UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the period ended March 31, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from N/A to N/A .
--- ---
Commission File Number: 1-4785
DEL WEBB CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0077724
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
6001 North 24th Street, Phoenix, Arizona 85016
(Address of principal executive offices) (Zip Code)
(602) 808-8000
(Registrant's phone number, including area code)
NONE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ----
As of April 30, 1995 Registrant had outstanding 14,875,843 shares of common
stock.
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
March 31, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1995,
June 30, 1994 and March 31, 1994............................... 1
Consolidated Statements of Earnings for the three and nine
months ended March 31, 1995 and 1994........................... 2
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1995 and 1994........................... 3
Notes to Consolidated Financial Statements....................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 16
Separate financial statements of the Company's subsidiaries that are guarantors
of the Company's 10 7/8 % Senior Notes due 2000 are not included because those
subsidiaries are jointly and severally liable as guarantors of the Notes and the
aggregate assets, liabilities, earnings and equity of those subsidiaries are
substantially equivalent to the assets, liabilities, earnings and equity of the
Company and its subsidiaries on a consolidated basis.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
March 31, June 30, March 31,
1995 1994 1994
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------
Real estate inventories
(Notes 2, 3 and 6) ........... $ 818,255 $ 662,613 $ 598,989
Cash and short-term investments 9,930 6,474 9,594
Receivables .................... 10,583 10,385 19,146
Property and equipment, net
(Note 1) ..................... 27,391 36,773 12,968
Deferred income taxes .......... -- 11,604 15,255
Other assets ................... 27,684 30,575 29,968
- -------------------------------------------------------------------------------
$ 893,843 $ 758,424 $ 685,920
===============================================================================
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
Notes payable, senior and
subordinated debt (Note 3) ... $ 493,993 $ 395,676 $ 363,984
Subcontractor and trade
accounts payable ............. 55,893 45,443 33,280
Accrued liabilities and
other payables ............... 36,349 39,905 26,605
Home sale deposits ............. 79,749 62,797 53,478
Income taxes payable ........... 3,092 7,155 6,626
Deferred income taxes .......... 1,096 -- --
Net liabilities of
discontinued operations ...... 4,150 6,124 6,664
- -------------------------------------------------------------------------------
Total liabilities ........ 674,322 557,100 490,637
- -------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value at
March 31, 1995, without par
value at June 30, 1994 and
March 31, 1994. Authorized
30,000,000 shares; issued
15,798,884 shares at March 31,
1995,
15,828,940 shares at June 30, 1994
and 15,829,077 shares at
March 31, 1994 (Note 7) 16 112,944 112,947
Additional paid-in capital
(Note 7) .................... 121,120 8,333 8,351
Retained earnings ............. 113,316 96,630 90,980
- -------------------------------------------------------------------------------
234,452 217,907 212,278
Less cost of common stock
in treasury, 922,904 shares
at March 31, 1995,
1,132,065 shares at June 30,
1994 and 1,137,160 shares at
March 31, 1994 ............. (11,636) (14,600) (14,678)
Less deferred compensation ... (3,295) (1,983) (2,317)
- -------------------------------------------------------------------------------
Total shareholders' equity 219,521 201,324 195,283
- -------------------------------------------------------------------------------
$ 893,843 $ 758,424 $ 685,920
===============================================================================
See accompanying notes to consolidated financial statements.
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
- --------------------------------------------------------------------------------
1995 1994 1995 1994
- --------------------------------------------------------------------------------
Revenues (Note 5) .............. $195,383 $136,259 $534,323 $349,356
Cost of sales (Note 5) ......... 156,274 107,862 427,574 277,713
Selling, general and
administrative expenses ...... 28,348 21,340 77,655 55,280
- --------------------------------------------------------------------------------
Operating earnings ......... 10,761 7,057 29,094 16,363
Income tax expense
(Note 4) ..................... 3,766 2,470 10,183 5,727
- --------------------------------------------------------------------------------
Net earnings ............... $ 6,995 $ 4,587 $ 18,911 $ 10,636
================================================================================
Weighted average
shares outstanding ........... 15,324 15,001 15,130 15,059
================================================================================
Net earnings per share ......... $ .46 $ .31 $ 1.25 $ .71
================================================================================
See accompanying notes to consolidated financial statements.
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
March 31,
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Cash received from customers
related to community home sales ................ $ 402,806 $ 280,035
Cash received from commercial
land sales ..................................... 1,599 2,762
Cash paid for costs related
to community home construction ................. (272,637) (199,567)
- --------------------------------------------------------------------------------
Net cash provided by community
sales activities ............................. 131,768 83,230
Cash paid for land acquisitions
at operating communities ....................... (3,495) (5,212)
Cash paid for lot development at
operating communities .......................... (43,326) (30,358)
Cash paid for amenity development
at operating communities ....................... (21,198) (25,789)
- --------------------------------------------------------------------------------
Net cash provided by operating communities ..... 63,749 21,871
Cash paid for costs related to communities
in the pre-operating stage ..................... (68,616) (61,075)
Cash received from customers related to
conventional homebuilding ...................... 103,205 52,248
Cash paid for land, development,
construction and other costs related
to conventional homebuilding ................... (112,142) (72,345)
Cash received from customers related
to residential land development project ........ 14,364 11,493
Cash paid for costs related to residential
land development project ....................... (11,365) (7,540)
Cash paid for corporate activities ............... (23,248) (20,782)
Interest paid .................................... (37,971) (26,373)
Cash received (paid) for income taxes ............ (1,546) 17
Net operating activities of discontinued
operations ..................................... (474) (1,837)
- --------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES ......... (74,044) (104,323)
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment .............. (9,914) (5,040)
Investments in life insurance policies ........... (1,101) (1,799)
- --------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES ......... (11,015) (6,839)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings ....................................... 562,000 262,714
Repayments of debt ............................... (470,030) (156,682)
Purchases of treasury stock ...................... (7) (13,326)
Proceeds from exercise of stock
options ........................................ 277 119
Dividends paid ................................... (2,225) (2,247)
Net financing activities of
discontinued operations ........................ (1,500) (3,500)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...... 88,515 87,078
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND SHORT-TERM INVESTMENTS ....................... 3,456 (24,084)
CASH AND SHORT-TERM INVESTMENTS
AT BEGINNING OF PERIOD ........................... 6,474 33,678
- --------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS
AT END OF PERIOD ................................. $ 9,930 $ 9,594
================================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
(Unaudited)
Nine Months Ended
March 31,
- -------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------
Reconciliation of net earnings to net
cash used for operating activities:
Net earnings ................................... $ 18,911 $ 10,636
Allocation of non-cash costs to
cost of sales, excluding interest ............ 120,880 76,306
Amortization of capitalized interest
included in cost of sales .................... 20,386 12,228
Deferred compensation amortization ............. 1,212 981
Depreciation and other amortization ............ 3,870 2,699
Deferred income tax expense .................... 12,700 5,410
Net change in home construction costs .......... (45,548) (36,049)
Land acquisitions .............................. (30,563) (52,773)
Lot development ................................ (112,379) (55,901)
Amenity development ............................ (49,895) (39,827)
Pre-acquisition costs .......................... (2,770) (4,219)
Net change in other assets and liabilities ..... (10,374) (21,977)
Net operating activities of discontinued
operations ................................... (474) (1,837)
- --------------------------------------------------------------------------------
Net cash used for operating activities ...... $ (74,044) $(104,323)
================================================================================
See accompanying notes to consolidated financial statements.
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Basis of Presentation
The consolidated financial statements include the accounts of Del Webb
Corporation and its subsidiaries ("Company"). In the opinion of management,
the accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal recurring adjustments, primarily
eliminations of all significant intercompany transactions and accounts)
necessary to present fairly the financial position, results of operations
and cash flows for the periods presented.
At June 30, 1994 the Company classified the unamortized cost of its
vacation apartments (aggregating $16.6 million) as property and equipment
as a result of its intent to operate the apartments. At October 1, 1994 the
Company decided to return to marketing the apartments for sale as
individual units. Accordingly, the apartments were reclassified from
property and equipment to real estate inventories.
The Company's continuing operations include its communities, conventional
homebuilding operations and residential land development project. The
Company's communities are large-scale, master-planned residential
communities at which the Company controls 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's conventional homebuilding operations encompass the
construction and sale of homes in subdivisions. The Company's residential
land development project operations include the sale of individual land
parcels and lots to other builders and developers for conventional housing
and related commercial development. The Company's commercial land
development projects are accounted for as discontinued operations.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and the related disclosures contained
in the Company's Annual Report on Form 10-K for the year ended June 30,
1994, filed with the Securities and Exchange Commission.
In the Consolidated Statements of Cash Flows, the Company defines operating
communities as communities generating revenue through home closings.
Communities in the pre-operating stage are those not currently generating
home sales revenues.
The results of operations for the nine months ended March 31, 1995 are not
necessarily indicative of the results to be expected for the full fiscal
year.
(2) Real Estate Inventories
The components of real estate inventories are as follows:
In Thousands
---------------------------------------------------------------------------
March 31, June 30, March 31,
1995 1994 1994
(Unaudited) (Unaudited)
---------------------------------------------------------------------------
Home construction costs ........... $145,337 $ 99,789 $101,646
Unamortized improvement
and amenity costs ............... 338,930 246,536 221,411
Unamortized capitalized
interest ........................ 54,079 40,357 36,245
Land held for housing ............. 216,336 210,700 149,567
Land held for future
development or sale ............. 63,573 65,231 90,120
---------------------------------------------------------------------------
$818,255 $662,613 $598,989
===========================================================================
At March 31, 1995 the Company had 341 completed homes (excluding models and
vacation apartments) and 482 homes under construction that were not subject
to a sales contract. These homes represented $24.1 million and $12.2
million, respectively, of home construction costs at March 31, 1995. At
March 31, 1994 the Company had 228 completed homes and 364 homes under
construction (representing $14.6 million and $10.1 million, respectively,
of home construction costs) that were not subject to a sales contract.
Included in land held for future development or sale at March 31, 1995 were
228 acres of residential land, 392 acres of commercial land and 44 acres of
worship sites that are currently being marketed for sale at the Company's
communities and conventional homebuilding operations. Also included in land
held for future development or sale at March 31, 1995 were 549 acres of
residential land and 40 acres of commercial land at the Company's
residential land development project.
(3) Notes Payable, Senior and Subordinated Debt
Notes payable, senior and subordinated debt consists of the following:
In Thousands
---------------------------------------------------------------------------
March 31, June 30, March 31,
1995 1994 1994
(Unaudited) (Unaudited)
---------------------------------------------------------------------------
Senior Notes, net .................... $ 96,615 $ 96,098 $ 95,926
9 3/4% Senior Subordinated
Debentures, net .................... 96,745 96,436 96,334
9% Senior Subordinated
Debentures, net .................... 97,013 96,879 97,010
Subordinated Swiss
Franc Bonds, net ................... 12,735 12,704 12,694
Notes payable to banks
under a revolving
credit agreement and
short-term lines of
credit.............................. 110,600 18,000 14,500
Real estate and other notes .......... 80,285 75,559 47,520
---------------------------------------------------------------------------
$493,993 $395,676 $363,984
===========================================================================
At March 31, 1995 the Company had $74.0 million and $10.4 million of unused
borrowing capacity under a $175 million unsecured revolving credit facility
and $20 million of short-term lines of credit, respectively. In November
1994 the Company negotiated an amendment to its unsecured revolving credit
facility to increase the amount of the facility from $125 million to $175
million.
At March 31, 1995, under the most restrictive of the covenants in the
Company's debt agreements, $20.9 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.
The Company does not trade in derivative financial instruments. It has two
derivative financial instruments for purposes other than trading.
The Company has a currency exchange agreement entered into with a major
bank in 1986 simultaneously with the issuance outside of the United States
of 50 million Subordinated Swiss Franc Bonds ($24 million) due February
1996. The agreement was entered into to eliminate the Company's exposure to
foreign currency fluctuations. As of March 31, 1995 the outstanding Bonds
and the currency exchange agreement have been reduced to 26.7 million Swiss
Francs ($12.8 million). The estimated fair value at March 31, 1995 of the
foreign currency exchange agreement reflects an unrealized gain of $14.2
million, although this is mostly offset by a $10.5 million increase in the
fair value over the book value of the subordinated Swiss Franc bonds.
The Company also has an interest rate swap agreement which calls for an
interest rate conversion with a notional amount of $20 million. This swap
agreement was entered into to manage the Company's interest rate risk. It
requires fixed interest payments on the notional amount at a rate of 10.5
percent annually until February 1996. The Company receives semi-annual
interest payments based on the six-month London interbank offered rate
(LIBOR) until February 1996. As a result of this agreement, the Company
incurred net interest of $776,000 for the nine months ended March 31, 1995.
A one percent decrease (increase) in the LIBOR would have resulted in a
$150,000 increase (decrease) in interest for the nine-month period. The
estimated fair value at March 31, 1995 of the interest rate swap agreement
reflects an unrealized loss of $687,000.
(4) Income Taxes
Components of Income Tax Expense
The components of income tax expense attributable to operating earnings
are:
In Thousands
(Unaudited)
---------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------------------------------------------------------
1995 1994 1995 1994
---------------------------------------------------------------------------
Current:
Federal ........... $ (3,027) $ (191) $ (3,119) $ 56
State ............. (534) (44) 602 261
---------------------------------------------------------------------------
(3,561) (235) (2,517) 317
---------------------------------------------------------------------------
Deferred:
Federal ........... 6,081 2,188 11,400 4,576
State ............. 1,246 517 1,300 834
---------------------------------------------------------------------------
7,327 2,705 12,700 5,410
---------------------------------------------------------------------------
Total ............... $ 3,766 $ 2,470 $ 10,183 $ 5,727
===========================================================================
(5) Revenues and Cost of Sales
The components of revenues and cost of sales are:
In Thousands
(Unaudited)
---------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------------------------------------------------------
1995 1994 1995 1994
---------------------------------------------------------------------------
Revenues:
Home sales -
communities ........ $148,408 $100,890 $413,466 $279,152
Home sales -
conventional
homebuilding ....... 36,271 27,025 96,230 51,387
Land sales and
other .............. 10,704 8,344 24,627 18,817
---------------------------------------------------------------------------
$195,383 $136,259 $534,323 $349,356
===========================================================================
Cost of Sales:
Home sales -
communities ........ $116,515 $ 79,269 $324,837 $219,757
Home sales -
conventional
homebuilding ....... 31,314 23,138 82,238 44,235
Land sales and
other .............. 8,445 5,455 20,499 13,721
---------------------------------------------------------------------------
$156,274 $107,862 $427,574 $277,713
===========================================================================
(6) Interest
The following table shows the components of interest:
In Thousands
(Unaudited)
---------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------------------------------------------------------
1995 1994 1995 1994
---------------------------------------------------------------------------
Interest incurred ............... $12,128 $ 8,841 $34,108 $23,790
Less capitalized
interest ...................... 12,128 8,841 34,108 23,790
---------------------------------------------------------------------------
Interest expense ............ -- -- -- --
===========================================================================
Amortization of capitalized
interest included in cost
of sales ...................... $ 7,818 $ 4,770 $20,386 $12,228
===========================================================================
Unamortized capitalized
interest included in real
estate inventories at
period end .................... $54,079 $36,245
===========================================================================
Interest income ................. $ 115 $ 341 $ 346 $ 926
===========================================================================
(7) Reincorporation
On November 3, 1994 the Company changed its state of incorporation from
Arizona to Delaware. In connection with this reincorporation, the common
stock changed from common stock without par value to common stock with a
par value of $.001 per share, which resulted in a consolidated balance
sheet reclassification within shareholders' equity from common stock to
additional paid-in capital. There was no impact on total shareholders'
equity as a result of the reincorporation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the results of operations and financial condition
should be read in conjunction with the accompanying financial statements and
notes thereto and the Company's Annual Report on Form 10-K for the year ended
June 30, 1994, filed with the Securities and Exchange Commission.
CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, Change March 31, Change
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 Amount Percent 1995 1994 Amount Percent
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA :
Number of net new orders: 1
Sun City West 283 385 (102) (26.5%) 707 897 (190) (21.2%)
Sun City Tucson 81 102 (21) (20.6%) 248 260 (12) (4.6%)
Sun City Las Vegas 187 212 (25) (11.8%) 571 617 (46) (7.5%)
Sun City Palm Springs 63 94 (31) (33.0%) 184 215 (31) (14.4%)
Sun City Roseville 2 17 N/A 17 N/A 297 N/A 297 N/A
Sun City Hilton Head 3 26 N/A 26 N/A 85 N/A 85 N/A
Terravita 4 125 208 (83) (39.9%) 342 300 42 14.0%
Coventry Homes 349 234 115 49.1% 719 565 154 27.3%
- ---------------------------------------------------------------------------------------------------------------------------
Total 1,131 1,235 (104) (8.4%) 3,153 2,854 299 10.5%
===========================================================================================================================
Number of home closings:
Sun City West 235 284 (49) (17.3%) 874 855 19 2.2%
Sun City Tucson 89 68 21 30.9% 297 223 74 33.2%
Sun City Las Vegas 193 209 (16) (7.7%) 618 565 53 9.4%
Sun City Palm Springs 70 77 (7) (9.1%) 202 190 12 6.3%
Sun City Roseville 2 82 N/A 82 N/A 82 N/A 82 N/A
Terravita 4 108 N/A 108 N/A 264 N/A 264 N/A
Coventry Homes 229 196 33 16.8% 629 398 231 58.0%
- ---------------------------------------------------------------------------------------------------------------------------
Total 1,006 834 172 20.6% 2,966 2,231 735 32.9%
===========================================================================================================================
BACKLOG DATA :
Homes Under Contract
at March 31, Change
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 Amount Percent
- ---------------------------------------------------------------------------------------------------------------------------
Sun City West 493 707 (214) (30.3%)
Sun City Tucson 234 305 (71) (23.3%)
Sun City Las Vegas 432 483 (51) (10.6%)
Sun City Palm Springs 144 150 (6) (4.0%)
Sun City Roseville 2 564 N/A 564 N/A
Sun City Hilton Head 3 85 N/A 85 N/A
Terravita 4 409 300 109 36.3%
Coventry Homes 5 488 378 110 29.1%
- ------------------------------------------------------------------------------
Total 2,849 6 2,323 526 22.6%
==============================================================================
Aggregate contract sales amount
(dollars in millions) $ 560 6 $ 396 $ 164 41.4%
==============================================================================
Average contract sales amount per
home (dollars in thousands) $ 197 $ 170 $ 27 15.9%
==============================================================================
</TABLE>
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
CONSOLIDATED FINANCIAL AND OPERATING DATA(Continued)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, Change March 31, Change
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994 Amount Percent 1995 1994 Amount Percent
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE REVENUE PER HOME
CLOSING:
Sun City West $ 154,900 $ 147,000 $ 7,900 5.4% $ 150,600 $ 140,400 $ 10,200 7.3%
Sun City Tucson 164,700 155,000 9,700 6.3% 164,300 155,900 8,400 5.4%
Sun City Las Vegas 181,300 161,100 20,200 12.5% 178,700 157,200 21,500 13.7%
Sun City Palm Springs 225,100 193,900 31,200 16.1% 211,900 187,000 24,900 13.3%
Sun City Roseville 2 219,500 N/A N/A N/A 219,500 N/A N/A N/A
Terravita 4 264,700 N/A N/A N/A 234,100 N/A N/A N/A
Coventry Homes 158,400 137,900 20,500 14.9% 153,000 129,100 23,900 18.5%
Total weighted average 183,600 153,400 30,200 19.7% 171,800 148,200 23,600 15.9%
===============================================================================================================================
OPERATING STATISTICS:
Cost of sales as a
percentage of revenues 80.0% 79.2% 0.8% 1.0% 80.0% 79.5% 0.5% 0.6%
Selling, general and
administrative expenses as
a percentage of
revenues 14.5% 15.7% (1.2%) (7.6%) 14.5% 15.8% (1.3%) (8.2%)
Operating earnings as a
percentage of revenues 5.5% 5.2% 0.3% 5.8% 5.4% 4.7% 0.7% 14.9%
Ratio of home closings to
homes under contract in
backlog at
beginning of period 36.9% 43.4% (6.5%) (15.0%) 111.4% 131.2% (19.8%) (15.1%)
===============================================================================================================================
<FN>
1 Net of cancellations. The Company recognizes revenue at close of escrow.
2 The Company began taking new home sales orders at Sun City Roseville in May
1994. Home closings at Sun City Roseville began in February 1995.
3 The Company began taking new home sales orders at Sun City Hilton Head in
November 1994.
4 The Company began taking new home sales orders at Terravita in November
1993. Home closings at Terravita began in July 1994.
5 The Coventry Homes backlog at March 31, 1995 was generated by 17
subdivisions in the Phoenix area, 3 subdivisions in Tucson, 1 subdivision in
Las Vegas and 2 subdivisions in Southern California.
6 A majority of this backlog is currently anticipated to result in revenues in
the next 12 months. However, a majority of the home sales orders reflected
in backlog at March 31, 1995 are contingent upon the availability of
financing for the customer, sale of the customer's existing residence or
other factors. Also, as a practical matter, the Company's ability to obtain
damages for breach of contract by a potential home buyer is limited to
retaining all or a portion of the deposit received. In the nine months ended
March 31, 1995 and 1994, cancellations of home sales orders as a percentage
of new home sales orders written during the period were 18.8 percent and
15.4 percent, respectively.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
REVENUES.
(Dollars in Millions)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, Change
- -------------------------------------------------------------------------------
1995 1994 Amount Percent
- -------------------------------------------------------------------------------
$195.4 $136.3 $59.1 43.4%
Home closings at Terravita and Sun City Roseville accounted for $28.6 million
and $18.0 million, respectively, of the increase in revenues for the three
months ended March 31, 1995 compared to the three months ended March 31, 1994.
The Company had not yet begun delivering homes at these communities in the 1994
quarter. Decreased home closings (resulting from the decreased net new order
activity for the nine months ended March 31, 1995 as compared to the nine months
ended March 31, 1994) at the Company's more mature active adult communities (Sun
City West, Sun City Tucson, Sun City Las Vegas and Sun City Palm Springs)
resulted in a $7.9 million decrease in revenues. Increased home closings
(resulting from the expansion of operations in Tucson, Las Vegas and Southern
California) for Coventry Homes, the Company's conventional homebuilding
operation, resulted in a $4.5 million increase in revenues. Increases in the
average revenue per home closing at the Company's more mature active adult
communities and Coventry Homes accounted for $8.8 million and $4.7 million,
respectively, of the increase in revenues. These increases in average revenues
per home closing were partially due to sales price increases implemented by the
Company and partially due to market-driven changes in product mix. Land sales
and other revenues were $2.4 million higher in the 1995 quarter than in the 1994
quarter.
COST OF SALES. The increase in cost of sales to $156.3 million in the 1995
quarter compared to $107.9 million in the 1994 quarter was primarily due to the
increase in home closings. As a percentage of revenues, cost of sales increased
to 80.0 percent for the 1995 quarter compared to 79.2 percent for the 1994
quarter. This increase was primarily due to (i) increased amortization of
capitalized interest to cost of sales and (ii) decreased base housing margins at
Sun City Tucson. Increased borrowings and higher interest rates resulted in an
increase in amortization of capitalized interest to 5.0 percent of total cost of
sales for the 1995 quarter compared to 4.4 percent for the 1994 quarter. Pricing
strategies employed by the Company to facilitate the completion of Sun City
Tucson resulted in a decrease in base housing margins at that community. On a
period-to-period basis, cost of sales as a percentage of revenues will vary due
to, among other things, changes in product mix, differences between individual
communities, lot premiums, upgrades and extras, price increases, changes in
construction costs and changes in the amortization of capitalized interest and
other common costs. Management currently anticipates that continued increases in
the amortization of capitalized interest to cost of sales, and changes in
estimates on which the amortization of other common costs is based, will result
in a greater percentage of common costs being amortized to cost of sales in the
future.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling,
general and administrative expenses to $28.3 million in the 1995 quarter as
compared to $21.3 million for the 1994 quarter, $2.5 million was attributable to
higher sales and marketing expenses and $1.3 million was attributable to
increased commissions on the increased revenues. The balance of the increase was
attributable to a variety of general and administrative expenses. Since a
significant portion of selling, general and administrative expenses are fixed,
the increase in revenues for the 1995 quarter resulted in a decrease in these
expenses as a percentage of revenues as compared to the 1994 quarter.
INCOME TAX EXPENSE. The increase in income tax expense to $3.8 million in the
1995 quarter as compared to $2.5 million in the 1994 quarter was due to the
increase in operating earnings. The effective tax rate in both quarters was 35
percent.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders decreased 8.4 percent in the
1995 quarter as compared to the 1994 quarter. This decrease was primarily
attributable to the Company's more mature active adult communities, which had a
22.6 percent decline in net new orders in the 1995 quarter compared to the 1994
quarter. Management believes that increased interest rates, a slower national
home resale market and price increases implemented by the Company have generally
softened demand at these communities from the comparable period one year ago
(the results for which were positively impacted by low interest rates and
generally favorable economic conditions), and may continue to do so in the
future. Management also believes that net new orders at Sun City Palm Springs
continue to be adversely affected by the current Southern California real estate
market and the Southern California economy generally.
Net new orders at Terravita were 39.9 percent lower in the 1995 quarter than in
the 1994 quarter. Management believes that decreased lot availability negatively
impacted net new order activity in the 1995 quarter compared to the 1994 quarter
and is expected to continue to cause fluctuations in net new orders on a
quarter-to-quarter basis in the future. Net new orders for Coventry Homes were
49.1 percent higher in the 1995 quarter than in the 1994 quarter, due both to an
increase in Phoenix-area operations and to the expansion of operations in
Tucson, Las Vegas and Southern California.
The Company had 26 and 17 net new orders at Sun City Hilton Head and Sun City
Roseville, respectively, in the 1995 quarter. The Company had not yet begun
taking new sales orders at these communities in the 1994 quarter. New orders at
Sun City Hilton Head were impacted by earlier heavy rains, which delayed
development activity and limited the ability of prospective buyers to visit home
sites. At Sun City Roseville, heavy rains created lot inaccessibility and
delayed infrastructure development, resulting in minimal new orders for the 1995
quarter. At both communities, the heavy rains delayed construction activity for
homes under contract.
The number of homes under contract at March 31, 1995 was 22.6 percent higher
than at March 31, 1994. This increase was primarily attributable to the new
sales orders at Sun City Roseville and the expansion of Coventry Homes
operations, partially offset by the decreased new order activity at the
Company's more mature active adult communitites.
NINE MONTHS ENDED MARCH 31, 1995 AND 1994
REVENUES.
(Dollars in Millions)
- --------------------------------------------------------------------------------
Nine Months Ended
March 31, Change
- -------------------------------------------------------------------------------
1995 1994 Amount Percent
- -------------------------------------------------------------------------------
$534.3 $349.4 $184.9 52.9%
Home closings at Terravita and Sun City Roseville accounted for $61.8 million
and $18.0 million, respectively, of the increase in revenues for the nine months
ended March 31, 1995 compared to the nine months ended March 31, 1994. The
Company had not yet begun delivering homes at these communities in the 1994
period. Increased home closings (due to a higher beginning backlog) at the
Company's more mature active adult communities and Coventry Homes accounted for
$24.8 million and $29.8 million, respectively, of the increase in revenues for
the 1995 period compared to the 1994 period. Increases in the average revenue
per home closing at the Company's more mature active adult communities and
Coventry Homes accounted for $29.7 million and $15.0 million, respectively, of
the increase in revenues. These increases in average revenues per home closing
were partially due to sales price increases implemented by the Company and
partially due to market-driven changes in product mix. Land sales and other
revenues were $5.8 million higher in the 1995 period than in the 1994 period.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
COST OF SALES. The increase in cost of sales to $427.6 million in the 1995
period compared to $277.7 million in the 1994 period was primarily due to
increased home closings at all locations. The Company also experienced an
increase in its cost of sales as a percentage of revenues from the 1994 period
to the 1995 period, primarily reflecting the impact of (i) increased
amortization of capitalized interest to cost of sales and (ii) decreased base
housing margins at Sun City Tucson. See "Three Months Ended March 31, 1995 and
1994 -- Cost of Sales."
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling,
general and administrative expenses to $77.7 million in the 1995 period as
compared to $55.3 million for the 1994 period, $6.6 million was attributable to
higher sales and marketing expenses and $4.5 million was attributable to
increased commissions on the increased revenues. The balance of the increase was
attributable to a variety of general and administrative expenses. Since a
significant portion of selling, general and administrative expenses are fixed,
the increase in revenues for the 1995 period resulted in a decrease in these
expenses as a percentage of revenues as compared to the 1994 period.
INCOME TAX EXPENSE. The increase in income tax expense to $10.2 million in the
1995 period as compared to $5.7 million in the 1994 period was due to the
increase in operating earnings. The effective tax rate in both periods was 35
percent.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 10.5 percent in the
1995 period as compared to the 1994 period. The number of homes under contract
at March 31, 1995 was 22.6 percent higher than at March 31, 1994. These
increases were primarily attributable to new sales orders at Sun City Roseville
and the growth and expansion of Coventry Homes operations, partially offset by
the decreased new order activity at the Company's more mature active adult
communities. See "Three Months Ended March 31, 1995 and 1994 -- Net New Order
Activity and Backlog."
Cancellations of home sales orders as a percentage of new home sales orders
written increased to 18.8 percent for the 1995 period compared to 15.4 percent
for the 1994 period. The increase is primarily attributable to Sun City
Roseville and Terravita, which experienced strong new order activity but higher
cancellation percentages than the Company's more mature active adult
communities. Management believes that cancellations at these new communities may
have been negatively impacted by extended home delivery periods resulting from
new orders taken prior to site and amenity development.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
At March 31, 1995 the Company had $9.9 million of cash and short-term
investments and $74.0 million and $10.4 of unused borrowing capacity under its
$175 million unsecured revolving credit facility and $20 million of short-term
lines of credit, respectively.
In November 1994 the Company negotiated an amendment to its unsecured revolving
credit facility to increase the amount of the facility from $125 million to $175
million. The Company is currently negotiating an additional amendment to its
unsecured revolving credit facility to increase the amount of the facility to
$300 million. This amendment, if effected, will require the Company to repay its
separate Coventry Homes project debt ($55.6 million at March 31, 1995) and will
provide greater flexibility in the nature and timing of future development
expenditures.
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. However, cash flows from the
Company's operating communities 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 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 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 the nine months ended March 31, 1995 the Company generated $131.8 million
of net cash from community sales activities, used $68.0 million of cash for land
and lot and amenity development at operating communities, paid $68.6 million for
costs related to communities in the pre-operating stage, used $8.9 million of
net cash for conventional homebuilding operations and used $60.3 million of cash
for other operating activities.
The Company believes that, of the $596.0 million of cash spent by the Company
during the nine months ended March 31, 1995 for land acquisitions, lot and
amenity development, home construction and other operating activities,
approximately $93.3 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 $93.3 million was comprised of $68.6
million related to projects in the pre-operating stage and $24.7 million for
land acquisitions and amenity development at operating communities.
At March 31, 1995, under the most restrictive of the covenants in the Company's
debt agreements, $20.9 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.
ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY
In March 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which will be
effective for the Company in its fiscal year ending June 30, 1997. Management is
currently assessing the impact, if any, that this new accounting standard, when
adopted, will have on the Company's financial position and results of
operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.0 Sample Directors and Officers Indemnification Agreement between
the Company and those directors and officers set forth in
Exhibit 10.0, dated as of February 1, 1995
Exhibit 27.0 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the period covered
by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEL WEBB CORPORATION
(Registrant)
Date: May 8, 1995 /s/ Philip J. Dion
------------------ -------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Date: May 8, 1995 /s/ John A. Spencer
------------------ --------------------------------------
John A. Spencer
Senior Vice President and
Chief Financial Officer
EXHIBIT 10.0
Attached hereto is a sample form copy of the Company's Directors and Officers
Indemnification Agreement which the Company has provided to the following
directors and officers effective February 1, 1995.
DIRECTORS
D. Kent Anderson
Robert Bennett
Hugh F. Culverhouse, Jr.
Philip J. Dion
Kenny C. Guinn
J. Russell Nelson
Peter A. Nelson
Michael E. Rossi
C. Anthony Wainwright
Sam Yellen
OFFICERS
Joseph F. Contadino
John H. Gleason
LeRoy C. Hanneman, Jr.
Robertson C. Jones
Anne L. Mariucci
Donald V. Mickus
Frank D. Pankratz
David E. Rau
Charles T. Roach
David G. Schreiner
M. Lynn Schuttenberg
John A. Spencer
Robert R. Wagoner
J. Dennis Wilkins
DIRECTORS and OFFICERS
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is entered into as of
the 1st day of February, 1995, between Del Webb Corporation, a Delaware
corporation (the "Company"), and ___________, a(n) _____________ of the Company
(the "Indemnitee").
RECITALS
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies in today's environment;
WHEREAS, the Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") of the Company requires the Company to
indemnify and advance expenses to its directors and officers to the fullest
extent permitted by law and the Indemnitee has been serving and continues to
serve as a director or officer of the Company in part in reliance on such
Certificate of Incorporation;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner and Indemnitee's reliance on the Certificate
of Incorporation, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by the Certificate of Incorporation will
be available to Indemnitee (regardless of, among other things, any amendment to
or revocation of such or any change in the composition of the Company's Board of
Directors or acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of, and the
advancing of expenses to, Indemnitee to the fullest extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors' and officers' liability insurance policies; and
THEREFORE, in consideration of Indemnitee continuing to serve the
Company directly or, at its request, with another enterprise, and intending to
be legally bound hereby, and for other good and valuable consideration, the
adequacy of which is hereby acknowledged, the parties agree as follows:
Indemnification Agreement
1. Certain Definitions:
(a) Action: any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether
conducted by the Company or any other party, that Indemnitee
in good faith believes might lead to the institution of any
such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(b) Change in Control: shall be deemed to have occurred if (i)
any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing 20% or more of the
total voting power represented by the Company's then
outstanding Voting Securities (as defined below), or (ii)
during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors
of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger
or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by
the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series
of transactions) all or substantially all the Company's
assets.
(c) Derivative Action: an Action by or in the right of the Company.
(d) Expenses: include reasonable attorneys' fees, court costs,
deposition costs, court reporter fees, travel and all other
costs, expenses and obligations actually paid to another or
incurred in connection with investigating the facts underlying
the Action, preparing to defend and defending the Action,
preparation for and participating in the Action as a witness,
or any of the foregoing expenses incurred on appeal, or any
other reasonable expenses incurred by Indemnitee in
participating in any Indemnifiable Action or Indemnifiable
Derivative Action.
(e) Indemnifiable Action or Indemnifiable Derivative Action:
any Action or Derivative Action arising out of or relating,
directly or indirectly, to the fact that Indemnitee is or was
a Director, Indemnitee, employee, agent or fiduciary of the
Company, or a subsidiary of the Company, or is or was serving
at the request of the Company as a Director, Indemnitee,
employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by
Indemnitee in any such capacity.
(f) Potential Change in Control: shall be deemed to have
occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Company)
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in
Control; (iii) any person other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company who is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting
Securities, increases such person's beneficial ownership of
such securities by five percentage points (5%) or more over
the percentage so owned by such person; or (iv) the Board of
Directors adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(g) Voting Securities: any securities of the Company which
vote generally in the election of directors.
2. No Pending Actions. Indemnitee represents to Company that to
Indemnitee's actual knowledge, (i) there is no Indemnifiable Action or
Indemnifiable Derivative Action involving Indemnitee as of the date of this
Agreement and (ii) no facts exist that may form the basis for such Action
involving Indemnitee.
3. Indemnification For Actions Other Than Derivative Actions. In the
event Indemnitee was, is, or becomes a party to or a witness or other
participant in, or is threatened to be made a party to or witness or other
participant in, an Indemnifiable Action other than an Indemnifiable Derivative
Action, the Company shall, subject to the provisions of this Agreement,
indemnify Indemnitee to the fullest extent permitted by law against any and all
Expenses, judgments, fines, penalties, and amounts paid in settlement of such
Action.
4. Indemnification For Derivative Actions.
(a) Basic Indemnification. In the event Indemnitee was, is, or
becomes a party to or a witness or other participant in, or is threatened to be
made a party to or witness or other participant in an Indemnifiable Derivative
Action, the Company shall, subject to the provisions of this Agreement,
indemnify Indemnitee to the fullest extent permitted by law against any and all
Expenses, but not judgments, fines, or, except as set forth below, amounts paid
in settlement of such Derivative Action.
(b) Adjudication of Liability in Derivative Actions.
Notwithstanding Paragraph 4(a), no indemnification shall be made in respect of
any claim, issue, or matter as to which Indemnitee shall have been adjudged (by
final judicial determination from which there is no further right to appeal) to
be liable to the Company unless and only to the extent that the court in which
such Derivative Action was brought shall determine upon application by
Indemnitee that despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnification which such court shall deem proper.
(c) Settlement of Derivative Actions. Notwithstanding
Paragraph 4(a), the court in which such Derivative Action was brought may
determine upon application of Indemnitee that, in view of all circumstances of
the case, indemnity for amounts paid in settlement is proper and may order
indemnity for the amounts so paid in settlement and for the Expenses actually
and reasonably paid in connection with such application, to the extent the court
deems proper.
5. Limits on Indemnification. Except as stated in Paragraph 6, there
shall be no indemnification pursuant to this Indemnification Agreement:
(a) to the extent that payment for the same claims or amounts
are actually made to the Indemnitee under a valid and collectible insurance
policy; provided, however, that if it should subsequently be determined that the
Indemnitee is not legally entitled to retain any such payment, the restriction
on indemnification pursuant to this subparagraph (a) shall no longer apply;
(b) to the extent that the Indemnitee is indemnified or
receives a recovery for the same claims or amounts otherwise than pursuant to
this Indemnification Agreement; provided, however, that if it should
subsequently be determined that the Indemnitee is not legally entitled to retain
any such recovery, the restriction on indemnification pursuant to this
subparagraph (b) shall no longer apply;
(c) on account of any violation of Section l6(b) of the
Securities Exchange Act of l934, as amended, and rules promulgated thereunder;
(d) on account of any violation of Section l0(b) of the
Securities Exchange Act of l934, as amended (the "Exchange Act"), and any rules
promulgated thereunder, or similar state law, to the extent that such violation
is based on (i) the purchase or sale of a security by Indemnitee or a person
affiliated with Indemnitee while Indemnitee is in possession of material
nonpublic information about the Company, or (b) the communication of material
nonpublic information about the Company in connection with any transaction on or
through the facilities of a national securities exchange or from or through a
broker or dealer, other than as part of a securities offering by the Company;
(e) with respect to any transaction from which the Indemnitee
derived an improper personal benefit to which he or she is not legally entitled;
(f) for the return of any remuneration paid to the Indemnitee
that is held by any court in a final judgment to have been illegal or improper;
(g) to the extent that the Indemnitee acted or failed to act
(i) not in good faith, or (ii) not in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company, or (iii) with respect
to any criminal Action, with reasonable cause to believe his or her conduct was
unlawful; or
(h) if a final nonappealable decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
6. Partial and Mandatory Indemnity. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company of some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of an Action but not for the total amount, the Company shall
indemnify Indemnitee for the portion to which Indemnitee is entitled. To the
extent that Indemnitee has been successful on the merits or otherwise (including
dismissal with or without prejudice) in defense of any Indemnifiable Action or
Indemnifiable Derivative Action, or in defense of any claim, issue or matter
therein, he or she shall be indemnified against Expenses actually and reasonably
incurred by him in connection therewith, except as stated in Paragraph 5(a) or
5(b).
7. Notification of Indemnifiable Action or Indemnifiable Derivative
Action. Indemnitee shall promptly notify the Company of any Indemnifiable Action
or Indemnifiable Derivative Action promptly after receipt by Indemnitee of
notice of the commencement of such Indemnifiable Action or Derivative Action.
With respect thereto:
(a) The Company will be entitled to participate therein at its
own expense.
(b) Except as otherwise provided below, the Company jointly
with any other indemnifying party may assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee to be chosen or approved by the Company.
After notice from the Company to Indemnitee of its election to so assume the
defense thereof, the Company will not be liable to Indemnitee for any legal or
other expenses subsequently incurred by Indemnitee in connection with the
defense thereof other than reasonable costs of investigation or participation in
any Action or Derivative Action (including travel expenses) or as otherwise
provided below. Indemnitee shall have the right to employ independent counsel in
such Action or Derivative Action; however, the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the expense of Indemnitee unless:
(i) the employment of independent counsel by
Indemnitee has been authorized by the Company;
(ii) counsel employed by the Company to represent the
Indemnitee shall have reasonably concluded that there may be a conflict
of interest in the conduct of the defense of such action that prevents
such counsel from representing Indemnitee; or
(iii) the Company shall not in fact have employed
counsel to assume the defense of such Action or Derivative Action on
behalf of Indemnitee.
The fees and expenses of independent counsel of Indemnitee in subparagraphs
7(b)(i), (ii) and (iii) shall be borne by the Company.
(c) If the Company has assumed the defense of the Indemnitee
pursuant to subparagraph (b) above, the Company shall not be liable to indemnify
Indemnitee under this Agreement for any amount paid in settlement of any Action
or Derivative Action effected without its written consent, the Company shall not
settle any Action or Derivative Action in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee's written consent, and
neither the Company nor Indemnitee will unreasonably withhold their consent to
any proposed settlement.
8. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a trust
for the benefit of Indemnitee and from time to time upon written request of
Indemnitee shall fund such trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Indemnifiable
Action or Indemnifiable Derivative Action, and any and all judgments, fines,
penalties and settlement amounts of any and all Indemnifiable Actions or
Indemnifiable Derivative Action from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid; provided, however, that in no
event shall more than $250,000 be required to be deposited in any trust created
hereunder in excess of amounts deposited in respect of reasonably anticipated
Expenses. The terms of the trust shall provide that upon a Change in Control (i)
the trust shall not be revoked or the principal thereof invaded without the
written consent of the Indemnitee, (ii) the trustee shall advance, within ten
(10) business days of a written request by the Indemnitee, any and all Expenses
to the Indemnitee (and the Indemnitee hereby agrees to reimburse the trust under
the circumstances under which the Indemnitee would be required to reimburse the
Company under Section 9(b) of this Agreement), (iii) the trust shall continue to
be funded by the Company in accordance with the funding obligation set forth
above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in such trust shall revert to the
Company upon a final determination by the Indemnitee or a court of competent
jurisdiction, as the case may be, that Indemnitee has been fully indemnified
under the terms of this Agreement. Trustee shall be chosen by the Board of
Directors. Nothing in this Section 8 shall relieve the Company of any of its
obligations under this Agreement.
9. Advance of Expenses; Failure to Pay Claim.
(a) Written Request. If so requested by Indemnitee in writing,
the Company shall (subject to the Expense Advance Rules hereinafter described)
advance to Indemnitee (an "Expense Advance") any and all Expenses incurred in
connection with the investigation and preparation of the Indemnitee's
participation in any Indemnifiable Action or Indemnifiable Derivative Action,
whether as a witness or a party, pursuant to this Agreement. The Company shall
comply with the Indemnitee's written request for an Expense Advance within ten
(10) business days of receipt of such written request together with the
reimbursement commitment referred to in subparagraph (b) below. In the event the
Company does not honor Indemnitee's request for an Expense Advance, Indemnitee
may bring an action in any court of competent jurisdiction to enforce the right
to an Expense Advance, and the Company shall have the burden of proof in such
action to demonstrate that the Expense Advance is not payable.
(b) Reimbursement by Indemnitee. The obligation of the Company
to make an Expense Advance shall be subject to the condition that, if it is
ultimately determined (by final judicial determination from which there is no
further right to appeal) that there are matters to which Indemnitee is not
entitled to indemnity under this Agreement, the Company shall be entitled to be
reimbursed by Indemnitee for all such amounts. Prior to obtaining the initial
Expense Advance, Indemnitee must confirm such reimbursement obligation by
delivery to Company of a signed undertaking in the form of Exhibit A or in such
other form as Company may reasonably accept.
(c) Expense Advance Rules. Expenses in all cases must be
reasonable and comply with existing or future billing procedures of the Company
so that the Company can reasonably monitor and audit such Expenses. With respect
to attorneys' fees, the Company will give reasonable consideration to requests
for specific counsel and to requests for the grouping of individuals for joint
defense purposes. Any attorney representing more than one individual may be
requested to render separate statements to each individual or otherwise allocate
billings by individual.
(d) Failure to Pay Claim. If loss has been incurred and a
claim for indemnification under this Agreement is not paid by the Company within
ten (10) business days after a written claim has been received by the Company,
Indemnitee may at any time thereafter bring suit against the Company to recover
any unpaid amount of the claim.
10. Burden of Proof. In connection with any determination as to whether
Indemnitee is entitled to be indemnified hereunder the burden of proof shall be
on the Company to establish that Indemnitee is not so entitled.
11. No Presumption. For purposes of this Agreement, the termination of
any action, suit or proceeding by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not payable under this Indemnification
Agreement or permitted by applicable law.
12. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall
be in addition to any other rights Indemnitee may have under the Company's
Certificate of Incorporation, or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Certificate of
Incorporation and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change.
13. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing Directors' and Officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
Company Director, Officer or Indemnitee. In the event Indemnitee incurs any
Expenses in tendering the defense of the Action to the insurance company
providing the Directors and Officers insurance, such Expenses shall be
considered indemnifiable Expenses.
14. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action such
shorter period shall govern.
15. No Right To Continued Employment. Nothing contained in this
Indemnification Agreement is intended to, or shall, create any right to
continued employment by the Company.
16. Amendments and Waiver. No supplement, modification, or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto; provided, however, that if any provision of this Agreement is
challenged as being unlawful, the parties agree that the court in which such
challenge is litigated may modify such provision so that it is enforceable to
the maximum extent permitted by law and may enforce the Agreement as so
modified. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
17. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
18. Binding Effect. Etc. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors, heirs, and assigns.
l9. Termination by Company. This Agreement shall continue in full force
and effect, regardless of whether Indemnitee continues to serve as an officer or
director of the Company or any other enterprise at the Company's request, unless
terminated pursuant to this Paragraph. By giving written notice to Indemnitee at
his or her address according to Company records, the Company, prior to a
Potential Change of Control or Change of Control, may terminate its obligations
under this Indemnification Agreement as to any act or omission of Indemnitee
after such written notice is given. Notice is deemed given when actually
received or two days after being sent by registered or certified mail, whichever
is earlier.
20. Severability. The provisions of this Agreement shall be severable
and, in the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, the remaining
provisions shall remain enforceable to the fullest extent permitted by law,
including the provisions that have been modified by a court pursuant to
Paragraph 16 hereof.
21. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
22. Prior Agreements. This Agreement supersedes all prior
Indemnification Agreements between the Company and Indemnitee.
DEL WEBB CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
--------------------------------------
Indemnitee
--------------------------------------
<PAGE>
EXHIBIT A
, l995
- --------- ---
DEL WEBB CORPORATION
Attention: General Counsel
6001 North 24th Street
Phoenix, Arizona 85016
Re: Indemnification Agreement Dated February 1, 1995 (the "Agreement")
Gentlemen:
I am the beneficiary of the above Agreement and am a defendant,
witness, or other participant in the following legal action:
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------. A copy
of the Complaint in this action is attached for your information.
Pursuant to Paragraph 9 of the Agreement, I hereby request that Del
Webb Corporation advance my Expenses as such term is used in the Agreement,
subject to the Expense Advance Rules, as such Rules are applied in the
Agreement. I hereby confirm that I will reimburse Del Webb Corporation for all
the amounts advanced to me that are ultimately determined (by final judicial
determination from which there is no further right to appeal) to be associated
with matters to which I am not entitled to indemnity under the Agreement.
If any additional information is needed, my address and telephone
number are listed below:
Address:
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Telephone Number:
------------------------------------------------------------
Very truly yours,
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<PERIOD-TYPE> 9-MOS
<EXCHANGE-RATE> 1
<CASH> 9,930
<SECURITIES> 0
<RECEIVABLES> 10,583
<ALLOWANCES> 0
<INVENTORY> 818,255
<CURRENT-ASSETS> 0
<PP&E> 43,971
<DEPRECIATION> 16,580
<TOTAL-ASSETS> 893,843
<CURRENT-LIABILITIES> 0
<BONDS> 493,993
<COMMON> 16
0
0
<OTHER-SE> 219,505
<TOTAL-LIABILITY-AND-EQUITY> 893,843
<SALES> 530,659
<TOTAL-REVENUES> 534,323
<CGS> 427,535
<TOTAL-COSTS> 427,574
<OTHER-EXPENSES> 77,655
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 29,094
<INCOME-TAX> 10,183
<INCOME-CONTINUING> 18,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,911
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 0
</TABLE>
