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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 20, 1998
KAUFMAN AND BROAD HOME CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-9195 95-3666267
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
10990 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(310) 231-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On October 20, 1998, the Registrant issued the press release attached
hereto and incorporated herein as Exhibit 1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: October 21, 1998
KAUFMAN AND BROAD HOME CORPORATION
Registrant
By: /s/ Kimberly N. King
---------------------------------------------
Kimberly N. King
Corporate Secretary
and Associate Counsel
2
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EXHIBIT 1
CONTACT: (Investors) Mary McAboy
OCTOBER 20, 1998 - 4:00 PM EST (212) 906-7647
(Investors) Dennis Welsch
(310) 231-4025
(Media) Jeff Charney
(212) 906-7647
KAUFMAN AND BROAD MERGES WITH LEWIS HOMES,
COMBINED COMPANY TO BECOME
AMERICA'S LEADING HOMEBUILDER
LOS ANGELES, CA (October 20, 1998) -- Kaufman and Broad Home Corporation
(NYSE:KBH) today announced it has signed a definitive agreement with privately
held Lewis Homes for consideration of approximately $409 million, plus
assumption of debt. The transaction is scheduled to close in January, 1999. This
merger is expected to be strongly accretive to earnings per share in 1999, and
to make Kaufman and Broad the largest homebuilder in the United States in 1999
in terms of unit deliveries.
"Lewis Homes is an excellent strategic fit with our operations. They
have a similar operating strategy, and their leading market shares in California
and Nevada combined with Kaufman and Broad's strong presence in those areas will
be a major boost to our market dominance strategies in those key markets," said
Bruce Karatz, chairman and chief executive officer. "We have long admired the
Lewis operations and are confident this combination will improve our ability to
deliver quality homes at affordable prices in these strategic markets for a long
time to come."
Lewis Homes, based in Upland, California, is the largest privately held
homebuilding company in the United States, with estimated 1998 revenues
approximating $685 million on
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KAUFMAN AND BROAD MERGES WITH LEWIS HOMES
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approximately 3,500 deliveries. Lewis also owns or controls approximately 24,000
lots and has a backlog of approximately 1,200 homes. In 1998, Kaufman and Broad
revenues are estimated at $2.4 billion on approximately 15,000 deliveries.
"This transaction will also help further the implementation of our
KB2000 operational business model," said Karatz. "With the benefit of the
outstanding management strength of the Lewis family and management team, we
expect to grow the combined business and expand overall margins and profits
through accelerated lot usage, building cost synergies and integration of
Kaufman and Broad Mortgage Company into the Lewis Homes business."
Earnings before interest, taxes, depreciation and amortization
("EBITDA") for 1998 for Lewis is expected to be approximately $97 million, and
if the transaction closes as anticipated, Kaufman and Broad expects the Lewis
homebuilding operations to deliver approximately 4,000 homes in 1999 at better
EBITDA margins than achieved by Lewis in 1998. Kaufman and Broad therefore
expects that the transaction will be significantly accretive to earnings per
share in 1999.
"The Lewis family and management team has a wealth of homebuilding
expertise and they will play key roles in our new operations," Karatz said.
"Lewis Homes also has one of the strongest brand names in the industry, which
has been built on more than 40 years' experience in building quality homes." It
is currently anticipated that the combined companies will continue to market
homes under both the Lewis and Kaufman and Broad brand names.
Under the terms of the agreement, Lewis Homes' ownership group will
receive approximately $409 million for the equity of its homebuilding business,
in the form of cash plus shares of Kaufman and Broad common stock. The
transaction does not include the commercial, rental and retail business of Lewis
Homes. Kaufman and Broad will also assume
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KAUFMAN AND BROAD MERGES WITH LEWIS HOMES
3-3-3
Lewis Homes' net debt, which is estimated at approximately $135 million at time
of closing. Total consideration is estimated at approximately $544 million
including assumed net debt, and the number of Kaufman and Broad shares to be
issued is fixed at approximately 7.9 million. The Lewis family will also receive
a seat on Kaufman and Broad's board of directors. At time of closing, Kaufman
and Broad's combined pro forma ratio of net debt to total capital is expected to
approximate 51.5%, consistent with Kaufman and Broad's targeted range of 45% -
55% for this ratio.
Lewis Homes principal markets are Las Vegas and Northern Nevada,
ranking as the largest homebuilder in both markets; Southern California, ranking
third in the market; and the greater Sacramento area in Northern California,
ranking sixth in the market.
"Kaufman and Broad was a highly attractive merger partner from the
beginning, due to the similarities of the two operations," said Randall Lewis,
executive vice president of Lewis Homes and the son of founders Ralph and Goldy
Lewis. "We believe in Kaufman and Broad's strategic vision and ambitious growth
plans, and are excited to play such a significant role in helping the company
achieve it goals."
The merger of Lewis Homes is the latest in a series of growth-oriented
transactions made by Kaufman and Broad in key markets throughout the West. In
1998, Kaufman and Broad acquired privately held homebuilders in Houston, Denver
and Tucson. Including the Lewis transaction, since 1995, the company has
successfully engaged in approximately $900 million of merger and acquisition
activity, including assumed debt.
Kaufman and Broad is currently the largest homebuilder west of the
Mississippi River, with operating divisions in California, Nevada, Arizona,
Texas, New Mexico, Utah and Colorado. The company is also among the largest
homebuilders in metropolitan Paris, France.
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KAUFMAN AND BROAD MERGES WITH LEWIS HOMES
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NOTE: Except for the historical information contained herein, certain of the
matters discussed in this press release are "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995,
which involve certain risks and uncertainties, including but not limited
to, changes in general economic conditions, materials prices, labor
costs, interest rates, consumer confidence, competition, environmental
factors, and government regulations affecting the Company's operations.
See the Company's Annual Report on Form 10-K for the year ended November
30, 1997 for a further discussion of these and other risks and
uncertainties applicable to the Company's business.
