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, 1997.
[ ] 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, 1998 Registrant had outstanding 17,833,110 shares of common
stock.
<PAGE>
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of December 31, 1997,
June 30, 1997 and December 31, 1996.............................................. 1
Consolidated Statements of Earnings for the three and six
months ended December 31, 1997 and 1996.......................................... 2
Consolidated Statements of Cash Flows for the six
months ended December 31, 1997 and 1996.......................................... 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 1. Legal Proceedings .................................................................16
Item 6. Exhibits and Reports on Form 8-K...................................................16
</TABLE>
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
<TABLE>
<CAPTION>
December 31, June 30, December 31,
1997 1997 1996
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
Assets .
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate inventories (Notes 2, 3 and 6) $ 1,018,692 $ 939,684 $ 930,250
Cash and short-term investments 1,222 24,715 1,876
Receivables 26,897 28,892 25,174
Property and equipment, net 18,415 20,937 22,109
Deferred income taxes (Note 4) 4,996 6,526 9,894
Other assets (Note 7) 88,226 65,908 55,306
- ----------------------------------------------------------------------------------------------------------------
$ 1,158,448 $ 1,086,662 $ 1,044,609
================================================================================================================
Liabilities and Shareholders' Equity
- ----------------------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 621,519 $ 563,068 $ 536,036
Contractor and trade accounts payable 61,766 70,827 74,080
Accrued liabilities and other payables 82,716 79,959 64,341
Home sale deposits 68,515 69,476 83,179
Income taxes payable (Note 4) 6,083 3,502 6,706
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 840,599 786,832 764,342
- ----------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized 30,000,000
shares; issued 17,839,710 shares at December 31, 1997,
17,691,118 shares at June 30, 1997 and 17,643,757 shares
at December 31, 1996 18 18 18
Additional paid-in capital 162,841 160,308 159,929
Retained earnings 161,545 145,922 126,071
- ----------------------------------------------------------------------------------------------------------------
324,404 306,248 286,018
Less cost of common stock in treasury, 124,509 shares at
June 30, 1997 and 16,971 shares at December 31, 1996 - (1,914) (287)
Less deferred compensation (6,555) (4,504) (5,464)
- ----------------------------------------------------------------------------------------------------------------
Total shareholders' equity 317,849 299,830 280,267
- ----------------------------------------------------------------------------------------------------------------
$ 1,158,448 $ 1,086,662 $ 1,044,609
================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
- ---------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (Note 5) $ 278,935 $ 293,682 $ 526,978 $ 557,977
- ---------------------------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 211,037 225,675 401,981 430,839
Interest (Note 6) 10,932 11,698 21,999 23,282
Selling, general and administrative 39,364 39,436 75,825 77,620
- ---------------------------------------------------------------------------------------------------------------
261,333 276,809 499,805 531,741
- ---------------------------------------------------------------------------------------------------------------
Earnings before income taxes 17,602 16,873 27,173 26,236
Income taxes (Note 4) 6,336 6,074 9,782 9,445
- ---------------------------------------------------------------------------------------------------------------
Net earnings $ 11,266 $ 10,799 $ 17,391 $ 16,791
===============================================================================================================
Weighted average shares outstanding 17,741 17,582 17,665 17,561
===============================================================================================================
Weighted average shares outstanding -
assuming dilution 18,298 17,876 18,119 17,890
===============================================================================================================
Net earnings per share $ .64 $ .61 $ .98 $ .96
===============================================================================================================
Net earnings per share - assuming
dilution $ .62 $ .60 $ .96 $ .94
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
- -------------------------------------------------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to community home sales $ 398,289 $ 404,331
Cash received from commercial land and facility sales 20,493 7,192
Cash paid for costs related to community home construction (243,929) (286,229)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by community sales activities 174,853 125,294
Cash paid for land acquisitions at operating communities (6,731) (1,888)
Cash paid for lot development at operating communities (52,695) (51,779)
Cash paid for amenity development at operating communities (23,486) (29,257)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating communities 91,941 42,370
Cash paid for costs related to communities in the pre-operating stage (61,274) (44,883)
Cash received from customers related to conventional homebuilding 102,280 120,387
Cash paid for land, development, construction and other costs related to
conventional homebuilding (103,819) (107,802)
Cash received from residential land development project 2,762 5,641
Cash paid for corporate activities (18,423) (19,187)
Interest paid (24,307) (24,264)
Cash paid for income taxes (4,789) (4,090)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (15,629) (31,828)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,188) (1,720)
Investments in life insurance policies (2,228) (1,303)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (3,416) (3,023)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 134,266 140,480
Repayments of debt (139,080) (120,490)
Proceeds from exercise of common stock options 2,137 150
Purchases of treasury stock (4) -
Dividends paid (1,767) (1,753)
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (4,448) 18,387
- -------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (23,493) (16,464)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 24,715 18,340
- -------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 1,222 $ 1,876
===================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
- -----------------------------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of net earnings to net cash used for operating activities:
Net earnings $ 17,391 $ 16,791
Allocation of non-cash common costs in costs and expenses, excluding interest 115,499 130,404
Amortization of capitalized interest in costs and expenses 21,999 23,282
Deferred compensation amortization 886 893
Depreciation and other amortization 3,122 4,208
Deferred income taxes 1,527 2,718
Net (increase) decrease in home construction costs 18,045 (17,818)
Land acquisitions (35,963) (14,535)
Lot development (81,068) (81,973)
Amenity development (38,001) (53,791)
Pre-acquisition costs (13,926) (11,173)
Net change in other assets and liabilities (25,140) (30,834)
- -----------------------------------------------------------------------------------------------------------------
Net cash used for operating activities $ (15,629) $ (31,828)
=================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
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.
The Company develops residential communities ranging from smaller-scale,
non-amenitized communities within its conventional homebuilding operations to
large-scale, master-planned communities with extensive amenities. The Company
currently conducts its operations in Arizona, Nevada, California, Texas and
South Carolina. The Company's communities are generally 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 usually
the exclusive builder of homes. The Company's conventional homebuilding
operations encompass the construction and sale of homes in various locations in
Arizona and Nevada.
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, 1997, 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 three and six months ended December 31, 1997
are not necessarily indicative of the results to be expected for the full fiscal
year.
5
<PAGE>
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
- ----------------------------------------------------------------------------------------------------------
December 31, June 30, December 31,
1997 1997 1996
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home construction costs $ 163,973 $ 182,018 $ 195,618
Unamortized improvement and amenity costs 537,745 489,142 474,110
Unamortized capitalized interest 50,125 46,121 45,366
Land held for housing 226,258 174,930 158,050
Land and facilities held for future development or
sale 40,591 47,473 57,106
- ----------------------------------------------------------------------------------------------------------
$ 1,018,692 $ 939,684 $ 930,250
==========================================================================================================
</TABLE>
At December 31, 1997 the Company had 383 completed homes and 822 homes under
construction that were not subject to a sales contract. These homes represented
$48.1 million of home construction costs at December 31, 1997. At December 31,
1996 the Company had 345 completed homes and 809 homes under construction
(representing $49.6 milion of home construction costs) that were not subject to
a sales contract.
Included in land and facilities held for future development or sale at December
31, 1997 were 304 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.
During the six months ended December 31, 1997, the Company acquired the initial
portions of land for a planned active adult community in the Chicago area town
of Huntley, Illinois, for a planned large-scale master-planned community in the
southern Las Vegas valley and for a planned smaller-scale, less-amenitized
community in northern California. Accordingly, capitalized pre-acquisition costs
previously classified as other assets for these communities are now classified
as part of real estate inventories.
In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating age-restricted communities in central Florida for a
total purchase price of approximately $45 million. The two communities had
approximately 2,600 homes remaining to be constructed and closed as of the date
of acquisition.
6
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(3) Notes Payable, Senior and Subordinated Debt
Notes payable, senior and subordinated debt consists of the following:
<TABLE>
<CAPTION>
In Thousands
- ----------------------------------------------------------------------------------------------------------
December 31, June 30, December 31,
1997 1997 1996
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 7/8% Senior Notes, net $ - $ - $ 97,820
9 3/4% Senior Subordinated Debentures due 2003, net 97,876 97,670 97,464
9% Senior Subordinated Debentures due 2006, net 97,765 97,628 97,491
9 3/4% Senior Subordinated Debentures due 2008, net 145,128 144,889 -
Notes payable to banks under a revolving credit
facility and short-term lines of credit 196,373 185,990 213,150
Real estate and other notes 84,377 36,891 30,111
- ----------------------------------------------------------------------------------------------------------
$ 621,519 $ 563,068 $ 536,036
==========================================================================================================
</TABLE>
At December 31, 1997 the Company had $187.0 million outstanding under its $350
million senior unsecured revolving credit facility and $9.4 outstanding under
its $25 million of short-term lines of credit.
At December 31, 1997, under the most restrictive of the covenants in the
Company's debt agreements, $20.2 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.
In January 1998 the amount of the Company's senior unsecured revolving credit
facility was increased to $400 million.
(4) Income Taxes
The components of income taxes are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
- ----------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
Federal $ 6,349 $ 4,345 $ 7,575 $ 5,403
State 607 1,292 680 1,324
- ----------------------------------------------------------------------------------------------------------
6,956 5,637 8,255 6,727
- ----------------------------------------------------------------------------------------------------------
Deferred:
Federal (502) 35 1,313 2,363
State (118) 402 214 355
- ----------------------------------------------------------------------------------------------------------
(620) 437 1,527 2,718
- ----------------------------------------------------------------------------------------------------------
$ 6,336 $ 6,074 $ 9,782 $ 9,445
==========================================================================================================
</TABLE>
7
<PAGE>
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 Six Months Ended
December 31, December 31,
- ----------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding:
Communities $ 216,882 $ 216,032 $ 395,684 $ 412,985
Conventional 50,700 63,389 102,226 112,724
- ----------------------------------------------------------------------------------------------------------
Total homebuilding 267,582 279,421 497,910 525,709
Land and facility sales 8,613 10,606 24,131 26,234
Other 2,740 3,655 4,937 6,034
- ----------------------------------------------------------------------------------------------------------
$ 278,935 $ 293,682 $ 526,978 $ 557,977
==========================================================================================================
Costs and expenses:
Home construction and land:
Communities $ 163,870 $ 161,832 $ 299,053 $ 312,176
Conventional 41,866 53,570 85,901 94,747
- ----------------------------------------------------------------------------------------------------------
Total homebuilding 205,736 215,402 384,954 406,923
Cost of land and facility sales 4,835 9,303 15,788 22,061
Other cost of sales 466 970 1,239 1,855
- ----------------------------------------------------------------------------------------------------------
Total home construction, land and other 211,037 225,675 401,981 430,839
Interest 10,932 11,698 21,999 23,282
Selling, general and administrative 39,364 39,436 75,825 77,620
- ----------------------------------------------------------------------------------------------------------
$ 261,333 $ 276,809 $ 499,805 $ 531,741
==========================================================================================================
</TABLE>
8
<PAGE>
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 Six Months Ended
December 31, December 31,
- ---------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest incurred and capitalized $ 12,989 $ 12,921 $ 26,003 $ 24,987
=========================================================================================================
Amortization of capitalized interest
in costs and expenses $ 10,932 $ 11,698 $ 21,999 $ 23,282
=========================================================================================================
Unamortized capitalized interest in real
estate inventories at period end $ 50,125 $ 45,366
=========================================================================================================
Interest income $ 302 $ 425 $ 555 $ 797
=========================================================================================================
</TABLE>
Interest income is included in other revenues in the Consolidated Statements of
Earnings.
(7) Other Assets
Other assets are summarized as follows:
<TABLE>
<CAPTION>
In Thousands
- ----------------------------------------------------------------------------------------------------------
December 31, June 30, December 31,
1997 1997 1996
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pre-acquisition costs $ 50,989 $ 30,876 $ 21,807
Cash surrender values of life insurance policies 21,887 20,083 17,441
Prepaid expenses 5,226 5,903 6,038
Utility deposits 4,896 4,971 5,344
Other 5,228 4,075 4,676
- ----------------------------------------------------------------------------------------------------------
$ 88,226 $ 65,908 $ 55,306
==========================================================================================================
</TABLE>
A large majority of pre-acquisition costs at December 31, 1997 consists of costs
incurred for the acquisition of environmentally-sensitive property by the
Company for the purpose of exchanging the property with the United States Bureau
of Land Management for property in the Los Vegas area that may be developed by
the Company. Any exchange is subject to regulatory approvals and other
conditions. When a trade is effected, these costs would be reclassified to be
part of real estate inventories.
Cash surrender values of life insurance policies relate to policies acquired in
connection with certain executive benefit plans.
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 fiscal year ended June 30, 1997, filed with the Securities and Exchange
Commission.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, Change December 31, Change
- -----------------------------------------------------------------------------------------------------------------------
1997 1996 Amount Percent 1997 1996 Amount Percent
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA :
- ----------------
Number of net new orders: (1)
Sun Cities Phoenix (2) 272 348 (76) (21.8%) 534 622 (88) (14.1%)
Sun Cities Las Vegas (3) 240 270 (30) (11.1%) 518 479 39 8.1%
Sun City Palm Desert 91 51 40 78.4% 153 65 88 135.4%
Sun City Roseville 137 96 41 42.7% 313 194 119 61.3%
Sun City Hilton Head 75 60 15 25.0% 170 136 34 25.0%
Sun City Georgetown 108 92 16 17.4% 193 193 - -
Other communities (4) 59 N/A 59 N/A 73 N/A 73 N/A
Coventry Homes 249 263 (14) (5.3%) 551 514 37 7.2%
- -----------------------------------------------------------------------------------------------------------------------
Total current communities 1,231 1,180 51 4.3% 2,505 2,203 302 13.7%
Completed operations:
Sun City Tucson (5) N/A 14 (14) (100.0%) N/A 38 (38) (100.0%)
Terravita (6) (1) 75 (76) (101.3%) (1) 103 (104) (101.0%)
Coventry Homes - So. California (7) N/A 41 (41) (100.0%) N/A 97 (97) (100.0%)
- -----------------------------------------------------------------------------------------------------------------------
Total 1,230 1,310 (80) (6.1%) 2,504 2,441 63 2.6%
=======================================================================================================================
Number of home closings:
Sun Cities Phoenix (2) 362 266 96 36.1% 621 498 123 24.7%
Sun Cities Las Vegas (3) 289 278 11 4.0% 531 531 - -
Sun City Palm Desert 77 50 27 54.0% 118 93 25 26.9%
Sun City Roseville 155 155 - - 273 328 (55) (16.8%)
Sun City Hilton Head 96 110 (14) (12.7%) 180 185 (5) (2.7%)
Sun City Georgetown 112 144 (32) (22.2%) 223 287 (64) (22.3%)
Terravita (6) 30 103 (73) (70.9%) 112 187 (75) (40.1%)
Other communities (4) N/A N/A N/A N/A N/A N/A N/A N/A
Coventry Homes 287 335 (48) (14.3%) 566 637 (71) (11.1%)
- -----------------------------------------------------------------------------------------------------------------------
Total current communities 1,408 1,441 (33) (2.3%) 2,624 2,746 (122) (4.4%)
Completed operations:
Sun City Tucson (5) N/A 24 (24) (100.0%) N/A 79 (79) (100.0%)
Coventry Homes - So. California (7) N/A 48 (48) (100.0%) 20 70 (50) (71.4%)
- -----------------------------------------------------------------------------------------------------------------------
Total 1,408 1,513 (105) (6.9%) 2,644 2,895 (251) (8.7%)
=======================================================================================================================
</TABLE>
10
<PAGE>
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 Six Months Ended
December 31, Change December 31, Change
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 Amount Percent 1997 1996 Amount Percent
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BACKLOG DATA :
- --------------
Homes under contract at December 31:
Sun Cities Phoenix (2) 605 677 (72) (10.6%)
Sun Cities Las Vegas (3) 520 590 (70) (11.9%)
Sun City Palm Desert 161 84 77 91.7%
Sun City Roseville 320 243 77 31.7%
Sun City Hilton Head 149 144 5 3.5%
Sun City Georgetown 172 284 (112) (39.4%)
Terravita (6) 7 220 (213) (96.8%)
Other communities (4) 73 N/A 73 N/A
Coventry Homes 443 449 (6) (1.3%)
- -------------------------------------------------------------------------------
Total current communities 2,450 2,691 (241) (9.0%)
Completed operations:
Sun City Tucson (5) N/A 4 (4) (100.0%)
Coventry Homes - So. California (7) N/A 50 (50) (100.0%)
- -------------------------------------------------------------------------------
Total (8) 2,450 2,745 (295) (10.7%)
===============================================================================
Aggregate contract sales amount
(dollars in millions) $ 506 $ 537 $ (31) (5.8%)
===============================================================================
Average contract sales amount per
home (dollars in thousands) $ 207 $ 196 $ 11 5.6%
===============================================================================
AVERAGE REVENUE PER HOME
- ---------------------------
CLOSING :
- --------
Sun Cities Phoenix (2) $ 160,400 $ 166,900 $ (6,500) (3.9%) $157,500 $161,000 $ (3,500) (2.2%)
Sun Cities Las Vegas (3) 205,000 174,800 30,200 17.3% 197,900 177,100 20,800 11.7%
Sun City Palm Desert 227,700 203,900 23,800 11.7% 228,800 220,500 8,300 3.8%
Sun City Roseville 208,400 213,200 (4,800) (2.3%) 209,400 206,600 2,800 1.4%
Sun City Hilton Head 165,900 163,100 2,800 1.7% 167,400 161,100 6,300 3.9%
Sun City Georgetown 201,200 184,100 17,100 9.3% 199,700 182,200 17,500 9.6%
Terravita (6) 376,200 304,100 72,100 23.7% 303,100 294,900 8,200 2.8%
Other communities (4) N/A N/A N/A N/A N/A N/A N/A N/A
Coventry Homes 176,700 155,800 20,900 13.4% 174,000 151,800 22,200 14.6%
Weighted average current
communities 190,000 183,400 6,600 3.6% 188,300 180,800 7,500 4.1%
Completed operations:
Sun City Tucson (5) N/A 167,600 N/A N/A N/A 168,000 N/A N/A
Coventry Homes - So. California (7) N/A 233,000 N/A N/A 186,600 229,000 (42,400) (18.5%)
Total weighted average 190,000 184,700 5,300 2.9% 188,300 181,600 6,700 3.7%
========================================================================================================================
</TABLE>
11
<PAGE>
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 Six Months Ended
December 31, Change December 31, Change
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 Amount Percent 1997 1996 Amount Percent
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATISTICS:
- ---------------------
Costs and expenses as a percentage
of revenues:
Home construction, land and other 75.7% 76.8% (1.1%) (1.4%) 76.3% 77.2% (0.9%) (1.2%)
Interest 3.9% 4.0% (0.1%) (2.5%) 4.2% 4.2% - -
Selling, general and administrative 14.1% 13.4% 0.7% 5.2% 14.4% 13.9% 0.5% 3.6%
Ratio of home closings to homes
under contract in backlog at
beginning of period 53.6% 51.3% 2.3% 4.5% 102.1% 90.5% 11.6% 12.8%
=======================================================================================================================
</TABLE>
(1) Net of cancellations. The Company recognizes revenue at close of
escrow.
(2) Includes Sun City West and Sun City Grand. The Company began taking new
home sales orders at Sun City Grand in October 1996. Home closings
began at Sun City Grand in February 1997.
(3) Includes Sun City Summerlin and Sun City MacDonald Ranch.
(4) Represents three smaller-scale communities in Arizona and California at
which net new order activity began in the six months ended December 31,
1997.
(5) The Company completed net new order activity at Sun City Tucson in
February 1997. Home closings at Sun City Tucson were completed in April
1997.
(6) The Company completed net new order activity at Terravita in April
1997.
(7) The Company completed net new order activity for its Coventry Homes -
Southern California operations in June 1997. Home closings for these
operations were completed in August 1997.
(8) A majority of the backlog at December 31, 1997 is currently anticipated
to result in revenues in the next 12 months. However, a majority of the
backlog is contingent primarily upon the availability of financing for
the customer and, in certain cases, 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, 1997 and 1996, cancellations of
home sales orders as a percentage of new home sales orders written
during the period were 14.7 percent and 19.8 percent, respectively. See
"Forward Looking Information; Certain Cautionary Statements."
12
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended December 31, 1997 and 1996
REVENUES. Revenues decreased to $278.9 million for the three months ended
December 31, 1997 from $293.7 million for the three months ended December 31,
1996. This decrease was due primarily to decreased closings at Terravita,
Coventry Homes' southern California operations and Sun City Tucson, reflecting
the completion or approaching completion of those operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The decrease in home construction, land
and other costs to $211.0 million for the 1997 quarter compared to $225.7
million for the 1996 quarter was primarily due to the decrease in home closings.
These costs as a percentage of revenues decreased to 75.7 percent for the 1997
quarter compared to 76.8 percent for the 1996 quarter, with the decrease
primarily due to improved margins on land and facility sales (due to the
declining contribution from lower-margin land sales at Foothills, the Company's
nearly complete residential land development project in Phoenix) and improved
margins for Coventry Homes (due to the completion of low-margin southern
California operations).
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses increased to 14.1 percent for the
1997 quarter compared to 13.4 percent for the 1996 quarter. This increase
resulted primarily from the spreading of relatively fixed corporate overhead
over lower revenues.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in the 1997 quarter were 6.1
percent lower than in the 1996 quarter. Exclusive of completed operations, net
new orders increased 4.3 percent. The increase was due to the commencement of
net new order activity at three smaller-scale communities in Arizona and
California in the six months ended December 31, 1997. Increased net new orders
were also experienced at all of the Company's other current communities except
the Sun Cities Phoenix (which had a high level of net new orders in the 1996
quarter due to pent-up demand at Sun City Grand, at which the Company began
taking net new orders in October 1996) and the Sun Cities Las Vegas (which
experienced a very strong 1996 quarter).
The number of homes under contract at December 31, 1997 was 10.7 percent lower
than at December 31, 1996. This backlog decrease was largely due to decreases
attributable to the approaching completion of Terravita and the August 1997
completion of Coventry Homes' southern California operations. A backlog decrease
was also experienced at Sun City Georgetown as net new orders did not keep pace
with home closings at that community over the past 12 months. Backlog increases
at Sun City Roseville and Sun City Palm Desert resulted from increases in net
new orders which management believes may indicate continued improvement in the
California real estate economy. The commencement of net new order activity at
the three smaller-scale communities in Arizona and California also contributed
to the backlog increase.
Six Months Ended December 31, 1997 and 1996
REVENUES. Revenues decreased to $527.0 million for the six months ended December
31, 1997 from $558.0 million for the six months ended December 31, 1996. This
decrease was due to the decreased closings at Terravita, Coventry Homes'
southern California operations and Sun City Tucson, reflecting the completion or
approaching completion of those operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The decrease in home construction, land
and other costs to $402.0 million for the 1997 period compared to $430.8 million
for the 1996 period was primarily due to the decrease in home closings. These
costs as a percentage of revenues decreased to 76.3 percent for the 1997 period
compared to 77.2 percent for the 1996 period, with the decrease primarily due to
improved margins on land and facility sales. The improved margins on land and
facility sales were primarily due to the declining contribution from
lower-margin land sales at Foothills.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses increased to 14.4 percent for the
1997 period compared to 13.9 percent for the 1996 period. This increase resulted
primarily from the spreading of relatively fixed corporate overhead over lower
revenues.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in the 1997 period were 2.6
percent higher than in the 1996 period. Exclusive of completed operations, net
new orders increased 13.7 percent. The increase was largely due to increases at
Sun City Roseville and Sun City Palm Desert, which management believes may
indicate continued improvement in the California real estate economy. In
addition, both of these California communities benefited from the introduction
of new product offerings, which management believes had a positive impact on new
orders.
Net new orders at the Sun Cities Las Vegas increased 8.1 percent, which
management believes is primarily due to the continued strength of the Las Vegas
market. At Sun City Hilton Head, net new orders increased 25.0 percent, which
management believes may be partially due to the fact that important commercial
and service-related businesses have announced development plans for the area
adjacent to Sun City Hilton Head. Coventry Homes' net new orders increased 7.2
percent as a result of increases in Tucson and Las Vegas. The commencement of
net new order activity at three smaller- scale communities in Arizona and
California in the six months ended December 31, 1997 also contributed to the
overall increase in net new orders from the 1996 period to the 1997 period.
The number of homes under contract at December 31, 1997 was 10.7 percent lower
than at December 31, 1996. See "Three Months Ended December 31, 1997 and 1996 --
Net New Order Activity and Backlog."
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
- ------------------------------------------------
At December 31, 1997 the Company had $1.2 million of cash and short-term
investments, $187.0 million outstanding under its $350 million senior unsecured
revolving credit facility and $9.4 million outstanding under its $25 million of
short-term lines of credit.
In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating age-restricted communities in central Florida for a
total purchase price of approximately $45 million, which was funded by
borrowings under the Company's senior unsecured revolving credit facility. Also
in January 1998, the amount of the Company's senior unsecured revolving credit
facility was increased from $350 million to $400 million.
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 and conventional homebuilding
activities, will provide the Company with adequate capital resources to fund the
Company's currently anticipated operating requirements for the next 12 months.
However, these operating requirements reflect some limitations on the timing and
extent of new projects and activities that the Company may 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 delay could result in cost increases
and may adversely affect the Company's results of operations.
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<PAGE>
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 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, 1997 the Company generated $174.9
million of net cash from community sales activities, used $82.9 million of cash
for land and lot and amenity development at operating communities, paid $61.3
million for costs related to communities in the pre-operating stage, used $1.5
million of net cash for conventional homebuilding operations and used $44.8
million of cash for other operating activities. The resulting $15.6 million of
net cash used for operating activities (which was primarily attributable to
expenditures for communities not yet generating home sales revenues) was funded
mainly through utilization of cash and short-term investments existing at the
beginning of the period.
At December 31, 1997, under the most restrictive of the covenants in the
Company's debt agreements, $20.2 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.
In October 1997 a shelf registration statement filed by the Company with the
Securities and Exchange Commission, covering up to $200 million of the Company's
debt and equity securities, became effective. The securities covered by the
registration statement may be offered for sale from time to time in the future
in one or more series and in the form of straight or convertible senior, senior
subordinated or subordinated debt, common stock, preferred stock, warrants or a
combination of any of them.
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 historical
results are forward looking statements. These forward looking statements involve
risks and uncertainties including, but not limited to, risks associated with the
development of future and newer communities (including development in new
geographic areas), governmental regulation, including in land exchanges with
governmental entities, environmental considerations, the geographic
concentration of the Company's operations, the cyclical nature of real estate
operations and other conditions generally, competition, fluctuations in labor
and material costs, the availability and cost of financing, natural risks that
exist in certain of the Company's market areas and other matters set forth in
the Company's Form 10-K for the year ended June 30, 1997. Actual results may
differ materially from those projected or implied. Further, certain forward
looking statements are based upon assumptions of future events, which may not
prove to be accurate.
15
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
In December 1997 a lawsuit was filed by eight Terravita residents, individually
and on behalf of a purported class consisting of all Terravita residents. The
complaint principally arises from disagreements over the value of the Terravita
golf course (and related assets) and representations allegedly made relating to
operation of the golf club and the Terravita community. The Company is involved
in settlement negotiations with the Terravita residents, and management of the
Company believes that the disagreements are likely to be resolved without any
material adverse financial impact on the Company. The complaint seeks, among
other things, injunctive relief, compensatory and punitive damages, and
rescission of all home sales contracts. Litigation arising from the complaint
could have a material adverse effect on the Company. The Company believes it has
meritorious defenses to all claims.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 10.1 Agreement of Purchase and Sale for acquisition of
Dreyfus property located on the eastern shore of Lake
Tahoe in Washoe County, Nevada.
Exhibit 27 Financial Data Schedule
Exhibit 27.1 Restated 12/31/96 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the period
covered by this report.
16
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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 9, 1998 /s/ Philip J. Dion
----------------------------- ------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Date: February 9, 1998 /s/ John A. Spencer
---------------------------- ------------------------------------
John A. Spencer
Senior Vice President and Chief
Financial Officer
17
AGREEMENT OF PURCHASE AND SALE
------------------------------
This AGREEMENT OF PURCHASE AND SALE (the "Agreement"), dated December
31, 1997 for reference purposes only, is by and between AMERICAN LAND
CONSERVANCY, a California nonprofit public benefit corporation ("Seller"), and,
DEL WEBB CONSERVATION HOLDING CORP., an Arizona corporation ("Buyer").
RECITALS
--------
A. The addresses and telephone numbers of the parties to this
Agreement are as follows. Telephone numbers are included for information only.
SELLER: BUYER:
American Land Conservancy Del Webb Conservation Holding Corp.
456 Montgomery Street, Suite 1450 6001 North 24th Street
San Francisco, CA 94104 Phoenix, Arizona 85016
Attn: Harriet Burgess Attn: LeRoy C. Hanneman, Jr.
Tel: (415) 403-3850 Tel: (602) 808-7800
Fax: (415) 403-3856 Fax: (602) 808-8097
B. Seller is a conservation organization exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
Seller's mission is to acquire for public trust, and to facilitate the
acquisition by appropriate public agencies of, environmentally significant
resources. One of the means by which Seller accomplishes this mission is to
undertake, in conjunction with appropriate federal agencies, exchanges of
federal land as authorized under the Federal Land Exchange Facilitation Act of
1982 ("FLEFA").
C. Seller has entered into that certain Agreement of Sale, dated
January 29, 1996, between Seller, as buyer, and Jack J. Dreyfus, Jr, Dreyfus
Charitable Foundation, a New York not for profit corporation, and William P.
Rogers, as sellers (collectively, "Dreyfus"), as amended by that certain
Amendment to Agreement of Sale, dated as of July 29, 1996, as further amended by
that certain Second Amendment to Agreement of Sale, dated as of January 31,
1997, as further amended by that certain Reinstatement of and Third Amendment to
Agreement of Sale, dated as of April 15, 1997 (as amended, the "Dreyfus
Agreement"), pursuant to which Dreyfus has agreed to sell to Seller, and Seller
has agreed to purchase from Dreyfus, the following: (i) that certain real
property located on the eastern shore of Lake Tahoe in Washoe County, Nevada,
which is more particularly described in Exhibit A attached hereto and
incorporated herein by reference (the "Subject Property"), (ii) Seller's rights
in and to that certain (30) year reservation in favor of Seller relating to
approximately ninety (90) acres of real property located adjacent to the
Property as set forth at Page 777 of the Warranty Deed recorded January 10,
1972, in Book 605, Page 773, in the Official Records of Washoe County, Nevada,
under Document No. 231291 (the "Reservation"), and (iii) the certificated water
rights set forth in Exhibit B attached hereto and incorporated herein by
reference (the "Water Rights") (the
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Subject Property, the Reservation and the Water Rights are collectively referred
to herein as the "Dreyfus Property").
D. Seller entered into the Dreyfus Agreement with the intention of
acquiring the Dreyfus Property and conveying the Dreyfus Property to the United
States of America for management by the United States Department of Agriculture,
Forest Service (the "USFS"), through land exchange transactions with the United
States Department of Interior, Bureau of Land Management ("BLM"), as authorized
by FLEFA.
E. Seller and Buyer have entered into that certain Memorandum of
Understanding, dated November 14, 1997 (the "MOU"), which provides for the
acquisition and disposition by Seller and Buyer of the entire Dreyfus Property
in connection with certain pending federal land exchange transactions involving
Buyer or Seller and certain other transactions and which contemplates the
execution and delivery of certain modifications to the Dreyfus Agreement by the
parties thereto.
F. Since Dreyfus has determined that it is unwilling to restructure
the Dreyfus Agreement in the manner contemplated by the MOU, it has become
necessary to restructure the terms and conditions of Seller's and Buyer's
acquisition of the Dreyfus Property as contemplated in the MOU.
G. Seller and Buyer now intend for Seller to acquire all of the
Dreyfus Property on or before December 31, 1997 in accordance with the terms of
the Dreyfus Agreement for a purchase price of Forty-Eight Million Five Hundred
Thousand Dollars ($48,500,000) (the "Dreyfus Purchase Price"), which shall be
payable as follows: (i) deposits previously made to Dreyfus by Seller in the
amount of Three Million Three Hundred Ten Thousand Dollars ($3,310,000), which
are credited against the Dreyfus Purchase Price, (ii) a cash payment at the
close of escrow in the amount of Twelve Million Dollars ($12,000,000), and (iii)
delivery of a nonrecourse promissory note in the principal sum of Thirty-Three
Million One Hundred Ninety Thousand Dollars ($33,190,000) (the "Dreyfus Note"),
from Seller to Dreyfus, which shall be secured by a first priority deed of trust
encumbering the Dreyfus Property (the "Dreyfus Deed of Trust") and which shall
mature on April 1, 1998.
H. Immediately upon Seller's acquisition of the Dreyfus Property and
pursuant to the other terms and conditions set forth below, Seller shall sell
the Dreyfus Property to Buyer for a purchase price equal to the sum of Fifty
Million Four Hundred Thousand Dollars ($50,400,000), which constitutes the
appraised fair market value of the Dreyfus Property, as finally approved by USFS
and BLM, plus the amount of certain clearances costs previously incurred by
Seller, which purchase price shall be payable as follows: (i) a cash payment by
Buyer to Seller at the close of escrow in the principal sum of Twelve Million
Dollars ($12,000,000), (ii) Buyer taking title to the Dreyfus Property subject
to the deed of trust securing the Dreyfus Note, and (iii) delivery of a
nonrecourse promissory note in the principal sum equal to the balance of the
purchase price, from Buyer to Seller, which shall be secured by a second
priority deed of trust encumbering the Dreyfus Property.
2
<PAGE>
I. In order to facilitate Seller's acquisition of the Dreyfus Property
pursuant to the terms of the Dreyfus Agreement, Buyer will advance to Seller
through escrow cash in the amount of Twelve Million Dollars ($12,000,000) on or
before December 31, 1997, which shall be used to make the cash payment due from
Seller to Dreyfus at the close of escrow of Seller's acquisition of the Dreyfus
Property and shall be credited against the cash payment due Seller from Buyer in
connection with Buyer's acquisition of the Dreyfus Property from Seller.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements and representations herein contained and subject to the satisfaction
of the conditions set forth herein, the parties hereto agree as follows:
1. Purchase and Sale. Immediately upon Seller's acquisition of the
Dreyfus Property from Dreyfus pursuant to the terms of the Dreyfus Agreement,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of
Seller's right, title and interest in, to and under the Dreyfus Property on the
terms and conditions set forth herein
2. Purchase Price.
(a) Purchase Price. The purchase price (the "Purchase Price")
for the Dreyfus Property shall be an amount equal to the sum of (a) Fifty
Million Four Hundred Thousand Dollars ($50,400,000), which constitutes the
appraised fair market value of the Dreyfus Property finally approved by USFS and
BLM, plus (b) the aggregate amount of Sixty-Five Thousand Dollars ($65,000),
which represents certain costs incurred by Seller in connection with the Dreyfus
Agreement which Buyer has agreed to reimburse.
(b) Payment of Purchase Price. The Purchase Price shall be
paid by Buyer to Seller as follows:
(i) Buyer's delivery to Seller at the Closing (as
defined below) of a cash payment in the amount equal to Twelve Million Dollars
($12,000,000) (the "Cash Payment");
(ii) Buyer taking title to the Dreyfus Property
subject to the Dreyfus Deed of Trust; provided, that, until the Dreyfus Note is
paid in full and the Dreyfus Deed of Trust is reconveyed by Dreyfus, Seller
shall not amend or modify any of the terms of the Dreyfus Note or the Dreyfus
Deed of Trust without first obtaining Buyer's written approval; and
(iii) Buyer's delivery to Seller at the Closing of a
nonrecourse promissory note by Buyer in favor of Seller in the principal sum
equal to Five Million Two Hundred Seventy-Five Thousand Dollars ($5,275,000)
(the "ALC Note"). The ALC Note shall be in form and substance reasonably
satisfactory to Buyer and Seller. The ALC Note shall be secured by a deed of
trust and assignment of rents encumbering the Dreyfus Property, which shall be
subject only to the title exceptions set forth in Section 6 of this Agreement
and shall be in form and substance reasonably satisfactory to Buyer and Seller
(the "ALC Deed of Trust").
(c) Cash Payment. Buyer shall deliver cash in the amount of
Twelve Million Dollars ($12,000,000) into Escrow (as defined below) at least one
day before the scheduled
3
<PAGE>
closing of Seller's acquisition of the Dreyfus Property from Dreyfus pursuant to
the terms of the Dreyfus Agreement and, in any event on or before 9:00 a.m. on
December 31, 1997. Seller and Buyer understand and agree that Seller's
acquisition of the Dreyfus Property from Dreyfus and Buyer's acquisition of the
Dreyfus Property from Seller shall occur in immediately consecutive transactions
and that the Twelve Million Dollars ($12,000,000) deposited into Escrow by Buyer
shall be used by Seller to make the cash payment due from Seller to Dreyfus
under the Dreyfus Agreement at the closing of Seller's acquisition of the
Dreyfus Property and shall constitute the Cash Payment due Seller from Buyer
pursuant to Section 2(b)(i) of this Agreement.
3. Escrow and Closing.
(a) Escrow. Buyer has opened an escrow (the "Escrow") for the
purpose of closing Buyer's purchase of the Subject Property at the Scottsdale,
Arizona office of First American Title Insurance Company (the "Escrow Holder").
(b) Escrow Instructions. Buyer and Seller shall promptly,
upon request, provide the Escrow Holder with escrow instructions which shall
incorporate the terms of and be consistent with this Agreement, and shall
provide that if there is any inconsistency between the terms of this Agreement
and such escrow instructions, the terms of this Agreement shall prevail and
control.
(c) Closing. The closing (the "Closing") of Buyer's purchase
of the Dreyfus Property shall occur at the time that all of the fully-executed
documents and funds described in Sections 3(d) and 3(e) have been delivered to
the Escrow Holder. The Closing shall take place on or before December 31, 1997,
unless such date is extended in writing by Buyer and Seller (the "Closing
Date").
(d) Documents to be Delivered by Seller. Not later than one
(1) business day before the Closing Date, Seller shall deliver to the Escrow
Holder the following documents and items:
(i) A grant, bargain and sale deed, in recordable
form, duly executed by Seller, conveying to Buyer all of Seller's right, title
and interest in and to the Subject Property and Reservation, which shall be in
form and substance reasonably satisfactory to Buyer and Seller;
(ii) A water rights quitclaim deed, in recordable
form, duly executed by Seller, conveying to Buyer all of Seller's right, title
and interest in and to the Water Rights, which shall be in form and substance
reasonably satisfactory to Buyer and Seller;
(iii) A bill of sale conveying certain personal
property located on the Subject Property from Buyer to Seller, which shall be in
form and substance reasonably satisfactory to Buyer and Seller;
(iv) A non-foreign certificate in form and substance
reasonably satisfactory to Buyer and Seller;
4
<PAGE>
(v) The originals or copies (if originals are not
available) of any governmental licenses or permits obtained by the previous
owners of the Dreyfus Property relating to the construction, development or use
of the Dreyfus Property, to the extent such licenses and permits are in the
possession of Seller;
(vi) All keys, security cards and other items
required in order to gain access or to use the Dreyfus Property which are in the
possession of Seller or any of the brokers referenced in Section 14 of this
Agreement;
(vii) A purchase and sale agreement between Buyer
and Seller providing for the purchase by Seller from Buyer after the Closing of
a portion of the Subject Property having an appraised fair market value, as
finally approved by USFS and BLM, of approximately Three Million Four Hundred
Thousand Dollars ($3,400,000) in connection with the portion of Seller's pending
land exchange transaction with Perma-Bilt, a Nevada corporation ("Perma-Bilt")
which is referred to by Seller and Perma-Bilt as "Phase 2B" (the "Perma-Bilt
Exchange"), which shall be in form and substance reasonably satisfactory to
Buyer and Seller (the "Perma-Bilt Agreement");
(viii) Written confirmation to Buyer from the
University and Community College System of Nevada ("UNR"), in form and substance
reasonably satisfactory to Buyer, regarding the commitment of UNR to purchase
from Buyer all of the existing structures and improvements located on the
Subject Property, together with a reserved estate relating to a portion of the
Subject Property which shall provide access to and use of such improvements and
shall be acceptable to USFS and Buyer (the "Reserved Estate) (the Improvements
and the Reserved Estate are collectively referred to herein, the "UNR
Improvements");
(ix) Written confirmation to Buyer from USFS and
BLM, in form and substance reasonably satisfactory to Buyer, regarding the final
approved appraised fair market value attributed to the Dreyfus Property and the
allocation of such value to the Reserved Estate and the Improvements;
(x) Such other documents or certificates as Buyer or
its counsel shall reasonably request.
(e) Funds and Documents to be Delivered by Buyer. Not later
than one (1) business day before the Closing Date, Buyer shall deliver or cause
to be delivered to the Escrow Holder the following documents and funds:
(i) Cash or immediately available funds in the
amount equal to the Cash Payment plus any costs or prorations chargeable to
Buyer under this Agreement;
(ii) The original ALC Note;
(iii) The original ALC Deed of Trust;
(iv) The Perma-Bilt Agreement; and
5
<PAGE>
(v) Such other documents or certificates as Seller
or its counsel shall reasonably request.
(f) Closing Expenses and Fees. All real property taxes and
assessments relating to the Dreyfus Property shall be prorated between Buyer and
Seller as of the Closing. All transfer taxes due in connection with the transfer
of the Dreyfus Property from Seller to Buyer shall be paid by Seller. Buyer
shall pay all other closing costs and expenses incurred in connection with this
transaction, including without limitation all escrow fees, recording fees and
title insurance policy expenses.
4. Clearances. Buyer and Seller understand and acknowledge that
certain clearances (the "Clearances") must be obtained, as required under FLEFA,
before any portion of the Dreyfus Property will be included in any of Buyer's or
Seller's pending land exchange transactions, including without limitation an
environmental assessment and approval of title condition. Buyer shall use its
reasonable efforts to obtain, on or before April 1, 1998, all final Clearances
required with respect to the Dreyfus Property in order to facilitate the
parties' pending land exchange transactions. All costs incurred after the
Closing in connection with obtaining such Clearances shall be borne by Buyer.
Seller shall take such reasonable actions requested by Buyer to facilitate
Buyer's efforts to obtain the legislative approvals necessary to permit BLM and
Buyer to proceed with the processing and closing of the Phase 2 portion of
Buyer's pending federal land exchange with BLM. The obligations of Buyer and
Seller under this Section 4 shall survive the Closing.
5. Buyer's Inspection of Dreyfus Property; Condition of the Dreyfus
Property. Buyer hereby acknowledges that Buyer has completed a full inspection
of all aspects of the Dreyfus Property and that the Dreyfus Property is being
sold by Seller to Buyer "as-is," without any warranties or representations,
express or implied, except for the representations and warranties set forth in
this Agreement. Buyer acknowledges that Buyer is purchasing the Dreyfus Property
on the basis of its own investigation and assumes the risk that adverse physical
and environmental conditions may not have been revealed by Buyer's
investigation. Closing of escrow shall be evidence that Buyer is satisfied as to
the value and condition of the Dreyfus Property, including without limitation,
its physical and environmental condition, title condition, exact acreage and
boundary lines, location of easements and rights of way, access, water supply,
drainage and extent of needed repairs. Buyer hereby waives, releases and forever
discharges Seller and its employees, agents and assigns from any and all claims,
actions, liabilities, damages and expenses whatsoever, direct or indirect, which
Buyer now has or which may arise in connection with the Dreyfus Property, except
with respect to any matter arising out of this Agreement or any gross negligence
or willful misconduct by Seller or its employees, agents and assigns relating to
the Dreyfus Property or the transactions contemplated hereby.
6. Examination of Title. Seller shall convey title to the Dreyfus
Property subject only to: (a) real estate taxes and assessments not yet due and
payable; (b) all of the title exceptions set forth in that certain Preliminary
Report No. 501535CS (2nd Amended), dated December 5, 1997, issued by First
American Title Company of Nevada; (c) Dreyfus Deed of Trust; (d) the standard
printed exceptions on the form of title insurance policy to be issued to Buyer
pursuant to Section 7; and (e) any other matters approved by Buyer.
6
<PAGE>
7. Title Insurance. Buyer may obtain, at Buyer's sole expense, a
standard owner's or extended owner's policy of title insurance insuring that
title to the Dreyfus Property is vested in Buyer at the Closing subject only to
the exceptions noted in Section 6.
8. Seller's Representations and Warranties. Seller makes the following
representations and warranties in favor of Buyer:
(a) Seller is a nonprofit public benefit corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has the full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder without the consent of any
other party. Notwithstanding anything herein to the contrary, it is understood
and agreed that no representation or warranty is being made by Seller, and no
condition to the performance of Buyer's obligations under this Agreement shall
exist, with respect to any consent that may be required under the Reservation in
connection with the transfer thereof to Buyer. Seller shall have obtained all
required corporate and other approvals required in connection with the
execution, delivery and performance of this Agreement. At the Closing, Seller
shall own and shall have the power to sell, transfer and convey to Buyer all
right, title and interest in and to the Dreyfus Property.
(b) As of the date of this Agreement, there is no pending
suit or action against Seller which, if adversely decided, would prevent the
consummation of the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, to the best of Seller's knowledge, as
of the date of this Agreement, there are no actual or threatened suits, actions
or proceedings, with respect to all or part of the Dreyfus Property (i) for
condemnation or (ii) alleging any material violation of any applicable law,
regulation, ordinance or code (collectively, "Laws and Regulations").
(c) Seller has not received any written notice (which remains
outstanding) from any governmental authority stating that all or any part of the
Dreyfus Property violates any Laws and Regulations in any material respect.
(d) To the best of Seller's knowledge, the conveyance of the
Dreyfus Property to Buyer will not violate any applicable Laws and Regulations,
including without limitation, subdivision laws.
(e) Seller represents and warrants that it is not a "foreign
person" as defined in Section 1445 of the Code. Seller's United States Taxpayer
Identification Number is 94-3121-656.
(f) All documents and items furnished by Seller to Buyer are
true, correct, accurate and complete to Seller's best knowledge.
(g) To Seller's best knowledge, there is no lawsuit, judicial
proceedings or dispute currently pending which may affect the Dreyfus Property
which has not been disclosed to Buyer.
7
<PAGE>
9. Buyer's Representations and Warranties. Buyer makes the following
representations and warranties in favor of Seller:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arizona and has the full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Buyer shall have obtained all required corporate and
other approvals required in connection with the execution, delivery and
performance of this Agreement.
10. Survival of Representations and Warranties. All of the
representations and warranties of Seller and Buyer set forth in Sections 8 and 9
of this Agreement shall survive the Closing.
11. Possession, Risk of Loss. Possession of the Dreyfus Property shall
be delivered to Buyer at the Closing, free and clear of any other possessory
interest. All risk of loss or damage with respect to the Dreyfus Property shall
pass from Seller to Buyer at the Closing.
12. Notices. Any notice, demand, approval, consent, or other
communication required or desired to be given under this Agreement in writing
shall be given in the manner set forth below, addressed to the party to be
served at the addresses set forth in Recital A, or at such other address for
which that party may have given notice under the provisions of this Section 12.
Any notice, demand, approval, consent, or other communication given by (a) mail
shall be deemed to have been given three (3) days following the date such mail
is deposited in the United States mail, certified; (b) overnight common carrier
courier service shall be deemed to be given on the business day (not including
Saturday) immediately following the date it was deposited with such common
carrier; (c) delivery in person or by messenger shall be deemed to have been
given upon delivery in person or by messenger; or (d) electronic facsimile shall
be deemed to have been given on the earlier of (i) the date and at the time as
the sending party (or such party's agent) shall have received from the receiving
party (or such party's agent) oral confirmation of the receipt of such
transmission or (ii) one hour after the completion of transmission of the entire
communication.
13. Attorneys' Fees. If any party to this Agreement shall take any
action to enforce this Agreement or bring any action or commence any arbitration
for any relief against any other party, declaratory or otherwise, arising out of
this Agreement, the losing party shall pay to the prevailing party a reasonable
sum for attorneys' fees incurred in bringing such suit or arbitration and/or
enforcing any judgment granted therein, all of which shall be deemed to have
accrued upon the commencement of such action or arbitration and shall be paid
whether or not such action or arbitration is prosecuted to judgment. Any
judgment or order entered in such action or arbitration shall contain a specific
provision providing for the recovery of attorneys' fees and costs incurred in
enforcing such judgment. The amount of attorneys' fees due hereunder shall be
determined by a court of competent jurisdiction and not by a jury. For purposes
of this section, attorneys' fees shall include, without limitation, fees
incurred in the following: (a) post-judgment motions; (b) contempt proceedings;
(c) garnishment, levy, and debtor and third party examinations; (d) discovery;
and (e) bankruptcy litigation.
8
<PAGE>
14. Brokers' Commissions. Buyer and Seller each warrant and represent
to the other that it has not retained, nor is it obligated to, any person for
brokerage, finder's or similar services in connection with the transactions
contemplated by this Agreement, and that no commission, finder's fee or other
brokerage or agent's compensation can be properly claimed by any person or
entity based upon the acts of such party with regard to the transactions which
are the subject matter of this Agreement. Each party shall indemnify, defend and
hold harmless the other party from and against all claims, demands, liabilities,
losses, damages, costs and expenses (including, without limitation, reasonable
attorneys' fees, costs of expert witnesses, court costs and other litigation
expenses) arising from or related to such party's breach of the foregoing
representation and warranty. The representations, warranties and covenants of
Buyer and Seller set forth in this Section 14 shall survive the Closing.
15. Time of the Essence. Time is of the essence of this Agreement. In
the event that any date specified in this Agreement falls on a Saturday, Sunday
or a public holiday, such date shall be deemed to be the succeeding day in which
the public agencies and major banks are open for business.
16. Press Releases. Seller and Buyer shall consult with each other as
to, and jointly approve, the form and substance of any press release or other
public disclosure of matters related to the Dreyfus Property, this Agreement or
any of the transactions contemplated hereby; provided, however, that nothing
herein shall be deemed to prohibit either party hereto from making (subject to
such prior consultation with the other party as shall be practicable under the
circumstances) any disclosure that its counsel deems necessary or advisable in
order to fulfill any of the requirements under FLEFA applicable to such party's
pending land exchange transaction or any other legal disclosure obligations of
such party. The covenants of Buyer and Seller set forth in this Section 16 shall
survive the Closing.
17. Funding of UNR Improvements. If UNR is unable to raise sufficient
funds to acquire the UNR Improvements on or before December 31, 1998 from Buyer
for a purchase price equal to the appraised fair market value of the UNR
Improvements, as finally approved by USFS and BLM, Buyer and Seller shall each
contribute to UNR, in equal amounts, cash in the amount necessary to enable UNR
to purchase the UNR Improvements from Buyer for such purchase price (the "UNR
Contribution"); provided, that in no event shall Seller be required to advance
to UNR an amount in excess of One Million Seven Hundred Thousand Dollars
($1,700,000) hereunder. The funds required to be advanced to UNR by Seller under
this Section 17 shall be made available to Seller by Buyer from Buyer's payment
of the ALC Note upon the maturity thereof. If the ALC Note matures concurrently
with or prior to the closing of UNR's acquisition of the UNR Improvements,
Seller shall deposit into an interest bearing escrow account under joint control
of Seller and Buyer a portion of the cash proceeds paid to Seller under the ALC
Note, which portion shall be equal to the amount of the UNR Contribution payable
by Seller pursuant to this Section 17. Concurrently with such deposit, Buyer
shall deposit into such escrow account cash in an amount equal to Seller's
deposit to fund a portion of Buyer's required contribution to UNR under this
Section 17. At the time that UNR acquires the UNR Improvements, the amounts
required of Buyer and Seller to fund such acquisition pursuant to this Section
17, if any, shall be released to UNR from the funds deposited into escrow
9
<PAGE>
by Buyer and Seller for UNR's use in connection with such acquisition, and any
funds deposited into escrow by Buyer and Seller which have not been released to
UNR will be released to Buyer and Seller, as appropriate. The covenants of Buyer
and Seller set forth in this Section 17 shall survive the Closing.
18. Personal Property. Buyer shall comply with all of the obligations
of Seller relating to the Dreyfus Property as set forth in that certain letter
agreement, dated December 24, 1997 between Dreyfus and Seller, and executed by
Buyer. The covenant of Buyer set forth in this Section 18 shall survive the
Closing.
19. Binding on Successors. This Agreement shall be binding not only
upon the parties but also, subject to the limitations set forth in Section 20
upon their heirs, personal representatives, assigns, and other successors in
interest.
20. Assignment. Neither Buyer nor Seller may assign its interests
under this Agreement to any other party without the prior written consent of the
other party. In any event, any such assignment shall not release the assigning
party from its obligations under this Agreement.
21. Entire Agreement; Modification; Waiver. This Agreement constitutes
the entire agreement between Buyer and Seller pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings, including, without limitation, the MOU. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
22. Further Assurances. Seller and Buyer shall execute and deliver
such additional documents, including escrow instructions, and shall take such
other actions as may be reasonable and necessary to carry out the provisions of
this Agreement.
23. Severability. Each provision of this Agreement is severable from
any and all other provisions of this Agreement. Should any provision(s) of this
Agreement be for any reason unenforceable, the balance shall nonetheless be of
full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
24. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada.
25. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original (including copies sent
to a party by telecopy or facsimile transmission), but all of which together
constitute one and the same instrument.
26. No Third Party Beneficiaries. This Agreement has been made and is
made solely for the benefit of Buyer and Seller and their respective successors
and permitted assigns. Nothing in this Agreement is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties to it and their respective successors and permitted assigns.
27. No Partnership. Nothing contained in this Agreement shall be
deemed to constitute a joint venture or partnership between Buyer and Seller, it
being the intent of the parties that only the relationship of buyer and seller
between Buyer and Seller shall be established.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
set forth below.
SELLER:
AMERICAN LAND CONSERVANCY, a
California nonprofit public benefit corporation
Dated: December 31, 1997 By: /s/ Harriet Burgess
--------------------------------------------
Harriet Burgess
President
BUYER:
DEL WEBB CONSERVATION HOLDING
CORP., an Arizona corporation
Dated: December 31, 1997 By: /s/ Mary S. Alexander
--------------------------------------------
Name: Mary S. Alexander
---------------------------------------
Title: Vice President - Secretary
--------------------------------------
11
<PAGE>
The undersigned hereby acknowledge receipt of a fully-executed copy of
this Agreement and their agreement to act in accordance with all of the
provisions of this Agreement in connection with the closing of the transactions
contemplated by this Agreement.
WESTERN TITLE COMPANY
Dated: December 31, 1997 By: /s/ Dolores Monroe
-----------------------------------
Dolores Monroe
FIRST AMERICAN TITLE INSURANCE COMPANY
Dated: December 31, 1997 By: /s/ Gerry Ring Waltz
-----------------------------------
Gerry Ring Waltz
EXHIBITS:
- ---------
A - Legal Description of Dreyfus Property
B - Description of Water Rights
12
<PAGE>
Exhibit A to Agreement
of Purchase and Sale
LEGAL DESCRIPTION OF DREYFUS PROPERTY
-------------------------------------
The real property referred to herein is situate in the County of
Washoe, State of Nevada, and legally described as follows:
Fractional Sections 11 and 14, Township 15 North, Range 18 East,
M.D.B&M., EXCEPTING THEREFROM parcels conveyed to the United States of
America, by Deed recorded January 10, 1972, in Book 605, Page 773,
Official Records of Washoe County, Nevada, under Document No. 231291.
A.P.N. 130-360-08.
A-1
<PAGE>
Exhibit B to Agreement
of Purchase and Sale
DESCRIPTION OF WATER RIGHTS
---------------------------
Those certain water rights on file in the Office of the Nevada State
Engineer, Division of Water Resources, described as follows:
Application Certificate Duty Uses
----------- ----------- ---- ----
12083 3908 0.0067 csf Domestic
12085 4332 0.2500 csf Power and Domestic
12086 4333 0.2500 csf Power and Domestic
12087 4334 0.2500 csf Power and Domestic
B-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX
MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,222
<SECURITIES> 0
<RECEIVABLES> 26,897
<ALLOWANCES> 0
<INVENTORY> 1,018,692
<CURRENT-ASSETS> 0
<PP&E> 18,415
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,158,448
<CURRENT-LIABILITIES> 0
<BONDS> 621,519
0
0
<COMMON> 18
<OTHER-SE> 317,831
<TOTAL-LIABILITY-AND-EQUITY> 1,158,448
<SALES> 0
<TOTAL-REVENUES> 526,978
<CGS> 0
<TOTAL-COSTS> 423,980
<OTHER-EXPENSES> 75,825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 27,173
<INCOME-TAX> 9,782
<INCOME-CONTINUING> 17,391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,391
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.96
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE IS A RESTATEMENT OF A PREVIOUSLY
FILED SCHEDULE TO DISCLOSE BASIC AND DILUTED
EARNINGS PER SHARE AS NOW REQUIRED BY STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 128. THIS
SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS
OF DECEMBER 31, 1996 AND THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,876
<SECURITIES> 0
<RECEIVABLES> 25,174
<ALLOWANCES> 0
<INVENTORY> 930,250
<CURRENT-ASSETS> 0
<PP&E> 22,109
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,044,609
<CURRENT-LIABILITIES> 0
<BONDS> 536,036
0
0
<COMMON> 18
<OTHER-SE> 280,249
<TOTAL-LIABILITY-AND-EQUITY> 1,044,609
<SALES> 0
<TOTAL-REVENUES> 557,977
<CGS> 0
<TOTAL-COSTS> 454,121
<OTHER-EXPENSES> 77,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,236
<INCOME-TAX> 9,445
<INCOME-CONTINUING> 16,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,791
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.94
</TABLE>
