,000
or an integral multiple thereof.
Certificates evidencing duly exercised Warrants shall be delivered by the
Warrant Agent to the transfer agent for the Preferred or Common Stock, as
applicable. Upon receipt thereof, the transfer agent will be obligated to
deliver or cause to be delivered, to or upon the written order of the exercising
Warrantholders, certificates representing the number of shares of Preferred or
Common Stock so purchased. If fewer than all of the Warrants evidenced by any
certificate are exercised, the Warrant Agent will be obligated to deliver to the
exercising Warrantholder a new Warrant certificate representing the unexercised
Warrants.
To the extent set forth in the accompanying Prospectus Supplement, the
Warrant Price and the number of shares of Preferred or Common Stock purchasable
upon the exercise of each Warrant are subject to adjustment in certain events,
including: (i) the issuance of a stock dividend to holders of Preferred Stock or
Common Stock (whichever the Warrants are exercisable for) or a combination,
subdivision or reclassification of the Preferred Stock or the Common Stock
(whichever the Warrants are exercisable for); (ii) the issuance of rights,
warrants or options or securities convertible into, or exchangeable for, the
Preferred Stock or the Common Stock (whichever the Warrants are exercisable
for), that are distributed to all holders of the Company's outstanding Preferred
or Common Stock (whichever the Warrants are exercisable for) entitling them to
subscribe for or purchase Preferred or Common Stock; and (iii) any distribution
by the Company to the holders of its Preferred or Common Stock (whichever the
Warrants are exercisable for) of evidences of indebtedness of the Company or of
assets (excluding, if and to the extent set forth in the accompanying Prospectus
Supplement, certain
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<PAGE> 40
cash dividends or distributions). To the extent set forth in the accompanying
Prospectus Supplement, no adjustment in the number of shares purchasable upon
exercise of the Warrants or in the Warrant Price will be required until
cumulative adjustments require an adjustment of at least one percent thereof. In
addition, unless the accompanying Prospectus Supplement states to the contrary,
the Company may, at its option, reduce the Warrant Price at any time. No
fractional shares will be issued upon exercise of Warrants, but the Company will
pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, unless the accompanying Prospectus
Supplement states to the contrary, in case of any consolidation, merger or sale
or conveyance of the property of the Company and its subsidiaries as a whole,
including a consolidation or merger in which the Company is the continuing
corporation and in which all or a majority of the Preferred and Common Stock
outstanding immediately prior to the consolidation or merger is converted into
consideration other than capital stock (or the right to receive such
consideration), the holder of each outstanding Warrant shall have the right to
exercise the Warrant for the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Preferred and Common Stock for which such Warrant was exercisable
immediately prior thereto.
Adjustments to the Warrant Price (and, possibly, adjustment to the number
of shares of Preferred or Common Stock purchasable upon the exercise of each
Warrant), or the failure to make such adjustments, may in certain circumstances
result in distributions that could be taxable as dividends under the Internal
Revenue Code of 1986, as amended, to holders of the Warrants or to holders of
shares of Preferred or Common Stock issued upon exercise thereof. The Company
will reserve the right (but will not be obligated) to make such adjustments to
the Warrant Price or in the number of shares of Preferred or Common Stock
purchasable upon the exercise of each Warrant, in addition to those required in
the foregoing provisions, as it shall determine to be advisable in order that
certain stock-related distributions which may be made by the Company to its
stockholders after the date of the applicable Prospectus Supplement are not
taxable to them.
If all or any portion of the Warrants are callable at the option of the
Company, the call provisions, including the call price and the date through
which the Warrants may be exercised, will be set forth in the accompanying
Prospectus Supplement. If upon expiration the unexercised Warrants will convert
into Preferred or Common Stock, the manner and rate of such conversion will be
set forth in the accompanying Prospectus Supplement.
Holders of Warrants are not entitled, by virtue of being holders, to
receive dividends or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, to vote at any such meeting or to exercise any rights
whatsoever as stockholders of the Company. The Warrant Agreement and the
Warrants will provide that no director, officer, employee or shareholder of the
Company, as such, will have any liability under the Warrants or the Warrant
Agreement. The Warrant Agreement and the Warrants will also each provide that
each holder of the Warrants, by accepting the Warrants, waives and releases all
such liability.
Unless otherwise specified in the accompanying Prospectus Supplement, the
Warrant Agreement and the Warrants will be governed by New York law.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, $.001 par value, and 10,000,000 shares of Preferred Stock,
$.001 par value, of which 14,920,921 shares of Common Stock (exclusive of
treasury shares) were issued and outstanding on June 30, 1995. No shares of
Preferred Stock were outstanding at that date.
COMMON STOCK
Subject to the rights of holders of any outstanding Preferred Stock, the
holders of outstanding shares of Common Stock are entitled to share ratably in
dividends declared out of assets legally available therefor at such time and in
such amounts as the Board of Directors may from time to time lawfully determine.
At the date of this Prospectus the payment of dividends on the Common Stock is
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<PAGE> 41
limited by provisions of the indentures (the "Public Debt Indentures") for the
Company's $100 million of 10 7/8% Senior Notes due April 1, 2000, its $100
million of 9 3/4% Senior Subordinated Debentures due March 1, 2003 and its $100
million of 9% Senior Subordinated Debentures due February 15, 2006 and the
provisions of the Company's principal credit facility.
Each holder of Common Stock is entitled to one vote for each share held by
him, her or it. Holders of Common Stock are not entitled to cumulate votes for
the election of directors. The Common Stock is not entitled to conversion or
preemptive rights and is not subject to redemption or assessment. Subject to the
rights of holders of any outstanding Preferred Stock, upon liquidation,
dissolution or winding up of the Company, any assets legally available for
distribution to shareholders as such are to be distributed ratably among the
holders of the Common Stock at that time outstanding. The Common Stock presently
outstanding is, and the Common Stock issued upon conversion of the Debt
Securities, exercise of the Warrants (upon payment in full of the Warrant
exercise price) or conversion of any convertible Preferred Stock offered hereby,
as the case may be, will be, fully paid and nonassessable. See "Incorporation of
Certain Documents by Reference" and "Available Information."
PREFERRED STOCK
The authorized shares of Preferred Stock are issuable, without further
shareholder approval, in one or more series as determined by the Board of
Directors, with such rights, privileges and preference as are fixed by the Board
of Directors, including dividend, liquidation and other rights preferred over
the Common Stock, subject to the restrictions in the Public Debt Indentures and
the credit facility referred to above. The Preferred Stock issuable upon
exercise of any Warrants exercisable for Preferred Stock (upon payment in full
of the Warrant exercise price) or conversion of any Debt Securities convertible
into Preferred Stock will be fully paid and nonassessable. The Preferred Stock
may be convertible and, if so convertible, may be converted into one or both of
Common Stock and Debt Securities. The Preferred Stock may also be exchangeable,
at the option of the Company, for Debt Securities (see "Description of Debt
Securities"). If Preferred Stock or Warrants exercisable for Preferred Stock are
being offered or if the Preferred Stock is exchangeable for Debt Securities, the
accompanying Prospectus Supplement will describe the rights, privileges,
preferences and restrictions of such Preferred Stock (including, without
limitation, the designation, the number of authorized shares of the series in
question, the dividend rate (or method of calculation), any voting rights,
conversion rights, anti-dilution protections, exchangeability provisions and
terms of the Debt Securities that are exchangeable for the Preferred Stock, any
redemption provisions, liquidation preferences and any sinking fund provisions).
If fractional interests in shares of Preferred Stock may be issued, there will
be a depositary for the shares of Preferred Stock involved and the applicable
Prospectus Supplement will describe the terms of the depositary arrangement and
related matters. See "Incorporation of Certain Documents by Reference" and
"Available Information."
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the applicable Prospectus Supplement. The
Company may sell Securities directly to investors on its own behalf in those
jurisdictions where it is authorized to do so.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Company
also may, from time to time, authorize dealers, acting as Company agents, to
offer and sell the Securities upon such terms and conditions as may be set forth
in the Prospectus Supplement. In connection with the sale of the Securities,
underwriters may receive compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell the Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for which they may act as
agents.
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<PAGE> 42
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts or
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities.
The Debt Securities, the Preferred Stock and the Warrants will be new
issues of securities with no established trading market. Any underwriters or
agents to or through which Securities are sold by the Company for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and any of them may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or trading market for any Debt Securities, Preferred Stock or Warrants.
CERTAIN LEGAL MATTERS
Gibson, Dunn & Crutcher has rendered an opinion (filed as an exhibit to the
Registration Statement) with respect to the validity of the Debt Securities,
Preferred Stock, Common Stock and Warrants covered by this Prospectus. The
partner of Gibson, Dunn & Crutcher who has primary responsibility for the work
of that firm in connection with this Registration Statement beneficially owns
$225,000 in principal amount of the 10 7/8% Senior Notes due 2000 of the
Company. Certain legal matters in connection with offerings made by this
Prospectus may be passed on for any underwriters by counsel named in the
Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedules of Del Webb Corporation
and subsidiaries as of June 30, 1994 and 1993, and for each of the years in the
three-year period ended June 30, 1994, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the June 30, 1993
consolidated financial statements refers to a change in the method of accounting
for income taxes.
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<PAGE> 43
[DESCRIPTION OF INSIDE BACK COVER PHOTOS]
Top Row: The first photo shows a model at Terravita. The second photo
shows the indoor pool at Sun City Palm Springs.
Second Row: This photo shows the Recreation Center at Sun City Las Vegas.
Third Row: This photo shows the Sales Ofice at Sun City Roseville.
<PAGE> 44
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THE
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, SHARES OF COMMON STOCK IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Supplement Summary......... S-3
Risk Factors.......................... S-8
Use of Proceeds....................... S-11
Capitalization........................ S-11
Price Range of Common Stock and
Dividend Policy..................... S-12
Selected Consolidated Financial and
Operating Data...................... S-12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... S-15
Business.............................. S-19
Management............................ S-25
Underwriting.......................... S-28
Certain Legal Matters................. S-28
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Consolidated Ratio of Earnings to
Fixed Charges....................... 3
Description of Debt Securities........ 4
Description of Warrants............... 11
Description of Capital Stock.......... 12
Plan of Distribution.................. 13
Certain Legal Matters................. 14
Experts............................... 14
</TABLE>
===============================================================================
===============================================================================
DEL WEBB CORPORATION
------------------------------
2,350,000 SHARES
COMMON STOCK
PROSPECTUS SUPPLEMENT
AUGUST 10, 1995
------------------------------
DILLON, READ & CO. INC.
MONTGOMERY SECURITIES
================================================================================
