<PAGE> 1
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, 1996.
/ / 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, 1996 Registrant had outstanding 17,539,049 shares of common
stock.
<PAGE> 2
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1996,
June 30, 1995 and March 31, 1995............................ 1
Consolidated Statements of Operations for the three and nine
months ended March 31, 1996 and 1995........................ 2
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1996 and 1995........................ 3
Notes to Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................. 18
</TABLE>
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> 3
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30, MARCH 31,
1996 1995 1995
(UNAUDITED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------
Real estate inventories (Notes 2, 3 and 6) $ 921,610 $ 828,752 $ 818,255
Cash and short-term investments 14,573 18,900 9,930
Receivables 24,946 21,995 10,583
Property and equipment, net 28,306 29,326 27,391
Deferred income taxes (Note 4) 13,485 -- --
Other assets 38,631 26,077 27,684
- ------------------------------------------------------------------------------------------------
$ 1,041,551 $ 925,050 $ 893,843
================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 555,081 $ 491,258 $ 493,993
Contractor and trade accounts payable 78,492 76,421 55,893
Accrued liabilities and other payables 64,121 52,046 40,499
Home sale deposits 89,120 66,887 79,749
Income taxes payable (Note 4) 1,488 3,899 3,092
Deferred income taxes (Note 4) -- 5,197 1,096
- ------------------------------------------------------------------------------------------------
Total liabilities 788,302 695,708 674,322
- ------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized
30,000,000 shares; issued 17,542,217 shares
at March 31, 1996, 15,798,649 shares at
June 30, 1995 and 15,798,884 shares at
March 31, 1995 (Note 7) 17 16 16
Additional paid-in capital (Note 7) 158,271 121,059 121,120
Retained earnings 99,965 122,153 113,316
- ------------------------------------------------------------------------------------------------
258,253 243,228 234,452
Less cost of common stock in treasury, 3,031
shares at March 31, 1996, 877,728 shares
at June 30, 1995 and 922,904 shares at
March 31, 1995 (Note 7) (57) (11,058) (11,636)
Less deferred compensation (4,947) (2,828) (3,295)
- ------------------------------------------------------------------------------------------------
Total shareholders' equity 253,249 229,342 219,521
- ------------------------------------------------------------------------------------------------
$ 1,041,551 $ 925,050 $ 893,843
================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
- ----------------------------------------------------------------------------------------------
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (Note 5) $ 256,014 $ 195,383 $ 701,791 $ 534,323
- ----------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 196,033 148,456 538,153 407,188
Interest (Note 6) 10,569 7,818 28,268 20,386
Selling, general and administrative 38,850 28,348 100,671 77,655
Impairment of southern California real
estate inventories (Notes 6 and 8) 65,000 -- 65,000 --
- ----------------------------------------------------------------------------------------------
310,452 184,622 732,092 505,229
- ----------------------------------------------------------------------------------------------
Earnings (loss) before income taxes (54,438) 10,761 (30,301) 29,094
Income taxes (Note 4) 19,053 (3,766) 10,605 (10,183)
- ----------------------------------------------------------------------------------------------
Net earnings (loss) $ (35,385) $ 6,995 $ (19,696) $ 18,911
==============================================================================================
Weighted average shares outstanding 17,958 15,324 17,527 15,130
==============================================================================================
Net earnings (loss) per share $ (1.97) $ .46 $ (1.12) $ 1.25
==============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
- -------------------------------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to community home sales $ 525,110 $ 402,806
Cash received from commercial land sales 7,564 1,599
Cash paid for costs related to community home construction (352,099) (272,637)
- -------------------------------------------------------------------------------------------------------
Net cash provided by community sales activities 180,575 131,768
Cash paid for land acquisitions at operating communities (5,076) (3,495)
Cash paid for lot development at operating communities (71,322) (43,326)
Cash paid for amenity development at operating communities (43,889) (21,198)
- -------------------------------------------------------------------------------------------------------
Net cash provided by operating communities 60,288 63,749
Cash paid for costs related to communities in the pre-operating stage (77,799) (68,616)
Cash received from customers related to conventional homebuilding 149,541 103,205
Cash paid for land, development, construction and other costs related to
conventional homebuilding (158,598) (112,142)
Cash received from customers related to residential land development project 13,707 14,364
Cash paid for costs related to residential land development project (7,299) (11,365)
Cash paid for corporate activities (30,569) (23,722)
Interest paid (33,466) (37,971)
Cash paid for income taxes (9,014) (1,546)
- -------------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (93,209) (74,044)
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,325) (9,914)
Investments in life insurance policies (2,313) (1,101)
- -------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (7,638) (11,015)
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 229,579 562,000
Repayments of debt (175,956) (471,530)
Proceeds from sale of common stock 45,271 --
Proceeds from exercise of common stock options 148 277
Purchases of treasury stock (30) (7)
Dividends paid (2,492) (2,225)
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 96,520 88,515
- -------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS (4,327) 3,456
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 18,900 6,474
- -------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 14,573 $ 9,930
=======================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
- ---------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of net earnings (loss) to net cash used for operating activities:
Net earnings (loss) $ (19,696) $ 18,911
Allocation of non-cash common costs to costs and expenses, excluding interest 164,949 120,880
Amortization of capitalized interest in costs and expenses 28,268 20,386
Deferred compensation amortization 1,336 1,212
Depreciation and other amortization 6,266 3,870
Deferred income taxes (18,683) 12,700
Non-cash loss from impairment of southern California real estate inventories 65,000 --
Net increase in home construction costs (47,549) (45,548)
Land acquisitions (31,159) (30,563)
Lot development (150,425) (112,379)
Amenity development (77,354) (49,895)
Pre-acquisition costs (6,256) (2,770)
Net change in other assets and liabilities (7,906) (10,848)
- ---------------------------------------------------------------------------------------------------------
Net cash used for operating activities $ (93,209) $ (74,044)
=========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
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. Certain financial statement items from prior periods have
been reclassified to be consistent with the current period financial
statement presentation.
The Company's 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
builder 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.
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, 1995, filed with the Securities and Exchange Commission.
In the Consolidated Statements of Cash Flows, the Company defines
operating communities as communities generating revenues from home
closings. Communities in the pre-operating stage are those not yet
generating revenues from home closings.
The results of operations for the nine months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full
fiscal year.
5
<PAGE> 8
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are as follows:
<TABLE>
<CAPTION>
In Thousands
- ------------------------------------------------------------------------------------
March 31, June 30, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home construction costs $189,904 $142,355 $145,337
Unamortized improvement and amenity costs 445,298 356,457 338,930
Unamortized capitalized interest (Note 6) 44,852 55,793 54,079
Land held for housing 191,240 220,297 216,336
Land held for future development or sale 50,316 53,850 63,573
- ------------------------------------------------------------------------------------
$921,610 $828,752 $818,255
====================================================================================
</TABLE>
Unamortized capitalized interest in real estate inventories at March
31, 1996 has been reduced by $21.8 million, the portion of the loss
from impairment of southern California real estate inventories
allocated to unamortized capitalized interest (see Note 8).
At March 31, 1996 the Company had 233 completed homes and 639 homes
under construction that were not subject to a sales contract. These
homes represented $17.6 million and $19.5 million, respectively, of
home construction costs at March 31, 1996. Included in land held for
future development or sale at March 31, 1996 were 396 acres of
residential land, commercial land and 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, 1996 were 336 acres of residential
land and 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:
<TABLE>
<CAPTION>
In Thousands
- ------------------------------------------------------------------------------------------
March 31, June 30, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------
<C> <C> <C> <C>
10 7/8% Senior Notes, net $ 97,303 $ 96,787 $ 96,615
9 3/4% Senior Subordinated Debentures, net 97,156 96,847 96,745
9% Senior Subordinated Debentures, net 97,286 97,081 97,013
Subordinated Swiss Franc Bonds, net -- 12,745 12,735
Notes payable to banks under a revolving credit
facility and short-term lines of credit 233,000 160,200 110,600
Real estate and other notes 30,336 27,598 80,285
- ------------------------------------------------------------------------------------------
$555,081 $491,258 $493,993
==========================================================================================
</TABLE>
In February 1996 the Company paid its Subordinated Swiss Franc Bonds.
The Company's related currency exchange agreement was fully performed
and, together with the interest rate swap agreement (the Company's
only derivative financial instruments), expired in February 1996.
6
<PAGE> 9
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT (CONTINUED)
At March 31, 1996 the Company had $233.0 million outstanding under its
$300 million unsecured revolving credit facility and no amount
outstanding under its $5 million short-term line of credit.
At March 31, 1996, under the most restrictive of the covenants in the
Company's debt agreements, $6.4 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.
(4) INCOME TAXES
The components of income taxes are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- --------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
Federal $ 3,972 $ (3,027) $ 7,298 $ (3,119)
State (158) (534) 780 602
- --------------------------------------------------------------------------------
3,814 (3,561) 8,078 (2,517)
- --------------------------------------------------------------------------------
Deferred:
Federal (19,672) 6,081 (15,981) 11,400
State (3,195) 1,246 (2,702) 1,300
- --------------------------------------------------------------------------------
(22,867) 7,327 (18,683) 12,700
- --------------------------------------------------------------------------------
$(19,053) $ 3,766 $(10,605) $ 10,183
================================================================================
</TABLE>
The deferred income tax benefit for the three and nine months ended
March 31, 1996, and the related deferred tax asset at March 31, 1996,
resulted from the non-cash loss from impairment of southern California
real estate inventories recognized by the Company as of March 31, 1996
(see Note 8).
7
<PAGE> 10
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) REVENUES AND COSTS AND EXPENSES
The components of revenues and costs and expenses are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- ---------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ---------------------------------------------------------------------------------------------
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding:
Communities $199,376 $148,408 $525,076 $413,466
Conventional 50,474 36,271 145,481 96,230
- ---------------------------------------------------------------------------------------------
Total homebuilding 249,850 184,679 670,557 509,696
Land sales 3,499 8,895 24,848 19,976
Other 2,665 1,809 6,386 4,651
- ---------------------------------------------------------------------------------------------
$256,014 $195,383 $701,791 $534,323
=============================================================================================
Costs and expenses:
Home construction and land:
Communities $150,949 $109,582 $393,816 $306,197
Conventional 41,843 30,650 123,024 80,827
- ---------------------------------------------------------------------------------------------
Total homebuilding 192,792 140,232 516,840 387,024
Interest 10,569 7,818 28,268 20,386
Cost of land sales 2,537 7,082 19,046 16,762
Other cost of sales 704 1,142 2,267 3,402
Selling, general and administrative 38,850 28,348 100,671 77,655
Impairment of southern California real
estate inventories 65,000 -- 65,000 --
- ---------------------------------------------------------------------------------------------
$310,452 $184,622 $732,092 $505,229
=============================================================================================
</TABLE>
8
<PAGE> 11
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) INTEREST
The following table shows the components of interest:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- -----------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest incurred $12,885 $12,128 $39,127 $34,108
Less capitalized interest 12,885 12,128 39,127 34,108
- -----------------------------------------------------------------------------------------
Interest expense $ - $ - $ - $ -
=========================================================================================
Amortization of capitalized interest
in costs and expenses $10,569 $ 7,818 $28,268 $20,386
=========================================================================================
Unamortized capitalized interest in real
estate inventories at period end (Notes 2
and 8) $44,852 $54,079
=========================================================================================
Interest income $ 182 $ 115 $ 732 $ 346
=========================================================================================
</TABLE>
(7) EQUITY TRANSACTION
In August 1995 the Company publicly sold 2,474,900 shares of its common
stock. The net proceeds of $45.3 million were used to repay a portion
of the indebtedness then outstanding under the Company's $300 million
senior unsecured revolving credit facility.
(8) IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES
In March 1995 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. The Company adopted this new standard in the third quarter
of fiscal 1996. In accordance with SFAS No. 121, prior period financial
statements have not been restated to reflect the change in accounting
principle.
SFAS No. 121 requires that long-lived assets, such as real estate
inventories, be reviewed for impairment whenever events or changes in
circumstances indicate that the book value of the asset may not be
recoverable. If the sum of the expected future net cash flows
(undiscounted and without interest charges) from an asset to be held
and used is less than the book value of the asset, an impairment loss
must be recognized in the amount of the difference between the book
value and fair value, as opposed to the difference between book value
and net realizable value under the previous accounting standard.
For long-term assets like active adult communities, the determination
of whether there is an impairment loss is dependent primarily on the
Company's estimate of annual home closings over the life of the
community, which involves numerous assumptions and judgments as to
future events over a period of many years. In connection with its
adoption of SFAS No. 121, the Company incurred a special, non-cash
charge related to the valuation of its Sun City Palm Desert active
adult community in southern California.
9
<PAGE> 12
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES (CONTINUED)
In the first six months of fiscal 1996, net new orders at Sun City
Palm Desert were substantially below both the comparable period
of the prior fiscal year and the Company's expectations. Although the
Company was encouraged by net new orders significantly greater in the
first 45 days of the third quarter of fiscal 1996 than in the
comparable period in the prior fiscal year, a lower than anticipated
level of net new orders was achieved in the last half of the fiscal
quarter. Net new orders decreased for the nine months ended March 31,
1996 compared to the same period a year earlier and net new orders for
the fiscal year ending June 30, 1996 are now anticipated to be lower
than in prior fiscal years. Additionally, a national home builder is
developing an active adult community near Sun City Palm Desert which
will cause additional competitive pressures at that community. Based
on these and other factors, the Company reduced its estimate with
respect to net new orders and closings in the fiscal years ending June
30, 1997 and beyond to below the levels achieved in the three fiscal
years ended June 30, 1995. This resulted in expected future net cash
flows (undiscounted and without interest charges) at Sun City Palm
Desert being less than the current book value of the asset. As
required by SFAS No. 121, the Company therefore recorded as of March
31, 1996 a non-cash loss from impairment of southern California real
estate inventories in the amount of $65.0 million ($42.3 million or
$2.35 per share after tax) to reflect Sun City Palm Desert at its
estimated fair value. Fair value was estimated based upon an
evaluation of comparable market prices and discounted expected future
cash flows.
10
<PAGE> 13
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 consolidated financial
statements and notes thereto and the Company's Annual Report on Form 10-K for
the year ended June 30, 1995, filed with the Securities and Exchange Commission.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, CHANGE MARCH 31, CHANGE
- ---------------------------------------------------------------------------------------------------------
1996 1995 AMOUNT PERCENT 1996 1995 AMOUNT PERCENT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA :
Number of net new orders:1
Sun City West 290 283 7 2.5% 694 707 (13) (1.8%)
Sun City Tucson 56 81 (25) (30.9%) 127 248 (121) (48.8%)
Sun Cities Las Vegas 2 345 187 158 84.5% 855 571 284 49.7%
Sun City Palm Desert 3 75 63 12 19.0% 142 184 (42) (22.8%)
Sun City Roseville 121 17 104 611.8% 373 297 76 25.6%
Sun City Hilton Head 4 124 26 98 376.9% 273 85 188 221.2%
Sun City Georgetown 4 151 N/A 151 N/A 326 N/A 326 N/A
Terravita 162 125 37 29.6% 309 342 (33) (9.6%)
Coventry Homes 464 349 115 33.0% 1,091 719 372 51.7%
- -------------------------------------------------------------------------------------------------------
Total 1,788 1,131 657 58.1% 4,190 3,153 1,037 32.9%
=======================================================================================================
Number of home closings:
Sun City West 207 235 (28) (11.9%) 611 874 (263) (30.1%)
Sun City Tucson 71 89 (18) (20.2%) 206 297 (91) (30.6%)
Sun Cities Las Vegas 2 265 193 72 37.3% 634 618 16 2.6%
Sun City Palm Desert 3 65 70 (5) (7.1%) 158 202 (44) (21.8%)
Sun City Roseville 4 206 82 124 151.2% 517 82 435 530.5%
Sun City Hilton Head 4 78 N/A 78 N/A 187 N/A 187 N/A
Sun City Georgetown 4 70 N/A 70 N/A 70 N/A 70 N/A
Terravita 90 108 (18) (16.7%) 321 264 57 21.6%
Coventry Homes 336 229 107 46.7% 974 629 345 54.8%
- -------------------------------------------------------------------------------------------------------
Total 1,388 1,006 382 38.0% 3,678 2,966 712 24.0%
=======================================================================================================
BACKLOG DATA :
Homes under contract at
March 31:
Sun City West 585 49 92 18.7%
Sun City Tucson 70 23 (164) (70.1%
Sun Cities Las Vegas 2 623 43 191 44.2%
Sun City Palm Desert 3 131 14 (13) (9.0%
Sun City Roseville 427 56 (137) (24.3%
Sun City Hilton Head 4 235 8 150 176.5%
Sun City Georgetown 4 378 N/ 378 N/A
Terravita 286 40 (123) (30.1%
Coventry Homes 657 48 169 34.6%
- -------------------------------------------------------------------
Total 5 3,392 2,84 543 19.1%
===================================================================
Aggregate contract sales amount
(dollars in millions) $ 647 $ 56 $ 87 15.5%
===================================================================
Average contract sales amount per
home (dollars in thousands) $ 191 $ 19 $ (6) (3.0%
===================================================================
</TABLE>
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, CHANGE MARCH 31, CHANGE
- --------------------------------------------------------------------------------------------------------------
1996 1995 AMOUNT PERCENT 1996 1995 AMOUNT PERCENT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE REVENUE PER HOME
CLOSING :
Sun City West $164,000 $154,900 $ 9,100 5.9% $160,500 $150,600 $ 9,900 6.6%
Sun City Tucson 172,400 164,700 7,700 4.7% 173,000 164,300 8,700 5.3%
Sun Cities Las Vegas 2 164,000 181,300 (17,300) (9.5%) 172,100 178,700 (6,600) (3.7%)
Sun City Palm Desert 3 212,000 225,100 (13,100) (5.8%) 226,200 211,900 14,300 6.7%
Sun City Roseville 4 209,500 219,500 (10,000) (4.6%) 212,900 219,500 (6,600) (3.0%)
Sun City Hilton Head 4 165,500 N/A N/A N/A 159,300 N/A N/A N/A
Sun City Georgetown 4 184,000 N/A N/A N/A 184,000 N/A N/A N/A
Terravita 300,100 264,700 35,400 13.4% 292,200 234,100 58,100 24.8%
Coventry Homes 150,200 158,400 (8,200) (5.2%) 149,400 153,000 (3,600) (2.4%)
Weighted average 180,000 183,600 (3,600) (2.0%) 182,300 171,800 10,500 6.1%
==============================================================================================================
OPERATING STATISTICS:
Cost and expenses as a percentage
of revenues:
Home construction, land and other 76.6% 76.0% 0.6% 0.8% 76.7% 76.2% 0.5% 0.7%
Interest 4.1% 4.0% 0.1% 2.5% 4.0% 3.8% 0.2% 5.3%
Selling, general and administrative 15.2% 14.5% 0.7% 4.8% 14.3% 14.5% (0.2%) (1.4%)
Ratio of home closings to homes
under contract in backlog at
beginning of period 46.4% 36.9% 9.5% 25.7% 127.7% 111.4% 16.3% 14.6%
==========================================================================================================
</TABLE>
1 Net of cancellations. The Company recognizes revenue at close of
escrow.
2 Includes Sun City Summerlin (the Company changed the name of its Sun
City Las Vegas community to Sun City Summerlin during the first quarter
of fiscal 1996) and Sun City MacDonald Ranch. The Company began taking
new home sales orders at Sun City MacDonald Ranch in September 1995.
Home closings began at Sun City MacDonald Ranch in January 1996.
3 During the first quarter of fiscal 1996 the Company changed the name of
its Sun City Palm Springs community to Sun City Palm Desert.
4 The Company began taking new home sales orders at Sun City Hilton Head
in November 1994 and at Sun City Georgetown in June 1995. Home closings
began at Sun City Roseville in February 1995, at Sun City Hilton Head
in August 1995 and at Sun City Georgetown in February 1996.
5 A majority of this backlog is currently anticipated to result in
revenues in the next 12 months. However, a majority of the backlog at
March 31, 1996 is 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, 1996 and 1995, cancellations of home sales orders as a
percentage of new home sales orders written during the period were 17.7
percent and 18.8 percent, respectively.
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
REVENUES. Home closings at Sun City Hilton Head and Sun City Georgetown
accounted for $12.9 million and $12.9 million, respectively, of the increase in
revenues to $256.0 million for the three months ended March 31,1996 from $195.4
million for the three months ended March 31, 1995. The Company had not yet begun
delivering homes at these communities in the 1995 quarter. Increased home
closings at the Sun Cities Las Vegas (where home closings began at Sun City
MacDonald Ranch in January 1996) and Sun City Roseville (where the Company had
home closings for only part of the 1995 quarter) accounted for $13.1 million and
$27.2 million, respectively, of the increase in revenues.
Decreased home closings, resulting from lower backlog at the beginning of the
period, at the Company's more mature communities of Sun City West, Sun City
Tucson, Sun City Palm Desert and Terravita resulted in a $13.2 million decrease
in revenues. Increased home closings for Coventry Homes (the Company's
conventional homebuilding operation), which benefitted from increases in
Phoenix, Tucson, Las Vegas and southern California operations, resulted in
increased revenues of $16.9 million.
A decrease in the average revenue per home closing (excluding the new
communities of Sun City Hilton Head and Sun City Georgetown) resulted in a $4.6
million decrease in revenues. This decrease in average revenue per home closing
was primarily due to market-driven changes in product and subdivision mix and
decreases in lot premiums at certain communities.
Land sales revenues and other revenues were $5.4 million lower and $0.8 million
higher, respectively, in the 1996 quarter than in the 1995 quarter. Sales of
commercial land are a normal part of the Company's master-planned community
developments, and revenues and pre-tax earnings from such sales normally
fluctuate from period to period.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $196.0 million for the 1996 quarter compared to the $148.5
million for the 1995 quarter was primarily due to the increase in home closings.
As a percentage of revenues, these costs were 76.6 percent for the 1996 quarter
compared to 76.0 percent for the 1995 quarter, with the increase primarily
attributable to changes in mix of product, subdivisions and home closings among
the Company's communities and conventional homebuilding operations.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
4.1 percent for the 1996 quarter compared to 4.0 percent for the 1995 quarter.
This increase was primarily due to higher levels of indebtedness and increases
in land held for longer-term development, with respect to which land the Company
does not allocate capitalized interest. As a result of the non-cash loss from
impairment of southern California real estate inventories recognized by the
Company as of March 31, 1996 (see "Impairment of Southern California Real Estate
Inventories"), management currently anticipates that in the future greater
capitalized interest will be allocated to communities with more home closings
than Sun City Palm Desert. This would result in an increase in amortization of
capitalized interest as a percentage of revenues in future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling,
general and administrative expenses to $38.8 million for the 1996 quarter from
$28.3 million for the 1995 quarter, $4.0 million was attributable to higher
sales and marketing expenses, $2.1 million was due to increased commissions on
the increased revenues and $2.2 million resulted from the recognition of general
and administrative expenses at Sun City Roseville, Sun City Hilton Head, Sun
City MacDonald Ranch and Sun City Georgetown in the 1996 quarter (for which
pre-operating costs were capitalized prior to the commencement of home closings,
which for each of these communities included part or all of the 1995 quarter).
The balance of the increase was due to a variety of general and administrative
expenses.
INCOME TAXES. The change in income taxes to a $19.1 million benefit for the 1996
quarter as compared to a $3.8 million expense for the 1995 quarter was due to
the change in earnings (loss) before income taxes. The effective tax rate in
both quarters was 35 percent.
13
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES. In the third
quarter of fiscal 1996 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. (For a brief description of SFAS
No. 121, see Note 8 to the Consolidated Financial Statements.) In connection
with its adoption of SFAS No. 121, the Company incurred a special, non-cash
charge related to the valuation of its Sun City Palm Desert active adult
community in southern California.
In the first six months of fiscal 1996, net new orders at Sun City Palm Desert
were substantially below both the comparable period of the prior fiscal year
and the Company's expectations. Although the Company was encouraged by net
new orders significantly greater in the first 45 days of the third quarter of
fiscal 1996 than in the comparable period in the prior fiscal year, a lower
than anticipated level of net new orders was achieved in the last half of the
fiscal quarter. Net new orders decreased for the nine months ended March 31,
1996 compared to the same period a year earlier and net new orders for the
fiscal year ending June 30, 1996 are now anticipated to be lower than in prior
fiscal years. Additionally, a national home builder is developing an active
adult community near Sun City Palm Desert which will cause additional
competitive pressures at that community. Based on these and other factors, the
Company reduced its estimate with respect to net new orders and closings in the
fiscal years ending June 30, 1997 and beyond to below the levels achieved in
the three fiscal years ended June 30, 1995. This resulted in expected future
net cash flows (undiscounted and without interest charges) at Sun City Palm
Desert being less than the current book value of the asset. As required by
SFAS No. 121, the Company therefore recorded as of March 31, 1996 a non-cash
loss from impairment of southern California real estate inventories in the
amount of $65.0 million ($42.3 million or $2.35 per share after tax) to reflect
Sun City Palm Desert at its estimated fair value. Fair value was estimated
based upon an evaluation of comparable market prices and discounted expected
future cash flows.
The Company owns additional land for a second phase of development at Sun City
Palm Desert. Development of subsequent phases of large-scale real estate
projects is always assessed in light of conditions existing when construction
of the phase is to begin, and any decision on the development of the second
phase at this community will depend on the state of the economy and prospects
for the community at the time the current phase is nearing completion.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 58.1 percent in the
1996 quarter as compared to the 1995 quarter. This increase was largely
attributable to new sales orders at Sun City Georgetown (at which the Company
began taking new sales orders in June 1995) and substantial increases at Sun
City Roseville and Sun City Hilton Head (at which net new orders were negatively
impacted in the 1995 quarter by a depleted inventory of available home sites and
adverse weather conditions, respectively).
Net new orders at Sun City Tucson decreased 30.9 percent in the 1996 quarter
compared to the 1995 quarter, reflecting the approaching completion of that
community. Net new orders at the Sun Cities Las Vegas increased 84.5 percent,
primarily as a result of the commencement of new order activity at Sun City
MacDonald Ranch in September 1995.
At Sun City Palm Desert, net new orders increased 19.0 percent in the 1996
quarter compared to the 1995 quarter; however, all of this increase was
attributable to net new orders received in the first half of the 1996 quarter.
Management continues to be concerned by adverse conditions in the southern
California economy and real estate market. Future net new order activity at Sun
City Palm Desert will be affected by various factors, including the condition of
the southern California economy and real estate market and competition. See
"Impairment of Southern California Real Estate Inventories."
Net new orders at Terravita increased 29.6 percent in the 1996 quarter compared
to the 1995 quarter, when they were negatively impacted by restricted lot
availability. Net new orders for Coventry Homes were 33.0 percent higher in the
1996 quarter than in the 1995 quarter, due to increases in Phoenix, Tucson, Las
Vegas and southern California operations.
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
The number of homes under contract at March 31, 1996 was 19.1 percent higher
than at March 31, 1995. This increase was primarily attributable to new sales
orders at Sun City Hilton Head, Sun City Georgetown and Sun City MacDonald Ranch
and to the growth of Coventry Homes operations, partially offset by the
decreased net new order activity at Sun City Tucson, reductions in the number of
homes under contract at Sun City Roseville and Terravita as a result of home
closings at those communities and the reduction at Sun City Palm Desert.
NINE MONTHS ENDED MARCH 31, 1996 AND 1995
REVENUES. Home closings at Sun City Hilton Head and Sun City Georgetown
accounted for $29.8 million and $12.9 million, respectively, of the increase in
revenues to $701.8 million for the nine months ended March 31, 1996 from $534.3
million for the nine months ended March 31, 1995. The Company had not yet begun
delivering homes at these communities in the 1995 period. Increased home
closings at Sun City Roseville, where the Company had home closings for only a
small part of the 1995 period, accounted for $95.5 million of the increase in
revenues.
Decreased home closings, resulting from lower backlog at the beginning of the
period, at the Company's more mature active adult communities of Sun City West,
Sun City Tucson and Sun City Palm Desert resulted in a $63.9 million decrease in
revenues. Increased home closings at Coventry Homes (which benefitted from
increases in Phoenix, Tucson, Las Vegas and southern California operations) and
Terravita (at which the 1995 period was the initial period of home closings)
resulted in increased revenues of $52.8 million and $13.3 million, respectively.
An increase in the average revenue per home closing (excluding the new
communities of Sun City Hilton Head and Sun City Georgetown) resulted in a $17.6
million increase in revenues. This increase was primarily due to sales price
increases previously implemented by the Company, increases in lot premiums at
certain communities and market-driven changes in product mix.
Land sales revenues and other revenues were $4.9 million higher and $1.7 million
higher, respectively, in the 1996 period than in the 1995 period. Sales of
commercial land are a normal part of the Company's master-planned community
developments, and revenues and pre-tax earnings from such sales normally
fluctuate from period to period.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $538.2 million for the 1996 period compared to $407.2 million
for the 1995 period was primarily due to the increase in home closings. As a
percentage of revenues, these costs were 76.7 percent for the 1996 period
compared to 76.2 percent for the 1995 period, with the increase primarily
attributable to changes in mix of product, subdivisions and home closings among
the Company's communities and conventional homebuilding operations.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
4.0 percent for the 1996 period compared to 3.8 percent for the 1995 period.
This increase was primarily due to higher levels of indebtedness and increases
in land held for longer-term development, with respect to which land the Company
does not allocate capitalized interest. See "Three Months Ended March 31, 1996
and 1995 -- Interest."
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Since a significant portion of
selling, general and administrative expenses is fixed, the increase in revenues
for the 1996 period resulted in a decrease in these expenses as a percentage of
revenues as compared to the 1995 period. Of the increase in total selling,
general and administrative expenses to $100.7 million for the 1996 period from
$77.7 million for the 1995 period, $7.8 million was attributable to higher sales
and marketing expenses, $5.1 million was due to increased commissions on the
increased revenues and $4.8 million resulted from the recognition of general and
administrative expenses at Sun City Roseville, Sun City Hilton Head, Sun City
MacDonald Ranch and Sun City Georgetown in the 1996 period (for which
pre-operating costs were capitalized prior to the commencement of home closings,
which for each of these communities included part or all of the 1995 period).
The balance of the increase was due to a variety of general and administrative
expenses.
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
INCOME TAXES. The change in income taxes to a $10.6 million benefit for the 1996
period as compared to a $10.2 million expense for the 1995 period was due to the
change in earnings (loss) before income taxes. The effective tax rate in both
periods was 35 percent.
IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES. See "Three Months
Ended March 31, 1996 and 1995 -- Impairment of Southern California Real Estate
Inventories" and Note 8 to the Consolidated Financial Statements.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 32.9 percent in the
1996 period as compared to the 1995 period. The number of homes under contract
at March 31, 1996 was 19.1 percent higher than at March 31, 1995. These
increases were primarily attributable to new sales orders at Sun City Georgetown
and Sun City MacDonald Ranch, increased new orders at Sun City Roseville and Sun
City Hilton Head and the growth of Coventry Homes operations, partially offset
by the decreased net new order activity at Sun City Tucson and Sun City Palm
Desert (see "Three Months Ended March 31, 1996 and 1995 -- Net New Order
Activity and Backlog") and Terravita.
Net new orders at Terravita were 9.6 percent lower in the 1996 period than in
the 1995 period, when they were high due to pent-up demand in the local market.
Company information indicates that the majority of home buyers at Terravita are
now coming from states other than Arizona. As a result, the Company believes
that net new orders at Terravita are likely to be more seasonal than they have
been in prior periods.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
At March 31, 1996 the Company had $14.6 million of cash and short-term
investments, $233.0 million outstanding under its $300 million unsecured
revolving credit facility and no amount outstanding under its $5 million
short-term line of credit.
In August 1995 the Company publicly sold 2,474,900 shares of its common stock.
The net proceeds of $45.3 million were used to repay a portion of the
indebtedness then outstanding under the Company's $300 million senior unsecured
revolving credit facility. The Company has reborrowed and will continue to
reborrow under the senior unsecured revolving credit agreement from time to time
as necessary to fund development of existing and new projects and for other
general corporate purposes.
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. Given the Company's current
capital resources, operating requirements reflect limitations on some of the
projects and activities that the Company might otherwise desire to undertake.
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. As of
March 31, 1996, after the effect of the non-cash loss from impairment of
southern California real estate inventories, the Company was in compliance with,
and had no restriction on the available borrowings under, its senior unsecured
revolving credit facility and short-term line of credit.
16
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
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 initial costs are generally capitalized,
this can result in income reported for financial statement purposes during the
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 earnings reported for financial statement purposes, as
costs and expenses include amortization charges for substantial amounts of
previously expended costs.
During the nine months ended March 31, 1996 the Company generated $180.6 million
of net cash from community sales activities, used $120.3 million of cash for
land and lot and amenity development at operating communities, paid $77.8
million for costs related to communities in the pre-operating stage, used $9.1
million of net cash for conventional homebuilding operations and used $66.6
million of cash for other operating activities.
At March 31, 1996, under the most restrictive of the covenants in the Company's
debt agreements, $6.4 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.
FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS
Certain statements contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section that are not related to
historical results are forward looking statements. Actual results may differ
materially from those projected or implied in the forward looking statements.
Further, certain forward looking statements are based upon assumptions of future
events which may not prove to be accurate. These forward looking statements
involve risks and uncertainties including but not limited to those referred to
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Forward Looking Information; Certain Cautionary
Statements" in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995, filed with the Securities and Exchange Commission.
For additional information on factors which could affect the Company's
financial results, see the Company's most recently filed Annual Report on Form
10-K, and subsequent periodic reports, filed with the Securities and Exchange
Commission.
17
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the period
covered by this report.
18
<PAGE> 21
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, who are duly authorized to do so.
DEL WEBB CORPORATION
(REGISTRANT)
Date: May 13, 1996 /s/ Philip J. Dion
------------------- --------------------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Date: May 13, 1996 /s/ John A. Spencer
------------------- --------------------------------------------------
John A. Spencer
Senior Vice President and Chief Financial Officer
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
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<CASH> 14,573
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