UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year JULY 1, 1998 TO JUNE 30, 1999.
[ ] 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 of Incorporation) (IRS Employer Identification Number)
6001 NORTH 24TH STREET, PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip Code)
(602) 808-8000
(Registrant's phone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
New York Stock Exchange
Common Stock (par value $.001 per share) Pacific Stock Exchange
9 3/4% Senior Subordinated Debentures due 2003 New York Stock Exchange
9 % Senior Subordinated Debentures due 2006 New York Stock Exchange
9 3/4% Senior Subordinated Debentures due 2008 New York Stock Exchange
9 3/8% Senior Subordinated Debentures due 2009 New York Stock Exchange
10 1/4% Senior Subordinated Debentures due 2010 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Registrant's Common Stock outstanding at July 30, 1999 was 18,215,535 shares. At
that date, the aggregate market value of Registrant's Common shares held by
non-affiliates, based upon the closing price of the Common Stock on the New York
Stock Exchange on that date, was approximately $405,300,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on November 4, 1999 are incorporated herein as set forth
in Part III of this Annual Report.
<PAGE>
DEL WEBB CORPORATION
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 1999
TABLE OF CONTENTS
PART I
ITEMS 1. PAGE
AND 2.
Business and Properties
The Company..........................................................1
Communities..........................................................1
Certain Factors Affecting the Company's Operations...................5
Forward Looking Information; Certain Cautionary Statements...........8
Executive Officers of the Company....................................8
Employees............................................................9
ITEM 3. Legal Proceedings....................................................9
ITEM 4. Submission of Matters to a Vote of Security Holders..................9
PART II
ITEM 5. Market for the Registrant's Common Equity and
Related Stockholder Matters.......................................10
ITEM 6. Selected Consolidated Financial Data................................11
ITEMS 7.
AND 7A. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................12
ITEM 8. Financial Statements and Supplementary Data.........................20
ITEM 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............................20
PART III
ITEM 10. Directors and Executive Officers of the Registrant..................21
ITEM 11. Executive Compensation..............................................21
ITEM 12. Security and Ownership of Certain Beneficial Owners
And Management....................................................21
ITEM 13. Certain Relationships and Related Transactions......................21
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K...............................................22
<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
THE COMPANY
The Company develops active adult communities and family and country club
communities. The Company's current communities are located in Arizona,
California, Florida, Illinois, Nevada, South Carolina and Texas.
The Company is the nation's leading developer of active adult communities. It
has extensive experience in the active adult community business, having built
and sold more than 65,000 homes at 12 Sun City communities over the past 39
years. The Company's active adult communities (primarily its Sun City
communities) are generally large-scale, master planned communities with
extensive amenities for people age 55 and over. The Company designs, develops
and markets these communities, controlling all phases of the master plan
development process from land selection through the construction and sale of
homes.
The Company's family and country club communities are open to people of all ages
and are generally developed in metropolitan or market areas in which the Company
is developing active adult communities. For the fiscal year ended June 30, 1999,
family and country club communities generated 21.8 percent of the Company's
homebuilding revenues. The Company currently expects that active adult
communities will continue to be its primary business. Within all of its
communities, the Company is usually the exclusive builder of homes.
The Company was incorporated in 1946 in Arizona and reincorporated in 1994 in
Delaware. The Company's principal executive offices are located at 6001 North
24th Street, Phoenix, Arizona 85016 and its telephone number is (602) 808-8000.
The Company conducts substantially all of its activities through subsidiaries
and, as used in this Annual Report, the term the "Company" includes Del Webb
Corporation and its subsidiaries unless the context indicates otherwise.
Statements in this Annual Report as to acreage, mileage, number of home sites,
square feet, employees and shareholders are approximations.
COMMUNITIES
The following table shows, at June 30, 1999, certain information concerning the
communities at which the Company has home sites on which it plans to build and
sell homes. Substantially all of these home sites are controlled by the Company.
<TABLE>
<CAPTION>
REMAINING HOME SITES(1)
TOTAL HOME ------------------------
FIRST PLANNED CLOSINGS UNDER
HOME TOTAL HOME THROUGH OPTION
CLOSING ACRES SITES 6/30/99 TOTAL OWNED OR OTHER
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Active adult communities:
Sun City Grand 1997 3,859 9,750 2,492 7,258 7,258 --
Sun Cities Las Vegas(2) 1989 6,720 19,592 9,633 9,959 3,159 6,800
Sun City Palm Desert 1992 1,645 4,443 2,170 2,273 2,273 --
Sun Cities Northern California 1995 3,594 8,800 3,042 5,758 3,514 2,244
Sun City Hilton Head 1995 5,600 8,250 1,462 6,788 5,244 1,544
Sun City Georgetown 1996 5,636 10,500 1,681 8,819 8,037 782
Sun City at Huntley 1999 1,996 5,570 195 5,375 4,955 420
Florida communities 1996 1,988 3,667 926 2,741 1,996 745
Other communities 1998 420 1,351 311 1,040 956 84
------ ------ ------ ------ ------
Total active adult communities 71,923 21,912 50,011 37,392 12,619
------ ------ ------ ------ ------
Family and country club communities:
Anthem Las Vegas Country Club 1999 950 1,100 83 1,017 1,017 --
Anthem Arizona Country Club(3) N/A 910 1,475 -- 1,475 1,475 --
Anthem Arizona family communities and
other(3) N/A 4,941 13,025 -- 13,025 13,025 --
Other Arizona family communities 1991 N/A 6,679 5,149 1,530 1,530 --
------ ------ ------ ------ ------
Total family and country club communities 22,279 5,232 17,047 17,047 --
------ ------ ------ ------ ------
Total 94,202 27,144 67,058 54,439 12,619
====== ====== ====== ====== ======
</TABLE>
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(1) Material additional regulatory approvals are required to build on many of
these home sites.
(2) The Company continues to work toward completion of an exchange with the
Bureau of Land Management for the remaining 2,400 acres not yet owned for
Sun City Anthem.
(3) The Company expects a long build out for Anthem Arizona. The Company has
the primary governmental approvals for up to 14,500 homes for Anthem
Arizona, 1,475 of which are currently planned for the Anthem Arizona County
Club community. The number of home sites developed may vary significantly
depending on market and other conditions over the life of the project.
ACTIVE ADULT COMMUNITIES
Sun City Grand is located 25 miles northwest of downtown Phoenix.
The Sun Cities Las Vegas include Sun City Summerlin, Sun City MacDonald Ranch
and Sun City Anthem. Sun City Summerlin, which is near completion, is located
eight miles northwest of downtown Las Vegas. Sun City MacDonald Ranch and Sun
City Anthem are both located in Henderson, Nevada, near Las Vegas. The Company
began taking new home sales orders at Sun City Anthem in July 1998 and began
home closings there in December 1998.
Sun City Anthem is part of the 4,900-acre Anthem Las Vegas project, which also
includes a country club and family community component. The 2,500 acres owned by
the Company for Anthem Las Vegas were acquired through a land exchange with the
Bureau of Land Management ("BLM"). The Company continues to work toward the
completion of an exchange with the BLM for the remaining acres, substantially
all of which will be used for Sun City Anthem.
Sun City Palm Desert is located in the Coachella Valley 20 miles east of Palm
Springs, California, and 130 miles east of downtown Los Angeles.
The Sun Cities Northern California include Sun City Roseville and Sun City
Lincoln Hills. Sun City Roseville, which is near completion, is located 20 miles
northeast of downtown Sacramento, California. Sun City Lincoln Hills is located
near Sun City Roseville in the town of Lincoln, California. The Company began
taking new home sales orders at Sun City Lincoln Hills in February 1999. Home
closings are scheduled to begin there in fiscal 2000.
Sun City Hilton Head is located inland 13 miles from Hilton Head Island, South
Carolina.
Sun City Georgetown is located 30 miles north of downtown Austin, Texas.
Sun City at Huntley is located in Huntley, Illinois (near Chicago). The Company
began taking home sales orders at Sun City at Huntley in September 1998. Home
closings began at Sun City at Huntley in April 1999.
The Florida communities consist of two communities - the Spruce Creek
communities - located near Ocala, Florida. In January 1998 the Company entered
the active adult community business in Florida by acquiring these two
communities.
The other communities represent two smaller-scale, age-qualified communities in
Tucson, Arizona and Cloverdale, California at which net new orders activity and
home closings began in fiscal 1998.
The Company believes that the demographic attributes of its active adult market
segment of people age 55 and over present significant opportunities for future
active adult communities. The Company's plan is to capitalize on those
opportunities and its experience, expertise and reputation by developing active
adult communities in strategically selected locations. The current business
strategy of the Company includes conducting extensive market research on
prospective areas, including consumer surveys and supply and demand analyses, in
connection with its evaluation of sites for future active adult communities. To
the extent the Company has had a successful community in an area, the Company
generally strives to maintain a market presence in that area through development
of a successor community as build-out of the former community approaches.
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<PAGE>
FAMILY AND COUNTRY CLUB COMMUNITIES
The Anthem Las Vegas Country Club community is part of the Anthem Las Vegas
project. The Company began taking new home sales orders at this community in
July 1998 and began home closings there in February 1999.
Anthem Arizona, located on 5,851 acres near Phoenix, includes country club and
family communities. The total number of home sites and types of communities
developed may vary significantly depending on market and other conditions over
the life of Anthem Arizona, which is expected to have a long build-out. The
Company began taking new home sales orders at both the country club and family
communities at Anthem Arizona in February 1999. Home closings began at Anthem
Arizona in July 1999.
The Company began its family community operations (conducted under the name
"Coventry Homes") in Arizona in 1991. At June 30, 1999 the Company had a backlog
of home sales orders at 13 family communities in Arizona, including 4
communities at Anthem Arizona.
The Company also conducted family community operations in California from fiscal
1995 to fiscal 1998 and in Nevada from fiscal 1994 to fiscal 1999. The Company
currently intends to offer for sale to other home builders substantially all
remaining lots in its Nevada family communities, including Anthem Las Vegas, in
fiscal 2000. The Company also plans to offer for sale certain land parcels in
its Arizona family community operations in fiscal 2000.
LAND ACQUISITION
At any given time, the Company may have a number of land acquisitions for
potential communities under study and in various stages of investigation or
negotiation. The Company is currently investigating the acquisition of land for
communities to be located both in areas of the country where the Company has
active adult communities and in other areas, including full four-season areas
(i.e., areas which experience cold winters), where it does not yet have
extensive experience in developing communities.
In making significant land acquisitions, the Company generally endeavors to
acquire options on the land to mitigate risks and reduce holding costs during
the detailed feasibility and entitlement process. However, under certain
circumstances, the Company may acquire land at an earlier stage in the
development process.
PRODUCT DESIGN
The Company designs homes to suit its market and endeavors to include popular
home design characteristics in the particular geographic market involved. Home
designs are periodically reviewed and refined or changed in response to customer
information obtained in each market. Homes at the Company's communities
generally range in size from 1,000 square feet to 3,000 square feet. The Company
offers an extensive program of interior and exterior upgrades and options to
allow home buyers the opportunity to customize their homes.
CONSTRUCTION
The Company generally functions as its own general contractor. At all stages of
production, the Company's management personnel and on-site superintendents
coordinate the activities of contractors, consultants and suppliers and subject
their work to quality and cost controls. Consulting firms assist in project
planning and independent contractors are employed to perform almost all of the
site development and construction work. The Company does not usually sell lots
to others for residential construction. The time required for construction of
the Company's homes depends on the weather, time of year, local labor
situations, availability of materials and supplies and other factors. The
Company strives to coordinate the construction of homes with home sales orders
to control the costs and risks associated with completed but unsold inventory.
An inventory of unsold homes is maintained for immediate sale to customers.
3
<PAGE>
SALES ACTIVITIES
At each of its large-scale, master-planned communities the Company establishes a
large and well-appointed sales pavilion and an extensive complex of furnished
model homes. These models include a wide variety of single family homes, each of
which is generally available in several exterior styles.
The Company's homes are sold by its commissioned sales personnel, who are
available to provide prospective home buyers with floor plans, price
information, option selections and tours of models and lots. The communities
also have co-brokerage programs with independent real estate brokers. Homes are
sold through sales contracts, some of which allow customers to purchase homes
for delivery up to one year or more in the future. The sales contracts generally
require an initial deposit and an additional deposit prior to commencement of
construction. At each community the Company provides to all home buyers
warranties standardized for the community, subject to specified limitations.
While more than one factor may contribute to a given home sale, the Company's
experience indicates that a substantial portion of the home sales at its active
adult communities are attributable in part to follow-ups on referrals from
residents of its communities and to the Company's "Vacation Getaway" program.
This program enables prospective purchasers to visit an active adult community
and stay (for a modest charge) in vacation homes for a few days to one week to
experience the Sun City lifestyle prior to deciding whether to purchase a home.
The Company's information indicates that most home buyers at its active adult
communities generally visit the community in which they purchase on more than
one occasion before buying. This may affect the success of the sales effort at
those communities at which a higher proportion of the potential customers do not
live within a several-hour driving distance from the community.
The Company also markets its communities through billboards, television and
radio commercials, local and national print advertising, direct mailings and
telemarketing.
The Company offers mortgage financing for the purchase of homes at its
communities. The Company sells the mortgages it generates to third parties.
COMPETITION
All of the Company's real estate operations are subject to substantial
competition. The Company competes with numerous national, regional and local
homebuilders and developers, some of which have greater financial resources than
the Company.
With the exception of the Florida communities, the Company believes that it
maintains a leading position within the active adult community market in each of
the metropolitan areas in which it has an active adult community currently
generating revenues. While the amount of competition varies from community to
community, each of the Company's active adult communities faces direct and
increasing competition from businesses exclusively or primarily selling homes to
buyers age 55 or older, as well as from non-age-qualified, master-planned
communities in these areas. The Company competes with new home sales and resales
at these other communities, as well as with resales of homes in its own
communities. The Company believes there may be significant additional future
competition in active adult community development, including competition from
national homebuilders and family community developers.
The Company believes the major competitive factors affecting home purchases at
its communities include location, home quality, lifestyle (including
recreational facilities and other amenities), price, value, design, mortgage
financing terms and builder/developer reputation.
4
<PAGE>
CERTAIN FACTORS AFFECTING THE COMPANY'S OPERATIONS
Set forth below is a brief description of certain matters that may affect the
Company.
FINANCING AND LEVERAGE. The Company is considerably more highly leveraged at
June 30, 1999 than it has been in recent years. If there is a significant
downturn in the Company's anticipated operations, the Company will need to
further modify its business plan to operate with lower capital resources.
Modifications of the business plan could include, among other things, delaying
development expenditures at its communities.
The Company's degree of leverage from time to time will affect its interest
incurred and capital resources, which could limit its ability to capitalize on
business opportunities or withstand adverse changes. Additionally, the
availability and cost of debt financing depends on governmental policies and
other factors outside the Company's control. If the Company cannot at any time
obtain sufficient capital resources to fund its development and expansion
expenditures, however, its projects may be delayed, resulting in cost increases,
adverse effects on the Company's results of operations and possible material
adverse effects on the Company. No assurance can be given as to the terms,
availability or cost of any future financing the Company may need. If the
Company is at any time unable to service its debt, refinancing or obtaining
additional financing may be required and may not be available or available on
terms acceptable to the Company.
FUTURE COMMUNITIES AND NEW GEOGRAPHIC MARKETS. The Company's communities will be
built out over time. Therefore, the medium- and long-term future of the Company
will depend on the Company's ability to successfully develop and market future
communities. Acquiring land and committing the financial and managerial
resources to develop a large-scale community on that land involve significant
risks. Before these communities generate any revenues, they require material
expenditures for, among other things, acquiring large tracts of land, obtaining
development approvals, developing land and lots and constructing project
infrastructure (such as roads and utilities), large recreation centers, golf
courses, model homes and sales facilities. It generally takes several years or
more for the Company to recover these material expenditures.
The Company incurs additional risks to the extent it develops communities in
climates or geographic areas in which it does not have significant (or any)
experience or develops a different size or style of community. These risks
include acquiring the necessary construction materials and labor in sufficient
amounts and on acceptable terms, adapting the Company's construction methods and
home styles to different geographies, climates and potential customers and
reaching acceptable sales levels at those communities. Among other things, the
Company believes that a significant portion of the home sales at its large-scale
active adult communities is attributable in part 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 large-scale active adult communities
where it currently sells homes, and there will be challenges attracting
potential customers from areas and to a market in which the Company has not had
significant (or any) experience.
GOVERNMENTAL REGULATION, GROWTH MANAGEMENT AND ENVIRONMENTAL CONSIDERATIONS. The
Company's business is subject to extensive federal, state and local
environmental concerns and other regulatory requirements, which have affected
and will continue to affect all of the Company's community development
operations. These requirements include, with respect to development activities
and land exchanges, the broad discretion that governmental agencies have in
administering those requirements and "no growth" or "managed growth" political
sentiments and the resulting regulatory implications, which have been increasing
in recent years. All of these requirements can prevent, delay, make uneconomic
or significantly increase the cost of the Company's developments.
If the land exchange for the Anthem Las Vegas project is not completed, that
project would have to be reduced in scope and reconfigured, which could affect
the timing and potential profitability of the project. The Company may then have
to dispose of property it acquired for the exchange at a price below its
purchase price.
5
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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. No
assurance can be given that the Company will receive, or receive in a timely
manner, any 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.
GEOGRAPHIC CONCENTRATION. The Company's operations are comprised of a limited
number of communities in seven states and are particularly concentrated, in
terms of both invested capital and profitability, in the Phoenix and Las Vegas
metropolitan areas. The Company's geographic concentration and limited number of
projects may create increased vulnerability to regional economic downturns or
other adverse region-specific matters.
A significant number of purchasers at the Company's active adult communities in
Arizona, Nevada and southern California are from southern California. These
communities have been and may in the future be affected by conditions in the
southern California real estate market and the southern California economy
generally.
CYCLICAL NATURE OF REAL ESTATE OPERATIONS. All of the Company's communities are
subject to fluctuations in the real estate market, both where its communities
are located and in areas where its potential customers reside, as well as the
cyclical nature of real estate operations, general economic conditions and
changing demographics.
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 in later periods over the life of the community. Revenues and earnings of
the Company will also be affected by periodic fluctuations in the mix of product
and home closings among the Company's communities and by sales of commercial
land and facilities at the Company's communities.
INTEREST RATES. The Company's real estate operations depend on 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 make it more difficult for the Company's potential customers to sell their
existing homes in order to move to one of the Company's communities or to
finance the purchases of their new homes.
CONSTRUCTION LABOR AND MATERIALS COST. The Company has from time to time
experienced shortages of materials or qualified tradespeople and volatile
increases in certain costs, particularly increases in the price of lumber and
framing, which are significant components of home construction costs. This has
caused longer than normal construction periods and cost increases that were not
reflected in the prices of homes for which home sale contracts had been entered
into up to one year in advance of scheduled closing. 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 cause construction delays, increase costs and the
loss of some home sale contracts.
NATURAL RISKS. Some of the Company's communities are subject to natural risks
including earthquakes, floods, tornadoes, hurricanes, severe winters and
significant rainfall. Some of these conditions have had a significant impact on
the Company's operations in the past. Any natural disaster could have a material
adverse impact on the Company's results of operations in the future.
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YEAR 2000 ISSUE. The Company expects to incur Year 2000-related costs in fiscal
2000 but does not at present anticipate that these costs will be material. The
Company believes that the most reasonably likely worst-case scenario for the
Year 2000 issue would occur if it, or the third parties with whom it has
significant relationships, were to cease or not successfully complete Year 2000
remediation efforts. In that event, the Company would encounter disruptions to
its business that could have a material adverse effect on its results of
operations. The Company would also be materially adversely affected by
widespread economic or financial market disruption or by Year 2000 computer
system failures at government agencies on which it is dependent for zoning,
building permits and related matters. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Year 2000 Issue."
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FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS
Certain statements contained in this Annual Report that are not historical
results are forward looking statements. These forward looking statements involve
risks and uncertainties including but not limited to those referred to above.
Forward looking statements are based upon assumptions of future events, which
may not prove to be accurate. Actual results may differ materially from those
projected or implied in the forward looking statements.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names and ages of all executive officers of the Company
and the offices held by each at July 31, 1999.
YEARS
YEARS AS AN EMPLOYED
EXECUTIVE BY THE
NAME AGE POSITION OFFICER COMPANY
---- --- -------- ------- -------
P. J. Dion 54 Chairman of the Board and 17 17
Chief Executive Officer
L. C. Hanneman, Jr. 52 President and Chief Operating 10 27
Officer
J. H. Gleason 57 Executive Vice President, 9 11
Project Planning and
Development
J. A. Spencer 50 Executive Vice President and 14 20
Chief Financial Officer
R. C. Jones 54 Senior Vice President and 7 7
General Counsel
A. L. Mariucci 42 Senior Vice President, 13 15
Family and Country Club
Communities
D. V. Mickus 53 Vice President, Treasurer 13 16
and Secretary
D. E. Rau 42 Vice President and Controller 13 14
Mr. Dion has served as Chairman of the Board and Chief Executive Officer since
1987. Mr. Dion will retire as Chief Executive Officer effective November 1999.
Mr. Hanneman has served as President and Chief Operating Officer since May 1998.
Prior to that time he served as Executive Vice President, overseeing active
adult community operations, from May 1996 to May 1998, as Senior Vice President
from January 1994 to May 1996 and as Vice President from 1989 to January 1994.
From 1987 to May 1996 he served as General Manager of the Sun Cities Las Vegas.
Mr. Gleason has served as Executive Vice President, Project Planning and
Development since February 1999. From January 1994 to February 1999 he served as
Senior Vice President, Project Planning and Development.
Mr. Spencer has served as Chief Financial Officer since 1993. Since February
1999 he has served as Executive Vice President. From February 1991 to February
1999 he served as Senior Vice President.
Mr. Jones has served as Senior Vice President and General Counsel since May
1998. Prior to that time he served as Vice President and General Counsel from
1992 to May 1998.
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EXECUTIVE OFFICERS OF THE COMPANY (CONTINUED)
Ms. Mariucci has served as Senior Vice President since May 1996. Prior to that
time she served as a Vice President from June 1986 (when she began serving as
Vice President, Corporate Planning and Development) to May 1996. She has had
responsibility for overseeing the Company's family and country club communities
since January 1998. Prior to that time she served as General Manager of
Terravita from 1992 to January 1998 and General Manager of Anthem Arizona from
July 1996 to January 1998.
Mr. Mickus has served as Vice President and Treasurer since 1985 and as
Secretary since 1991.
Mr. Rau has served as Vice President and Controller since 1991.
EMPLOYEES
At June 30, 1999 the Company had 4,100 employees. The Company currently has no
unionized employees. The Company believes that its employee relations are
generally satisfactory.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of business. While it is not feasible to predict the ultimate disposition
of these matters, in the opinion of management their outcome will not have a
material adverse effect on the financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is listed on the New York Stock Exchange and Pacific
Stock Exchange under the trading symbol (WBB). The following table sets forth
the high and low sales prices of the Company's common stock on the New York
Stock Exchange for the two fiscal years ended June 30,1999.
SALES PRICE
FISCAL YEAR 1999 FISCAL YEAR 1998
-------------------- -------------------
QUARTER ENDED HIGH LOW HIGH LOW
- ------------- ---- --- ---- ---
September 30 28 3/16 19 5/8 21 3/8 16 3/8
December 31 29 1/2 17 1/16 27 3/8 17 7/8
March 31 29 19 9/16 34 7/8 24 5/16
June 30 25 15/16 19 15/16 30 1/2 23
- --------------------------------------------------------------------------------
As of July 30, 1999 there were 2,758 shareholders of record of the Company's
common stock.
The Company paid regular quarterly dividends of $.05 per share in the four
fiscal years ended June 30, 1998 and for the quarter ended September 30, 1998.
The Company ceased paying dividends thereafter and currently utilizes the
capital that would otherwise be paid as cash dividends to make opportunistic
purchases of its common stock or for other corporate purposes. The amount and
timing of any future dividends is subject to the discretion of the Board of
Directors.
The Company is party to a loan agreement and various indentures that contain
covenants restricting the Company's ability to pay dividends and acquire its
common stock. Under the most restrictive of these covenants, at June 30, 1999,
$50.7 million of the Company's retained earnings were available for payment of
cash dividends and the acquisition by the Company of its common stock.
10
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (NOT COVERED BY REPORT OF
INDEPENDENT AUDITORS)
The following tables set forth selected consolidated financial data of the
Company as of and for each of the five fiscal years ended June 30, 1999. They
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA
YEAR ENDED JUNE 30,
-------------------------------------------------------------
1999 1998 1997 (1) 1996 (2) 1995
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS INFORMATION:
Revenues:
Home sales - active adult communities $1,084,463 $ 830,728 $ 786,746 $ 669,055 $512,204
Home sales - family and country club
communities 302,658 287,656 357,343 342,774 252,277
Land and facility sales and other 79,060 59,383 42,173 38,904 38,638
---------- ---------- ---------- ---------- --------
Total revenues $1,466,181 $1,177,767 $1,186,262 $1,050,733 $803,119
========== ========== ========== ========== ========
Earnings (loss):
Before extraordinary item $ 58,090 $ 42,533 $ 39,686 $ (7,751) $ 28,491
Total 58,090 42,533 38,401 (7,751) 28,491
========== ========== ========== ========== ========
Net earnings (loss) per share - basic:
Before extraordinary item $ 3.20 $ 2.39 $ 2.26 $ (.44) $ 1.92
Total 3.20 2.39 2.18 (.44) 1.92
========== ========== ========== ========== ========
Net earnings (loss) per share - assuming dilution:
Before extraordinary item $ 3.11 $ 2.30 $ 2.22 $ (.44) $ 1.87
Total 3.11 2.30 2.15 (.44) 1.87
========== ========== ========== ========== ========
Cash dividends per share $ .05 $ .20 $ .20 $ .20 $ .20
========== ========== ========== ========== ========
</TABLE>
(1) Earnings for fiscal 1997 include a $1.3 million extraordinary loss from the
early extinguishment of debt.
(2) In fiscal 1996, in connection with the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 121, the Company incurred a non-cash loss
from impairment of southern California real estate inventories of $65.0
million pre-tax ($42.3 million after tax) related to the valuation of its
Sun City Palm Desert active adult community. Exclusive of the non-cash
loss, the Company's net earnings for fiscal 1996 were $34.5 million ($2.01
per share - basic or $1.96 per share - assuming dilution).
<TABLE>
<CAPTION>
DOLLARS IN THOUSANDS
AT JUNE 30,
------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:
Total assets $1,866,797 $1,310,462 $1,086,662 $1,024,795 $ 925,050
Notes payable and senior debt 359,056 167,608 222,881 320,063 284,585
Subordinated debt 681,557 536,330 340,187 194,614 206,673
---------- ---------- ---------- ---------- ----------
Total notes payable, senior and
subordinated debt ("Debt") 1,040,613 703,938 563,068 514,677 491,258
Shareholders' equity $ 404,794 $ 345,767 $ 299,830 $ 264,776 $ 229,342
Total Debt divided by the sum
of Debt and shareholders' equity 72.0% 67.1% 65.3% 66.0% 68.2%
========== ========== ========== ========== ==========
</TABLE>
11
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of results of operations and financial condition should
be read in conjunction with the Selected Consolidated Financial Data and the
Consolidated Financial Statements and Notes thereto.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
Set forth below is certain consolidated financial and operating data of the
Company as of and for each of the three fiscal years ended June 30, 1999.
<TABLE>
<CAPTION>
YEAR ENDED CHANGE CHANGE
JUNE 30, 1999 VS 1998 1998 VS 1997
------------------------------ ----------------- -----------------
1999 1998 1997 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of net new orders:
Active adult communities:
Sun Cities Phoenix 1,324 1,245 1,271 79 6.3% (26) (2.0%)
Sun City Tucson N/A N/A 58 N/A N/A (58) (100.0%)
Sun Cities Las Vegas 1,271 1,179 1,091 92 7.8% 88 8.1%
Sun City Palm Desert 501 443 262 58 13.1% 181 69.1%
Sun Cities Northern California 757 739 553 18 2.4% 186 33.6%
Sun City Hilton Head 425 396 337 29 7.3% 59 17.5%
Sun City Georgetown 349 437 440 (88) (20.1%) (3) (0.7%)
Sun City at Huntley 700 N/A N/A 700 N/A N/A N/A
Florida communities 318 240 N/A 78 32.5% 240 N/A
Other communities 310 169 N/A 141 83.4% 169 N/A
-------- -------- -------- ------- ------ ------- ------
Total active adult communities 5,955 4,848 4,012 1,107 22.8% 836 20.8%
-------- -------- -------- ------- ------ ------- ------
Family and country club communities:
Arizona country club communities 244 N/A 226 244 N/A (226) (100.0%)
Nevada country club communities 218 N/A N/A 218 N/A N/A N/A
Arizona family communities 1,216 1,116 917 100 9.0% 199 21.7%
Nevada family communities 505 319 262 186 58.3% 57 21.8%
California family communities N/A N/A 180 N/A N/A (180) (100.0%)
-------- -------- -------- ------- ------ ------- ------
Total family and country club communities 2,183 1,435 1,585 748 52.1% (150) (9.5%)
-------- -------- -------- ------- ------ ------- ------
Total 8,138 6,283 5,597 1,855 29.5% 686 12.3%
======== ======== ======== ======= ====== ======= ======
Number of home closings:
Active adult communities:
Sun Cities Phoenix 1,259 1,268 1,132 (9) (0.7%) 136 12.0%
Sun City Tucson N/A N/A 103 N/A N/A (103) (100.0%)
Sun Cities Las Vegas 1,274 1,164 1,200 110 9.5% (36) (3.0%)
Sun City Palm Desert 482 304 248 178 58.6% 56 22.6%
Sun Cities Northern California 731 637 650 94 14.8% (13) (2.0%)
Sun City Hilton Head 400 386 371 14 3.6% 15 4.0%
Sun City Georgetown 382 448 616 (66) (14.7%) (168) (27.3%)
Sun City at Huntley 195 N/A N/A 195 N/A N/A N/A
Florida communities 460 170 N/A 290 170.6% 170 N/A
Other communities 244 67 N/A 177 264.2% 67 N/A
-------- -------- -------- ------- ------ ------- ------
Total active adult communities 5,427 4,444 4,320 983 22.1% 124 2.9%
-------- -------- -------- ------- ------ ------- ------
Family and country club communities:
Arizona country club communities N/A 120 410 (120) (100.0%) (290) (70.7%)
Nevada country club communities 83 N/A N/A 83 N/A N/A N/A
Arizona family communities 974 998 1,042 (24) (2.4%) (44) (4.2%)
Nevada family communities 340 326 251 14 4.3% 75 29.9%
California family communities N/A 20 183 (20) (100.0%) (163) (89.1%)
-------- -------- -------- ------- ------ ------- ------
Total family and country club communities 1,397 1,464 1,886 (67) (4.6%) (422) (22.4%)
-------- -------- -------- ------- ------ ------- ------
Total 6,824 5,908 6,206 916 15.5% (298) (4.8%)
======== ======== ======== ======= ====== ======= ======
</TABLE>
12
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED CHANGE CHANGE
JUNE 30, 1999 VS 1998 1998 VS 1997
----------------------------- ----------------- -----------------
1999 1998 1997 AMOUNT PERCENT AMOUNT PERCENT
-------- -------- ------- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BACKLOG DATA:
Homes under contract at June 30:
Active adult communities:
Sun Cities Phoenix 734 669 692 65 9.7% (23) (3.3%)
Sun City Tucson N/A N/A N/A N/A N/A N/A N/A
Sun Cities Las Vegas 545 548 533 (3) (0.5%) 15 2.8%
Sun City Palm Desert 284 265 126 19 7.2% 139 110.3%
Sun Cities Northern California 408 382 280 26 6.8% 102 36.4%
Sun City Hilton Head 194 169 159 25 14.8% 10 6.3%
Sun City Georgetown 158 191 202 (33) (17.3%) (11) (5.4%)
Sun City at Huntley 505 N/A N/A 505 N/A N/A N/A
Florida communities 133 275 N/A (142) (51.6%) 275 N/A
Other communities 168 102 N/A 66 64.7% 102 N/A
-------- -------- -------- -------- ----- -------- -----
Total active adult communities 3,129 2,601 1,992 528 20.3% 609 30.6%
-------- -------- -------- -------- ----- -------- -----
Family and country club communities:
Arizona country club communities 244 N/A 120 244 N/A (120) (100.0%)
Nevada country club communities 135 N/A N/A 135 N/A N/A N/A
Arizona family communities 727 485 367 242 49.9% 118 32.2%
Nevada family communities 249 84 91 165 196.4% (7) (7.7%)
California family communities N/A N/A 20 N/A N/A (20) (100.0%)
-------- -------- -------- -------- ----- -------- -----
Total family and country club communities 1,355 569 598 786 138.1% (29) (4.8%)
-------- -------- -------- -------- ----- -------- -----
Total 4,484 3,170 2,590 1,314 41.5% 580 22.4%
======== ======== ======== ======== ===== ======== =====
Aggregate contract sales amount
(dollars in millions) $ 1,038 $ 642 $ 514 $ 396 61.7% $ 128 24.9%
======== ======== ======== ======== ===== ======== =====
Average contract sales amount per
home (dollars in thousands) $ 231 $ 203 $ 198 $ 28 13.8% $ 5 2.5%
======== ======== ======== ======== ===== ======== =====
AVERAGE REVENUE PER HOME
CLOSING:
Active adult communities:
Sun Cities Phoenix $178,300 $157,400 $158,900 $ 20,900 13.3% $ (1,500) (0.9%)
Sun City Tucson N/A N/A 167,000 N/A N/A N/A N/A
Sun Cities Las Vegas 208,700 202,400 182,900 6,300 3.1% 19,500 10.7%
Sun City Palm Desert 243,800 234,000 221,100 9,800 4.2% 12,900 5.8%
Sun Cities Northern California 239,800 219,200 215,800 20,600 9.4% 3,400 1.6%
Sun City Hilton Head 189,100 173,100 168,100 16,000 9.2% 5,000 3.0%
Sun City Georgetown 218,300 201,000 183,100 17,300 8.6% 17,900 9.8%
Sun City at Huntley 236,700 N/A N/A N/A N/A N/A N/A
Florida communities 115,900 97,900 N/A 18,000 18.4% N/A N/A
Other communities 175,300 168,000 N/A 7,300 4.3% N/A N/A
Average active adult communities 199,800 186,900 182,100 12,900 6.9% 4,800 2.6%
Family and country club communities:
Arizona country club communities N/A 310,200 292,100 N/A N/A 18,100 6.2%
Nevada country club communities 379,000 N/A N/A N/A N/A N/A N/A
Arizona family communities 211,100 191,000 152,300 20,100 10.5% 38,700 25.4%
Nevada family communities 193,000 172,100 159,800 20,900 12.1% 12,300 7.7%
California family communities N/A 186,600 211,900 N/A N/A (25,300) (11.9%)
Average family and country club communities 216,600 196,500 189,500 20,100 10.2% 7,000 3.7%
Total average $203,300 $189,300 $184,400 $ 14,000 7.4% $ 4,900 2.7%
======== ======== ======== ======== ===== ======== =====
</TABLE>
13
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED CHANGE CHANGE
JUNE 30, 1999 VS 1998 1998 VS 1997
----------------------- -------------- --------------
1999 1998 1997 AMOUNT PERCENT AMOUNT PERCENT
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATISTICS:
Costs and expenses as a percentage of revenues:
Home construction, land and other 75.9% 76.3% 77.0% (0.4%) (0.5%) (0.7%) (0.9%)
Selling, general and administrative 13.9% 14.1% 13.6% (0.2%) (1.4%) 0.5% 3.7%
Interest 4.0% 3.9% 4.2% 0.1% 2.6% (0.3%) (7.1%)
Ratio of home closings to homes under
contract in backlog at beginning of period 215.3% 228.1% 194.0% (12.8%) (5.6%) 34.1% 17.6%
===== ===== ===== ===== ===== ===== =====
</TABLE>
NOTES:
New orders are net of cancellations. The Company recognizes revenue at close of
escrow.
The Sun Cities Phoenix include Sun City West, which is built out, and Sun City
Grand.
The Sun Cities Las Vegas include Sun City Summerlin, Sun City MacDonald Ranch
and Sun City Anthem. The Company began taking new home sales orders at Sun City
Anthem in July 1998. Home closings began at Sun City Anthem in December 1998.
The Sun Cities Northern California include Sun City Roseville and Sun City
Lincoln Hills. The Company began taking new home sales orders at Sun City
Lincoln Hills in February 1999.
The Company began taking new home sales orders at Sun City at Huntley in
September 1998. Home closings began at Sun City at Huntley in April 1999.
In January 1998 the Company acquired certain assets and assumed certain
liabilities at two operating active adult communities in central Florida.
Other active adult communities represent two smaller-scale communities in
Arizona and California at which new order activity began in October and November
1997, respectively. Home closings began at these communities in March and May
1998, respectively.
Arizona country club communities include Terravita and Anthem Country Club. The
Company completed new order activity and home closings at Terravita in fiscal
1998. The Company began taking new home sales orders at Anthem Country Club in
February 1999.
The Company began taking new home sales orders at Anthem Country Club (a Nevada
country club community near Las Vegas) in July 1998. Home closings began at
Anthem Country Club in February 1999.
The Company completed new order activity for its California family communities
in June 1997. Home closings for these communities were completed in August 1997.
A substantial majority of the backlog at June 30, 1999 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 years ended June 30, 1999, 1998 and 1997,
cancellations of home sales orders as a percentage of new home sales orders
written during the year were 14.4 percent, 13.9 percent and 17.1 percent,
respectively. See "Business and Properties - Forward Looking Information;
Certain Cautionary Statements."
14
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
REVENUES. Total revenues increased to $1.47 billion for the fiscal year ended
June 30, 1999 from $1.18 billion for the fiscal year ended June 30, 1998.
Active adult community homebuilding revenues increased to $1.08 billion for
fiscal 1999 from $831 million for fiscal 1998. The Company's Sun City Anthem
community near Las Vegas, Sun City at Huntley community near Chicago, Florida
communities and smaller-scale active adult communities in Arizona and California
(which collectively had only 237 home closings in fiscal 1998) accounted for
$155 million of the increase in active adult community homebuilding revenues. An
increase in the average revenue per home closing resulted in $74 million of the
increase in active adult community homebuilding revenues. Sun City Palm Desert
and Sun City Roseville, which respectively closed 178 and 94 more homes in
fiscal 1999 than in fiscal 1998, accounted for $62 million of the increase in
active adult community homebuilding revenues. Management believes that these
increases are largely attributable to improvement in California's real estate
economy and its economy generally. Partially offsetting these increases were $40
million of decreased revenues from decreased home closings at the nearly
complete community of Sun City Summerlin in Las Vegas.
Family and country club community homebuilding revenues increased to $303
million for fiscal 1999 from $288 million for fiscal 1998. The Company's Anthem
communities near Las Vegas and Coventry Bellasera community near Phoenix (which
collectively had only 39 home closings in fiscal 1998) accounted for a $49
million increase in family and country club community homebuilding revenues. An
increase in the average revenue per home closing resulted in $15 million of the
increase in family and country club community homebuilding revenues. Partially
offsetting these increases were $52 million of decreased revenues from decreased
home closings at the completed Terravita, Coventry Tucson and Coventry Southern
California communities, which collectively had only 140 home closings in fiscal
1999.
Land and facility sales and other revenues increased to $79 million for fiscal
1999 from $59 million for fiscal 1998. The increase was largely attributable to
the sale of all of the Company's unsold family community lots in the Tucson area
and a gain on an equipment sale in fiscal 1999. The Company currently intends to
offer for sale in fiscal 2000 certain land parcels in its Arizona family
community operations and all remaining home sites at its Nevada family community
operations (see "Liquidity and Financial Condition of the Company").
Total revenues decreased slightly to $1.18 billion for fiscal 1998 from $1.19
billion for the fiscal year ended June 30, 1997. Active adult community
homebuilding revenues increased to $831 million for fiscal 1999 from $787
million for fiscal 1998. This increase in active adult community homebuilding
revenues was primarily due to the commencement in fiscal 1998 of active adult
community operations in Florida, home closings at two smaller-scale active adult
communities in Arizona and California and an increase in the average revenue per
home closing.
Family and country club community homebuilding revenues decreased to $288
million for fiscal 1998 from $357 million for fiscal 1997. This decrease was due
to decreased home closings at Terravita and California family communities,
reflecting the completion of those operations.
Land and facility sales and other revenues increased to $59 million for fiscal
1998 from $42 million for fiscal for fiscal 1997. The increase was primarily
attributable to the sale of a golf course and shopping center in connection with
the completion of operations at Terravita.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $1.11 billion for fiscal 1999 from $899 million for fiscal
1998 was largely due to the increase in home closings. As a percentage of
revenues, these costs decreased to 75.9 percent for fiscal 1999 from 76.3
percent for fiscal 1998. Homebuilding margins improved to 24.2 percent in fiscal
1999 from 23.0 percent in fiscal 1998, primarily as a result of increased
revenue per home closing at virtually all of the Company's communities.
15
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The decrease in home construction, land and other costs to $899 million for
fiscal 1998 from $914 million for fiscal 1997 was primarily due to the decrease
in home closings. These costs as a percentage of revenues decreased to 76.3
percent for fiscal 1998 from 77.0 percent for fiscal 1997, with the decrease
primarily due to improved margins on land and facility sales. The improved
margins on land and facility sales were largely due to the declining volume of
lower-margin land sales at a completed residential land development project in
Phoenix. A higher profit margin on home closings was also realized as a result
of a change in mix of product and home closings among the Company's family
community operations.
On a period-to-period basis, home construction, land and other costs as a
percentage of revenues will vary due to, among other things, changes in product
mix, differences between individual communities, lot premiums, optional
upgrades, price increases and changes in construction costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses decreased to 13.9 percent for
fiscal 1999 compared to 14.1 percent for fiscal 1998. This decrease resulted
from the spreading of corporate overhead over significantly greater revenues.
As a percentage of revenues, selling, general and administrative expenses
increased to 14.1 percent for fiscal 1998 from 13.6 percent for fiscal 1997.
This increase was due primarily to increased corporate overhead to investigate
new market opportunities and support an increased number of pre-operating
communities.
INTEREST. As a percentage of revenues, amortization of capitalized interest was
4.0 percent for fiscal 1999 compared to 3.9 percent for fiscal 1998. This
increase was primarily due to an increase in debt levels (see "Liquidity and
Financial Condition of the Company").
As a percentage of revenues, amortization of capitalized interest was 3.9
percent for fiscal 1998 compared to 4.2 percent for fiscal 1997. This decrease
was primarily due to an increase in pre-operating communities, at which interest
was being capitalized on qualified assets but at which interest amortization on
home closings had not yet begun.
INCOME TAXES. The increases in income taxes to $33 million in fiscal 1999 from
$24 million in fiscal 1998, and to $24 million in fiscal 1998 from $22 million
in fiscal 1997, were due to the increases in earnings before income taxes. The
effective tax rate in each of the three fiscal years was 36 percent.
EXTRAORDINARY ITEM. In connection with the early redemption of all of the
Company's $100 million of outstanding 10 7/8% Senior Notes at par on March 31,
1997, an extraordinary loss of $1.3 million was recognized in fiscal 1997.
NET EARNINGS. The increase in net earnings to $58 million for fiscal 1999
compared to $43 million for fiscal 1998 was primarily attributable to the
increase in home closings, revenues and homebuilding gross margins.
The increase in net earnings to $43 million for fiscal 1998 from $38 million for
fiscal 1997 was primarily attributable to the increase in earnings from land and
facility sales. Largely due to the sale of a golf course and shopping center at
Terravita, earnings before income taxes attributable to land and facility sales
increased to $15 million for fiscal 1998 compared to $5.2 million for fiscal
1997. Land and facility sales are a normal part of the Company's operations but
occur irregularly and vary significantly in magnitude, complicating
period-to-period comparisons.
16
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in fiscal 1999 were 29.5
percent higher than in fiscal 1998. The number of homes under contract at June
30, 1999 was 41.5 percent higher than at June 30, 1998. Both of these increases
were primarily attributable to Sun City at Huntley and the family and country
club communities at the Anthem projects near Phoenix and Las Vegas. These
communities had new order activity in fiscal 1999 but had not yet commenced new
order activity in fiscal 1998. Management believes that the decreases in net new
orders and backlog at Sun City Georgetown and the Florida active adult
communities may have been partially attributable to the impact of increased
sales prices and potential buyers awaiting the recent openings of new model
homes.
Total net new orders in fiscal 1998 were 12.3 percent higher than in fiscal
1997. Net new orders at operations that were selling homes in both fiscal 1998
and fiscal 1997 increased 12.5 percent.
The increase in total net new orders in fiscal 1998 was largely due to the
commencement of Florida active adult community operations in January 1998 and
net new order activity at two smaller-scale active adult communities in Arizona
and California and the Coventry Bellasera community near Phoenix in fiscal 1998.
These increases were partially offset by declines attributable to the completed
operations of Terravita, California family communities and Sun City Tucson.
The increase in net new orders at communities that were selling homes in both
fiscal 1998 and fiscal 1997 was largely due to increases at Sun City Roseville
and Sun City Palm Desert, which management believes was attributable to
continued improvement in the California real estate economy and its economy
generally, as well as to the introduction of new models. Management believes
that the increase in net new orders at the Sun Cities Las Vegas was due to the
continued strength of the Las Vegas market. At Sun City Hilton Head, management
believes that the increase in net new orders was partially due to the fact that
important commercial and service-related businesses had announced development
plans for the area adjacent to Sun City Hilton Head. Family community net new
orders increased as a result of increases in Phoenix and Las Vegas.
The number of homes under contract at June 30, 1998 was 22.4 percent higher than
at June 30, 1997. Management believe that this backlog increase was largely due
to the same factors that produced the increase in net new orders. Backlog
decreases were experienced at the Sun Cities Phoenix (where Sun City West was
approaching completion) and Sun City Georgetown (where management believes sales
had leveled after satisfaction of initial local pent-up demand).
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
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, acquiring large tracts of land, obtaining development
approvals, developing land and lots and constructing project infrastructure
(such as roads and utilities), large recreation centers, golf courses, model
homes and sales facilities. 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 fiscal 1999 the Company generated $570 million of net cash from operating
community sales activities, used $328 million for land and lot and amenity
development at operating communities, paid $381 million for costs related to
communities in the pre-operating stage and used $139 million for other operating
activities. The resulting $278 million of net cash used for operating activities
was funded mainly through borrowings under the Company's $500 million senior
unsecured revolving credit facility (the "Credit Facility") and $25 million
short-term lines of credit (together with the Credit Facility, the "Credit
Facilities"). The net proceeds from the February 1999 public offering of $150
million in principal amount of 10 1/4% Senior Subordinated Debentures due 2010
(the "Offering") were used to repay a portion of the indebtedness outstanding
under the Credit Facility. Increased home sale deposits (resulting from the
increase in net new orders and backlog) were also a significant source of
funding in fiscal 1999.
17
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Real estate development is dependent on, among other things, the availability
and cost of financing. In periods of significant growth, the Company may require
significant additional capital resources, whether from issuances of equity or by
increasing its indebtedness. In fiscal 1999 the Company decided to engage in
substantial development and permit its leverage to increase substantially. It
had under development, among other projects: (i) Sun City Lincoln Hills, the
successor community to Sun City Roseville; (ii) Anthem Las Vegas, which includes
Sun City Anthem, country club and family communities; (iii) Anthem Arizona,
which includes country club and family communities and (iv) Sun City at Huntley.
To date, material cash expenditures have been made for these communities. The
Company anticipates that it will make material additional development and
housing construction expenditures at these communities through at least December
31, 1999. In order to provide adequate capital to meet the Company's operating
requirements for the next 12 months, the Company in February 1999 completed the
Offering and negotiated an increase in the amount of its Credit Facility from
$450 million to $500 million. At June 30, 1999 the Company had $301 million
outstanding under the Facilities. At that date, $99 million of the $224 million
of unused capacity under the Credit Facilities was not available to the Company.
However, as a result of an amendment, effective July 1, 1999, to the "Total Debt
to Tangible Net Worth" covenant under the Credit Facility, the Company had full
availability of the Credit Facilities (the short-term lines of credit were $15
million as of that date).
As a result of public offerings of debt and borrowings to fund development
expenditures, described above, the Company is considerably more highly leveraged
at June 30, 1999 than it has been in recent years. The Company expects to
continue to borrow additional amounts under the Credit Facilities to fund
continuing development at these communities. The Company expects to have
adequate capital resources to meet its needs for the next 12 months. In
addition, the Company will offer for sale to other home builders certain land
parcels in its Arizona family community operations and substantially all
remaining lots in its Nevada family communities and to otherwise manage its
expenditures to meet its needs and available resources over this time period. If
there is a significant downturn in the Company's anticipated operations, the
Company will need to further modify its business plan to operate with lower
capital resources. Modifications of the business plan could include, among other
things, delaying development expenditures at its communities.
The Company's degree of leverage from time to time will affect its interest
incurred and capital resources, which could limit its ability to capitalize on
business opportunities or withstand adverse changes. Additionally, the
availability and cost of debt financing depends on governmental policies and
other factors outside the Company's control. If the Company cannot at any time
obtain sufficient capital resources to fund its development and expansion
expenditures, its projects may be delayed, resulting in cost increases, adverse
effects on the Company's results of operations and possible material adverse
effects on the Company. No assurance can be given as to the terms, availability
or cost of any future financing the Company may need. If the Company is at any
time unable to service its debt, refinancing or obtaining additional financing
may be required and may not be available or available on terms acceptable to the
Company.
At June 30, 1999, under the most restrictive of the covenants in the Company's
debt agreements, $51 million of the Company's retained earnings was available
for payment of cash dividends and the acquisition by the Company of its common
stock.
MARKET RISK FOR FINANCIAL INSTRUMENTS
The Company does not trade in derivative financial instruments and at June 30,
1999 had no significant derivative financial instruments. The Company does have
other financial instruments, for purposes other than trading, in the form of
notes payable, senior and subordinated debt. The Company's Credit Facility,
short-term lines of credit and some real estate and other notes are at variable
interest rates and are thus subject to market risk in the form of fluctuations
in interest rates.
18
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The following table provides interest rate sensitivity information about the
Company's notes payable, senior and subordinated debt at June 30, 1999 (dollars
in millions):
<TABLE>
<CAPTION>
AMOUNT BY SCHEDULED MATURITY FOR ESTIMATED
FISCAL YEARS ENDING JUNE 30, FAIR VALUE
----------------------------------------------- AT JUNE 30,
2000 2001 2002 2003 2004 THEREAFTER TOTAL 1999
---- ---- ---- ---- ---- ---------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED RATE DEBT
Amount $ 7.8 $ 2.3 $ 3.2 $ 101.0 $ 11.6 $ 592.9 $ 718.8 $ 731.9
Average Interest
Rate 7.6% 7.8% 8.1% 9.7% 7.1% 9.6% 9.5%
VARIABLE RATE DEBT
Amount $ 35.5 $ 0.1 $ 286.0 -- -- $ 0.2 $ 321.8 $ 321.8
Average Interest
Rate 8.0% 8.8% 7.8% -- -- 8.8% 7.8%
</TABLE>
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using two
digits (rather than four) to define the applicable year. Computer programs that
have time-sensitive software may not recognize dates beginning in the year 2000,
which could result in miscalculations or system failures.
Through June 30, 1999, the Company's Year 2000 remediation efforts have focused
primarily on its core business computer applications (i.e., those systems that
the Company is dependent upon for the conduct of day-to-day business
operations). Starting approximately three years ago, the Company initiated a
comprehensive review of its core business applications to determine the adequacy
of these systems to meet future business requirements. Year 2000 readiness was
only one of many factors considered in this assessment. Out of this effort, a
number of systems were identified for upgrade or replacement. In no case was a
system being replaced solely because of Year 2000 issues, although in some cases
the timing of system replacements was accelerated. Thus, the Company does not
believe the costs of these system replacements, the majority of which related to
software acquisitions and were thus capitalized, were specifically Year 2000
related. Additionally, while the Company may have incurred an opportunity cost
for addressing the Year 2000 issue, it does not believe that any specific
information technology projects have been deferred to date as a result of its
Year 2000 efforts.
As of August 1999, the Company believes all of its core business systems are
adequately Year 2000 capable for its purposes, except for its lead tracking and
mortgage processing systems and some of its document imaging systems. Projects
are currently underway to replace these systems, with implementations and
testing scheduled for completion by October 1999. As with systems that have
already been replaced, the Company does not believe the costs of these remaining
replacements, which are anticipated to aggregate approximately $2 million, are
specifically Year 2000 related. The Company has also purchased at a cost of
approximately $100,000 a software product that, it believes, can identify
personal computers and related equipment with imbedded software that is not
adequately Year 2000 capable for the Company's purposes. The Company expects to
incur costs to replace or repair such equipment, but it has not at this time
determined the amount of these costs. Since some of the equipment would
otherwise be replaced through normal attrition, lease expirations and scheduled
upgrades in the ordinary course of business, it is possible that many of these
costs would not be solely related to Year 2000 readiness.
The Company is also assessing other potential Year 2000 issues, including
non-information technology systems. A broad-based Year 2000 Task Force has been
formed and is meeting regularly to identify areas of concern and develop action
plans. The Company currently anticipates that testing of non-information
technology systems will also be completed by October 1999. As part of the Year
2000 Task Force effort, the Company's relationships with vendors, contractors,
financial institutions and other third parties are being considered to determine
the status of the Year 2000 issue efforts on the part of the other parties to
material relationships. The Year 2000 Task Force includes both internal and
Company-external representation.
19
<PAGE>
ITEMS 7. AND 7A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company expects to incur Year 2000-related costs in fiscal 2000 but does not
at present anticipate that these costs will be material. The Company believes
that the most reasonably likely worst-case scenario for the Year 2000 issue
would be that the Company or the third parties with whom it has material
relationships were to be unsuccessful in their Year 2000 remediation efforts. In
that event, the Company may encounter disruptions to its business that could
have a material adverse effect on it. The Company would also be materially
adversely affected by widespread economic or financial market disruption or by
Year 2000 computer system failures at government agencies on which the Company
is dependent for zoning, building permits and related matters.
The Company has not at this time established a formal Year 2000 contingency plan
but will consider and, if necessary, address doing so as part of its Year 2000
Task Force activities. The Company maintains and deploys contingency plans
designed to address various other potential business interruptions. These plans
may be applicable to address the interruption of support provided by third
parties resulting from their failure to be Year 2000 ready.
IMPACT OF INFLATION
Operations of the Company can be impacted by inflation. Home and land sales
prices can increase, but inflation can also cause increases in interest costs
and the costs of land, raw materials and contract labor. Unless such increased
costs are recovered through higher sales prices, operating margins will
decrease. High mortgage interest rates may also make it more difficult for the
Company's potential customers to sell their existing homes in order to move to
one of the Company's communities or to finance the purchases of their new homes.
ACCOUNTING STANDARDS NOT YET ADOPTED BY THE COMPANY
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVES AND SIMILAR FINANCIAL INSTRUMENTS AND FOR HEDGING
ACTIVITIES, to establish accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities on the balance sheet and measure
those instruments at fair value. This new standard, which will be effective for
the Company for its fiscal year ending June 30, 2001, is not expected to have a
significant impact on the Company's consolidated financial statements since the
Company does not have significant derivative financial instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this report
below.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
20
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Executive Officers of the Registrant, see
"Item 1 - Executive Officers of the Company" at the end of Part I of this
report. Information with respect to the Directors of the Registrant is
incorporated herein by reference to the Registrant's definitive proxy statement
to be filed pursuant to Regulation 14A within 120 days after the end of the most
recent fiscal year covered by this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Annual Report on Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Annual Report on Form 10-K.
21
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. and 2. The response to this portion of Item 14 is submitted as a
separate section of this report beginning on page 24.
3. Exhibits
The Exhibit Index attached to this Report is hereby
incorporated by reference.
(b) The Company did not file any reports on Form 8-K during the quarter ended
June 30, 1999.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, who is duly authorized to do so, in Phoenix, Arizona
on the 16th day of September, 1999.
DEL WEBB CORPORATION
(Registrant)
By: /s/ Philip J. Dion
------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Philip J. Dion Chairman and Chief Executive September 16, 1999
- --------------------------- Officer (Principal Executive
(Philip J. Dion) Officer)
/s/ LeRoy C. Hanneman, Jr. President, Chief Operating September 16, 1999
- --------------------------- Officer and Director
(LeRoy C. Hanneman, Jr.) (Principal Operating Officer)
/s/ John A. Spencer Executive Vice President and September 16, 1999
- --------------------------- Chief Financial Officer
(John A. Spencer) (Principal Financial Officer)
/s/ David E. Rau Vice President and Controller September 16, 1999
- --------------------------- (Principal Accounting Officer)
(David E. Rau)
/s/ D. Kent Anderson Director September 16, 1999
- ---------------------------
(D. Kent Anderson)
/s/ Michael O. Maffie Director September 16, 1999
- ---------------------------
(Michael O. Maffie)
/s/ J. Russell Nelson Director September 16, 1999
- ---------------------------
(J. Russell Nelson)
/s/ Peter A. Nelson Director September 16, 1999
- ---------------------------
(Peter A. Nelson)
/s/ Michael E. Rossi Director September 16, 1999
- ---------------------------
(Michael E. Rossi)
/s/ Glenn W. Schaeffer Director September 16, 1999
- ---------------------------
(Glenn W. Schaeffer)
/s/ C. Anthony Wainwright Director September 16, 1999
- ---------------------------
(C. Anthony Wainwright)
/s/ Sam Yellen Director September 16, 1999
- ---------------------------
(Sam Yellen)
23
<PAGE>
DEL WEBB CORPORATION
FORM 10-K
ITEM 8, ITEM 14(A) (1) AND (2)
INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
The following financial statements required to be included in Item 8 and other
disclosures by the Registrant are listed below:
PAGE
Management's Report......................................................... 25
Independent Auditors' Report................................................ 26
Consolidated Financial Statements:
Balance Sheets as of June 30, 1999 and 1998............................... 27
Statements of Earnings for each of the years in the three-year
period ended June 30, 1999.............................................. 28
Statements of Shareholders' Equity for each of the years in the
three-year period ended June 30, 1999................................... 29
Statements of Cash Flows for each of the years in the three-year
period ended June 30, 1999.............................................. 30
Notes to Consolidated Financial Statements................................ 32
The following financial statement schedule of the Registrant and its
subsidiaries is included in Item 14(a)(2):
PAGE
Consolidated Financial Statement Schedule:
II Valuation and Qualifying Accounts for each of the years in the
three-year period ended June 30, 1999................................. 45
Information other than that contained in the schedule listed above is omitted
because the conditions requiring filing do not exist or because the required
information is given in the financial statements, including the notes thereto.
24
<PAGE>
MANAGEMENT'S REPORT
FINANCIAL STATEMENTS
Del Webb Corporation is responsible for the preparation, integrity and fair
presentation of its published financial statements. The consolidated financial
statements that follow have been prepared in accordance with generally accepted
accounting principles and, as such, include amounts based on judgments and
estimates made by management. The Company also prepared the other information
included in this Annual Report and is responsible for its accuracy and
consistency with the consolidated financial statements.
The consolidated financial statements have been audited by the independent
accounting firm, KPMG LLP, which was given access to all financial records and
related data, including minutes of all meetings of shareholders, the board of
directors and committees of the board. The Company believes that all
representations made to the independent auditors during their audit were valid
and appropriate. KPMG LLP's audit report is presented on the following page.
INTERNAL CONTROL SYSTEM
The Company maintains a system of internal control over financial reporting and
over safeguarding of assets against unauthorized acquisition, use or
disposition. This system is designed to provide reasonable assurance to the
Company's management and board of directors regarding the preparation of
reliable published financial statements and such asset safeguarding. The system
includes a documented organizational structure and division of responsibility,
established policies and procedures (including a code of conduct) which are
communicated throughout the Company, and the selection, training and development
of employees. Internal auditors monitor the operation of the internal control
system and report findings and recommendations to management and the board of
directors, and corrective actions are taken to correct deficiencies if and as
they are identified. The board, operating through its audit committee which is
composed of directors who are not officers or employees of the Company, provides
oversight to the financial reporting and asset safeguarding process.
Even an effective internal control system, no matter how well designed, has
inherent limitations - including the possibility of the circumvention or
overriding of controls - and therefore can provide only reasonable assurance
with respect to financial statement preparation and asset safeguarding. Further,
because of changes in conditions, internal control system effectiveness may vary
over time.
The Company assessed its internal control system as of June 30, 1999 in relation
to criteria for effective internal control over financial reporting described in
"Internal Control - Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on its assessment, the Company
believes that, at June 30, 1999, its system of internal control over financial
reporting and over safeguarding of assets against unauthorized acquisition, use
or disposition met those criteria.
/s/ Philip J. Dion
- ---------------------------
Philip J. Dion
Chairman and Chief Executive Officer
/s/ John A. Spencer
- ---------------------------
John A. Spencer
Executive Vice President and Chief Financial Officer
June 30, 1999
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Del Webb Corporation:
We have audited the consolidated financial statements of Del Webb Corporation
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Del Webb Corporation
and subsidiaries as of June 30, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 1999 in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
Phoenix, Arizona
August 16, 1999
26
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 1998
IN THOUSANDS
-------------------------
1999 1998
----------- -----------
ASSETS
Real estate inventories (Notes 2, 6 and 11) $ 1,622,581 $ 1,113,297
Cash and short-term investments 22,669 14,362
Receivables (Note 3) 33,529 41,498
Property and equipment, net (Note 4) 72,423 33,333
Other assets (Note 5) 115,595 107,972
----------- -----------
$ 1,866,797 $ 1,310,462
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, senior and subordinated debt (Note 6) $ 1,040,613 $ 703,938
Contractor and trade accounts payable 115,456 78,114
Accrued liabilities and other payables 127,980 98,066
Home sale deposits 145,362 80,332
Deferred income taxes (Note 7) 22,510 4,245
Income taxes payable (Note 7) 10,082 --
----------- -----------
Total liabilities 1,462,003 964,695
----------- -----------
Shareholders' equity:
Common stock, $.001 par value. Authorized
30,000,000 shares; issued 18,221,385 shares
and 18,107,606 shares at June 30,1999 and
1998, respectively (Note 8) 18 18
Additional paid-in capital 168,865 166,328
Retained earnings (Note 6) 242,075 184,890
----------- -----------
410,958 351,236
Less deferred compensation (Note 8) (6,164) (5,469)
----------- -----------
Total shareholders' equity 404,794 345,767
----------- -----------
$ 1,866,797 $ 1,310,462
=========== ===========
See accompanying notes to consolidated financial statements.
27
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
IN THOUSANDS
EXCEPT PER SHARE DATA
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (Note 10) $ 1,466,181 $ 1,177,767 $ 1,186,262
----------- ----------- -----------
Costs and expenses (Note 10):
Home construction, land and other 1,112,525 898,754 913,872
Selling, general and administrative 203,711 166,343 160,924
Interest (Note 11) 59,179 46,212 49,457
----------- ----------- -----------
1,375,415 1,111,309 1,124,253
----------- ----------- -----------
Earnings before income taxes and extraordinary item 90,766 66,458 62,009
Income taxes (Note 7) 32,676 23,925 22,323
----------- ----------- -----------
Earnings before extraordinary item 58,090 42,533 39,686
Extraordinary item:
Loss from extinguishment of debt (net of $700 tax) -- -- 1,285
----------- ----------- -----------
Net earnings $ 58,090 $ 42,533 $ 38,401
=========== =========== ===========
Weighted average shares outstanding - basic 18,174 17,829 17,580
=========== =========== ===========
Weighted average shares outstanding - assuming dilution 18,705 18,458 17,862
=========== =========== ===========
Earnings per share - basic:
Earnings before extraordinary item $ 3.20 $ 2.39 $ 2.26
Extraordinary item -- -- (0.07)
----------- ----------- -----------
Net earnings $ 3.20 $ 2.39 $ 2.18
=========== =========== ===========
Earnings per share - assuming dilution:
Earnings before extraordinary item $ 3.11 $ 2.30 $ 2.22
Extraordinary item -- -- (0.07)
=========== =========== ===========
Net earnings $ 3.11 $ 2.30 $ 2.15
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
DELL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
IN THOUSANDS
-----------------------------------------------------------------------------------
COMMON ADDITIONAL TOTAL
SHARES COMMON PAID-IN RETAINED TREASURY DEFERRED SHAREHOLDERS'
OUTSTANDING STOCK CAPITAL EARNINGS STOCK COMPENSATION EQUITY
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1996 17,538 $ 18 $ 158,262 $ 111,033 $ (70) $ (4,467) $ 264,776
Shares issued and retired for
stock option and restricted
stock plans, net of
amortization 166 -- 2,046 -- 261 (37) 2,270
Treasury stock acquired (137) -- -- -- (2,105) -- (2,105)
Cash dividends ($.20 per share) -- -- -- (3,512) -- -- (3,512)
Net earnings -- -- -- 38,401 -- -- 38,401
--------- --------- --------- --------- --------- --------- ---------
Balances at June 30, 1997 17,567 18 160,308 145,922 (1,914) (4,504) 299,830
Shares issued and retired for
stock option and restricted
stock plans, net of
amortization 541 -- 6,025 -- 1,918 (965) 6,978
Shares repurchased -- -- (5) -- (4) -- (9)
Cash dividends ($.20 per share) -- -- -- (3,565) -- -- (3,565)
Net earnings -- -- -- 42,533 -- -- 42,533
--------- --------- --------- --------- --------- --------- ---------
Balances at June 30, 1998 18,108 18 166,328 184,890 -- (5,469) 345,767
Shares issued and retired for
stock option and restricted
stock plans, net of
amortization 184 -- 3,982 -- -- (695) 3,287
Shares repurchased (71) -- (1,445) -- -- -- (1,445)
Cash dividends ($.05 per share) -- -- -- (905) -- -- (905)
Net earnings -- -- -- 58,090 -- -- 58,090
--------- --------- --------- --------- --------- --------- ---------
Balances at June 30, 1999 18,221 $ 18 $ 168,865 $ 242,075 $ -- $ (6,164) $ 404,794
========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to community home sales $ 1,394,475 $ 1,113,118 $ 1,115,546
Cash received from commercial land and facility sales
at operating communities 56,746 43,185 12,395
Cash paid for costs related to home construction at operating
communities (881,272) (712,509) (742,091)
----------- ----------- -----------
Net cash provided by operating community sales activities 569,949 443,794 385,850
Cash paid for land acquisitions at operating communities (33,626) (29,294) (41,650)
Cash paid for lot development at operating communities (197,650) (147,844) (134,709)
Cash paid for amenity development at operating communities (96,650) (45,911) (56,503)
----------- ----------- -----------
Net cash provided by operating communities 242,023 220,745 152,988
Cash paid for costs related to communities in the pre-operating stage (381,361) (162,910) (81,755)
Cash received from (paid for) mortgage operations 3,138 (5,673) 2,213
Cash received from (paid for) residential land development project (1,361) 5,195 7,110
Cash paid for corporate activities (64,057) (59,871) (42,327)
Interest paid (73,348) (53,118) (45,854)
Cash paid for income taxes (2,807) (14,930) (14,879)
----------- ----------- -----------
Net cash used for operating activities (277,773) (70,562) (22,504)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (43,480) (16,855) (4,284)
Investments in life insurance policies (1,835) (4,568) (3,222)
----------- ----------- -----------
Net cash used for investing activities (45,315) (21,423) (7,506)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 739,740 592,611 547,871
Repayments of debt (407,813) (513,531) (506,990)
Stock repurchases (1,445) (9) (2,105)
Proceeds from exercise of common stock options 1,818 6,126 1,121
Dividends paid (905) (3,565) (3,512)
----------- ----------- -----------
Net cash provided by financing activities 331,395 81,632 36,385
----------- ----------- -----------
Net increase (decrease) in cash and short-term investments 8,307 (10,353) 6,375
Cash and short-term investments at beginning of year 14,362 24,715 18,340
----------- ----------- -----------
CASH AND SHORT-TERM INVESTMENTS AT END OF YEAR $ 22,669 $ 14,362 $ 24,715
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Reconciliation of net earnings to net
cash used for operating activities:
Net earnings $ 58,090 $ 42,533 $ 38,401
Amortization of non-cash common costs in
costs and expenses, excluding interest 365,260 273,173 268,806
Amortization of capitalized interest in
costs and expenses 59,179 46,212 49,457
Deferred compensation amortization 2,431 1,838 1,748
Depreciation and other amortization 8,134 6,725 6,425
Deferred income taxes on earnings before extraordinary item 18,265 10,771 6,086
Extraordinary loss from extinguishment of debt (net of tax) -- -- 1,285
Net increase in home construction costs (83,198) (152) (4,218)
Land acquisitions (40,619) (69,482) (61,499)
Lot development (411,309) (204,080) (155,348)
Amenity development (279,150) (99,280) (89,063)
Pre-acquisition costs -- (13,776) (19,869)
Net change in other assets and liabilities 25,144 (65,044) (64,715)
--------- --------- ---------
Net cash used for operating activities $(277,773) $ (70,562) $ (22,504)
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
31
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Del Webb
Corporation and its subsidiaries (the "Company"). All significant
intercompany transactions and accounts have been eliminated in
consolidation.
OPERATIONS
The Company conducts it operations in Arizona, California, Florida,
Illinois, Nevada, South Carolina and Texas (see Note 12). The Company's
active adult communities (primarily its Sun City communities) are generally
large-scale, master planned communities with extensive amenities for people
age 55 and over. The Company's family and country club communities are open
to people of all ages and are generally developed in metropolitan or market
areas in which the Company is developing active adult communities. Within
all of its communities, the Company is usually the exclusive builder of
homes.
The Company's operations are subject to a number of risks and
uncertainties, including, but not limited to, risks associated: with
financing and leverage; the development of future communities, including in
new geographic markets; governmental regulation, including growth
management and land exchanges with governmental entities; environmental
considerations; competition; the geographic concentration of the Company's
operations; the cyclical nature of real estate operations; interest rate
increases; fluctuations in labor and material costs; natural risks that
exist in certain of the Company's market areas; and year 2000 disruptions.
REAL ESTATE INVENTORIES
Real estate inventories include undeveloped land, partially improved land,
amenities and homes on finished lots, in various stages of completion.
These assets include direct construction costs for homes and common costs.
Common costs include land; general and subdivision land development costs;
model home, vacation home and owned golf course costs in excess of normal
direct construction costs; costs of community sales centers; costs of
assets (such as golf courses and recreation centers) contributed to certain
of the community associations; costs of subsidizing the community
associations; development period interest and other costs. All of these
common costs are capitalized and, along with estimated future common costs,
are allocated on a community by community basis to residential and
commercial lots based upon the estimated relative sales value that each lot
has to the estimated aggregate sales value of all lots in the community.
Home construction, land and other costs and expenses includes the direct
construction costs of the home and an allocation of common costs. Sales
commissions and advertising expenses are included in selling, general and
administrative expenses. The Company recognizes revenue at close of escrow.
The Company values its real estate inventories to be developed or under
development in accordance with Statement of Financial Accounting Standards
("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF. The Company has no significant
completed real estate projects.
32
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SFAS No. 121 requires that long-lived assets to be developed or under
development, 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. For long-term assets like active adult communities the
determination of whether there is an impairment loss is dependent primarily
on the Company's estimate of annual home closings over the life of the
community, which involves numerous assumptions and judgements as to future
events over a period of many years. Long-lived assets to be disposed of,
such as real estate inventories held for sale, must be reported at the
lower of book value or fair value less costs to sell.
CASH AND SHORT-TERM INVESTMENTS
The Company's policy is to invest its cash in high-grade, income-producing
short-term investments. Accordingly, uninvested cash balances are generally
kept at minimum levels. Short-term investments are valued at the lower of
cost or market and principally include overnight repurchase agreements,
certificates of deposit and commercial paper with an original maturity of
less than 90 days.
DEPRECIATION
Depreciation is computed using principally the straight-line method for
financial statement purposes and accelerated methods for tax purposes, over
the estimated useful lives of the assets.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in future years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the consolidated statement of earnings as an adjustment to
the effective income tax rate in the period that includes the enactment
date.
EARNINGS PER SHARE
Earnings per share-basic is determined by dividing net earnings by the
weighted average number of common shares outstanding during the year.
Earnings per share-assuming dilution is determined by dividing net earnings
by the weighted average number of common and common equivalent shares
(which reflect the effect of stock options) outstanding during the year.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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.
WARRANTY COSTS
Estimated future warranty costs are charged to home construction, land and
other costs and expenses when the revenues from home closings are
recognized.
33
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, REPORTING COMPREHENSIVE INCOME, during
fiscal 1999. SFAS No. 130 requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section
of its balance sheet. The Company had no items of other comprehensive
income in any period presented in these consolidated financial statements
GOODWILL
Goodwill is included in other assets and represents the unamortized excess
of the purchase price of two active adult communities in central Florida
over the fair value of net assets acquired in fiscal 1998 (see Note 5).
This goodwill is being amortized on a straight-line basis over a period of
15 years.
The Company assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its
remaining life can be recovered through undiscounted future operating cash
flows of the acquired operation. The amount of goodwill impairment, if any,
is measured based on projected discounted future operating cash flows using
a discount rate reflecting the Company's average cost of funds. The
assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.
FINANCIAL INSTRUMENTS
In the normal course of business, the Company may invest in various
financial assets and incurs various financial liabilities. The Company does
not trade in derivative financial instruments, although it occasionally
enters into agreements involving derivative financial instruments for
purposes other than trading. At June 30, 1999 the Company had no
significant derivative financial instruments.
The fair value estimates of financial instruments presented in Note 6 have
been determined by the Company using available market information and
valuation methodologies deemed appropriate by the Company. Considerable
judgement is required in interpreting market data to develop the estimates
of fair value. Accordingly, these fair value estimates are not necessarily
indicative of the amounts the Company might pay or receive in actual market
transactions. Potential taxes and other transaction costs have not been
considered in estimating fair value.
The fair values of the Company's publicly held debt are estimated based on
the quoted bid prices for these debt instruments on June 30, 1999. The
carrying amounts of the Company's remaining debt approximate the estimated
fair values because they are at interest rates comparable to rates
currently available to the Company for debt with similar terms and
remaining maturities. For all other financial instruments, the carrying
amounts approximate the fair values because of the short maturity of these
instruments and in some cases because they bear interest at market rates.
As substantially all of the Company's assets (including real estate
inventories and property and equipment) are not financial instruments, the
disclosures in Note 6 do not reflect the value of the Company as a whole.
STOCK-BASED COMPENSATION
In accordance with the provisions of Accounting Principals Board Opinion
No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, the Company measures
employee stock-based compensation expense as the excess of the market price
at the grant date over the amount the employee must pay for the stock. The
Company's general policy is to grant stock options at fair market value at
the date of grant, so no compensation expense is recognized. As permitted,
the Company has elected to adopt only the disclosure provisions of SFAS No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION (see Note 8).
34
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions, particularly those previously
discussed for real estate inventories, that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual
results could differ materially from those estimates.
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are as follows:
In Thousands
at June 30,
-----------------------
1999 1998
---------- ----------
Home construction costs $ 265,368 $ 182,170
Unamortized improvement and amenity costs 977,867 603,390
Unamortized capitalized interest 85,007 61,455
Land held for housing 191,624 220,441
Land and facilities held for future
development or sale 102,715 45,841
---------- ----------
$1,622,581 $1,113,297
========== ==========
At June 30, 1999, the Company had 418 completed homes and 504 homes under
construction that were not subject to a sales contract. These homes
represented $54.7 million of home construction costs at June 30, 1999. At
June 30, 1998 the Company had 436 completed homes and 395 homes under
construction (representing $44.5 million of home construction costs) that
were not subject to a sales contract.
Included in land and facilities held for future development or sale at June
30, 1999 were 187 acres of commercial land that are currently being
marketed for sale at the Company's active adult communities, 462 acres of
commercial land that are currently being marketed for sale at the Company's
Anthem Arizona project, 541 lots on selected residential land parcels in
the Company's Arizona family community operations and all 1,466 remaining
unsold lots in the Company's Nevada family communities.
(3) RECEIVABLES
Receivables are summarized as follows:
In Thousands
at June 30,
-----------------------
1999 1998
---------- ----------
Mortgage loans held for sale $ 14,390 $ 15,020
Notes from sales of land and facilities 6,466 8,090
Escrow funds from home and land sales 4,826 12,853
Other 7,847 5,535
---------- ----------
$ 33,529 $ 41,498
========== ==========
35
<PAGE>
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment, stated at cost, and related accumulated
depreciation are summarized as follows:
In Thousands
at June 30,
-----------------------
1999 1998
---------- ----------
Buildings and improvements $ 23,796 $ 11,186
Equipment 61,981 43,556
Land and improvements 14,613 7,965
---------- ----------
100,390 62,707
Less accumulated depreciation 27,967 29,374
---------- ----------
$ 72,423 $ 33,333
========== ==========
(5) OTHER ASSETS
Other assets are summarized as follows:
In Thousands
at June 30,
-----------------------
1999 1998
---------- ----------
Pre-acquisition costs $ 46,783 $ 51,655
Cash surrender value of life insurance policies 27,152 24,260
Utility costs and deposits 12,916 9,118
Prepaid expenses 9,648 6,373
Goodwill, net 9,028 9,694
Water right costs 3,263 3,263
Other 6,805 3,609
---------- ----------
$ 115,595 $ 107,972
========== ==========
Substantially all of pre-acquisition costs at June 30, 1999 and 1998
consists of costs incurred for the acquisition of an
environmentally-sensitive property by the Company for the purpose of
exchanging the property with the Bureau of Land Management for property in
the Las Vegas area to be included in the Company's Anthem Las Vegas
project, substantially all of which would be for Sun City Anthem. Any
exchange is subject to regulatory approvals and other conditions. If an
exchange is effected, these costs will 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.
(6) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT
Notes payable, senior and subordinated debt consists of the following:
In Thousands
at June 30,
-----------------------
1999 1998
---------- ----------
9 3/4% Senior Subordinated Debentures due 2003,
net, unsecured $ 98,492 $ 98,081
9% Senior Subordinated Debentures due 2006,
net, unsecured 98,176 97,902
9 3/4% Senior Subordinated Debentures due 2008,
net, unsecured 145,854 145,370
9 3/8% Senior Subordinated Debentures due 2009,
net, unsecured 195,413 194,977
10 1/4% Senior Subordinated Debentures due 2010,
net, unsecured 143,622 --
Notes payable to banks under a revolving credit
facility and short-term lines of credit,
unsecured 301,000 111,209
Real estate and other notes, variable interest
rates from prime to prime plus 1% and fixed
rates from 6.8% to 9.0%, maturities to 2006,
primarily secured 58,056 56,399
---------- ----------
$1,040,613 $ 703,938
========== ==========
36
<PAGE>
(6) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT (CONTINUED)
In March 1993 the Company completed a public offering of $100 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs and discount. These Debentures are due on March 1, 2003 and
have a stated interest rate of 9 3/4 percent per year. Interest is payable
semi-annually on March 1 and September 1. The annual effective interest
rate of the Debentures, after giving effect to the amortization of deferred
financing costs and discount, is 10.2 percent. The Debentures may be
redeemed by the Company on or after March 1, 1999 and 2000 at 102.4375 and
100 percent, respectively, of the principal amount of the Debentures
redeemed, plus accrued and unpaid interest to the redemption date.
In February 1994 the Company completed a public offering of $100 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs. These Debentures are due on February 15, 2006 and have a
stated interest rate of 9 percent per year. Interest is payable
semi-annually on February 15 and August 15. The annual effective interest
rate of the Debentures, after giving effect to the amortization of deferred
financing costs, is 9.3 percent. The Debentures may be redeemed by the
Company on or after February 15, 1999, 2000, 2001, 2002 and 2003 at
104.500, 103.375, 102.250, 101.125 and 100 percent, respectively, of the
principal amount of the Debentures redeemed, plus accrued and unpaid
interest to the redemption date.
In January 1997 the Company completed a public offering of $150 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs and discount. These Debentures are due on January 15, 2008
and have a stated interest rate of 9 3/4 percent per year. Interest is
payable semi-annually on January 15 and July 15. The annual effective
interest rate of the Debentures, after giving effect to the amortization of
deferred financing costs and discount, is 10.1 percent. The Debentures may
be redeemed by the Company on or after January 15, 2002, 2003, 2004 and
2005 at 104.875, 103.250, 101.625 and 100 percent, respectively, of the
principal amount of the Debentures redeemed, plus accrued and unpaid
interest to the redemption date.
In May 1998 the Company completed a public offering of $200 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs. These Debentures are due on May 1, 2009 and have a stated
interest rate of 9 3/8 percent per year. Interest is payable semi-annually
on May 1 and November 1. The annual effective interest rate of the
Debentures, after giving effect to the amortization of deferred financing
costs, is 9.6 percent. The Debentures may be redeemed by the Company on or
after May 1, 2003, 2004, 2005 and 2006 at 104.688, 103.125, 101.563 and 100
percent, respectively, of the principal amount of the Debentures redeemed,
plus accrued and unpaid interest to the redemption date.
In February 1999 the Company completed a public offering of $150 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs. These Debentures are due on February 15, 2010 and have a
stated interest rate of 10 1/4 percent per year. Interest is payable
semi-annually on February 15 and August 15. The annual effective interest
rate of the Debentures, after giving effect to the amortization of deferred
financing costs, is 10.7 percent. The Debentures may be redeemed by the
Company on or after February 15, 2004, 2005, 2006, 2007 and 2008 at
105.125, 103.844, 102.563, 101.281 and 100 percent, respectively, of the
principal amount of the Debentures redeemed, plus accrued and unpaid
interest to the redemption date.
The Company has a $500 million senior unsecured revolving credit facility
(the "Credit Facility"), increased from $450 million in February 1999. If
the Credit Facility is not subsequently amended, it will mature in May
2002. Borrowings under the Credit Facility bear interest at the prime rate
or, if the Company selects, at the London interbank offered rate plus 1.30
to 1.90 percent (plus 1.30 to 2.35 percent effective July 1, 1999),
depending on the Company's ratio of debt to tangible net worth. The
effective interest rate on borrowings outstanding under the Credit Facility
at June 30, 1999 and 1998 was 7.3 percent and 8.5 percent, respectively.
37
<PAGE>
(6) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT (CONTINUED)
The Credit Facility and the indentures for the Company's publicly-held debt
contain covenants which, taken together and among other things, limit
investments in unentitled land and unsold homes, family community assets,
dividends, stock repurchases, incurrence of indebtedness and certain
acquisitions and which could, depending on the circumstances, affect the
Company's ability to borrow in the future. At June 30, 1999 the Company had
$286.0 million outstanding under the Credit Facility and $15.0 million
outstanding under its $25 million of short-term lines of credit (together
with the Credit Facility, the "Credit Facilities"). At that date, $98.5
million of the $224.0 million of unused capacity under the Credit
Facilities was not available to the Company. However, as a result of an
amendment, effective July 1, 1999, to the "Total Debt to Tangible Net
Worth" covenant under the Credit Facility, the Company had full
availability of the Credit Facilities (the short-term lines of credit were
$15 million as of that date).
At June 30, 1999, under the most restrictive of the covenants in the
Company's debt agreements, $50.7 million of the Company's retained earnings
was available for payment of cash dividends and the acquisition by the
Company of its common stock.
The estimated fair values at June 30, 1999 of the Company's 9 3/4% Senior
Subordinated Debentures due 2003, 9% Senior Subordinated Debentures due
2006, 9 3/4% Senior Subordinated Debentures due 2008, 9 3/8% Senior
Subordinated Debentures due 2009 and 10 1/4% Senior Subordinated Debentures
due 2010 were $100.0 million, $97.9 million, $149.0 million, $196.5 million
and $151.3 million, respectively. The estimated fair values at June 30,
1998 of the Company's 9 3/4% Senior Subordinated Debentures due 2003, 9%
Senior Subordinated Debentures due 2006, 9 3/4% Senior Subordinated
Debentures due 2008 and 9 3/8% Senior Subordinated Debentures due 2009 were
$103.1 million, $99.5 million, $150.9 million and $196.8 million,
respectively.
The principal payment requirements (in thousands) on debt for the next five
years ended June 30 are as follows:
2000 $ 43,303
2001 $ 2,375
2002 $ 289,195
2003 $ 101,006
2004 $ 11,594
(7) INCOME TAXES
The components of income taxes on earnings before the extraordinary item
are as follows:
In Thousands
Year Ended June 30,
--------------------------------------
1999 1998 1997
-------- -------- --------
Current:
Federal $ 13,506 $ 12,252 $ 14,029
State 905 902 2,208
-------- -------- --------
14,411 13,154 16,237
-------- -------- --------
Deferred:
Federal 16,471 9,730 6,854
State 1,794 1,041 (768)
-------- -------- --------
18,265 10,771 6,086
-------- -------- --------
$ 32,676 $ 23,925 $ 22,323
======== ======== ========
38
<PAGE>
(7) INCOME TAXES (CONTINUED)
In the year ended June 30, 1997, the Company also recognized a $0.7 million
income tax benefit related to the extraordinary loss from extinguishment of
debt.
Deferred tax assets and liabilities have been recognized in the
consolidated balance sheets due to temporary differences and carryforwards
as follows:
In Thousands
at June 30,
-------------------
1999 1998
-------- --------
Deferred tax assets:
Net operating loss carryforwards $ 1,401 $ 1,093
Tax credit carryforwards 900 621
Liabilities of discontinued operations,
principally due to loss provisions 1,113 3,629
Property and equipment, principally due
to differences in depreciation 10,925 2,773
State income taxes 1,512 1,709
Deferred compensation 7,584 6,679
Accruals 12,769 10,225
Other 2,770 2,100
-------- --------
38,974 28,839
Valuation allowance 3,389 3,389
-------- --------
35,585 25,450
-------- --------
Deferred tax liabilities:
Real estate, principally due to basis differences 57,641 27,106
Other 454 2,589
-------- --------
58,095 29,695
======== ========
Net deferred income tax liability $ 22,510 $ 4,245
======== ========
Income taxes differ from the amounts computed using the federal statutory
income tax rate as a result of the following:
In Thousands
Year Ended June 30,
--------------------------------
1999 1998 1997
-------- -------- --------
Expected taxes at current federal
statutory income tax rate $ 31,768 $ 23,260 $ 21,703
State income taxes, net of federal
benefit 2,696 2,438 2,856
Federal and state tax credits (2,146) (1,798) (2,210)
Adjustments due to the settlement of
audits and resolution of issues 85 (351) 252
Change in deferred tax asset valuation
allowance -- -- (473)
Other 273 376 195
-------- -------- --------
Income taxes $ 32,676 $ 23,925 $ 22,323
======== ======== ========
At June 30, 1999 the Company had a state net operating loss carryforward of
$28.0 million that expires in fiscal 2019.
39
<PAGE>
(8) COMMON STOCK RESERVED
The Company has six employee stock option plans: the 1981 Stock Option Plan
(under which no grants can be made subsequent to December 31, 1991), the
1986 Stock Option and Stock Appreciation Rights (SAR) Plan (under which no
grants can be made subsequent to December 31, 1995) and the 1991, 1993,
1995 and 1998 Executive Long-Term Incentive Plans (1991 ELTIP, 1993 ELTIP,
1995 ELTIP and 1998 ELTIP, which cover both options and restricted stock
grants). Options under each of these plans are granted to key employees to
purchase shares of the Company's common stock at a price not less than the
current market price at the date of the grant. The options are exercisable
over a ten-year period from the date of the grant. Shares authorized for
grant under the 1991 ELTIP total 750,000. Shares authorized for grant under
the 1993 ELTIP total 1,200,000, of which no more than 450,000 may be used
for restricted stock grants. Shares authorized for grant under the 1995
ELTIP total 1,200,000, of which no more than 100,000 may be used for
restricted stock grants. Shares authorized for grant under the 1998 ELTIP
total 1,000,000, of which no more than 100,000 may be used for time-based
restricted stock grants and no more than 100,000 may be used for
performance-based restricted stock grants.
The Company also has the 1991 Directors' Stock Plan, the 1995 Director
Stock Plan and the 1998 Director Stock Plan, under which options may be
granted to the Directors of the Company to purchase shares of the Company's
common stock at a price not less than the current market price at the date
of grant. Under these plans the Directors may elect to defer some or all of
their annual retainers and receive restricted stock or stock options at
prices that, when combined with the amounts of deferred retainers, equal
the current market price at the date of the grant. Shares authorized under
these plans total 75,000 per plan.
Effective in fiscal 1997 the Company adopted the disclosure requirements of
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. As permitted under
SFAS No. 123, the Company will continue to measure employee stock-based
compensation expense as the excess of the market price at the grant date
over the amount the employee must pay for the stock.
SFAS No. 123 requires disclosure of pro forma net earnings and pro forma
net earnings per share as if the fair value based method had been applied
in measuring employee compensation expense for awards granted in fiscal
1999, 1998, 1997 and 1996. Management believes that the fiscal 1999, 1998
and 1997 pro forma amounts may not be representative of the effects of
stock-based awards on future pro forma net earnings and pro forma net
earning per share because, among other reasons, those pro forma amounts
exclude the pro forma employee compensation expense related to unvested
stock options granted before fiscal 1996.
Reported and such pro forma net earnings, in thousands, and net earnings
per share amounts for the years ended June 30, 1999, 1998 and 1997 are set
forth below:
1999 1998 1997
---- ---- ----
Reported:
Net earnings $58,090 $42,533 $38,401
Net earnings per share - basic 3.20 2.39 2.18
Net earnings per share - assuming dilution 3.11 2.30 2.15
Pro forma:
Net earnings 56,890 41,588 37,777
Net earnings per share - basic 3.13 2.33 2.15
Net earnings per share - assuming dilution 3.04 2.25 2.11
40
<PAGE>
(8) COMMON STOCK RESERVED (CONTINUED)
The fair values of employee stock options granted were estimated on the
dates of their grant using the Black-Scholes option pricing model based on
the following weighted average assumptions:
1999 1998 1997
---------------------------------------------------------------------------
Risk free interest rate 5.71% 5.65% 6.26%
Expected life (in years) 7.4 7.5 7.4
Expected volatility 30% 29% 27%
Expected dividend yield 0.82% 1.08% 1.17%
---------------------------------------------------------------------------
Stock option activity for the years ended June 30, 1999, 1998, and 1997 is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 1,807,632 $ 16.61 1,981,613 $ 15.12 1,801,288 $ 14.82
Granted 372,879 25.91 372,750 20.97 339,665 16.39
Exercised (138,570) 15.79 (460,506) 13.30 (94,017) 11.93
Canceled (109,120) 21.02 (86,225) 19.06 (65,323) 17.89
---------- ---------- ---------- ---------- ---------- ----------
Options outstanding
at end of year 1,932,821 $ 18.21 1,807,632 $ 16.61 1,981,613 $ 15.12
========== ========== ========== ========== ========== ==========
Options exercisable
at end of year 1,098,619 $ 15.16 1,050,291 $ 14.47 1,287,530 $ 13.49
========== ========== ========== ========== ========== ==========
Weighted average
fair valueof options
granted during year $10.90 $ 8.32 $ 6.46
====== ====== ======
</TABLE>
Stock options outstanding at June 30, 1999 were as follows:
Options Outstanding Options Exercisable
----------------------------------------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Range of Remaining Exercise Exercise
Exercise Price Options Contractual Life Price Options Price
-------------- ------- ---------------- ----- ------- -----
$ 8.00 - $ 9.89 140,419 1.6 years $ 8.67 140,419 $ 8.67
$10.44 - $14.53 359,036 2.8 12.78 359,036 12.78
$15.71 - $18.10 519,916 5.9 16.40 372,130 16.41
$20.56 - $27.22 913,450 8.2 22.84 227,034
---------- ----------
1,932,821 6.1 years $ 18.21 1,098,619 $ 15.16
========= === ======== ========= ========
Shares granted, net of cancellations, under the Company's restricted stock
plans during the years ended June 30, 1999, 1998 and 1997 aggregated 96,930
shares, 128,070 shares and 109,200 shares, respectively. The Company
recognized compensation expense of $2.4 million, $1.8 million and $1.7
million related to shares granted under the restricted stock plans for the
years ended June 30, 1999, 1998 and 1997, respectively.
(9) DEFINED CONTRIBUTION PLAN
The Company sponsors a defined contribution retirement savings plan that
covers substantially all employees of the Company after completion of six
months of service. Company contributions to this plan, which can include
amounts based on a percentage of employee contributions as well as
discretionary contributions, were $1.3 million, $1.7 million and $2.6
million for the years ended June 30, 1999, 1998 and 1997, respectively.
41
<PAGE>
(10) REVENUES AND COSTS AND EXPENSES
The components of revenues and costs and expenses:
In Thousands
Year Ended June 30,
----------------------------------
1999 1998 1997
---------- ---------- ----------
Revenues:
Homebuilding:
Active adult communities $1,084,463 $ 830,728 $ 786,746
Family and country club communities 302,658 287,656 357,343
---------- ---------- ----------
Total homebuilding 1,387,121 1,118,384 1,144,089
Land and facility sales 61,861 48,522 31,289
Other 17,199 10,861 10,884
---------- ---------- ----------
$1,466,181 $1,177,767 $1,186,262
========== ========== ==========
Costs and expenses:
Home construction and land:
Active adult communities $ 807,518 $ 624,361 $ 595,401
Family and country club communities 244,607 237,332 289,526
---------- ---------- ----------
Total homebuilding 1,052,125 861,693 884,927
Cost of land and facility sales 52,268 33,479 26,051
Other cost of sales 8,132 3,582 2,894
---------- ---------- ----------
Total home construction,
land and other 1,112,525 898,754 913,872
Selling, general and administrative 203,711 166,343 160,924
Interest 59,179 46,212 49,457
---------- ---------- ----------
$1,375,415 $1,111,309 $1,124,253
========== ========== ==========
(11) INTEREST
The following table shows the components of interest:
In Thousands
Year Ended June 30,
---------------------------
1999 1998 1997
------- ------- -------
Interest incurred and capitalized $82,731 $61,546 $51,917
======= ======= =======
Amortization of capitalized interest in costs
and expenses $59,179 $46,212 $49,457
======= ======= =======
Unamortized capitalized interest included
in real estate inventories at year end $85,007 $61,455 $46,121
======= ======= =======
Interest income $ 1,081 $ 1,072 $ 1,510
======= ======= =======
Interest income is included in other revenues.
42
<PAGE>
(12) SEGMENT INFORMATION
The Company conducts its operations in two primary segments in Arizona,
California, Florida, Illinois, Nevada, South Carolina and Texas. The
Company's active adult communities (primarily its Sun City communities) are
generally large-scale, master planned communities with extensive amenities
for people age 55 and over. The Company's family and country club
communities are open to people of all ages and are generally developed in
metropolitan or market areas in which the Company is developing active
adult communities. Within all of its communities, the Company is usually
the exclusive builder of homes.
Both of the Company's primary segments generate their revenues through the
sale of homes (and, to a much lesser extent, land and facilities) to
external customers in the United States. The Company is not dependent on
any major customer.
Information as to the operations of the Company in different business
segments is set forth below based on the nature of the Company's
communities and their customers. Certain information has not been included
by segment due to the immateriality of the amount to the segments or in
total. The Company evaluates segment performance based on several factors,
of which the primary financial measure is earnings before interest and
taxes ("EBIT"). The accounting policies of the business segments are the
same as those described in Note 1 for the Company. There are no significant
intersegment transactions.
In Thousands
Year Ended June 30,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
Revenues:
Active adult communities $ 1,111,366 $ 846,837 $ 804,617
Family and country club
communities 344,051 321,591 361,873
Corporate and other 10,764 9,339 19,772
----------- ----------- -----------
$ 1,466,181 $ 1,177,767 $ 1,186,262
=========== =========== ===========
EBIT:
Active adult communities $ 171,311 $ 122,968 $ 115,808
Family and country club
communities 39,548 37,862 39,990
Corporate and other (60,914) (48,160) (44,332)
----------- ----------- -----------
$ 149,945 $ 112,670 $ 111,466
=========== =========== ===========
Amortization of Capitalized
Interest:
Active adult communities $ 44,816 $ 33,492 $ 33,502
Family and country club
communities 14,363 12,720 15,955
Corporate and other -- -- --
----------- ----------- -----------
$ 59,179 $ 46,212 $ 49,457
=========== =========== ===========
Assets at Year End:
Active adult communities $ 1,213,448 $ 895,919 $ 743,365
Family and country club
communities 444,889 259,780 209,956
Corporate and other 208,460 154,763 133,341
----------- ----------- -----------
$ 1,866,797 $ 1,310,462 $ 1,086,662
=========== =========== ===========
Expenditures for Real Estate
Inventories:
Active adult communities $ 1,053,866 $ 698,763 $ 619,085
Family and country club
communities 452,787 253,589 275,994
Corporate and other 103 312 1,842
----------- ----------- -----------
$ 1,506,756 $ 952,664 $ 896,921
=========== =========== ===========
Purchases of Property and
Equipment:
Active adult communites $ 19,733 $ 13,822 $ 2,742
Family and country club
communities 904 523 208
Corporate and other 22,843 2,510 1,334
----------- ----------- -----------
$ 43,480 $ 16,855 $ 4,284
=========== =========== ===========
43
<PAGE>
(13) CONTINGENT LIABILITIES AND COMMITMENTS
The Company is a party to various legal proceedings arising in the ordinary
course of business. While it is not feasible to predict the ultimate
disposition of these matters, it is the opinion of management that their
outcome will not have a material adverse effect on the financial statemens
of the Company taken as a whole.
The Company has issued surety bonds and standby letters of credit
aggregating $273.1 million at June 30, 1999.
The Company leases from third parties, under operating leases, office
space, model homes, apartment units which it rents to prospective customers
at its large-scale active adult communities, automobiles, computers, office
equipment, golf course equipment, heavy machinery and certain other
equipment. The leases are generally renewable at the Company's option for
additional periods. Total rent expense incurred by the Company was $13.6
million, $10.5 million and $7.5 million for the years ended June 30, 1999,
1998 and 1997, respectively. Minimum lease payments (in thousands) to be
made by the Company under non-cancelable lease agreements are as follows:
2000 $ 10,415
2001 8,201
2002 5,033
2003 3,930
2004 2,748
Later years 12,660
--------
$ 42,987
========
(14) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended June 30, 1999 and 1998
is presented below. The sum of the individual quarterly data may not equal
the annual data due to rounding and fluctuations in weighted average shares
outstanding on a quarter-to-quarter basis.
<TABLE>
<CAPTION>
In Thousands Except Per Share Data
Three Months Ended
------------------------------------------------
June 30, March 31, December 31, September 30,
1999 1999 1998 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 518,858 $ 324,428 $ 354,248 $ 268,647
Net earnings 23,724 12,469 13,483 8,414
Net earnings per share - basic 1.30 .68 .74 .46
Net earnings per share - assuming dilution 1.27 .66 .72 .45
June 30, March 31, December 31, September 30,
1998 1998 1997 1997
---- ---- ---- ----
Revenues $ 396,075 $ 254,714 $ 278,935 $ 248,043
Net earnings 17,622 7,520 11,266 6,125
Net earnings per share - basic .97 .42 .64 .35
Net earnings per share - assuming dilution .94 .40 .62 .34
</TABLE>
44
<PAGE>
SCHEDULE II
DEL WEBB CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
In Thousands
--------------------------------------------------------
Additions Additions
Balance at Charged to Charged to
Beginning Costs and Other Balance at
of Year Expenses Accounts Deductions End of Year
-------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C>
1999
Reserve for residential land
development project $ 7,898 $ -- $ -- $ 7,898 $ --
Reserves for disposal costs
of discontinued operations 9,703 -- -- 2,437 7,266
-------- ------- ------- -------- --------
$ 17,601 $ -- $ -- $ 10,335 $ 7,266
======== ======= ======= ======== ========
1998
Reserve for residential land
development project $ 7,491 $ -- $ 407 $ -- $ 7,898
Reserves for disposal costs
of discontinued operations 10,382 -- -- 679 9,703
-------- ------- ------- -------- --------
$ 17,873 $ -- $ 407 $ 679 $ 17,601
======== ======= ======= ======== ========
1997
Reserve for residential land
development project $ 7,126 $ 365 $ -- $ -- $ 7,491
Reserves for disposal costs
of discontinued operations 12,209 -- -- 1,827 10,382
-------- ------- ------- -------- --------
$ 19,335 $ 365 $ -- $ 1,827 $ 17,873
======== ======= ======= ======== ========
</TABLE>
45
<PAGE>
DEL WEBB CORPORATION
Report on Form 10-K For The
Year Ended June 30, 1999
10-K EXHIBIT INDEX
NON-FINANCIAL STATEMENT EXHIBITS
Exhibits Filed
EXHIBIT NO.
- -----------
10.1 Second Amendment to Second Amended and Restated Revolving Loan
Agreement by and among Del Webb Corporation and Bank of America
National Trust and Savings Association as Agent, and Bank One
Arizona, NA, as Co-Agent, entered into as of July 20, 1999.
10.2 Current list of participants to the Del Webb Corporation
Supplemental Executive Retirement Plan No. 2.
10.3 Current list of Directors and Officers that are party to the
Directors and Officers Indemnification Agreement.
10.4 Del Webb Corporation Management Incentive Plan Fiscal 2000 (July
1, 1999 - June 30, 2000).
10.5 1999/00 Executive Management Incentive Plan Award Agreement
between the Registrant and Philip J. Dion dated July 22, 1999.
10.6 1999/00 Executive Management Incentive Plan Award Agreement
between the Registrant and LeRoy C. Hanneman, Jr. dated July 22,
1999.
10.7 Amendment to Employment Agreement between Anne L. Mariucci and
Del Webb Corporation dated May 1, 1999.
10.8 Del Webb Corporation 1998 Executive Long-Term Incentive Plan
effective November 4, 1998.
10.9 Del Webb Corporation 1998 Director Stock Plan effective July 23,
1998.
10.10 Second Amendment to the Del Webb Corporation Supplemental
Executive Retirement Plan No. 1 effective June 26, 1996.
10.11 Second Amendment to the Del Webb Corporation Supplemental
Executive Retirement Plan No. 2 effective June 26, 1996.
<PAGE>
10.12 Third Amendment to the Del Webb Corporation Supplemental
Executive Retirement Plan No. 2 effective February 11, 1998.
10.13 Not Used.
21.0 Subsidiaries of the Registrant.
23.0 Consent of KPMG LLP.
27 Financial Data Schedule.
In addition to those Exhibits shown above, the Company hereby incorporates
the following Exhibits* pursuant to Exchange Act Rule 12b-32 and Regulation
ss.229.10(d) by reference to the fillings set forth below:
EXHIBIT NO.
- -----------
3.0 Amended and Restated Certificate of Incorporation of the
Registrant, incorporated by reference to Exhibit 99.0 to
Registrant's Report on Form 10-Q for the quarter ended September
30, 1994.
3.1 The Bylaws of the Registrant effective November 1, 1994, as
amended on February 13, 1996, incorporated by reference to
Exhibit 3.1 to Registrant's Report on Form 10-K for the year
ended June 30, 1996.
4.1 Indenture dated as of May 11, 1998 between Registrant and State
Street Bank and Trust Company, as Trustee, defining the rights of
holders of the 9 3/8% Senior Subordinated Debentures due 2009,
incorporated by reference to Exhibit 1.1 to Registrant's Report
on Form 8-K dated May 11, 1998.
4.2 Indenture dated as of March 8, 1993 between Registrant and
Fidelity Trust Company, New York, as Trustee, defining the rights
of the holders of the 9 3/4% Senior Subordinated Debentures due
2003, incorporated by reference to Exhibit 4.1 to Registrant's
Report on Form 8-K dated March 8, 1993.
4.3 Indenture dated as of February 11, 1994, between Registrant and
The Bank of New York, as Trustee, defining the rights of the
holders of the 9% Senior Subordinated Debentures due 2006,
incorporated by reference to Exhibit 4.1 to Registrant's Report
on Form 8-K dated February 11, 1994.
4.4 Indenture dated as of January 21, 1997, between Registrant and
State Street Bank and Trust Company, as Trustee, defining the
rights of the holders of the 9 3/4% Senior Subordinated
Debentures due 2008, incorporated by reference to Exhibit 1.1 to
Registrant's Report on Form 8-K dated January 21, 1997.
4.5 Indenture dated as of February 18, 1999, between Registrant and
Bank of Montreal Trust Company, as Trustee, defining the rights
2
<PAGE>
of the holders of the 10 1/4% Senior Subordinated Debentures due
2010, incorporated by reference to Exhibit 1.2 to Registrant's
Report on Form 8-K dated February 18, 1999; as supplemented by
the First Supplemental Indenture, incorporated by reference to
Exhibit 10.2 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
10.14 Change in Control Agreement letter dated March 15, 1999, and
related list of recipients, as incorporated by reference to
Exhibit 10.14 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
10.15 Second Amended and Restated Revolving Loan Agreement by and among
Del Webb Corporation and Bank of America National Trust and
Savings Association as Agent, and Bank One Arizona, NA, as
Co-Agent, dated June 5, 1998; as amended by the First Amendment
to the Agreement entered into as of February 19, 1999,
incorporated by reference to Exhibit 10.1 to Registrant's Report
on Form 10-Q for the quarter ended March 31, 1999.
10.16 Del Webb Corporation Deferred Compensation Plan effective June 1,
1993, incorporated by reference to Exhibit 10.7 to Registrant's
Report on Form 10-K for the year ended June 30, 1993.
10.17 1981 Stock Option Plan, as amended, incorporated by reference to
Exhibit 10.18 to Registrant's Report on Form 10-K for the year
ended June 30, 1993.
10.18 1986 Stock Option and SAR Plan of the Del Webb Corporation, as
amended, incorporated by reference to Exhibit 10.19 to
Registrant's Report on Form 10-K for the year ended June 30,
1993.
10.19 Del Webb Corporation Executive Long-Term Incentive Plan adopted
November 20, 1991, as amended, incorporated by reference to
Exhibit 10.10 to Registrant's Report on Form 10-K for the year
ended June 30, 1997; as amended by the Third Amendment to Plan
effective as of February 11, 1998, incorporated by reference to
Exhibit 10.8 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
10.20 Del Webb Corporation 1993 Executive Long Term Incentive Plan
dated March 17, 1994, as amended, incorporated by reference to
Exhibit 10.11 to Registrant's Report on Form 10-K for the year
ended June 30, 1997; as amended by the Second Amendment to Plan
effective as of February 11, 1998, incorporated by reference to
Exhibit 10.7 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
3
<PAGE>
10.21 Del Webb Corporation 1995 Executive Long-Term Incentive Plan
adopted July 13, 1995, as amended, incorporated by reference to
Exhibit 10.25 to Registrant's Report on Form 10-K for the year
ended June 30, 1997; as amended by the Second Amendment to Plan
effective as of February 11, 1998, incorporated by reference to
Exhibit 10.6 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
10.22 Del Webb Corporation Director Stock Plan dated November 20, 1991,
incorporated by reference to Exhibit 10.13 to Registrant's Report
on Form 10-K for the year ended June 30, 1993; as amended by the
First Amendment to Plan effective as of February 11, 1998,
incorporated by reference to Exhibit 10.5 to Registrant's Report
on Form 10-Q for the quarter ended March 31, 1999.
10.23 Del Webb Corporation 1995 Director Stock Plan adopted July 13,
1995, incorporated by reference to Exhibit 10.26 to Registrant's
Report on Form 10-K for the year ended June 20, 1995; as amended
by the First Amendment to Plan effective as of February 11, 1998,
incorporated by reference to Exhibit 10.3 to Registrant's Report
on Form 10-Q for the quarter ended March 31, 1999.
10.24 Del E. Webb Corporation Umbrella Trust dated June 11, 1987, as
amended, incorporated by reference to Exhibit 10.23 to
Registrant's Report on Form 10-K for the year ended June 30,
1996.
10.25 Del Webb Corporation 1995 Executive Management Incentive Plan
adopted July 13, 1995, incorporated by reference to Exhibit 10.27
to Registrant's Report on Form 10-K for the year ended June 30,
1995; as amended by the First Amendment to Plan effective as of
February 11, 1998, incorporated by reference to Exhibit 10.4 to
Registrant's Report on Form 10-Q for the quarter ended March 31,
1999.
10.26 Key Executive Life Insurance Plan dated May 15, 1991,
incorporated by reference to Exhibit 10.10 to Registrant's Report
on Form 10-K for the year ended June 30, 1991; as amended on
November 18, 1994, incorporated by reference to Exhibit 10.9 to
Registrant's Report on Form 10-K for the year ended June 30,
1996.
10.27 Key Executive Life Insurance Plan II dated April 1, 1992,
incorporated by reference to Exhibit 10.8 to Registrant's Report
on Form 10-K for the year ended June 30, 1992; as amended on
November 8, 1994, incorporated by reference to Exhibit 10.8 to
Registrant's Report on Form 10-K for the year ended June 30,
1996.
10.28 Key Executive Life Plan Plus dated August 23, 1995, incorporated
by reference to Exhibit 10.32 to Registrant's Report on Form 10-K
for the year ended June 30, 1996.
10.29 Key Executive Life Plan 1995 dated October 5, 1995, incorporated
by reference to Exhibit 10.33 to Registrant's Report on Form 10-K
for the year ended June 30, 1996.
4
<PAGE>
10.30 Senior Officer Medical and Dental Reimbursement Plan, as amended
and restated November 16, 1992, incorporated by reference to
Exhibit 10.17 to Registrant's Report on Form 10-K for the year
ended June 30, 1993.
10.31 Group Term Carve-Out Plan dated November 18, 1994, incorporated
by reference to Exhibit 10.34 to Registrant's Report on Form 10-K
for the year ended June 30, 1996.
10.32 Del Webb Corporation Supplemental Executive Retirement Plan No.
1, as amended and restated April 20, 1993, incorporated by
reference to Exhibit 10.12 to Registrant's Report on Form 10-K
for the year ended June 30, 1993; as amended by First Amendment
to the Del Webb Corporation Supplemental Executive Retirement
Plan No. 1 effective July 1, 1995, incorporated by reference to
Exhibit 10.13 to Registrant's Report on Form 10-K for the year
ended June 30, 1995; as amended by the Third Amendment to Plan
dated March 10, 1999, incorporated by reference to Exhibit 10.9
to Registrant's Report on Form 10-Q for the quarter ended March
31, 1999.
10.33 Supplemental Executive Retirement Plan No. 1 Participation
Agreement between the Registrant and Philip J. Dion, amended and
restated effective July 25, 1996, incorporated by reference to
Exhibit 10.30 to Registrant's Report on Form 10-K for the year
ended June 30, 1996.
10.34 Supplemental Executive Retirement Plan No. 2 Participation
Agreement as of April 11, 1997 between the Registrant and John H.
Gleason, incorporated by reference to Exhibit 10.40 to
Registrant's Report on Form 10-K for the year ended June 30,
1997.
10.35 Supplemental Executive Retirement Plan No. 2 Participation
Agreement as of April 11, 1997 between the Registrant and LeRoy
C. Hanneman., incorporated by reference to Exhibit 10.41 to
Registrant's Report on Form 10-K for the year ended June 30,
1997.
10.36 Supplemental Executive Retirement Plan No. 2 Participation
Agreement as of April 11, 1997 between the Registrant and Anne L.
Mariucci, incorporated by reference to Exhibit 10.42 to
Registrant's Report on Form 10-K for the year ended June 30,
1997.
10.37 Employment and Consulting Agreement dated July 10, 1996, between
the Registrant and Philip J. Dion, incorporated by reference to
Exhibit 10.2 to Registrant's Report on Form 10-K for the year
ended June 30, 1996; as amended by the Amendment to Agreement
entered into as of March 9, 1999, incorporated by reference to
Exhibit 10.11 to Registrant's Report on Form 10-Q for the quarter
ended March 31, 1999.
5
<PAGE>
10.38 Employment Agreement dated April 11, 1997 between the Registrant
and John H. Gleason, incorporated by reference to Exhibit 10.36
to Registrant's Report on Form 10-K for the year ended June 10,
1997; as amended by the Amendment to Agreement entered into as of
March 22, 1999, incorporated by reference to Exhibit 10.13 to
Registrant's Report on Form 10-Q for the quarter ended March 31,
1999.
10.39 Employment Agreement dated April 11, 1997 between the Registrant
and LeRoy C. Hanneman, incorporated by reference to Exhibit 10.37
to Registrant's Report on Form 10-K for the year ended June 30,
1997; as amended by the Amendment to Agreement entered into as of
March 22, 1999, incorporated by reference to Exhibit 10.12 to
Registrant's Report on Form 10-Q for the quarter ended March 31,
1999.
10.40 Employment Agreement dated April 11, 1997 between the Registrant
and Anne L. Mariucci, incorporated by reference to Exhibit 10.38
to Registrant's Report on Form 10-K for the year ended June 30,
1997.
10.41 Form of Directors and Officers Indemnification Agreement between
Registrant and its directors and officers, incorporated by
reference to Exhibit 10.24 to Registrant's Report on Form 10-K
for the year ended June 30, 1997.
10.42 Asset Acquisition Agreement, dated December 22, 1997 by and among
Del Webb Communities, Inc. and Spruce Creek Golf and Country
Club, Inc., Spruce Creek Golf and Country Club Homeowners'
Association, Inc. and Spruce Creek Preserve Homeowners'
Association, Inc. incorporated by reference to Exhibit 99.1 to
Registrant's Report on Form 10-Q dated May 14, 1998.
10.43 Agreement of Purchase and Sale between Del Webb Conservation
Holding Corp. and American Land Conservancy for acquisition of
Dreyfus property located on the eastern shore of Lake Tahoe in
Washoe County, Nevada, incorporated by reference to Exhibit 10.1
to Registrant's Report on Form 10-Q dated February 9, 1998.
10.44 Del Webb Corporation Supplemental Executive Retirement Plan No.
2, as amended and restated April 20, 1993, incorporated by
reference to Exhibit 10.16 to Registrant's Report on Form 10-K
for the year ended June 30, 1993; as amended by First Amendment
to the Del Webb Corporation Supplemental Executive Retirement
Plan No. 2 effective July 1, 1995, incorporated by reference to
Exhibit 10.16 to Registrant's Report on Form 10-K for the year
ended June 30, 1995; as amended by the Fourth Amendment to Plan
dated March 10, 1999, incorporated by reference to Exhibit 10.10
to Registrant's Report on Form 10-Q for the quarter ended March
31, 1999.
* Reports filed under File No. 1-4785 were filed in the office of the
Security and Exchange Commission located in Washington, D.C.
6
SECOND AMENDMENT TO SECOND AMENDED AND
RESTATED REVOLVING LOAN AGREEMENT
This Second Amendment to Second Amended and Restated Revolving Loan
Agreement ("Second Amendment") is entered into as of July 20, 1999 by and among
DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose name
is set forth on the signature pages of this Second Amendment (collectively, the
"Banks" and individually a "Bank"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association (the "Agent") and BANK ONE, ARIZONA,
NA, a national banking association (the "Co-Agent"). This Second Amendment is
one of the Loan Documents referred to in the Loan Agreement defined below. All
terms and agreements set forth in the Loan Agreement which are generally
applicable to the Loan Documents shall apply to this Second Amendment.
Capitalized terms not otherwise defined herein shall have the meanings given
them in the Loan Agreement.
RECITALS
A. Borrower, the Banks, the Agent and the Co-Agent have previously made and
entered into that certain Second Amended and Restated Revolving Loan Agreement,
dated as of June 5, 1998, as amended by a First Amendment to Second Amended and
Restated Revolving Loan Agreement, dated as of February 19, 1999 (the "Loan
Agreement"), pursuant to which the Banks agreed to make revolving loans to
Borrower in the aggregate principal amount of up to $500,000,000 (the "Loan").
The Loan is evidenced by the Loan Agreement and the various Line A Notes and
Line B Notes executed by Borrower in favor of the Banks.
B. Borrower has requested the amendment of certain covenants in the Loan
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower, the Banks, the Co-Agent and
the Agent hereby agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT.
1.1 SECTION 1.1 In Section 1.1 of the Loan Agreement, the definition
of "Applicable Eurodollar Spread" is amended by adding the following sentence at
the end thereof:
"Notwithstanding the foregoing, if the Leverage Ratio for the quarter
ending September 30, 1999 is greater than 2.35:1.00, then the
Applicable Eurodollar Spread for the period from December 1, 1999 to
February 29, 2000 shall be 2.35%, and if the Leverage Ratio for the
quarter ending December 31, 1999 is greater than 2.35:1.00, then the
Applicable Eurodollar Spread for the period from March 1, 2000 to May
31, 2000 shall be 2.35%."
-1-
<PAGE>
1.2 SECTION 6.13. The schedule contained in Section 6.13 of the Loan
Agreement is hereby restated in its entirety to read as follows:
Leverage
Period Ratio
- ------ -----
Jan. 1, 1998 through
March 31, 1999 2.50:1.00
April 1, 1999 through
June 30, 1999 2.35:1.00
July 1, 1999 through
September 30, 1999 2.50:1.00
October 1, 1999 through
December 31, 1999 2.40:1.00
January 1, 2000 through
March 31, 2000 2.35:1.00
April 1, 2000 and thereafter 2.15:1.00
2. FEES. For purposes of this Section 2, an "Approving Bank" means each
Bank (and any successor-in-interest to such Bank) that has provided the Agent
with evidence of final approval of its execution of this Second Amendment on or
before July 20, 1999. Should this Second Amendment thereafter become effective
in accordance with the terms of Section 4 hereof, the Agent will send written
notice to Borrower and each of the Banks of the list of Approving Banks.
(a) On the effective date of this Second Amendment, Borrower agrees to
pay to the Agent, for the pro rata accounts of the Approving Banks, a fee
equal to five basis points of the aggregate Commitments held by the
Approving Banks on the date of this Second Amendment (a maximum total fee
of $250,000).
(b) If the Leverage Ratio exceeds 2.42:1.00 as of the end of the
Fiscal Quarter ending September 30, 1999, Borrower shall, no later than 60
days following the end of such Fiscal Quarter, pay to the Agent, for the
respective accounts of the Approving Banks, a fee equal to five basis
points of the aggregate Commitments held by the Approving Banks on the date
of this Second Amendment (a maximum total fee of $250,000).
-2-
<PAGE>
(c) If the Leverage Ratio exceeds 2.35:1.00 as of the end of the
Fiscal Quarter ending December 31, 1999, Borrower shall, no later than 60
days following the end of such Fiscal Quarter, pay to the Agent, for the
respective accounts of the Approving Banks, a fee equal to five basis
points of the aggregate Commitments held by the Approving Banks on the date
of this Second Amendment (a maximum total fee of $250,000).
All of the foregoing fees are fully earned upon their due dates and are
nonrefundable.
3. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants that except as previously disclosed to the Banks in writing, all of
the representations and warranties contained in the Loan Documents are true and
correct on and as of the date of this Second Amendment as though made on that
date and after giving effect to this Second Amendment no Event of Default shall
be continuing.
4. CONDITIONS PRECEDENT. The effectiveness of this Second Amendment is
conditioned upon the execution hereof by the Majority Banks and the satisfaction
by Borrower of each of the following conditions on or before July 30, 1999:
(a) Borrower shall have delivered or caused to be delivered to the
Agent fully executed original counterparts of this Second Amendment and
Exhibit A hereto, sufficient in number for distribution to the Agent, the
Banks and Borrower;
(b) Borrower shall have paid the fees required in Section 2 hereof;
(c) The Agent shall have received a written legal opinion of
counsel(s) to Borrower and each Guarantor, in form and substance
satisfactory to the Agent, regarding the execution, delivery, performance
and enforceability of this Second Amendment and the Guarantors' Consent
hereto; and
(d) The Agent shall have received a written certification from a
Responsible Official of Borrower that Borrower and its Subsidiaries are in
compliance with all the terms and provisions of the Loan Documents and
after giving effect to this Second Amendment no Default or Event of Default
shall be continuing.
5. AMENDMENT TO OTHER LOAN DOCUMENTS. Each of the Loan Documents is hereby
amended such that all references to the Loan Agreement contained therein shall
be deemed to be made with respect to the Loan Agreement as amended hereby. Each
of the Loan Documents are hereby further amended such that any reference
contained therein to any document amended hereby shall be deemed to be made with
respect to such document as amended hereby. Each reference to Loan Documents
generally shall be deemed to include this Second Amendment.
6. LOAN DOCUMENTS IN FULL FORCE AND EFFECT. Except as modified hereby, the
Loan Documents remain in full force and effect.
-3-
<PAGE>
7. GOVERNING LAW. This Second Amendment shall be governed by, and construed
in accordance with, the Laws of the State of California.
8. SEVERABILITY. If any provision of this Second Amendment is held invalid
or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
9. COUNTERPARTS. This Second Amendment may be executed in counterparts and
any party may execute any counterpart, each of which shall be deemed to be an
original and all of which, taken together, shall be deemed to be one and the
same document. The execution hereof by any parties shall not become effective
until this Second Amendment, and Exhibit A hereto, is executed and delivered by
all parties hereto and thereto.
10. PRIOR AGREEMENTS. This Second Amendment contains the entire agreement
between Borrower, the Banks and the Agent with respect to the subject matter
hereof, and all prior negotiations, understandings, and agreements with respect
thereto are superseded by this Second Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed as of the date first above written.
-4-
<PAGE>
"Borrower"
DEL WEBB CORPORATION
By:
----------------------------
John A. Spencer
Executive Vice President
"Agent"
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
By:
----------------------------
----------------------------
Printed Name and Title
"Co-Agent"
BANK ONE, ARIZONA, NA, as Co-Agent
By:
----------------------------
----------------------------
Printed Name and Title
"Banks"
BANK ONE, ARIZONA, NA, as a Bank
By:
----------------------------
----------------------------
Printed Name and Title
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank
By:
----------------------------
----------------------------
Printed Name and Title
GUARANTY FEDERAL BANK, F.S.B.
By:
----------------------------
----------------------------
Printed Name and Title
BANKBOSTON, N.A. (formerly known as The First National Bank of Boston)
By:
----------------------------
----------------------------
Printed Name and Title
-5-
<PAGE>
CREDIT LYONNAIS
LOS ANGELES BRANCH
By:
----------------------------
----------------------------
Printed Name and Title
FIRST UNION NATIONAL BANK
(formerly known as First Union National
Bank of North Carolina)
By:
----------------------------
----------------------------
Printed Name and Title
BANK OF HAWAII
By:
----------------------------
----------------------------
Printed Name and Title
FLEET NATIONAL BANK
By:
----------------------------
----------------------------
Printed Name and Title
M&I THUNDERBIRD BANK
By:
----------------------------
----------------------------
Printed Name and Title
By:
----------------------------
----------------------------
Printed Name and Title
NORWEST BANK ARIZONA,
National Association
By:
----------------------------
----------------------------
Printed Name and Title
PNC BANK, N.A.
By:
----------------------------
----------------------------
Printed Name and Title
COMERICA BANK
By:
----------------------------
----------------------------
Printed Name and Title
-6-
<PAGE>
BANK UNITED
By:
----------------------------
----------------------------
Printed Name and Title
AMSOUTH BANK
By:
----------------------------
----------------------------
Printed Name and Title
-7-
<PAGE>
EXHIBIT A
GUARANTORS' CONSENTS
The undersigned do each hereby (a) consent to that certain Second Amendment
to Amended and Restated Revolving Loan Agreement, dated as of July 20, 1999, by
and among Del Webb Corporation ("Borrower"), the Banks named therein, Bank of
America National Trust and Savings Association, as Agent, and Bank One, Arizona,
NA, as Co-Agent, and (b) reaffirm (i) their respective obligations under that
certain 1998 Subsidiary Guaranty, dated as of June 5, 1998, and (ii) that the
1998 Subsidiary Guaranty remains in full force and effect.
Dated: July 20, 1999
Del Webb California Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Commercial Properties Corporation, an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Communities, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Conservation Holding Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Home Construction, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Anthem Arizona, Inc. (formerly known as The Villages at Desert Hills, Inc. and
as Del Webb Lakeview Corporation), an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Exhibit A
Page 1 of 4
<PAGE>
Del Webb's Coventry Homes Construction Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb's Coventry Homes, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb's Coventry Homes of Nevada, Inc., an Arizona corporation (formerly
known as Del Webb of Nevada, Inc.)
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb's Coventry Homes Construction of Tucson Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb's Coventry Homes of Tucson, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del E. Webb Development Co., L.P., a Delaware limited partnership
By: Del Webb Communities, Inc., general partner
By:
---------------------------
Donald V. Mickus
Treasurer
Del E. Webb Foothills Corporation, an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
DW Aviation Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Fairmount Mortgage, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Terravita Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Exhibit A
Page 2 of 4
<PAGE>
Terravita Home Construction Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Trovas Company, an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Trovas Construction Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Limited Holding Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Southwest Co., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
New Mexico Asset Corporation, an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb Texas Limited Partnership, an Arizona limited partnership
By: Del Webb Southwest Co., an Arizona corporation
By:
--------------------------
Donald V. Mickus
Treasurer
New Mexico Asset Limited Partnership (formerly known as
New Mexico Investment Co. Limited Partnership), an
Arizona limited partnership
By: Del Webb Corporation, a Delaware corporation
By:
------------------------------
Donald V. Mickus
Treasurer
Bellasera Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Exhibit A
Page 3 of 4
<PAGE>
Del Webb's Sunflower of Tucson, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Del Webb's Spruce Creek Communities, Inc., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Anthem Arizona L.L.C., an Arizona limited liability company
By: Bellasera Corp., an Arizona corporation, its sole member
By:
----------------------------
Donald V. Mickus
Treasurer
Mountain View Two LLC, an Arizona limited liability company
By: Del Webb Corporation, a Delaware corporation, its sole member
By:
-----------------------------
Donald V. Mickus
Treasurer
Spruce Creek South Utilities, Inc., a Florida corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Asset Five Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Asset Seven Corp., an Arizona corporation
By:
--------------------------------
Donald V. Mickus
Treasurer
Exhibit A
Page 4 of 4
EXHIBIT 10.2
DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
LIST OF PARTICIPANTS
Larry W. Beckner
Kimball Bannister, III
Joseph F. Contadino
John H. Gleason
LeRoy C. Hanneman, Jr.
Robertson C. Jones
Anne L. Mariucci
Helen M. McEnerney
Donald V. Mickus
John M. Murray
Frank D. Pankratz
Scott J. Peterson
David E. Rau
Charles T. Roach
David G. Schreiner
M. Lynn Schuttenberg
John A. Spencer
Richard L. Vandermeer - received lump-sum payment 5/1/99 - no more benefits owed
Robert R. Wagoner
J. Dennis Wilkins
DIRECTORS AND OFFICERS
1999
INDEMNIFICATION AGREEMENTS
Directors
- ---------
Philip J. Dion
D. Kent Anderson
LeRoy C. Hanneman, Jr.
Michael O. Maffie
Dr. J. Russell Nelson
Peter A. Nelson
Michael E. Rossi
Glenn W. Schaeffer
C. Anthony Wainwright
Sam Yellen
Officers
- --------
Philip J. Dion
Mary S. Alexander
Kimball Bannister, III
Larry W. Beckner
John H. Gleason
LeRoy C. Hanneman Jr.
Robertson C. Jones
Anne L. Mariucci
Helen M. McEnerney
Donald V. Mickus
Frank D. Pankratz
Scott J. Peterson
David E. Rau
Charles T. Roach
David G. Schreiner
M. Lynn Schuttenberg
John A. Spencer
Robert R. Wagoner
DEL WEBB CORPORATION
MANAGEMENT INCENTIVE PLAN
FISCAL 2000 (JULY 1, 1999 - JUNE 30, 2000)
PLAN OBJECTIVES
* To motivate key management personnel to achieve or exceed Corporate
financial goals and to contribute to the short and longer term interest of
shareholders.
* To provide a competitive bonus program necessary to attract, retain and
motivate high quality management.
ADMINISTRATION
1. Bonuses may be paid in cash or in stock, less applicable tax deductions and
subject to prior deferral agreements as soon as practicable after the end
of the Fiscal Year.
2. In order to receive a bonus, the participant must be on the active payroll
at the time the bonus is paid unless approval for a pro rata bonus is
granted by the Chairman/Chief Executive Officer (CEO).
3. At the discretion of the CEO and upon approval of the Human Resources
Committee, financial objectives may be adjusted upward or downward as a
result of significant windfalls or disasters beyond the control of
management. In addition, the Human Resources Committee can revise financial
objectives during the year if significant events occur that were not
included in the budget. Total incentives payable under the MIP will not
exceed 11% of pre-tax, pre-incentive earnings of the Company for the 2000
fiscal year.
4. The CEO, upon approval of the Human Resources Committee, may adjust
computed payouts upward or downward to reflect unusual situations or
events. In no case would exceptions or adjustments exceed 10% of Plan.
5. Bonuses are computed under the plan criteria for corporate earnings,
community earnings and cash flow approved by the Human Resources Committee
of the Board. Bonus calculations are reviewed by the CEO and the Human
Resources Department, and presented to the Human Resources Committee of the
Board for final approval.
6. All terms and conditions of the Plan and its very existence are at the sole
discretion of the Human Resources Committee of the Board of Directors.
1
<PAGE>
ELIGIBILITY
Key Management personnel:
* whose duties and responsibilities can materially affect the growth,
development and profitability of the Company and,
* who are nominated by a subsidiary or Company officer and are approved
by the CEO, and
* who are assigned to an eligible position on or before July 1st unless
otherwise approved by the CEO.
BONUS OPPORTUNITY LEVELS
Each participant will have a Target Bonus which will be the amount earned for
meeting the Plan objectives. The Target Bonus will be expressed as a percentage
of actual base salary paid throughout the 1999/2000 fiscal year and will be
established by the CEO and the Human Resources Department based on competitive
compensation data and internal equity.
TARGET BONUSES
Target bonus levels will range from 10% to 75% of salary based on the
participant's salary grade and organizational level and recommendation of the
CEO. No bonuses will be payable until the minimum acceptable threshold earnings
target is achieved unless specifically approved by the Human Resources Committee
of the Board of Directors. A bonus of 100% of the target bonus will be payable
for achieving 100% of Plan objectives. A maximum bonus of 200% of Target Bonus
will be payable for attaining the maximum expected performance.
In view of the challenging financial and cash flow objectives for fiscal year
2000, a one-time provision is added to the FY00 plan. At any community where
both the financial AND cash flow targets for the year are met , including
specifically the cash flow targets for each of the first two quarters (100% or
greater achievement on BOTH targets), all participants will have an automatic 5%
increase in their bonus targets for purposes of payout calculations.
BONUS OBJECTIVES
Bonus objectives will be comprised of the financial and cash flow objectives
relating to the participant's area of responsibility for participants in
operating entities and Corporate, and on project milestone achievements for
communities in start-up prior to initiation of sales and closings.
* Depending upon the business unit of the company involved, financial
objectives for a participant may be based on Corporate net after-tax
earnings, budgeted Group or Project operating earnings before interest and
cash discounts and/or operations cash flow. The minimum acceptable
threshold, target and maximum expected earnings levels will be determined
by the CEO based on the degree of difficulty and the level of acceptability
of the budget.
2
<PAGE>
* Project milestone objectives are the most significant non-financial goals
which the individual participant or overall community is expected to
accomplish during the Plan year in conjunction with the project start-up
schedule.
REVENUE-GENERATING CORPORATE AFTER OPERATING CASH
COMMUNITIES & CRG PARTICIPANTS TAX EARNINGS EARNINGS(1) FLOW(2)
- ------------------------------ ------------ ----------- -------
Corporate Officers 75% -- 25%
Community/Operations Officers 20% 55% 25%
CRG Participants (non-Corp. officers) 75% -- 25%
Community Participants (non officers) 20% 55% 25%
CORPORATE AFTER PROJECT MILESTONE CASH
START UP COMMUNITIES TAX EARNINGS OBJECTIVES FLOW
- -------------------- ------------ ---------- ----
General Managers and Officers 20% 55% 25%
Community Participants (non officers) 20% 55% 25%
- ----------
1 Operating earnings are the pre-tax, pre-interest, pre-cash discounts
earnings achieved at the operation where the individual is assigned.
2 Cash Flow is the achievement of quarterly objectives at the operation where
the individual is assigned.
CRG - defined as the Available Borrowing Capital each quarter, actual
vs. budget performance
Communities - defined as the Cash Flow dollar amount to be used or
generated, actual vs. budget performance.
Performance under this component will be weighted as follows, and
determined if the actual performance did or did not meet the quarter's stated
goal:
Achievement of 1st quarter goal: 50%
Achievement of 2nd quarter goal: 25%
Achievement of 1st half year goal: 25%
Achievement of 3rd quarter goal: 25%
Achievement of 4th quarter goal: 25%
Achievement of 2nd half year goal: 25%
Achievement of full-year goal: 25%
---
Maximum achievement: 200%
FINANCIAL OBJECTIVES
A minimum bonus will be paid upon the corporation or operation achieving the
threshold earnings forecast as shown on the income schedules included as part of
this Management Incentive Plan. For results between a threshold and maximum
expected earnings, the bonus percent will increase incrementally to a maximum of
200% of target bonus based upon operating earnings and the achievement of the
other formula targets. (See attached for net after-tax earnings and operating
income schedules.)
3
<PAGE>
CASH FLOW COMPONENT
Quarterly goals will be established for each location and results will be
measured against those goals. The cumulative achievement of the four quarters
will determine the final achievement percent for this component. The ultimate
recommendation of cash flow component awards will be made by the Chief Executive
Officer with input from the Corporate Chief Financial Officer and Corporate
Controller. The cash flow element of the Plan works independently of all other
Plan components, including the earnings component. Plan participants can earn up
to 200% of target based upon overall cash management.
PROJECT MILESTONE PERFORMANCE OBJECTIVES
Non-financial performance objectives will be established at the beginning of the
fiscal year for each participant whose primary responsibility is in a start-up
community. These objectives, which will be submitted to the CEO for final
approval, will reflect the project milestones which must be successfully met in
order for the community to open for sales on time and on budget. Objectives must
be specific, realistic, quantifiable and time-limited before they will be
approved and will be mutually agreed to by the participant and management.
In the event circumstances or directions change, affecting any participant's
pre-established project milestone objectives, the senior vice president
overseeing the start-up project and the chief operating officer are responsible
for revising them or establishing new objectives during the year.
The achievement of performance objectives is measured by the participant's
immediate superior based upon documented evaluation of results. Accomplishments
will be evaluated using the following scale:
THRESHOLD TARGET MAXIMUM
--------- ------ -------
Overall Rating Poor Good Excellent Superior
Percent of Target 0 - 49 50 - 75 76 - 125 126 - 200
Evaluation of results should take into account the difficulty the objective, the
timeliness of accomplishment, the effectiveness of results and the overall
impact on the individual's organizational unit. Achievement of overall Corporate
operating earnings is paramount in the bonus computation formula; project
milestone objectives are reviewed and evaluated only if minimum earnings
objectives have been met or if specifically approved by the Human Resources
Committee.
RATING DEFINITIONS
MAXIMUM A "superior" rating is achieved if the participant accomplishes
highly challenging objectives resulting in significant
contribution to the Company or business unit. This rating
incorporates superior reaction to crisis and superior
exploitation of unanticipated opportunities.
4
<PAGE>
TARGET An "excellent" rating is achieved if the participant
accomplishes all objectives in a timely and effective manner
and overall performance for the year is considered standard or,
if the participant accomplished most of a number of significant
and highly challenging objectives and overall performance is
considered above standard.
THRESHOLD A "good" rating is achieved if the participant accomplished
most of the objectives in an acceptable manner or all of a
group of objectives that were minimally challenging. Overall
performance of the year is considered standard.
PERFORMANCE APPRAISALS
In view of the importance of employees receiving feedback from management, all
Plan participants are expected to have completed, and on file with the human
resources department, annual performance appraisals on all of their direct
reports. If, by the end of the fiscal year, a participant has not completed
performance appraisals on 100% of his/her direct reports, a 25% reduction will
be made to the participant's total calculated bonus. This 25% reduction will be
made notwithstanding achievement of any or all other financial measures.
5
July 22, 1999
Philip J. Dion
Chairman of the Board and Chief Executive Officer
Del Webb Corporation
RE: 1999/00 EXECUTIVE MANAGEMENT INCENTIVE PLAN AWARD AGREEMENT
Dear Phil:
Del Webb Corporation (the "Company") has adopted the Del Webb Corporation
1995 Executive Management Incentive Plan (the "Plan"). Under the Plan, the Human
Resources Committee (the "Committee") of the Company"s Board of Directors is
authorized to make awards of performance-based compensation to you.
The Committee has decided to make an award to you pursuant to which you may
become entitled to receive performance-based compensation. The payment of the
performance-based compensation is subject to the terms and provisions of the
Plan and this letter, which is the "Award Agreement".
1. PERFORMANCE COMPENSATION: The maximum amount of your Performance
Compensation will depend on the level at which the Performance Goals are
satisfied. For fiscal year 2000 ("Performance Period"), this amount will not
exceed the lesser of 2,000,000 or 1.75% of pre-tax, pre-incentive earnings. The
Committee will evaluate performance under one or more of three specific
performance elements: after tax net earnings, net margin, and return on equity
relative to return of the comparator peer group. The Performance Compensation
and Performance Goals under which the 1999/00 Performance Award will be made are
set forth on the attached performance goals spreadsheet.
If the Performance Goal or Goals are satisfied during the Performance
Period, you will be entitled to receive the Performance Compensation provided by
this paragraph, subject to the discretionary adjustment provisions of paragraph
2. If the Performance Goal evaluation is not satisfied at the minimum level, you
will not be entitled to receive any performance-based compensation.
Your Performance Compensation, if any, will be paid to you as soon as
administratively feasible following the date the Committee certifies that the
Performance Goals for the Performance Period have been satisfied.
2. TARGET BONUS: Solely for purposes of limitation under SERP, your bonus
target is deemed to be 120% of base salary.
<PAGE>
Mr. Philip J. Dion
July 22, 1999
Page 2
3. DISCRETIONARY ADJUSTMENTS: We have set the Performance Compensation that
could be payable to you upon attainment of the Performance Goals at an
intentionally high level. We have followed this approach because under the terms
of the Plan the Committee has the discretion to reduce or eliminate (but not
increase) the amount of your Performance Compensation on the basis of subjective
factors the Committee determines to be appropriate. The Committee reserves this
right.
4. STATUS OF PLAN: This Award Agreement is made pursuant to the provisions
of the Plan. The Plan is incorporated herein and a copy is attached as Exhibit
B. In the event of any conflict between the provisions of the Plan and this
Award Agreement, the provisions of the Plan control.
5. DEFERRAL OF PAYMENTS: You may elect to defer all or a portion of the
Performance Compensation payable to you pursuant to the terms and provisions of
the Del Webb Corporation Deferred Compensation Plan. Any such election must be
made on or before December 15, 1999.
6. AMENDMENTS: This Award Agreement may be amended only by a written
agreement executed by the Company and you. Any changes required in order to
qualify the Performance Compensation as performance-based compensation for the
purposes of Section 162(m) of the Internal Revenue Code of 1986, however, may be
unilaterally adopted by the Company without your consent.
Please execute the acknowledgment in the enclosed extra copy of this letter
and return it in the enclosed self-addressed, stamped envelope.
DEL WEBB CORPORATION
By:
-----------------------------------
Chairman, Human Resources Committee
ACKNOWLEDGMENT
I acknowledge receipt of a copy of the Del Webb Corporation 1995 Executive
Management Incentive Plan. I also acknowledge that no amounts will be payable to
me pursuant to the Plan or this Award Agreement if the Performance Goals
referred to above are not attained within the Performance Period. I also
acknowledge that the Committee has the right to reduce the Performance
Compensation in the exercise of its discretion. I accept the terms and
provisions of this Award Agreement and the Plan.
DATED: ____________________, 1999 ____________________________________
Your signature
July 22, 1999
LeRoy C. Hanneman, Jr.
President and Chief Operating Officer
Del Webb Corporation
RE: 1999/00 EXECUTIVE MANAGEMENT INCENTIVE PLAN AWARD AGREEMENT
Dear LeRoy:
Del Webb Corporation (the "Company") has adopted the Del Webb Corporation
1995 Executive Management Incentive Plan (the "Plan"). Under the Plan, the Human
Resources Committee (the "Committee") of the Company's Board of Directors is
authorized to make awards of performance-based compensation to you.
The Committee has decided to make an award to you pursuant to which you may
become entitled to receive performance-based compensation. The payment of the
performance-based compensation is subject to the terms and provisions of the
Plan and this letter, which is the "Award Agreement".
1. PERFORMANCE COMPENSATION: The maximum amount of your Performance
Compensation will depend on the level at which the Performance Goals are
satisfied. For fiscal year 2000 ("Performance Period"), this amount will not
exceed the lesser of 2,000,000 or 2% of pre-tax, pre-incentive earnings. The
Committee will evaluate performance under one or more of three specific
performance elements: after tax net earnings, net margin, and return on equity
relative to return of the comparator peer group. The Performance Compensation
and Performance Goals under which the 1999/00 Performance Award will be made are
set forth on the attached performance goals spreadsheet.
If the Performance Goal or Goals are satisfied during the Performance
Period, you will be entitled to receive the Performance Compensation provided by
this paragraph, subject to the discretionary adjustment provisions of paragraph
2. If the Performance Goal evaluation is not satisfied at the minimum level, you
will not be entitled to receive any performance-based compensation.
Your Performance Compensation, if any, will be paid to you as soon as
administratively feasible following the date the Committee certifies that the
Performance Goals for the Performance Period have been satisfied.
2. TARGET BONUS: Solely for purposes of limitation under SERP, your bonus
target is deemed to be 120% of base salary.
<PAGE>
Mr. LeRoy C. Hanneman
July 22, 1999
Page 2
3. DISCRETIONARY ADJUSTMENTS: We have set the Performance Compensation that
could be payable to you upon attainment of the Performance Goals at an
intentionally high level. We have followed this approach because under the terms
of the Plan the Committee has the discretion to reduce or eliminate (but not
increase) the amount of your Performance Compensation on the basis of subjective
factors the Committee determines to be appropriate. The Committee reserves this
right.
4. STATUS OF PLAN: This Award Agreement is made pursuant to the provisions
of the Plan. The Plan is incorporated herein and a copy is attached as Exhibit
B. In the event of any conflict between the provisions of the Plan and this
Award Agreement, the provisions of the Plan control.
5. DEFERRAL OF PAYMENTS: You may elect to defer all or a portion of the
Performance Compensation payable to you pursuant to the terms and provisions of
the Del Webb Corporation Deferred Compensation Plan. Any such election must be
made on or before December 15, 1999.
6. AMENDMENTS: This Award Agreement may be amended only by a written
agreement executed by the Company and you. Any changes required in order to
qualify the Performance Compensation as performance-based compensation for the
purposes of Section 162(m) of the Internal Revenue Code of 1986, however, may be
unilaterally adopted by the Company without your consent.
Please execute the acknowledgment in the enclosed extra copy of this letter
and return it in the enclosed self-addressed, stamped envelope.
DEL WEBB CORPORATION
By:
-----------------------------------
Chairman, Human Resources Committee
ACKNOWLEDGMENT
I acknowledge receipt of a copy of the Del Webb Corporation 1995 Executive
Management Incentive Plan. I also acknowledge that no amounts will be payable to
me pursuant to the Plan or this Award Agreement if the Performance Goals
referred to above are not attained within the Performance Period. I also
acknowledge that the Committee has the right to reduce the Performance
Compensation in the exercise of its discretion. I accept the terms and
provisions of this Award Agreement and the Plan.
DATED: ____________________, 1999 ____________________________________
Your signature
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment (the "Amendment") is entered into as of the 1st day of May,
1999, by DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and Anne
L. Mariucci.
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement (the "Agreement"), dated April 11, 1997; and
WHEREAS, the Company and the Employee desire to amend the Agreement in
certain respects;
NOW THEREFORE, the Agreement is hereby amended as follows:
7. Section 9(e)(4) of the Agreement is hereby amended to read as follows:
9(e)(4) Two additional elements of Good Reason shall be added as
follows:
(A) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is relocated to,
a location which would require a round-trip commute to work from
Employee's principal residence on the Relevant Date of more than 100
miles per day.
(B) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or substantially all the
assets, of Company to assume this Agreement or issue a substantially
similar agreement.
8. Section 9(g)(1) of the Agreement is hereby amended to read as follows:
9(g)(1) Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum severance
payment shall be in an amount equal to: (i) 2.5 times Employee's
yearly Base Salary as set forth in Section 3 or as it may be increased
from time to time; plus (ii) 2.5 times the greatest of (a) the average
annual incentive compensation paid to Employee pursuant to the MIP (or
any predecessor or successor plan) with respect to the five fiscal
years preceding the fiscal year in which the Change in Control occurs,
or (b) an amount equal to 100% of the incentive compensation paid to
Employee pursuant to the MIP (or any predecessor or successor plan)
during the 12 month period prior to the Termination Date, or (c) an
amount equal to the Employee's Base Salary as set forth in Section 3
<PAGE>
or as such Base Salary may be increased from time to time, multiplied
by such Employee's current target bonus percentage under the MIP then
in effect; minus (iii) the total amounts due to Employee, if any,
pursuant to Sections B(b)(1) and (2).
9. Section 10 of the Agreement is hereby amended to read as follows:
10. EXERCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes
significant tax burdens on the Employee and Company if the total
amounts received by the Employee due to a Change in Control exceed
prescribed limits. These tax burdens include a requirement that the
Employee pay a 20% excise tax on certain amounts received in excess of
the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, the Employee is required to pay such
excise tax, then upon written notice from the Employee to Company,
Company shall pay the Employee an amount equal to the total excise tax
imposed on the Employee (including the excise tax reimbursements due
pursuant to this sentence and the excise taxes on any federal and
state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay the Employee pursuant to the preceding
sentence, Company also shall pay the Employee an amount equal to the
"total presumed federal and state taxes" that could be imposed on the
Employee with respect to the excise tax reimbursements due to the
Employee pursuant to the preceding sentence and the federal and state
tax reimbursements due to the Employee pursuant to this sentence. For
purposes of the preceding sentence, the "total presumed federal and
state taxes" that could be imposed on the Employee shall be
conclusively calculated using a combined tax rate equal to the sum of
(a) the highest individual income tax rate in effect under (1) Federal
tax law and (ii) the tax laws of the state in which the Employee
resides on the date that the payment under this Section 10 is computed
and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the
federal return. the loss of itemized deductions or exemptions, or for
any other purpose. The Employee shall be responsible for paying the
actual taxes. The amounts payable to the Employee pursuant to this or
any other agreement or arrangement with Company shall not be limited
in any way by the amount that may be paid pursuant to the Code without
the imposition of an excise tax or the loss of Company deductions.
Either the Employee or Company may elect to challenge any excise taxes
imposed by the Internal Revenue Service and the Employee and Company
agree to cooperate with each other in prosecuting such challenges. If
<PAGE>
the Employee elects to litigate or otherwise challenge the imposition
of such excise tax, however, Company will join the Employee in such
litigation or challenge only if Company's General Counsel determines
in good faith that the Employee's position has substantial merit and
that the issues should be litigated from the standpoint of Company's
best interest.
10. Section 12(e) of the Agreement is hereby amended to read as follows:
12(e) Expenses
The costs and expenses of any mediator shall be borne by Company.
Should the Employee or Company, at any time, initiate arbitration for
breach of this Agreement, Company shall reimburse the Employee for all
amounts spent by the Employee to pursue such arbitration, unless the
arbitrator finds the Employee's action to have been frivolous and
without merit.
11. Section 18 of the Agreement is hereby amended to read as follows:
GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
12. Except as amended herein, the provisions of the Agreement, shall
continue in full force and effect.
DEL WEBB CORPORATION
By: Robertson C. Jones
---------------------------
Its: Senior Vice President
--------------------------
Company
Anne L. Mariucci
--------------------------
Employee
DEL WEBB CORPORATION
1998 EXECUTIVE LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Del Webb Corporation, a Delaware corporation
(the "Company"), hereby establishes an incentive compensation plan to be known
as the "Del Webb Corporation 1998 Executive Long-Term Incentive Plan" (the
"Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Restricted Stock,
Performance Units, and Performance-Based Awards.
Upon approval by the Board of Directors of Company and subject to
shareholder ratification, the Plan shall become effective as of November 4, 1998
(the "Effective Date") and shall remain in effect as provided in Section 1.3.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success,
and enhance the value, of Company by linking the personal interests of
Participants to those of Company shareholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to Company in
itsability to motivate, attract, and retain the services of Participants upon
whose judgment, interest, and special effort the successful conduct of its
operation largely is dependent.
1.3 Duration of the Plan. Subject to approval by the Board of Directors of
Company and ratification by the shareholders of Company, the Plan shall commence
on the Effective Date, as described in Section 1.1, and shall remain in effect,
subject to the right of the Board of Directors to terminate the Plan at any time
pursuant to Article 14, until all Shares subject to it shall have been purchased
or acquired according to the Plan's provisions. However, in no event may an
Award be granted under the Plan on or after November 3, 2008.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted
Stock, Performance Units, or Performance-Based Awards.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(c) "Board" or "Board or Directors" means the Board of Directors of
Del Webb Corporation.
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(d) "Cause" means (i) the breach by a Participant of any employment
contract between the Participant and Company, (ii) the conviction of a
Participant of a felony or crime involving moral turpitude (meaning a crime
that necessarily includes the commission of an act of gross depravity,
dishonesty or bad morals), or (iii) willful and gross misconduct on the
part of a Participant that is materially and demonstrably detrimental to
Company.
(e) A "Change in Control" of Company shall be deemed to have occurred
in any or all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act, other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a corporation
owned directly or indirectly by the stockholders of Company in
substantially the same proportions as their ownership of stock of
Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of Company representing 20% or more of the total voting power
represented by Company's then outstanding Voting Securities (as
defined below); or
(2) During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
Company and any new Director whose election by the Board of Directors
or nomination for election by Company's stockholders was approved by a
vote of at least two-thirds of the Directors then still in office who
either were Directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(3) The stockholders of Company approve a merger or consolidation
of Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of Company
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into Voting Securities
of the surviving entity) at least 80% of the total voting power
represented by the Voting Securities of Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(4) The stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or disposition by
Company of (in one transaction or a series of transactions) all or
substantially all Company's assets.
For purposes of this Section, the term "Voting Securities" shall mean
and include any securities of Company which vote generally for the election
of directors.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means the committee, as specified in Article 3,
appointed by the Board to administer the Plan with respect to grants of
Awards.
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(h) "Company" means Del Webb Corporation, a Delaware corporation
(including any and all Subsidiaries), or any successor thereto as provided
in Article 16 herein.
(i) "Covered Employee" means an Employee who is a "covered employee"
within the meaning of Section 162(m) of the Code.
(j) "Director" means any individual who is a member of the Board of
Directors of Company.
(k) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3), as determined by the Committee in good
faith, upon receipt of sufficient competent medical advice from one or more
individuals, selected by the Committee, who are qualified to give
professional medical advice.
(l) "Employee" means any full-time, nonunion employee of Company.
Directors who are not otherwise employed by Company shall not be considered
Employees under this Plan.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(n) "Fair Market Value" means, as of any given date, the fair market
value of a Share or other property determined by such methods or procedures
as may be established from time to time by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of a Share as of any
date shall be the closing price for a Share on any national securities
exchange on which the Shares are then listed for that date or, if there is
no closing price for that date, the closing price on the next preceding
date for which there is a closing price, all as reported in the Wall Street
Journal.
(o) "Incentive Stock Option" or "ISO" means an option to purchase
Shares which is designated as an Incentive Stock Option and is intended to
meet the requirements of Section 422 of the Code.
(p) "Insider" means an Employee who is, at the time an Award is made
under this Plan, an insider pursuant to Section 16 of the Exchange Act.
(q) "Non-Employee Director" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange
Act as it may be amended, replaced, or suspended from time to time.
(r) "Nonqualified Stock Option" or "NQSO" means an Option to purchase
Shares which is not intended to be an Incentive Stock Option.
(s) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
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(t) "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option, as determined by the Committee.
(u) "Parent" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
(v) "Participant" means an Employee of Company who has outstanding an
Award granted under the Plan.
(w) "Performance-Based Awards" means the Restricted Stock Awards and
Performance Unit Awards granted to selected Covered Employees pursuant to
Articles 7 and 8, but which are subject to the terms and conditions set
forth in Article 9. All Performance- Based Awards are intended to qualify
as "performance-based compensation" under Section 162(m) of the Code.
(x) "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance
Goals for a Participant for a Performance Period. The Performance Criteria
that will be used to establish Performance Goals are limited to the
following: pre- or after-tax net earnings, revenue growth, operating
income, operating cash flow, return on net assets, return on shareholders'
equity, return on assets, return on capital, Share price growth,
shareholder returns, gross or net profit margin, earnings per share, price
per Share, and market share, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to
results of a peer group. The Committee shall, within the time prescribed by
Section 162(m) of the Code, define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance
Period for such Participant.
(y) "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based
upon the Performance Criteria. Depending on the Performance Criteria used
to establish such Goal, the Goal may be expressed in terms of overall
Company performance or the performance of an operating unit or community.
The Committee, in its discretion, may, within the time prescribed by
Section 162(m) of the Code, adjust or modify the calculation of Performance
Goals for such Performance Period in order to prevent the dilution or
enlargement of the rights of Participants, (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development; and (ii) in recognition of, or in anticipation of,
any other unusual or nonrecurring events affecting Company, or the
financial statements of Company, or (iii) in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions.
(z) "Performance Period" means the one or more periods of time, which
may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured
for the purpose of determining a Participant's right to, and the payment
of, a Performance-Based Award.
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(aa) "Performance Unit" means an Award granted to an Employee pursuant
to Article 8.
(bb) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, in its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in Article 7.
(cc) "Restricted Stock" means an Award granted to a Participant
pursuant to Article 7.
(dd) "Retirement" means a voluntary termination of employment by a
Participant who has less than ten (10) years of service with Company at or
after age sixty-five (65), or voluntary termination at or after age
fifty-five (55) for Participants who have at least ten (10) years of
service with Company as of the date of employment termination.
(ee) "Shares" means the shares of common stock of Del Webb
Corporation.
(ff) "Subsidiary" means any corporation in which Company owns
directly, or indirectly through subsidiaries, at least fifty percent (50%)
of the total combined voting power of all classes of stock, or any other
entity (including, but not limited to, partnerships and joint ventures) in
which Company owns at least fifty percent (50%) of the combined equity
thereof.
2.2 Gender and Number. Except where otherwise indicated by the context,any
masculine term used herein also shall include the feminine; the plural
shallinclude the singular and the singular shall include the plural.
2.3 Severability. In the event that a court of competent
jurisdictiondetermines that any portion of this Plan is in violation of any
statute, commonlaw, or public policy, then only the portions of this Plan that
violate suchstatute, common law, or public policy shall be stricken. All
portions of this Plan that do not violate any statute or public policy shall
continue in full force and effect. Further, any court order striking any portion
of this Plan shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Plan.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Human Resources
Committee of the Board, or by any other Committee appointed by the Board to
administer the Plan. In any event, unless otherwise specifically provided by the
Board, the Committee shall consist of not less than two (2) Directors each of
whom qualifies as (i) a Non-Employee Director, and (ii) an "outside director"
under Code Section 162(m) and the regulations thereunder. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board of Directors. The Human Resources Committee of the
Board shall constitute the Committee unless the Board determines otherwise.
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3.2 Authority of the Committee. The Committee shall have full power,except
as limited by law or by the Articles of Incorporation or Bylaws ofCompany, and
subject to the provisions herein, to determine the size and typesof Awards; to
determine the terms and conditions of such Awards including, but not limited to,
the exercise price, grant price, or purchase price, any restrictions or
limitations on any Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the Committee in its sole
discretion determines; to cancel and reissue anyAwards granted hereunder in the
event the Award lapses for any reason (provided that the Committee shall not
have the authority to reprice previously issued and currently outstanding Awards
without shareholder approval); to construe and interpret the Plan and any
agreement or instrument entered into under the Plan;to establish, amend, or
waive rules and regulations for the Plan's administration; and (subject to the
provisions of Article 14) to amend the terms and conditions of any outstanding
Award to the extent such terms and conditions are within the discretion of the
Committee as provided in the Plan. Further, theCommittee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan. As permitted by law, the Committee may delegate its authorities as
identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding on
all persons, including Company, its stockholders, Employees, Participants, and
their estates and beneficiaries.
3.4 Delegation. The Committee may delegate to any officer of Company or any
committee comprised of officers of Company the authority to take any and all
actions permitted or required to be taken by the Committee hereunder; provided
that such delegation shall not be permitted with respect to Options or
otherAwards granted or to be granted to any officer of Company and that, to the
extent the Committee delegates authority to grant Options and other Awards
hereunder, such delegation shall specify the aggregate number of Shares that
maybe awarded pursuant to such delegation and may establish the maximum number
ofShares that may be subject to any Award made pursuant to such delegation and
any other limitations thereon that the Committee may choose to impose.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for grant under the Plan shall be one million
(1,000,000). These one million (1,000,000) Shares may be either authorized but
unissued or reacquired Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, any Shares subject to such Award
again shall be available for the grant of an Award under the Plan.
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4.3 Adjustments in Authorized Shares. The Committee may make or provide for
such adjustments in the (a) number of Shares covered by outstanding Awards
granted hereunder, (b) prices per Share applicable to outstanding Awards and (C)
kind of Shares covered thereby, as the Committee in its sole discretion may in
good faith determine to be equitably required in order to prevent dilution
orenlargement of the rights of Participants that otherwise would result from (x)
any stock dividend, stock split, combination or exchange of Shares,
recapitalization or other change in the capital structure of Company, (y) any
merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization,
partial or complete liquidation, or other distribution of assets (other than a
normal cash dividend), issuance of rights or warrants to purchase securities, or
(z) any other corporate transaction or event having an effect similar to any of
the foregoing. Moreover, in the event of any such transaction or event, the
Committee may provide in substitution for any or all outstanding Awards under
this Plan such alternative consideration as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Awards so replaced. The Committee may also make or provide for
such adjustments in the number of Shares specified in Section 4.1, 4.4, or 9.5as
the Committee in its sole discretion may in good faith determine to be
appropriate in order to reflect any transaction or event described in this
Section. Any adjustment pursuant to this Section will be conclusive and binding
for all purposes of the Plan.
4.4 Limitation on Number of Shares Subject to Award. Notwithstanding
anyprovision in the Plan to the contrary, the maximum number of shares of Stock
that may be subject to one or more Awards granted to any one Participant over
the term of the Plan shall be three hundred thousand (300,000).
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include all
officers and key Employees of Company, as determined by the Committee, including
Employees who are members of the Board, but excluding Non-Employee Directors.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Employee shall have any right to be granted an Award under this
Plan.In addition, nothing in this Plan shall interfere with or limit in any way
theright of Company to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of Company.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as shall
be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each
Participant.The Committee may grant ISOs, NQSOs, or a combination thereof.
Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in
excess of the maximum established for ISOs by Section 422(d) of the Code.
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6.2 Option Agreement. Each Option grant shall be evidenced by an Option
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Option Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,or
a NQSO whose grant is intended not to fall under the provisions of Section422 of
the Code.
6.3 Option Price. The Option Price for each grant of an Option shall not be
less than one hundred percent (100%) of the Fair Market Value of such Share on
the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of
itsgrant.
6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions
asthe Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Secretary of Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by fullpayment for
the Shares.
The Option Price upon exercise of any Option shall be payable to Company
infull either: (a) in cash or its equivalent, or (b) by tendering previously
acquired Shares having a Fair Market Value at the time of exercise equal to the
total Option Price, or (c) by a combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. The proceeds from such a payment shall be
added to the general funds of Company and shall be used for general corporate
purposes.
As soon as practicable after receipt of a written notification of exercise
and full payment, Company shall deliver to the Participant, in the Participant's
name, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.8 Termination of Employment Due to Death, Disability, or Retirement.
(a) Termination by Death. In the event the employment of a Participant
is terminated by reason of death, any outstanding Options granted to that
Participant which are deemed vested as of the date of death shall remain
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exercisable at any time prior to their expiration date, or for one (1) year
after the date that employment was terminated, whichever period is shorter,
by such person or persons as shall have been named as the Participant's
beneficiary or by such persons that have acquired the Participant's rights
under the Option by will or by the laws of descent and distribution. The
portion of any outstanding Option which is deemed vested under this Plan as
of the date of employment termination shall be determined according to the
following guidelines:
(i) The portion of the Option which is exercisable as of the date
of employment termination shall remain exercisable;
(ii) The percentage vesting of the portion of an Option which
otherwise would have vested on the anniversary of the date of grant
next following the Participant's death (the "Next Vesting Date"),
shall equal a fraction, the numerator of which is the number of full
weeks of such Participant's employment during the 12-month period
ending on the Next Vesting Date, and the denominator of which is
fifty-two (52); and
(iii) Any portion of an Option which is not deemed vested as of
the date of employment termination, including the portion of an Option
that is not deemed vested prior to the Next Vesting Date (determined
in accordance with Subparagraph (ii) above), and the portion of an
Option which would have vested after the Next Vesting Date, shall
expire immediately and may not be exercised following such time. The
Shares subject to such expired Option shall be forfeited by the
Participant and shall again be available for grant under the Plan.
(b) Termination by Disability. In the event the employment of a
Participant is terminated by reason of Disability, any outstanding Options
granted to that Participant which are vested as of the date of termination
due to Disability shall remain exercisable at any time prior to their
expiration date, or for one (l) year after the date of termination due to
Disability, whichever period is shorter.
The portion of any outstanding Option which is deemed vested as of the
date of termination due to Disability shall be determined pursuant to the
guidelines set forth in Subparagraphs (a)(i) through (a)(iii) of this
Section 6.8.
Any Options that are not vested as of the date of termination due to
Disability shall expire immediately and may not be exercised following such
date.
(c) Termination by Retirement. In the event the employment of a
Participant is terminated by reason of Retirement, any outstanding Options
granted to that Participant which are vested as of the effective date of
Retirement shall remain exercisable at any time prior to their expiration
date, or for three (3) years after the effective date of Retirement,
whichever period is shorter.
The portion of any outstanding Option which is deemed vested as of the
effective date of Retirement shall be determined pursuant to the guidelines
set forth in Subparagraphs (a)(i) through (a)(iii) of this Section 6.8.
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Any Options which are not vested as of the effective date of
Retirement shall expire immediately and may not be exercised following such
date.
(d) Exercise Limitations on ISOs. In the case of ISOs, the tax
treatment prescribed under Section 422 of the Code may not be available if
the Options are not exercised within the Section 422 prescribed time
periods after each of the various types of employment termination.
(e) Option Agreements. The exercise periods and vesting rules
described in Subparagraphs (a), (b), and (c) above shall apply in the
absence of any contrary provisions in the Option Agreement. The Committee
may prescribe alternative vesting rules and exercise periods in an Option
Agreement.
6.9 Termination of Employment for Other Reasons. Except as otherwise
provided in an applicable Option Agreement, if the employment of a Participant
shall terminate for any reason (other than the reasons set forth in Section 6.8
or for Cause), all Options held by the Participant which are not vested as of
the effective date of employment termination immediately shall be forfeited to
Company (and shall once again become available for grant under the Plan).
Except as otherwise provided in an applicable Option Agreement, options
which are vested as of the effective date of employment termination may be
exercised by the Participant within the period beginning on the effective date
of employment termination and ending three (3) months after such date.
If the employment of a Participant shall terminate for Cause, all
outstanding Options held by the Participant immediately shall be forfeited
toCompany and no additional exercise period shall be allowed, regardless of the
vested status of the Options.
6.10 Nontransferability of Options. An Incentive Stock Option granted under
the Plan may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution.
A NQSO granted under the Plan may be transferrable subject to such terms and
conditions as may be established by the Committee from time to time.All Options
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant; provided that a NQSO that has been
transferred pursuant to the preceding sentence may be exercised by the
transferee.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Employees in such amounts as the Committee shall
determine. The total number of Shares of Restricted Stock granted under this
Plan pursuant to Restricted Stock Agreements that include only time based
restrictions shall not exceed one hundred thousand (100,000) Shares of
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Restricted Stock. The total number of Shares of Restricted Stock granted under
this Plan pursuant to Restricted Stock Agreements that include restrictions
based on achievement of specific performance goals, (including, but not
limitedto Company-wide, divisional, and/or individual goals) shall not exceed an
additional one hundred thousand (100,000) Shares.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Restricted Stock Shares granted, and such
other provisions as the Committee shall determine.
7.3 Transferability. Except as provided in this Article 7, the Shares of
Restricted Stock granted under this Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the
applicablePeriod of Restriction established by the Committee and specified in
theRestricted Stock Agreement, or upon earlier satisfaction of any
otherconditions, as specified by the Committee in its sole discretion and set
forthin the Restricted Stock Agreement. All rights with respect to the
RestrictedStock granted to a Participant under the Plan shall be available
during his orher lifetime only to such Participant.
7.4 Other Restrictions. The Committee shall impose such other restrictions
on any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions based upon the achievement
of specific performance goals (Company-wide, divisional, and/orindividual),
and/or restrictions under applicable Federal or state securities laws; and may
legend the certificates representing Restricted Stock to give appropriate notice
of such restrictions.
7.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 7.4, each certificate representing Shares of Restricted
Stock granted pursuant to the Plan may bear the following legend:
"The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer as set forth in the Del Webb
Corporation 1998 Executive Long-Term Incentive Plan, and in a Restricted
Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may
be obtained from the Secretary of Del Webb Corporation."
7.6 Removal of Restrictions. Except as otherwise provided in this Article
7, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant after the last day
of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required
bySection 7.5 removed from his or her Share certificate.
7.7 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted under this Plan may exercise full voting
rights with respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted under this Plan shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
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paid in Shares, the Shares shall be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock withrespect
to which they were paid.
7.9 Termination of Employment. If the employment of a Participant shall
terminate for any reason, except as otherwise set forth in the Restricted
StockAgreement all nonvested shares of Restricted Stock held by the Participant
upon the effective date of employment termination immediately shall be forfeited
and shall once again become available for grant under the Plan. The number of
Shares of Restricted Stock which are deemed vested as of the effective date of
employment termination shall be determined pursuant to the guidelines set
forthwith respect to the vesting of Options, as specified in Sections 6.8 and
6.9,except as otherwise provided in the Restricted Stock Agreement.
ARTICLE 8. PERFORMANCE UNITS
8.1 Grant of Performance Units. Subject to the terms of the Plan,
Performance Units may be granted to eligible Employees at any time and from time
to time, as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance Units granted to
each Participant. The terms upon which the Performance Units are granted shall
be set forth in a Performance Unit Award Agreement
8.2 Value of Performance Units. Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant. The Committee
shall set performance goals in its discretion which, depending on the extent to
which they are met, will determine the number and/or value of Performance Units
that will be paid out to the Participants.
8.3 Earning of Performance Units. After the applicable time period during
which the goals must be met, the holder of Performance Units shall be entitled
to receive payout on the number of Performance Units earned by the Participant
over such period, to be determined as a function of the extent to which the
corresponding performance goals have been achieved, all as set forth in the
Performance Unit Award Agreement.
8.4 Form and Timing of Payment of Performance Units. Payment of earned
Performance Units shall be made in a single lump sum, within forty-five
(45)calendar days following the close of the applicable time period during which
the goals must be met. The Committee, in its sole discretion, may pay earned
Performance Units in the form of cash or in Shares (or in a combination thereof)
which have an aggregate Fair Market Value equal to the value of the earned
Performance Units at the close of such period.
Prior to the beginning of each time period during which the goals must be
met, Participants may elect to defer the receipt of the Performance Unit payout
upon such terms as the Committee deems appropriate.
8.5 Termination of Employment Due to Death, Disability, Retirement, or
Involuntary Termination (without Cause). In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement, or
involuntary termination without Cause during a Performance Period, the
Participant shall receive a prorated payout of the Performance Units. The
prorated payout shall be determined by the Committee, in its sole discretion,
<PAGE>
based upon the guidelines set forth with respect to the vesting of Options, as
specified in Sections 6.8 and 6.9, or such other standards as may be prescribed
by the Committee in the Performance Unit Award Agreement, and further adjusted
based on the achievement of the preestablished performance goals.
Payment of earned Performance Units shall be made at the same time payments
are made to Participants who did not terminate employment during the applicable
time period during which the goals must be met.
8.6 Termination of Employment for Other Reasons. In the event that a
Participant terminates employment with Company for any reason other than those
reasons set forth in Section 8.5, unless the Committee determines otherwise, all
Performance Units shall be forfeited by the Participant to Company and shall
once again be available for grant under the Plan.
8.7 Nontransferability. Performance Units may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further a Participant's rights under
the Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
ARTICLE 9. PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of this Article 9 is to provide the Committee the
ability to qualify the Restricted Stock Awards under Article 7 and the
Performance Unit Awards under Article 8 as "performance-based compensation"under
Section 162(m) of the Code. If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of
thisArticle 9 shall control over any contrary provision contained in Articles 7
or8.
9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
Committee may, in its discretion, grant Restricted Stock Awards or
PerformanceUnit Awards to Covered Employees that do not satisfy the requirements
of this Article 9. The designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employee as a Participant in such period or in
any other period.
9.3 Discretion of Committee with Respect to Performance Awards. With regard
to a particular Performance Period, the Committee shall have full discretion to
select the length of such Performance Period, the type of Performance-Based
Awards to be issued, the kind and/or level of the Performance Goal, and whether
the Performance Goal is to apply to Company, a Subsidiary orany division or
business unit thereof.
9.4 Payment of Performance Awards. Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by Company or a
<PAGE>
Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant shall
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved.
In determining the actual size of an individual Performance-Based Award,
the Committee may reduce or eliminate the amount of the Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion such
reduction or elimination is appropriate.
9.5 Maximum Award Payable. Notwithstanding any provision contained in
thePlan to the contrary, the maximum Performance-Based Award payable to any
oneParticipant under the Plan for a Performance Period is seventy-five thousand
(75,000) Shares, or in the event the Performance-Based Award is paid in cash,
such maximum Performance-Based Award shall be determined by multiplying
seventy-five thousand (75,000) by the Fair Market Value of one Share as of the
date of grant of the Performance-Based Award.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by Company, and will be effective only when filed by the Participant
in writing with the Human Resource Department of Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise of an Option, the lapse or waiver of
restrictions with respect to Restricted Stock, or the satisfaction of any
requirements or goals with respect to Performance Units. If any such deferral
election is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 Employment. Nothing in the Plan shall interfere with or limit in
anyway the right of Company to terminate any Participant's employment at any
time,nor confer upon any Participant any right to continue in the employ of
Company. For purposes of the Plan, transfer of employment of a Participant
between Company and any one of its Subsidiaries (or between Subsidiaries) shall
not be deemed a termination of employment.
12.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
<PAGE>
ARTICLE 13. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited by the terms of Article 17:
(a) Any and all Options granted under the Plan shall become
immediately exercisable and shall remain exercisable by the Participant at
any time prior to their expiration date or for one (1) year after the date
of the occurrence of the Change in Control, whichever period is shorter;
provided that, if the Participant is terminated following such Change in
Control, the provisions of the Plan regarding exercisability of vested
options set forth in Sections 6.8 and 6.9 shall apply.
(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse, and within ten (10) business days after the occurrence
of a Change in Control, the stock certificates representing Shares of
Restricted Stock, without any restrictions or legend thereon, shall be
delivered to the applicable Participants;
(c) The value of all Performance Units and the time and manner of
payment for Performance Units shall be governed by the terms of the
Performance Unit Award Agreement; and
(d) Subject to Article 14, the Committee shall have the authority to
make any modifications to the Awards as determined by the Committee to be
appropriate before the effective date of the Change in Control.
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, and Termination. With the approval of
theBoard, at any time and from time to time, the Committee may terminate, amend,
or modify the Plan. However, to the extent necessary and desirable to comply
with any applicable law, regulation, or stock exchange rule, the Board shall
obtain shareholder approval of any Plan amendment in such manner and to such a
degree as may be required.
14.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall in any manner adversely affect any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.
ARTICLE 15. WITHHOLDING
The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to Company, an amount sufficient to satisfy
Federal, state, and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any grant, exercise, or payment
made under or as a result of this Plan.
<PAGE>
ARTICLE 16. SUCCESSORS
All obligations of Company with respect to Awards granted under the Plan
shall be binding on any successor to Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation,or otherwise, of all or substantially all of the business and/or
assets of Company.
ARTICLE 17. REQUIREMENTS OF LAW
17.1 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
governed by the laws of the State of Delaware.
DEL WEBB CORPORATION
1998 DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Del Webb Corporation, a Delaware corporation
(the "Company"), hereby establishes a stock plan for Nonemployee Directors, to
be known as the "Del Webb Corporation 1998 Director Stock Plan"(the "Plan"), as
set forth in this document. The Plan permits the deferral of Directors' Annual
Retainers into grants of Nonqualified Stock Options and Restricted Stock, and
sets forth the terms of annual grants of Stock Options to Nonemployee Directors.
Upon approval by the Board of Directors of Company, and conditioned upon
subsequent approval of the Plan by the shareholders of Company, the Plan shall
become effective as of July 23, 1998 (the "Effective Date"), and shall remain in
effect as provided in Section 1.3. Any Awards made in accordance with the
provisions of the Plan prior to shareholder approval are effective when made,
but no Award may be exercised or settled and no restrictions relating to any
Award may lapse before shareholder approval. If the shareholders fail to approve
the Plan at the 1998 annual shareholders meeting or any adjournment thereof, the
Plan and any Award made under the Plan shall be void ab initio and of no force
or effect.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
achievement of long-term objectives of Company by linking the personal interests
of Nonemployee Directors to those of Company shareholders and to attract and
retain Nonemployee Directors of outstanding competence.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1, and shall remain in effect, subject to the right of
the Board of Directors to terminate the Plan at any time pursuant to Article 9,
until all Shares subject to it shall have been purchased or acquired according
to the Plan's provisions. However, in no event may an Award be granted under the
Plan on or after July 22, 2008.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Annual Retainer" means the annual fee payable by Company to a
Director, including amounts payable for service as a chairperson of a
committee of the Board, but excluding meeting fees.
(b) "Award" means, individually or collectively, a grant of
Nonqualified Stock Options or Restricted Stock under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
<PAGE>
(d) "Board" or "Board of Directors" means the Board of Directors of
Del Webb Corporation, and includes any committee of the Board of Directors
designated by the Board to administer part or all of this Plan.
(e) A "Change in Control" of Company shall be deemed to have occurred
in any or all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act, other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a corporation
owned directly or indirectly by the stockholders of Company in
substantially the same proportions as their ownership of stock of
Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of Company representing 20% or more of the total voting power
represented by Company's then outstanding Voting Securities (as
defined below); or
(2) During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
Company and any new Director whose election by the Board of Directors
or nomination for election by Company's stockholders was approved by a
vote of at least two-thirds of the Directors then still in office who
either were Directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(3) The stockholders of Company approve a merger or consolidation
of Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of Company
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into Voting Securities
of the surviving entity) at least 80% of the total voting power
represented by the Voting Securities of Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(4) The stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or disposition by
Company of (in one transaction or a series of transactions) all or
substantially all Company's assets.
For purposes of this Section, the term "Voting Securities" shall mean
and include any securities of Company which vote generally for the election
of directors.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means the Human Resources Committee of the Board of
Directors, or any other committee appointed by the Board to administer this
Plan. In any event, unless otherwise specifically provided by the Board,
the Committee shall be comprised of at least two individuals each of whom
qualifies as a "non-employee director" as defined in Rule 16b-3(b)(3) of
the Exchange Act, as it may be amended, replaced, or superseded from time
to time.
<PAGE>
(h) "Company" means Del Webb Corporation, a Delaware corporation, or
any successor thereto as provided in Section 10.2 herein.
(i) "Director" means any individual who is a member of the Board of
Directors of Company.
(j) "Disability" means a permanent and total disability, within the
meaning of Code Section 22(e)(3). Disability shall be determined by the
Board in good faith, upon receipt of sufficient competent medical advice
from one or more individuals, selected by the Board, who are qualified to
give professional medical advice.
(k) "Employee" means any full-time, nonunion, salaried employee of
Company. For purposes of this Plan, an individual whose only employment
relationship with Company is as a Director shall not be deemed to be an
Employee.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(m) "Fair Market Value" means, as of any given date, the fair market
value of a Share or other property determined by such methods or procedures
as may be established from time to time by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of a Share as of any
date shall be the closing price for a Share on any national securities
exchange on which the Shares are then listed for that date or, if there is
no closing price for that date, the closing price on the next preceding
date for which there is a closing price, all as reported in the Wall Street
Journal.
(n) "Grant Date" means (I) with respect to Awards granted pursuant to
Section 7.1 or 7.3, the effective date of the grant as set forth in Section
7.1 or 7.3, and (ii) with respect to Awards granted pursuant to Sections
6.1, 6.2, 6.3, and 7.2, the tenth (10th) day following the public release
of Company's fiscal year-end earnings information.
(o) "Nonemployee Director" means any individual who is a member of the
Board of Directors of Company, but who is not otherwise an Employee of
Company.
(p) "Option" means an option to purchase Shares, granted under
Articles 6 or 7.
(q) "Participant" means a Nonemployee Director of Company who has
outstanding an Award granted under the Plan.
(r) "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way, and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 6.
<PAGE>
(s) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
(t) "Restricted Stock" means an Award granted to a Nonemployee
Director pursuant to Article 6.
(u) "Shares" means the shares of common stock of Del Webb Corporation.
2.2 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Plan is in violation of any statute, common
law, or public policy, then only the portions of this Plan that violate such
statute, common law, or public policy shall be stricken. All portions of this
Plan that do not violate any statute or public policy shall continue in full
force and effect. Further, any court order striking any portion of this Plan
shall modify the stricken terms as narrowly as possible to give as much effect
as possible to the intentions of the parties under this Plan.
ARTICLE 3. ADMINISTRATION
3.1 The Board and the Committee. Subject to the restrictions set forth in
this Plan, the Board shall administer the discretionary grant provisions of
Section 7.3 and bear the responsibility for all related administrative matters.
The Committee shall be responsible for the administration of all other
provisions of the Plan.
3.2 Administration. The Committee or the Board, as the case may be, shall
have full power, discretion, and authority to interpret and administer this Plan
in a manner which is consistent with the Plan's provisions. The Board shall have
full power, except as limited by law or by the Articles of Incorporation or
Bylaws of Company, and subject to the provisions herein, to determine the terms
and conditions of any discretionary grants made pursuant to Section 7.3,
including, but not limited to, the number of Shares subject to the Option, the
exercise price, any restrictions or limitations on any Option, any schedule for
lapse of restrictions on the exercisability of an Option, and accelerations or
waivers thereof, based in each case on such considerations as the Board in its
sole discretion determines.
3.3 Decisions Binding. All determinations and decisions made by the Board
or the Committee pursuant to the provisions of the Plan shall be final,
conclusive, and binding on all persons, including Company, its stockholders,
employees, Participants, and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for grant under the Plan may not exceed
<PAGE>
seventy-five thousand (75,000). The Shares issued as Restricted Stock and the
Shares issued pursuant to the Options exercised under this Plan may be
authorized and unissued Shares or Shares reacquired by Company, as determined by
the Committee.
4.2 Lapsed Awards. If any Option or Share of Restricted Stock granted under
this Plan terminates, expires, or lapses for any reason, any Shares subject to
purchase pursuant to such Option and any such Shares of Restricted Stock again
shall be available for grant under the Plan.
4.3 Adjustments. The Committee may make or provide for such adjustments in
the (a) number of Shares covered by outstanding Options and Restricted Stock
granted hereunder, (b) prices per share applicable to outstanding Options and
(C) kind of Shares covered thereby, as the Committee in its sole discretion may
in good faith determine to be equitably required in order to prevent dilution or
enlargement of the rights of Participants that otherwise would result from (x)
any stock dividend, stock split, combination or exchange of Shares,
recapitalization or other change in the capital structure of Company, (y) any
merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization,
partial or complete liquidation, or other distribution of assets (other than a
normal cash dividend), issuance of rights or warrants to purchase securities, or
(z) any other corporate transaction or event having an effect similar to any of
the foregoing. Moreover, in the event of any such transaction or event, the
Committee may provide in substitution for any or all outstanding Awards under
this Plan such alternative consideration as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Awards so replaced. The Committee may also make or provide for
such adjustments in the number of Shares specified in Section 4.1 as the
Committee in its sole discretion may in good faith determine to be appropriate
in order to reflect any transaction or event described in this Section 4.3. Any
adjustment pursuant to this Section 4.3 will be conclusive and binding for all
purposes of the Plan.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan are limited
to Nonemployee Directors.
5.2 Actual Participation. All eligible Nonemployee Directors shall receive
grants of Options pursuant to Article 7, and shall be given the opportunity to
defer all or a portion of their Annual Retainers into Options and/or Restricted
Stock, pursuant to the terms and provisions set forth in Article 6.
ARTICLE 6. DEFERRAL OF ANNUAL RETAINERS
6.1 Deferral Election. On or before December 31 of each year during the
term of this Plan, each Nonemployee Director shall have the ability to elect to
defer any portion or all of his or her Annual Retainer, pursuant to the terms of
this Article 6. Deferrals may, at the discretion of the Director, be made in the
form of discounted Options or Restricted Stock, or a combination thereof.
The deferral election shall be irrevocable and shall be made by means of a
written notice delivered to the Secretary of Company on or before December 31 of
<PAGE>
the calendar year which ends prior to the beginning of the applicable fiscal
year. The deferral election shall state the percentage and/or dollar amount of
the Director's Annual Retainer which is to be deferred and shall specify whether
the deferral is to be in the form of discounted Options or Restricted Stock or a
combination thereof.
Each deferral election by a Director shall relate to the Annual Retainer
which is to be earned by the Director for Company's fiscal year which begins in
the first calendar year following the calendar year in which the deferral
election is made. For example, a deferral election made by a Director on
December 31, 1998 will correspond to the deferral of an Annual Retainer which is
to be earned by the Director during the fiscal year beginning July 1, 1999, and
ending June 30, 2000.
The effective date of the Award grant relating to Annual Retainer deferrals
shall be the Grant Date which falls in the first calendar year following the
calendar year in which the applicable deferral election is made. Awards of
Restricted Stock pursuant to Annual Retainer deferrals under this Plan also
shall be made on the same Grant Date.
6.2 Terms of Stock Option Deferrals.
(a) Number of Shares under Option. The number of Shares which may be
purchased under Options issued pursuant to Annual Retainer deferrals shall
be determined according to the following formula:
Number of Shares = Amount of Deferral divided by (0.25 X Fair Market Value
of Shares at Grant Date)
The Option price for each Share granted pursuant to an Annual Retainer
deferral shall equal seventy-five percent (75%) of the Fair Market Value of
a Share on the Grant Date. Options are issued using this formula to give
the Director who is deferring his or her Annual Retainer an equivalent
economic value.
(b) Vesting of Options. Options granted under this Article 6 shall
vest immediately.
(c) Individual Award Agreement. Each Option grant shall be evidenced
by an Individual Award Agreement that will not include any terms or
conditions that are inconsistent with the terms and conditions of this
Plan.
(d) Duration of Options. Unless earlier terminated, forfeited, or
surrendered pursuant to a provision of this Plan, each Option shall expire
on the tenth (10th) anniversary date of its grant.
(e) Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares.
<PAGE>
The Option price upon exercise of any Option shall be payable to Company in
full either: (i) in cash or its equivalent, (ii) by tendering previously
acquired Shares having a Fair Market Value at the time of exercise equal to the
total Option price, (iii) subject to the approval of the Board in the case of
discretionary grants under Section 7.3, or subject to the approval of the
Committee in all other cases, pursuant to a cashless exercise arrangement,
including a broker-assisted cashless exercise arrangement under Federal Reserve
Board Regulation T, or (iv) by a combination of (I), (ii) and (iii). The
proceeds from such a payment shall be added to the general funds of Company and
shall be used for general corporate purposes.
To the extent that a Participant exercises an Option by tendering
previously acquired Shares, the Participant may elect to defer the receipt of
any "Excess Shares" so acquired, with such election to be made at such time and
in such manner as may be prescribed from time to time in rules adopted for
purposes of this paragraph. For purposes of this paragraph, the term "Excess
Shares" means (i) the difference between the number of Shares that could be
received upon exercise of the Option by tendering previously acquired Shares and
(ii) the number of previously acquired Shares tendered as payment of the
exercise price.
(f) Restrictions on Share Transferability. To the extent necessary to
ensure that Awards granted hereunder comply with applicable law, the Committee
shall impose restrictions on any Shares acquired pursuant to the exercise of an
Option under this Plan, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock exchange
or market upon which such Shares are then listed and/or traded, and under any
blue sky or state securities laws applicable to such Shares.
(g) Termination of Service on Board of Directors. In the event the service
of a Participant on the Board is terminated for any reason, any Option acquired
pursuant to this Article shall remain exercisable at any time prior to its
expiration date, or for one (1) year after the termination of service, whichever
period is shorter, by the Participant or such person or persons as shall have
been named as the Participant's legal representative or beneficiary, or by such
persons that have acquired the Participant's rights under the Option by will or
by the laws of descent and distribution.
(h) Nontransferability of Options. Except as otherwise allowed by uniform
rules adopted by the Board or the Committee, no Option granted under this Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will, by the laws of descent and distribution, or
pursuant to Section 10.1. Further, all Options granted to a Participant under
this Plan shall be exercisable during his or her lifetime only by such
Participant.
6.3 Terms of Restricted Stock Deferrals.
(a) Grants of Restricted Stock. The number of shares of Restricted
Stock which shall be granted pursuant to an Annual Retainer deferral shall
be determined according to the following formula:
<PAGE>
Number of Shares = Amount of Deferral divided by Fair Market Value of
Shares at Grant Date
Awards of Restricted Stock under this Plan shall be made on the Grant
Date which falls within the first (1st) calendar year following the
calendar year in which the applicable deferral election was made.
(b) Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Restricted Stock Shares granted, and
such other provisions as the Committee shall determine.
(c) Transferability. Except as provided in this Section 6.3(c), the
Shares of Restricted Stock granted herein may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated (other than
pursuant to Section 10.1) until the end of the applicable Period of
Restriction, as specified in the Restricted Stock Agreement. The Period of
Restriction for Shares of Restricted Stock awarded pursuant to this Article
6 shall end six (6) months following the Grant Date on which such Shares
were issued. All rights with respect to the Restricted Stock granted to a
Director under the Plan shall be available during his or her lifetime only
to such Director.
(d) Certificate Legend. Each certificate representing Shares of
Restricted Stock granted pursuant to the Plan may bear the following
legend: "The sale or other transfer of the Shares of Stock represented by
this certificate, whether voluntary, involuntary, or by operation of law,
is subject to certain restrictions on transfer as set forth in the Del Webb
Corporation 1998 Director Stock Plan and in a Restricted Stock Agreement. A
copy of the Plan and such Restricted Stock Agreement may be obtained from
the Secretary of Del Webb Corporation."
(e) Removal of Restrictions. Except as otherwise provided in this
Plan, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant
after the last day of the Period of Restriction. Once the Shares are
released from the restrictions, the Director shall be entitled to have the
legend required by Section 6.3(d) removed from his or her Share
certificate.
(f) Voting Rights. During the Period of Restriction, Directors holding
Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
(g) Dividends and Other Distributions. During the Period of
Restriction, Directors holding Shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid
with respect to those Shares while they are so held. If any such dividends
or distributions are paid in Shares, the Shares shall be subject to the
same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
<PAGE>
(h) Termination of Service on Board of Directors Due to Death,
Disability, or Retirement. In the event that a Director's service on the
Board terminates prior to the end of the Period of Restriction by reason of
death, Disability, or retirement from the Board after attaining age 72,
then the percentage vesting of the Shares of Restricted Stock shall be
determined according to a fraction, the numerator of which is the number of
full weeks of service on the Board between the applicable Grant Date and
the date the Director's service on the Board terminates, and the
denominator of which is twenty-six (26).
Within thirty (30) days after termination of service on the Board, the
Director (or his or her legal representative) shall return to Company all
of the certificates representing Shares of Restricted Stock. As soon as
practicable thereafter, Company shall issue a new certificate representing
the number of vested Shares to which the Director is entitled.
(i) Termination of Service on Board of Directors for Other Reasons. If
the service of a Director on the Board terminates prior to the end of the
Period of Restriction for reasons other than death, Disability, or
retirement from the Board after attaining age 72, then all Shares of
Restricted Stock that are not vested as of the date the Director's service
on the Board terminates shall be forfeited to Company (and shall once again
become available for grant under the Plan). Within thirty (30) days after
the termination of service on the Board, the Director shall return to
Company all of the certificates representing his or her Shares of
Restricted Stock.
ARTICLE 7. INITIAL AND ANNUAL OPTION GRANTS
7.1 Initial Option Grants. Each individual who first became or becomes a
Nonemployee Director on or after July 23, 1998 shall be granted an Option to
purchase six thousand (6,000) Shares, effective as of the later of July 23, 1998
or the first Board meeting at which such individual serves as a Nonemployee
Director. Effective as of July 23, 1998, each other Nonemployee Director shall
be granted an option to purchase the number of Shares equal to such Nonemployee
Director's "shortfall". A Nonemployee Director's "shortfall" shall equal the
difference between six thousand (6,000) Shares and the number of Shares subject
to Options granted to the Director prior to July 23, 1998.
7.2 Annual Grant of Options. Each Nonemployee Director shall be granted an
Option to purchase two thousand (2,000) Shares upon each November 20 of each
calendar year commencing in 1998 (less the number of shares granted to the
Director under the Del Webb Corporation Director Stock Plan or the Del Webb
Corporation 1995 Director Stock Plan during each such calendar year).
7.3 Discretionary Grants. The Board shall have the authority to grant
Options, in addition to those granted under Sections 6.1, 6.2, 7.1 and 7.2, in
such amounts and at such times as the Board determines to be appropriate. The
specific terms of a discretionary option grant made pursuant to this Section
will be subject to all of the provisions of this Article and the related Option
Agreement. The Grant Date for such Option shall be determined by the Board at
the time the Award is made.
<PAGE>
7.4 Individual Award Agreement. Each Option grant shall be evidenced by an
Individual Award Agreement that will not include any terms or conditions that
are inconsistent with the terms and conditions of this Plan.
7.5 Option Price. The purchase price per Share for an Option granted
pursuant to this Article 7 shall be equal to the Fair Market Value of such Share
on the date the Option is granted.
7.6 Duration of Options. Unless earlier terminated, forfeited, or
surrendered pursuant to a provision of this Plan, each Option granted under this
Article 7 shall expire on the tenth (10th) anniversary of its Grant Date.
7.7 Vesting and Exercise. Participants shall be entitled to exercise
Options granted under this Article 7 at any time and from time to time after the
Options vest and prior to the end of the ten (10) year period beginning on the
Grant Date of the Option. The Option shall vest according to the following
vesting schedule: one-third of the Options shall vest on the first anniversary
date of the Grant Date of the Options, and one-third of the Options shall vest
on each of the second and third anniversaries of the Grant Date of the Options.
7.8 Payment. Options granted under this Article 7 shall be exercised in the
manner set forth in Section 6.2(e).
7.9 Restrictions on Share Transferability. To the extent necessary to
ensure that Options granted under this Article 7 comply with applicable law, the
Board shall impose restrictions on any Shares acquired pursuant to the exercise
of an Option under this Article 7, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
7.10 Termination of Service Due to Death, Disability, or Retirement. In the
event the service of a Participant on the Board is terminated by reason of
death, Disability, or retirement from the Board after attaining age 72, and if a
portion of the Participant's Award is not fully vested as of the date of
termination of service on the Board, then the portion of the Participant's Award
which is exercisable as of the date of termination of service on the Board shall
be determined by prorating the Award according to the following guidelines:
(i) The portion of the Award which is exercisable as of the date of
termination of service on the Board shall remain exercisable;
(ii) The percentage vesting of the portion of an Award which otherwise
would have vested on the anniversary of the Grant Date next following the
date on which the Participant's service on the Board terminates (the "Next
Vesting Date") will be a fraction, the numerate of which is the number of
full weeks of service on the Board during the 12-month period ending on the
Next Vesting Date, and the denominator of which is fifty-two (52); and
<PAGE>
(iii) Any portion of an Option which is not deemed vested as of the
date service to the Board is terminated, including the portion of an Option
that is not deemed vested prior to the Next Vesting Date (determined in
accordance with Subparagraph (ii) above), and the portion of an Option
which would have vested after the Next Vesting Date, shall be forfeited by
the Participant and shall again be available for grant under the Plan.
To the extent an Option is exercisable as of the date of termination of
service on the Board, it shall remain exercisable at any time prior to its
expiration date, or for one (1) year after the date of death (or the date of
termination by reason of Disability or retirement from the Board after attaining
age 72, as applicable), whichever period is shorter, by the Participant or such
person or persons as shall have been named as the Participant's legal
representative or beneficiary, or by such persons that have acquired the
Participant's rights under the Option by will or by the laws of descent and
distribution.
7.11 Termination of Service on the Board of Directors for Other Reasons. If
the service of a Participant on the Board shall terminate for any reason other
than for death, Disability or retirement from the Board after attaining age 72,
any outstanding Options held by the Participant that are not exercisable as of
the date of termination shall be forfeited and lapse. To the extent an Option is
exercisable as of the date of termination of the Participant's service on the
Board under this Section 7.11, it shall remain exercisable at any time prior to
its expiration date, or for one (1) year after the date the Participant's
service on the Board terminates, whichever period is shorter.
7.12 Nontransferability of Options. Except as otherwise allowed by uniform
rules adopted by the Board or the Committee, no Option granted under this
Article 7 may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution, or
pursuant to Section 10.1. Further, all Options granted to a Participant under
this Article 7 shall be exercisable during his or her lifetime only by such
Participant.
ARTICLE 8. CHANGE IN CONTROL
In the event of a Change in Control of Company, all Awards granted under
this Plan that are still outstanding and not yet vested, shall become
immediately one hundred percent (100%) vested in each Participant, as of the
first date that the definition of Change in Control has been fulfilled, and
shall remain as such for the remaining life of the Award, as such life is
provided herein, and within the provisions of the related individual Award
agreements entered into with each Participant. All Options that are exercisable
as of the effective date of the Change in Control shall remain as such for the
remaining life of the Options.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1 Amendment, Modification, and Termination. Subject to the terms set
forth in this Section 9.1, the Board may terminate, amend, or modify this Plan
at any time and from time to time. However, to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Board shall obtain shareholder approval of any Plan amendment in such manner
and to such a degree as may be required.
<PAGE>
9.2 Awards Previously Granted. Unless required by law, no termination,
amendment, or modification of this Plan shall in any manner adversely affect any
Award previously granted under this Plan, without the written consent of the
Participant holding such Award.
ARTICLE 10. MISCELLANEOUS
10.1 Beneficiary Designation. Each Participant under this Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
10.2 Successors. All obligations of Company under this Plan, with respect
to Awards granted hereunder, shall be binding on any successor to Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of Company.
10.3 Requirements of Law. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
10.4 Governing Law. This Plan, and all agreements hereunder, shall be
governed by the laws of the State of Delaware.
SECOND AMENDMENT
TO THE DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1
The Del Webb Corporation Supplemental Executive Retirement Plan No. 1 (the
"Plan"), which was originally effective as of January 1. 1989, and was restated
effective as of April 20, 1993, is hereby further amended as follows:
1. Section 4.2(b) shall be amended by adding The following to the end of
the paragraph:
Beginning June 1, 1996. the incentive compensation included in the
computations of High Average Compensation shall in no event exceed one
hundred twenty-five percent (125 %) of the Participant's target incentive
compensation.
2. Section 4.5(a) of the Plan is amended in its entirety to read as
follows:
(a) Normal Form of Benefit Payments. Benefits payable under this Plan
shall be paid as follows.
(i) In the event the actuarial equivalent lump sum value of a
Participant's plan benefit is two hundred thousand dollars ($200,000)
or less, that benefit shall be paid as a lump sum;
(ii) In the event the actuarial equivalent lump sum value of a
Participant's plan benefit exceeds Two hundred thousand dollars
(S200,000). that benefit shall be paid in one of the following forms
as elected by the Participant in The Participation Agreement:
(a) one hundred Thousand dollars ($100,000) as a lump sum
and the balance of the benefit in the form of an actuarial
equivalent single-life annuity payable monthly for the
Participant's life. If a Participant dies prior to ten (10) years
of payments, the- remaining payments shall be made to the
Participant's Beneficiary pursuant to 3.2;
(b) an actuarial equivalent single-life annuity payable
monthly for the Participant's life. If a Participant dies prior
to ten (10) years of payments. the remaining payment shall be
made to the Participant's Beneficiary pursuant to 3.2; or
(c) notwithstanding (a) and (b) above, a Participant may
request the benefits payable under subparagraph (ii) be paid in a
different form of payment (such as a joint and survivor annuity).
The request MUSE be submitted no later than the last day of the
calendar year, two years prior to retirement or termination. Any
such request shall be granted or denied based solely on the
Committee's discretion. If The Participant's request is granted
and the Participant retires or terminates prior to the period
described above, the form of payment granted by the Committee
shall be null and void and payment shall be made in the form
elected by the Participant in the Participation Agreement.
3. Section 4.6(a)(i) of the Plan is amended in its entirety to read as
follows:
(i) The benefit shall be based on the lesser of years of service at Normal
Retirement Date or twenty (20) Years of Service notwithstanding actual Years of
Service.
4. Section 4.6(e) of the Plan, which defines [he term "Change in Control,"
is hereby amended and restated in its entirety as follows:
(e) CHANGE IN CONTROL. "Change in Control" means and includes both an
"Actual Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(i) Any "person' as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Employer or a corporation owned directly or indirectly
by the stockholders of Employer in substantially the same proportions
as their ownership of stock of Employer. is or becomes the "beneficial
owner (as defined in Rule 13d-3 under said Act), directly or
indirectly. of securities of Employer representing 20% or more of the
total voting power represented by Employer's then outstanding Voting
Securities (as defined below); or
(ii) During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
Employer and any new director whose election by the Board of Directors
or NOMINATION FOR election by Employer's stockholders was approved by
a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; or
(iii) The stockholders of Employer approve a merger or
consolidation of Employer with any other -corporation, other than a
merger or consolidation which would result In the Voting Securities of
Employer outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of THE surviving entity) at least 80% of the total voting
power represented by the Voting Securities of EMPLOYER or SUCH
surviving entity outstanding immediately after such merger or
consolidation; or
2
<PAGE>
(iv) The stockholders of Employer approve a plan of complete
liquidation of Employer or an agreement for the sale or disposition by
Employer of (in one transaction or a series of transactions) all or
substantially all Employer's assets.
A "Potential Change in Control" shall BE deemed to have occurred in any or
all of the following instances:
(i) Employer enters into an agreement, the consummation of which
would result IN the occurrence of an Actual Change in Control;
(ii) Any person (INCLUDING Employer) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control;
(iii) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Employer or a corporation
owned, directly or indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership of stock of
Employer who is or becomes the beneficial owner. directly or
indirectly, of securities of Employer representing 10% or more of the
combined voting power of the Employer's then outstanding Voting
Securities, increases such person's beneficial ownership of such
securities by five percentage points (5 %) or more over the percentage
so owned by such person; or
(iv) The Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control
has occurred.
For purposes of this Section, the term "Voting Securities" shall mean
and include any securities of the Employer which vote generally for
the election of directors.
Except as otherwise provided above, the provisions of the plan, as amended
and restated as of April 20, 1993, shall continue in full force and effect.
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
------------------------------------
Its V.P.
Dated: 6/26/96
3
SECOND AMENDMENT
TO THE DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
The Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the
"Plan"), which was originally effective as of January 1, 1989, and was restated
effective as of April 20. 1993, is hereby further amended as follows:
1. Section 4.2(b) shall be amended by adding the following to the end of
the paragraph
Beginning June 1, 1996, the incentive compensation included in the
computations of High Average Compensation shall in no event exceed one hundred
twenty-five percent (125%) of the Participant's target incentive compensation.
2. Section 4.5(a) of the Plan is amended in its entirety to read as
follows:
(a) NORMAL FORM OF BENEFIT PAYMENTS. Benefits payable under this Plan
shall be paid as follows:
(i) In the event the actuarial equivalent lump sum value of a
Participant's plan benefit is two hundred thousand dollars ($200,000)
or less, that benefit shall be paid as a lump sum;
(ii) In the event the actuarial equivalent lump sum value of a
Participant's plan benefit exceeds two hundred thousand dollars
($200,000) that benefit shall be paid in one of the following forms as
elected by the Participant in the Participation Agreement:
(a) one hundred thousand dollars ($100,000) as a lump sum
and the balance of the benefit in the form of an actuarial
equivalent single-life annuity payable monthly for the
Participant's life. If a Participant dies prior to ten (10) years
of payments, the remaining payments shall be made to the
Participant's Beneficiary pursuant to 3.2;
(b) an actuarial equivalent single-life annuity payable
monthly for the Participant's life. If a Participant dies prior
to ten (10) years of payments, the remaining payment shall be
made TO the Participant's Beneficiary pursuant to 3.2; or
(c) notwithstanding (a) and (b) above, a Participant may
request the benefits payable under subparagraph (ii) be paid in a
different form of payment (such as a joint and survivor annuity).
The request must be submitted no later than the last day of the
calendar year, two years prior to retirement or termination. Any
such request shall be granted or denied based solely on the
Committee's discretion. If the Participant's request is granted
and the Participant retires or terminates prior to the period
described above, the form of payment granted by the Committee
shall be null and void and payment shall be made in the form
elected by the Participant in the Participation Agreement.
<PAGE>
3. Section 4.6(a)(i) of the Plan is amended in its entirety to read as
follows:
(i) The benefit shall be based on the lesser of years of service at
Normal Retirement Date or twenty (20) Years of Service notwithstanding
actual Years of Service.
4. Section 4.6(e) of the Plan, which defines [he term "Change in Control,"
is hereby amended and restated in its entirety as follows:
(e) CHANGE IN CONTROL. "Change in Control" means and includes both an
"Active Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(i) Any "person" as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Employer or a corporation owned directly or indirectly
by the stockholders of Employer in substantially the same proportions
as their ownership of stock of Employer, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Employer representing 20% or more of the
total voting power represented by Employer's then outstanding Voting
Securities (as defined below); or
(ii) During any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
Employer and any new director whose election by the Board of Directors
or nomination for election by Employer's stockholders was approved by
a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof, or
(iii) The stockholders of Employer approve a merger or
consolidation of Employer with any other corporation, other than a
merger or consolidation which would result in the Voting Securities of
Employer outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of Employer or such
surviving entity outstanding immediately after such merger or
consolidation; or
2
<PAGE>
(iv) The stockholders of Employer approve a plan of complete
liquidation of Employer or an agreement for the sale or disposition by
Employer of (in one transaction or a series of transactions) all or
substantially all Employer's assets.
A "Potential Chancre in Control" shall be deemed to have occurred in any or
all of the following instances:
(i) Employer enters into an agreement, the consummation of which
would result in the occurrence of an Actual Change in Control;
(ii) Any person (including Employer) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control;
(iii) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Employer or a corporation
owned, directly or indirectly, by the stockholders of Employer in
substantially the same proportions as their ownership of stock of
Employer who is or becomes the beneficial owner, directly or
indirectly, of securities of Employer representing 10% or more of the
combined voting power of the Employer's then outstanding Voting
Securities, increases such person's beneficial ownership of such
securities by five percentage points (5%) or more over the percentage
so owned by such person; or
(iv) The Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control
has occurred.
For purposes of this Section, the term "Voting Securities" shall mean
and include any securities of the Employer which vote generally for
the election of directors.
Except as otherwise provided above. the provisions of the Plan, as amended
and restated as of April 20, 1993, shall continue in fall force and effect,
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-----------------------------------
Its V.P.
Dated: 6/26/96
DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
AMENDMENT NO. 3
The Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the
"Plan"), originally effective as of January 1, 1989, and as amended since that
time, is further amended as follows, effective as of February 11, 1998:
Section 4.2(a) is amended in its entirety to ready as follows:
(a) AMOUNT. If a Participant retires on or after Normal Retirement Date,
the Employer shall pay the Participant a Normal Retirement Benefit for the
Participant's life equal to the target percentage specified in the Participant's
Participation Agreement times the Participant's High average Compensation, less
the sum of the following:
(i) Fifty percent (50%) of the Participant's maximum primary Social
Security benefit determined at age sixty-five (65); and
(ii) The single-life annuity payable at age sixty-five (65) which is
actuarially equivalent to amounts contributed (and earnings thereon) by die
Employer to the participant's account under the Employer's current
tax-qualified profit sharing plan and any predecessor or successor plan.
For purposes of this section, Employer contributions made under the prior
Employee Stock Ownership Plan and the frozen Del E. Webb Corporate Restated
Profit Sharing plan shall be considered as amounts contributed by the
Employer.
The target benefit designated shall not exceed 60%.
Section 4.2(c) is amended in its entirety to read as follows:
(c) SHORT SERVICE PENALTY. For a Participant retiring before having twenty
(20) Years of Service, the target percentage in (a) shall be reduced by
one-twentieth (1/20) for each Year of Service less than twenty (20). The offset
amounts in (a)(i) and (ii) shall not be reduced. For this purpose, but not for
vesting under 2.3, a partial Year of Service shall be prorated to the nearest
mouth for partial yew.
DEL WEBB CORPORATION
By: /s/ Lynn Schuttenberg
------------------------------------
Its: VP Human Resources
-----------------------------------
EXHIBIT 21.0
SUBSIDIARIES OF THE REGISTRANT*
AS OF SEPTEMBER 7, 1999
Anthem Admin Building LLC
Anthem Arizona L.L.C.
Anthem Golf and Country Club, Inc.
Asset One Corp.
Asset Four Corp.
Asset Five Corp.
Asset Six Corp.
Asset Seven Corp.
Bellasera Corp.
Coventry of California, Inc.
Del Webb Architectural Services, Inc.
Del Webb California Corp.
Del Webb Commercial Properties Corporation
Del Webb Communities, Inc.
Del Webb Communities of Nevada, Inc.
Del Webb Community Management Co.
Del Webb Conservation Holding Corp.
Del Webb Construction Services Co.
Del Webb Golf Corp.
Del Webb Home Construction, Inc.
Del Webb Homes, Inc.
Del Webb Limited Holding Co.
Del Webb Midatlantic Corp.
Del Webb Property Corp.
Del Webb Purchasing Company of Illinois, Inc.
Del Webb Southwest Co.
Del Webb Texas Limited Partnership
Del Webb Texas Title Agency Co.
Del Webb Title Company of Nevada, Inc., a
Nevada corporation
Del Webb's Contracting Services, Inc.
Del Webb's Contracting Services of Tucson, Inc.
Del Webb's Coventry Homes Construction Co.
Del Webb's Coventry Homes, Inc.
Del Webb's Coventry Homes of Nevada, Inc.
Del Webb's Coventry Homes Construction
of Tucson Co.
Del Webb's Coventry Homes of Tucson, Inc.
Del Webb's Landscaping Services, Inc.
Del Webb's Spruce Creek Communities, Inc.
Del Webb's Stetson Hills, Inc.
Del Webb's Sun City Realty, Inc.
Del Webb's Sunflower of Tucson, Inc.
Del E. Webb Cactus Development Corp.
Del E. Webb Development Co., L.P., a Delaware
limited partnership
Del E. Webb Financial Corporation
Del E. Webb Foothills Corporation
Del E. Webb Glen Harbor Development Corporation
DW Aviation Co.
DW Homebuilding Co.
Fairmount Mortgage, Inc.
Marina Operations Corp.
Mountain View II Aviation, LL, a North Carolina limited
liability company
Mountain View One LLC
Mountain View Two LLC
New Mexico Asset Corporation
New Mexico Asset Limited Partnership
Spruce Creek South Utilities, Inc., a Florida corporation
Sun City Homes, Inc., a Nevada corporation
Sun City Sales Corporation, a Michigan corporation
Sun City Title Agency Co.
Sun City Title Agency of Illinois, Inc.
Sun State Insulation Co., Inc.
Terravita Commercial Corp.
Terravita Corp.
Terravita Home Construction Co.
Terravita Marketplace L.L.C.
Trovas Company
Trovas Construction Co.
* All subsidiaries are Arizona corporations or limited liability companies
except the following:
Del Webb Texas Limited Partnership, an Arizona limited partnership
Del Webb Title Company of Nevada, Inc., a Nevada corporation
Del E. Webb Development Co., L.P., a Delaware limited partnership
Del E. Webb Finance Company, a Nevada corporation
Mountain View II Aviation, LLC, a North Carolina limited liability company
New Mexico Asset Limited Partnership, an Arizona limited partnership
Spruce Creek South Utilities, Inc., a Florida corporation
Sun City Homes, Inc., a Nevada corporation
Sun City Sales Corporation, a Michigan corporation
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Del Webb Corporation:
We consent to incorporation by reference in the Registration Statements (Nos.
33-12023, 2-78336, 33-32309, 33-10228, 33-46720, 33-46704, 33-6564, 33-52725,
33-65161, 33-65163, 333-72733 and 333-72735 on Forms S-8 and No. 333-81507 on
Form S-3) of Del Webb Corporation of our report dated August 16, 1999, relating
to the consolidated balance sheets of Del Webb Corporation and subsidiaries as
of June 30, 1999 and 1998 and the related consolidated statements of earnings,
shareholders' equity and cash flows and related schedule for each of the years
in the three-year period ended June 30, 1999 which appears in the June 30, 1999
annual report on Form 10-K of Del Webb Corporation.
Phoenix, Arizona /s/ KPMG LLP
September 16, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999 AND THE CONSOLIDATED STATEMENT OF
EARNINGS FOR THE FISCAL YEAR ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 22,669
<SECURITIES> 0
<RECEIVABLES> 33,529
<ALLOWANCES> 0
<INVENTORY> 1,622,581
<CURRENT-ASSETS> 0
<PP&E> 72,423
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,866,797
<CURRENT-LIABILITIES> 0
<BONDS> 1,040,613
0
0
<COMMON> 18
<OTHER-SE> 404,776
<TOTAL-LIABILITY-AND-EQUITY> 1,866,797
<SALES> 0
<TOTAL-REVENUES> 1,466,181
<CGS> 0
<TOTAL-COSTS> 1,171,704
<OTHER-EXPENSES> 203,711
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 90,766
<INCOME-TAX> 32,676
<INCOME-CONTINUING> 58,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,090
<EPS-BASIC> 3.20
<EPS-DILUTED> 3.11
</TABLE>
