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 December 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 January 31, 1996 Registrant had outstanding 17,534,782 shares of common
stock.
<PAGE>
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
DECEMBER 31, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of December 31, 1995,
June 30, 1995 and December 31, 1994............................. 1
Consolidated Statements of Earnings for the three and six
months ended December 31, 1995 and 1994......................... 2
Consolidated Statements of Cash Flows for the six
months ended December 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............................ 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............ 16
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>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
<CAPTION>
December 31, June 30, December 31,
1995 1995 1994
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate inventories (Notes 2, 3 and 6) $ 927,938 $ 828,752 $ 763,293
Cash and short-term investments 7,116 18,900 5,053
Receivables 19,488 21,995 8,688
Property and equipment, net 29,574 29,326 23,202
Deferred income taxes (Note 4) - - 6,231
Other assets 36,532 26,077 33,909
- -------------------------------------------------------------------------------------------------------------------
$ 1,020,648 $ 925,050 $ 840,376
===================================================================================================================
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 509,407 $ 491,258 $ 445,672
Contractor and trade accounts payable 68,264 76,421 44,913
Accrued liabilities and other payables 54,603 52,046 47,564
Home sale deposits 88,399 66,887 82,198
Income taxes payable (Note 4) 1,580 3,899 7,228
Deferred income taxes (Note 4) 9,382 5,197 -
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 731,635 695,708 627,575
- -------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized 30,000,000 shares; issued 17,537,901
shares at December 31, 1995, 15,798,649 shares at June 30, 1995 and
15,805,004 shares at December 31, 1994 (Note 7) 17 16 16
Additional paid-in capital (Note 7) 158,243 121,059 121,218
Retained earnings 136,227 122,153 107,065
- -------------------------------------------------------------------------------------------------------------------
294,487 243,228 228,299
Less cost of common stock in treasury, 1,494 shares at December 31, 1995,
877,728 shares at June 30, 1995 and 929,759 shares at
December 31, 1994 (Note 7) (29) (11,058) (11,715)
Less deferred compensation (5,445) (2,828) (3,783)
- -------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 289,013 229,342 212,801
- -------------------------------------------------------------------------------------------------------------------
$ 1,020,648 $ 925,050 $ 840,376
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
- -------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (Note 5) $ 239,459 $ 176,058 $ 445,777 $ 338,940
- -------------------------------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 182,828 132,698 342,120 258,733
Interest 9,999 6,697 17,699 12,567
Selling, general and administrative 32,547 26,495 61,821 49,307
- -------------------------------------------------------------------------------------------------------------------
225,374 165,890 421,640 320,607
- -------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 14,085 10,168 24,137 18,333
Income taxes (Note 4) 4,930 3,559 8,448 6,417
- -------------------------------------------------------------------------------------------------------------------
Net earnings $ 9,155 $ 6,609 $ 15,689 $ 11,916
===================================================================================================================
Weighted average shares outstanding 17,950 15,117 17,310 15,044
===================================================================================================================
Net earnings per share $ .51 $ .44 $ .91 $ .79
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
December 31,
- -------------------------------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to community home sales $ 329,422 $ 260,980
Cash received from commercial land sales 6,604 19
Cash paid for costs related to community home construction (217,729) (177,363)
- -------------------------------------------------------------------------------------------------------------------
Cash provided by community sales activities 118,297 83,636
Cash paid for land acquisitions at operating communities (1,275) (1,524)
Cash paid for lot development at operating communities (44,853) (22,409)
Cash paid for amenity development at operating communities (24,229) (14,925)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating communities 47,940 44,778
Cash paid for costs related to communities in the pre-operating stage (59,009) (37,161)
Cash received from customers related to conventional homebuilding 102,313 64,891
Cash paid for land, development, construction and other costs related to
conventional homebuilding (102,491) (73,949)
Cash received from customers related to residential land development project 11,113 8,367
Cash paid for costs related to residential land development project (5,173) (8,621)
Cash paid for corporate activities (29,348) (18,191)
Interest paid (20,299) (17,137)
Cash paid for income taxes (5,600) (971)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (60,554) (37,994)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,893) (5,814)
Investments in life insurance policies (1,352) (398)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (5,245) (6,212)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 144,276 301,108
Repayments of debt (133,967) (256,839)
Proceeds from sale of common stock 45,271 -
Proceeds from exercise of common stock options 80 -
Purchases of treasury stock (30) (3)
Dividends paid (1,615) (1,481)
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 54,015 42,785
- -------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (11,784) (1,421)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 18,900 6,474
- -------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 7,116 $ 5,053
===================================================================================================================
See accompanying notes to consolidated financial statements.
3
</TABLE>
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
December 31,
- -------------------------------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of net earnings to net cash used for operating activities:
Net earnings $ 15,689 $ 11,916
Allocation of common costs in costs and expenses, excluding interest 107,014 74,326
Amortization of capitalized interest in costs and expenses 17,699 12,567
Deferred compensation amortization 865 816
Depreciation and other amortization 4,181 2,500
Deferred income taxes 4,184 5,373
Net increase in home construction costs (21,867) (24,230)
Land acquisitions (13,925) (16,597)
Lot development (109,023) (71,132)
Amenity development (49,942) (33,843)
Pre-acquisition costs - (1,548)
Net change in other assets and liabilities (15,429) 1,858
- -------------------------------------------------------------------------------------------------------------------
Net cash used for operating activities $ (60,554) $ (37,994)
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
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 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 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 six months ended December 31, 1995 are not
necessarily indicative of the results to be expected for the full fiscal year.
5
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(2) Real Estate Inventories
The components of real estate inventories are as follows:
<CAPTION>
In Thousands
- ----------------------------------------------------------------------------------------------------------
December 31, June 30, December 31,
1995 1995 1994
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home construction costs $ 164,222 $ 142,355 $ 124,019
Unamortized improvement and amenity costs 435,781 356,457 306,680
Unamortized capitalized interest 64,336 55,793 49,769
Land held for housing 212,411 220,297 219,843
Land held for future development or sale 51,188 53,850 62,982
- ----------------------------------------------------------------------------------------------------------
$ 927,938 $ 828,752 $ 763,293
==========================================================================================================
</TABLE>
At December 31, 1995 the Company had 339 completed homes and 587 homes under
construction that were not subject to a sales contract. These homes represented
$25.3 million and $14.4 million, respectively, of home construction costs at
December 31, 1995. At December 31, 1994 the Company had 204 completed homes and
474 homes under construction (representing $14.1 million and $15.3 million,
respectively, of home construction costs) that were not subject to a sales
contract. Included in land held for future development or sale at December 31,
1995 were 414 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 December 31, 1995 were 347 acres of residential land and
commercial land at the Company's residential land development project.
(3) Notes Payable, Senior and Subordinated Debt
<TABLE>
<CAPTION>
Notes payable, senior and subordinated debt consists of the following:
In Thousands
- ----------------------------------------------------------------------------------------------------------
December 31, June 30, December 31,
1995 1995 1994
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 7/8% Senior Notes, net $ 97,131 $ 96,787 $ 96,442
9 3/4% Senior Subordinated Debentures, net 97,053 96,847 96,642
9% Senior Subordinated Debentures, net 97,218 97,081 96,944
Subordinated Swiss Franc Bonds, net 12,765 12,745 12,724
Notes payable to banks under a revolving credit
facility and short-term lines of credit 180,000 160,200 63,850
Real estate and other notes 25,240 27,598 79,070
- ----------------------------------------------------------------------------------------------------------
$ 509,407 $ 491,258 $ 445,672
==========================================================================================================
</TABLE>
At December 31, 1995 the Company had $180 million outstanding under its $300
million unsecured revolving credit facility and no amount outstanding under its
$5 million short-term line of credit.
At December 31, 1995, under the most restrictive of the covenants in the
Company's debt agreements, $42.2 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.
6
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(4) Income Taxes
The components of income taxes are:
<CAPTION>
In Thousands
(Unaudited)
- ---------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
Federal $ 2,234 $ (547) $ 3,326 $ (92)
State 861 756 938 1,136
- ---------------------------------------------------------------------------------------------------------
3,095 209 4,264 1,044
- ---------------------------------------------------------------------------------------------------------
Deferred:
Federal 1,900 3,447 3,691 5,319
State (65) (97) 493 54
- ---------------------------------------------------------------------------------------------------------
1,835 3,350 4,184 5,373
- ---------------------------------------------------------------------------------------------------------
$ 4,930 $ 3,559 $ 8,448 $ 6,417
=========================================================================================================
</TABLE>
7
<PAGE>
<TABLE>
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:
<CAPTION>
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding:
Communities $ 176,501 $ 142,777 $ 325,700 $ 265,058
Conventional 49,736 27,967 95,007 59,959
- ----------------------------------------------------------------------------------------------------------
Total homebuilding 226,237 170,744 420,707 325,017
Land sales 11,152 3,616 21,349 11,081
Other 2,070 1,698 3,721 2,842
- ----------------------------------------------------------------------------------------------------------
$ 239,459 $ 176,058 $ 445,777 $ 338,940
==========================================================================================================
Costs and expenses:
Home construction and land:
Communities $ 131,004 $ 105,140 $ 242,867 $ 196,615
Conventional 42,472 23,316 81,181 50,177
- ----------------------------------------------------------------------------------------------------------
Total homebuilding 173,476 128,456 324,048 246,792
Interest 9,999 6,697 17,699 12,567
Cost of land sales 8,520 3,194 16,509 9,680
Other cost of sales 832 1,048 1,563 2,261
Selling, general and administrative 32,547 26,495 61,821 49,307
- ----------------------------------------------------------------------------------------------------------
$ 225,374 $ 165,890 $ 421,640 $ 320,607
==========================================================================================================
</TABLE>
8
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(6) Interest
The following table shows the components of interest:
<CAPTION>
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest incurred $ 12,045 $ 11,424 $ 26,242 $ 21,979
Less capitalized interest 12,045 11,424 26,242 21,979
- ----------------------------------------------------------------------------------------------------------
Interest expense $ - $ - $ - $ -
==========================================================================================================
Amortization of capitalized interest
in costs and expenses $ 9,999 $ 6,697 $ 17,699 $ 12,567
==========================================================================================================
Unamortized capitalized interest in real
estate inventories at period end $ 64,336 $ 49,769
==========================================================================================================
Interest income $ 223 $ 107 $ 550 $ 230
==========================================================================================================
</TABLE>
(7) Equity Transaction
In August 1995 the Company publicly sold 2,474,900 shares of its treasury and
authorized but unissued common stock. The net proceeds of $45.3 million were
used to repay a portion of the indebtedness outstanding under the Company's $300
million senior unsecured revolving credit facility.
9
<PAGE>
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.
<TABLE>
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
<CAPTION>
Three Months Ended Six Months Ended
December 31, Change December 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 247 194 53 27.3% 404 424 (20) (4.7%)
Sun City Tucson 30 99 (69) (69.7%) 71 167 (96) (57.5%)
Sun Cities Las Vegas (2) 283 192 91 47.4% 510 384 126 32.8%
Sun City Palm Desert (3) 37 85 (48) (56.5%) 67 121 (54) (44.6%)
Sun City Roseville 102 116 (14) (12.1%) 252 280 (28) (10.0%)
Sun City Hilton Head (4) 89 59 30 50.8% 149 59 90 152.5%
Sun City Georgetown (4) 44 N/A 44 N/A 175 N/A 175 N/A
Terravita 91 89 2 2.2% 147 217 (70) (32.3%)
Coventry Homes 315 188 127 67.6% 627 370 257 69.5%
- -------------------------------------------------------------------------------------------------------------------
Total 1,238 1,022 216 21.1% 2,402 2,022 380 18.8%
===================================================================================================================
Number of home closings:
Sun City West 208 346 (138) (39.9%) 404 639 (235) (36.8%)
Sun City Tucson 69 112 (43) (38.4%) 135 208 (73) (35.1%)
Sun Cities Las Vegas (2) 172 200 (28) (14.0%) 369 425 (56) (13.2%)
Sun City Palm Desert (3) 50 81 (31) (38.3%) 93 132 (39) (29.5%)
Sun City Roseville (4) 167 N/A 167 N/A 311 N/A 311 N/A
Sun City Hilton Head (4) 87 N/A 87 N/A 109 N/A 109 N/A
Terravita 122 89 33 37.1% 231 156 75 48.1%
Coventry Homes 332 188 144 76.6% 638 400 238 59.5%
- -------------------------------------------------------------------------------------------------------------------
Total 1,207 1,016 191 18.8% 2,290 1,960 330 16.8%
===================================================================================================================
BACKLOG DATA :
Homes under contract at
December 31:
Sun City West 502 445 57 12.8%
Sun City Tucson 85 242 (157) (64.9%)
Sun Cities Las Vegas (2) 543 438 105 24.0%
Sun City Palm Desert (3) 121 151 (30) (19.9%)
Sun City Roseville 512 629 (117) (18.6%)
Sun City Hilton Head (4 189 59 130 220.3%
Sun City Georgetown (4) 297 N/A 297 N/A
Terravita 214 392 (178) (45.4%)
Coventry Homes 529 368 161 43.8%
- --------------------------------------------------------------------------
Total (5) 2,992 2,724 268 9.8%
==========================================================================
Aggregate contract sales amount
(dollars in millions) $ 569 $ 531 $ 38 7.2%
==========================================================================
Average contract sales amount per
home (dollars in thousands) $ 190 $ 195 $ (5) (2.6%)
==========================================================================
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
<TABLE>
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (Continued)
<CAPTION>
Three Months Ended Six Months Ended
December 31, Change December 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 $ 160,100 $ 151,700 $ 8,400 5.5% $158,700 $149,100 $ 9,600 6.4%
Sun City Tucson 178,800 163,900 14,900 9.1% 173,400 164,100 9,300 5.7%
Sun Cities Las Vegas (2) 177,400 182,300 (4,900) (2.7%) 177,900 177,400 500 0.3%
Sun City Palm Desert (3) 239,600 209,900 29,700 14.1% 236,100 204,900 31,200 15.2%
Sun City Roseville (4) 226,200 N/A N/A N/A 215,100 N/A N/A N/A
Sun City Hilton Head (4) 161,600 N/A N/A N/A 154,800 N/A N/A N/A
Terravita 299,600 207,300 92,300 44.5% 289,200 212,800 76,400 35.9%
Coventry Homes 149,800 148,800 1,000 0.7% 148,900 149,900 (1,000) (0.7%)
Weighted average 187,400 168,100 19,300 11.5% 183,700 165,800 17,900 10.8%
===================================================================================================================
OPERATING STATISTICS:
Cost and expenses as a percentage of revenues:
Home construction, land and other 76.4% 75.4% 1.0% 1.3% 76.7% 76.3% 0.4% 0.5%
Interest 4.2% 3.8% 0.4% 10.5% 4.0% 3.7% 0.3% 8.1%
Selling, general and 13.6% 15.0% (1.4%) (9.3%) 13.9% 14.5% (0.6%) (4.1%)
administrative
Earnings before income taxes as a
percentage of revenues 5.9% 5.8% 0.1% 1.7% 5.4% 5.4% - -
Ratio of home closings to homes
under contract in backlog at
beginning of period 40.8% 37.4% 3.4% 9.1% 79.5% 73.6% 5.9% 8.0%
===================================================================================================================
</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.
(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 and at Sun City Hilton Head in
August 1995.
(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 December 31,
1995 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 six months ended December 31, 1995 and
1994, cancellations of home sales orders as a percentage of new home sales
orders written during the period were 19.1 percent and 19.4 percent,
respectively.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994
REVENUES. Home closings at Sun City Roseville and Sun City Hilton Head accounted
for $37.8 million and $14.1 million, respectively, of the increase in revenues
to $239.5 million for the three months ended December 31, 1995 from $176.1
million for the three months ended December 31, 1994. The Company had not yet
begun delivering homes at these communities in the 1994 quarter.
Decreased home closings (resulting from lower backlogs at the beginning of the
periods) at the Company's more mature active adult communities (Sun City West,
Sun City Tucson, Sun City Summerlin and Sun City Palm Desert) resulted in a
$39.6 million decrease in revenues. Increased home closings at Terravita (for
which the 1994 quarter was only the second quarter of home closings) and
Coventry Homes (the Company's conventional homebuilding operation, which
benefitted from increases in Phoenix and Tucson operations and the expansion of
operations to Las Vegas and Southern California) resulted in increased revenues
of $6.8 million and $21.4 million, respectively.
Increases in the average revenue per home closing at the Company's more mature
active adult communities (other than Sun City Summerlin), Terravita and Coventry
Homes accounted for $4.3 million, $11.3 million and $0.3 million, respectively,
of the increase in revenues. These increases in average revenues per home
closing were 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. Changes in product mix at Sun City Summerlin caused a
decrease in the average revenue per home closing, resulting in decreased
revenues of $0.9 million.
Land sales revenues and other revenues were $7.5 million higher and $0.4 million
higher, respectively, in the 1995 quarter than in the 1994 quarter. Revenues and
pre-tax earnings from sales of commercial land at the Company's communities,
which fluctuate from period to period, were significantly higher in the 1995
quarter than in the 1994 quarter. These sales are a part of the Company's
master-planned community developments and in good business cycles are generally
higher.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $182.8 million for the 1995 quarter compared to the $132.7
million for the 1994 quarter was primarily due to the increase in home closings.
As a percentage of revenues, these costs were 76.4 percent for the 1995 quarter
compared to 75.4 percent for the 1994 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
4.2 percent for the 1995 quarter compared to 3.8 percent for the 1994 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.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Since a significant portion of
selling, general and administrative expenses is 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. Of the increase in total selling,
general and administrative expenses to $32.5 million for the 1995 quarter from
$26.5 million for the 1994 quarter, $1.8 million was attributable to higher
sales and marketing expenses, $1.4 million was due to increased commissions on
the increased revenues and $1.6 million resulted from the recognition of general
and administrative expenses at Sun City Roseville and Sun City Hilton Head in
the 1995 quarter (pre-operating costs were capitalized in the 1994 quarter
because home closings had not then begun at these communities). The balance of
the increase was due to a variety of general and administrative expenses.
INCOME TAXES. The increase in income taxes to $4.9 million for the 1995 quarter
as compared to $3.6 million for the 1994 quarter was due to the increase in
earnings before income taxes. The effective tax rate in both quarters was 35
percent.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 21.1 percent in the
1995 quarter as compared to the 1994 quarter. This increase was partially
attributable to new sales orders at Sun City Hilton Head and Sun City
Georgetown, at which the Company began taking new sales orders in November 1994
and June 1995, respectively.
Net new orders at Sun City West increased 27.3 percent in the 1995 quarter
compared to the 1994 quarter, when they were adversely affected by increased
interest rates and price increases implemented by the Company. Net new orders at
Sun City Tucson decreased 69.7 percent, reflecting the approaching completion of
that community. Net new orders at the Sun Cities Las Vegas increased 47.4
percent as a result of the commencement of new order activity at Sun City
MacDonald Ranch in September 1995.
Sun City Palm Desert continued to be affected by adverse conditions in the
southern California economy and real estate market. Net new orders at that
community decreased 56.5 percent in the 1995 quarter compared to the 1994
quarter. Additionally, a national home builder has begun development of an
active adult community near Sun City Palm Desert which may cause additional
competitive pressures at that community. 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.
Net new orders for Coventry Homes were 67.6 percent higher in the 1995 quarter
than in the 1994 quarter, due to increases in Phoenix and Tucson operations and
the expansion of operations to Las Vegas and Southern California.
The number of homes under contract at December 31, 1995 was 9.8 percent higher
than at December 31, 1994. 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 and expansion of Coventry Homes operations, partially offset
by the decreased new order activity at Sun City Tucson, Sun City Palm Desert and
Terravita and the fact that home closings at Sun City Roseville reduced the
number of homes under contract at that community at December 31, 1995 as
compared to December 31, 1994.
SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
REVENUES. Home closings at Sun City Roseville and Sun City Hilton Head accounted
for $66.9 million and $16.9 million, respectively, of the increase in revenues
to $445.8 million for the six months ended December 31, 1995 from $338.9 million
for the six months ended December 31, 1994. The Company had not yet begun
delivering homes at these communities in the 1994 period.
Decreased home closings, resulting from lower backlogs at the beginning of the
periods, at the Company's more mature active adult communities resulted in a
$64.9 million decrease in revenues. Increased home closings at Terravita (at
which the 1994 period was the initial period of home closings) and Coventry
Homes (which benefitted from increases in Phoenix and Tucson operations and the
expansion of operations to Las Vegas and Southern California) resulted in
increased revenues of $16.0 million and $35.7 million, respectively.
Increases in the average revenue per home closing at the Company's more mature
active adult communities and Terravita accounted for $8.2 million and $17.6
million, respectively, of the increase in revenues. These increases in average
revenues per home closing were 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. Changes in subdivision mix caused a
decrease in the average revenue per home closing for Coventry Homes, resulting
in decreased revenues of $0.7 million.
Land sales revenues and other revenues were $10.3 million higher and $0.9
million higher, respectively, in the 1995 period than in the 1994 period.
Revenues and pre-tax earnings from sales of commercial land at the Company's
communities, which fluctuate from period to period, were significantly higher in
the 1995 period than in the 1994 period. These sales are a part of the Company's
master-planned community developments and in good business cycles are generally
higher.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $342.1 million for the 1995 period compared to the $258.7
million for the 1994 period was primarily due to the increase in home closings.
As a percentage of revenues, these costs were 76.7 percent for the 1995 period
compared to 76.3 percent for the 1994 period.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
4.0 percent for the 1995 period compared to 3.7 percent for the 1994 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.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Since a significant portion of
selling, general and administrative expenses is 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. Of the increase in total selling,
general and administrative expenses to $61.8 million for the 1995 period from
$49.3 million for the 1994 period, $3.8 million was attributable to higher sales
and marketing expenses, $3.0 million was due to increased commissions on the
increased revenues and $2.5 million resulted from the recognition of general and
administrative expenses at Sun City Roseville and Sun City Hilton Head in the
1995 period (pre-operating costs were capitalized in the 1994 period since home
closings had not yet begun at these communities). The balance of the increase
was due to a variety of general and administrative expenses.
INCOME TAXES. The increase in income taxes to $8.4 million for the 1995 period
as compared to $6.4 million for the 1994 period was due to the increase in
earnings before income taxes. The effective tax rate in both periods was 35
percent.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 18.8 percent in the
1995 period as compared to the 1994 period. The number of homes under contract
at December 31, 1995 was 9.8 percent higher than at December 31, 1994. These
increases were primarily attributable to new sales orders at Sun City Hilton
Head, Sun City Georgetown and Sun City MacDonald Ranch and to the growth and
expansion of Coventry Homes operations, partially offset by the decreased new
order activity at Sun City Tucson and Sun City Palm Desert. See "Three Months
Ended December 31, 1995 and 1994 -- Net New Order Activity and Backlog."
Net new orders at Terravita were 32.3 percent lower in the 1995 period than in
the 1994 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 will be more seasonal and will be higher in the January
through May time period.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
At December 31, 1995 the Company had $7.1 million of cash and short-term
investments, $180 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 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.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
The Company's senior unsecured revolving credit facility and the indentures for
the Company's publicly-held debt contain restrictions which could, depending on
the circumstances, affect the Company's ability to borrow in the future. If the
Company at any time is not successful in obtaining sufficient capital to fund
its then planned development and expansion expenditures, some or all of its
projects may be significantly delayed. Any such delay could result in cost
increases and may adversely affect the Company's results of operations.
The cash flow for each of the Company's communities can differ substantially
from reported earnings, depending on the status of the development cycle. The
initial years of development or expansion require significant cash outlays for,
among other things, land acquisition, obtaining master plan and other approvals,
construction of amenities (including golf courses and recreation centers), model
homes, sales and administration facilities, major roads, utilities, general
landscaping and 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 earnings reported for financial statement purposes, as
costs and expenses include amortization charges for substantial amounts of
previously expended costs.
During the six months ended December 31, 1995 the Company generated $118.3
million of net cash from community sales activities, used $70.4 million of cash
for land and lot and amenity development at operating communities, paid $59.0
million for costs related to communities in the pre-operating stage, used $0.2
million of net cash for conventional homebuilding operations and used $49.3
million of cash for other operating activities.
The Company believes that, of the $510.0 million of cash spent by the Company
during the six months ended December 31, 1995 for land acquisitions, lot and
amenity development, home construction and other operating activities,
approximately $84.5 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 $84.5 million was comprised of $59.0
million related to projects in the pre-operating stage and $25.5 million for
land acquisitions and amenity development at operating communities.
At December 31, 1995, under the most restrictive of the covenants in the
Company's debt agreements, $42.2 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.
VALUATION OF REAL ESTATE ASSETS;
ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY
The Financial Accounting Standards Board has 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", which the
Company will be required to implement no later than for its fiscal year
beginning July 1, 1996. This standard 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.
The southern California economy and homebuilding industry have performed poorly
for the past several years. Other homebuilders with substantial southern
California real estate assets have, upon the early adoption of SFAS No. 121,
recently written down the book values of certain of their southern California
assets.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
At the Company's southern California community, Sun City Palm Desert, net new
orders decreased for the six months ended December 31, 1995 as compared to the
same period a year earlier, and net new orders for the fiscal year ending June
30, 1996 will be lower than in prior years. However, the Company believes that
appropriate measures are being taken to improve new orders at Sun City Palm
Desert and is encouraged by fiscal third quarter net new order activity to date.
The Company remains firmly committed to the long-term development of Sun City
Palm Desert and currently believes that there is not an impairment loss at that
community since expected future net cash flows are greater than the book value
of the asset. These expected future net cash flows are based upon various
assumptions, the most significant of which is that average annual net new orders
and home closings over a period of years beginning with fiscal 1997 will equal
or exceed net new orders and home closings achieved during the fiscal year ended
June 30, 1995. If net new orders do not improve from the expected fiscal 1996
level, it is likely that the Company will be required to record a material
non-cash loss under SFAS No. 121. The Company reviews the valuation of its real
estate inventories on a continual basis. See "Results of Operations -- Three
Months Ended December 31, 1995 and 1994 -- Net New Order Activity and Backlog"
and "Forward Looking Information; Certain Cautionary Statements."
FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS
Certain statements contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations 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 below.
FUTURE AND NEWER COMMUNITIES. The Company's communities will be built out over
time. Therefore, the medium- and long-term future of the Company will be
dependent on the Company's ability to develop and market future communities
sucessfully. Acquiring land and committing the financial and managerial
resources to develop a community on that land involve significant risks. Before
these communities generate any revenues, they require material expenditures for,
among other things, acquiring land, obtaining development approvals and
constructing project infrastructure (such as roads and utilities), recreation
centers, model homes and sales facilities. It generally takes several years for
communities to achieve cumulative positive cash flow.
The Company believes that the development of Sun City Hilton Head presents
significant new development and marketing challenges, including acquiring the
necessary construction materials and labor in sufficient amounts and on
acceptable terms, adapting the Company's construction methods to a different
geography and climate, and attracting potential customers from areas and to a
market in which the Company has not had significant experience.
The Company will incur additional risks to the extent it develops communities in
climates or other geographic areas in which it does not have experience
developing communities or develops a different size or style of community. Among
other things, the Company believes that a significant portion of the home sales
at its active adult communities is attributable to referrals from, or sales to,
residents of those communities. The extent of such referrals or sales at new
communities, including communities developed in other areas of the country, may
be less than the Company has enjoyed at the active adult communities where it
currently sells homes.
LONG-TERM NATURE OF PROJECTS; PERIOD-TO-PERIOD FLUCTUATIONS; REAL ESTATE,
ECONOMIC AND OTHER CONDITIONS; GEOGRAPHIC CONCENTRATION. The Company's
communities are long-term projects. Sales activity at the Company's communities
varies from period to period, and the ultimate success of any community cannot
necessarily be judged by results in any particular period or periods. A
community may generate significantly higher sales levels at inception (whether
because of local pent-up demand in the area or other reasons) than it does
during later periods over the life of the community. Revenues and earnings of
the Company will also be affected by period-to-period fluctuations in the mix of
product, subdivisions and home closings among the Company's communities and
conventional homebuilding operations and by sales of commercial land at the
Company's communities.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
The Company's communities and its other real estate operations are subject to
substantial existing and potential competition, real estate market conditions
(both where its communities, conventional homebuilding operations and other
projects are located and in areas where its potential customers reside), the
cyclical nature of the real estate business, general national economic
conditions and changing demographic conditions.
Company data indicate that, for the past several years, a significant number of
the home purchasers at its active adult communities in Arizona, Nevada and
southern California, particularly Sun City Palm Desert, were from southern
California. Four of the Company's conventional homebuilding subdivisions are
located in California, including two in Orange County. Any of those communities,
particularly Sun City Palm Desert, as well as the Company's southern California
conventional homebuilding subdivisions, may be affected by the continuing
adverse conditions in the southern California real estate market and the
southern California economy generally, including the financial difficulties of
certain southern California municipalities.
The Company's primary business operations are concentrated in a limited number
of communities in five states. The Company's geographic concentration and
limited number of projects may create increased vulnerability to regional
economic downturns or other adverse project-specific matters.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS. The Company's business
is subject to extensive federal, state and local regulatory requirements, the
broad discretion that governmental agencies have in administering those
requirements and "no growth" or "slow growth" political policies, all of which
can prevent, delay, make uneconomic or significantly increase the cost of its
developments. In addition, environmental concerns and related governmental
requirements have affected and will continue to affect all the Company's
community development operations.
In connection with the development of the Company's communities and other real
estate projects, particularly those located in California, numerous governmental
approvals and permits are required throughout the development process and no
assurance can be given as to the receipt (or timing of receipt) of these
approvals or permits. In addition, third parties can file lawsuits challenging
approvals or permits received, which could cause substantial uncertainties and
material delays for the project and, if successful, could result in approvals or
permits being voided.
FINANCING; LEVERAGE; INTEREST RATES. Real estate development is dependent on the
availability and cost of financing. In periods of significant growth, therefore,
the Company will require significant additional capital resources, whether from
issuances of equity or by incurring additional indebtedness. The Company's
principal credit facility and the indentures for its publicly-held debt restrict
the indebtedness the Company may incur. The availability of debt financing is
also dependent on governmental policies and other factors outside the control of
the Company. If the Company is at any time not successful in obtaining
sufficient capital to fund its development and expansion expenditures, some or
all of its projects may be significantly delayed, resulting in cost increases
and adverse effects on the Company's results of operations. No assurance can be
given as to the availability or cost of any future financing. In addition, the
Company's degree of leverage from time to time will affect its interest incurred
and may limit funds available for operations. As a result, the Company may be
more vulnerable to economic downturns, which could limit its ability to
withstand adverse changes or to capitalize on business opportunities. If the
Company is at any time unable to generate sufficient cash flow from operations
to service its debt, refinancing of all or a portion of that debt or obtaining
additional financing may be required to avoid defaults (including cross
defaults) on some or all of its indebtedness. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained, or obtained on terms that are favorable or acceptable to the Company.
The Company's real estate operations are also dependent upon the availability
and cost of mortgage financing. An increase in interest rates, which may result
from governmental policies and other factors outside the control of the Company,
may adversely affect the buying decisions of potential home buyers and their
ability to sell their existing homes.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
CONSTRUCTION. The Company has from time to time experienced shortages of
materials or qualified tradespeople or volatile increases in the cost of certain
materials (particularly increases in the price of lumber and framing, which are
significant components of home construction costs), resulting in longer than
normal construction periods and increased costs not reflected in the prices of
homes for which home sales contracts had been entered into up to one year in
advance of scheduled closing. Generally, the Company's home sale contracts do
not contain, or contain limited, provisions for price increases if the Company's
costs of construction increase.
The Company relies heavily on local contractors, who may be inadequately
capitalized or understaffed. The inability or failure of one or more local
contractors to perform may result in construction delays, increased costs and
loss of some home sale contracts.
NATURE RISKS. Sun City Roseville and Sun City Hilton Head are subject to
significant seasonal rainfall that can cause delays in construction and
development and increase costs. Both of these communities were adversely
affected by significantly higher than normal rainfall in fiscal 1995.
Earthquake faults, including the San Andreas fault, run through the Coachella
Valley, which includes Sun City Palm Desert and the communities of Palm Springs,
Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A portion of Sun
City Palm Desert is also located in a flood plain. The Coachella Valley Water
District has approved the Company's conceptual flood control plan for Sun City
Palm Desert and has approved the Company's specific flood control plan for the
first phase of this project. A major earthquake or flood could have a material
adverse impact on the development of and results of operations for Sun City Palm
Desert. Sun City Hilton Head is located in an area which may be subject to
hurricanes. A major hurricane could have a material adverse impact on the
development of and results of operations for Sun City Hilton Head.
Additional information on factors which could affect the Company's financial
results may be included in the Company's most recently filed Annual Report on
Form 10-K, and subsequent reports, filed with the Securities and Exchange
Commission.
18
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the shareholders of the Company was held on November 8,
1995. The shareholders voted on the election of four directors for three-year
terms. The shareholders voted to elect all four nominees, voting as follows:
Votes For Votes Withheld
---------- --------------
D. Kent Anderson 15,111,713 127,858
Kenny C. Guinn 15,105,924 133,647
Michael E. Rossi 15,111,201 128,370
Sam Yellen 15,102,874 136,697
Other directors whose terms of office as directors continued after the Annual
Meeting were Philip J. Dion, J. Russell Nelson, Peter A. Nelson, Robert Bennett,
Hugh F. Culverhouse, Jr. and C. Anthony Wainwright.
The shareholders also voted to approve the Del Webb Corporation 1995 Director
Stock Plan, Del Webb Corporation 1995 Executive Long-Term Incentive Plan and Del
Webb Corporation 1995 Executive Management Incentive Plan and to ratify the
appointment of KPMG Peat Marwick LLP as the principal independent public
accounting firm of the Company for the year ending June 30, 1996, voting as
follows:
<TABLE>
<CAPTION>
Votes Shares Not
Votes For Votes Against Withheld Voted
---------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Director Stock Plan 12,504,175 507,436 78,528 4,306,395
Executive Long-Term Incentive Plan 9,174,088 3,841,089 83,877 4,297,480
Executive Management Incentive Plan 13,972,390 759,655 309,337 2,355,152
KPMG Peat Marwick LLP 15,080,271 32,488 126,812 2,156,963
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) 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.
19
<PAGE>
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: February 14, 1996 /s/ Philip J. Dion
---------------------------- -------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Date: February 14, 1996 /s/ John A. Spencer
---------------------------- -------------------------------------
John A. Spencer
Senior Vice President and
Chief Financial Officer
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET AS OF DECEMBER 31, 1995 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX
MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 7,116
<SECURITIES> 0
<RECEIVABLES> 19,488
<ALLOWANCES> 0
<INVENTORY> 927,938
<CURRENT-ASSETS> 0
<PP&E> 50,030
<DEPRECIATION> 20,456
<TOTAL-ASSETS> 1,020,648
<CURRENT-LIABILITIES> 0
<BONDS> 509,407
<COMMON> 0
0
0
<OTHER-SE> 289,013
<TOTAL-LIABILITY-AND-EQUITY> 1,020,648
<SALES> 443,680
<TOTAL-REVENUES> 445,777
<CGS> 359,768
<TOTAL-COSTS> 359,819
<OTHER-EXPENSES> 61,821
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,137
<INCOME-TAX> 8,448
<INCOME-CONTINUING> 15,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,689
<EPS-PRIMARY> .91
<EPS-DILUTED> 0
</TABLE>
