<PAGE> 1
Pursuant To Rule 424(b)(1)
Registration No. 33-93870
333-37525
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 29, 1995)
$150,000,000
PULTE CORPORATION
7 5/8% SENIOR NOTES DUE OCTOBER 15, 2017
------------------------
Interest on the 7 5/8% Senior Notes due 2017 (the "Senior Notes") of Pulte
Corporation (the "Company") is payable semi-annually on April 15 and October 15,
commencing April 15, 1998. The Senior Notes are not redeemable prior to
maturity.
The Senior Notes will be senior, unsecured obligations of the Company,
guaranteed on a senior basis by guarantees (the "Senior Guarantees") of Pulte
Home Corporation ("Pulte"), an indirect, wholly-owned subsidiary of the Company,
and certain other wholly-owned homebuilding subsidiaries of Pulte (collectively,
the "Guarantors").
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<TABLE>
<S> <C> <C> <C>
==================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------------------
Per Senior Note.......................... 98.550% .875% 97.675%
- ------------------------------------------------------------------------------------------------------------------
Total.................................... $147,825,000 $1,312,500 $146,512,500
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from October 15, 1997.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $115,000.
------------------------
The Senior Notes are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Senior Notes will be made in book-entry form through the
facilities of The Depository Trust Company on or about October 15, 1997.
------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SBC WARBURG DILLON READ INC.
------------------------
The date of this Prospectus Supplement is October 9, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SENIOR NOTES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF SENIOR NOTES TO COVER
SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
THE COMPANY
Pulte Corporation (the "Company") conducts operations in two primary
business segments: homebuilding and financial services. The Company conducts
homebuilding operations through Pulte Home Corporation ("Pulte") and Pulte's
homebuilding subsidiaries, and financial services operations principally through
the Company's mortgage banking (Pulte Mortgage Corporation ("PMC")) and
financing (Pulte Financial Companies, Inc. ("PFCI")) subsidiaries.
Founded by William J. Pulte in 1950, Pulte is one of the country's leading
producers of for-sale housing and has closed over 87,000 homes since January
1988. Pulte specializes in the construction and sale of moderately priced to
semi-custom, single-family detached and attached homes. Pulte homes are marketed
primarily to customers ranging from first-time home buyers to first and
second-time "move-up" home buyers. Pulte homes feature high-quality design and
construction, as well as Pulte's commitment to customer delight. The homes are
constructed for use as principal residences in 40 markets throughout 25 states
as well as Puerto Rico and Mexico. Pulte believes it is a leading homebuilder in
most of its established markets.
RECENT DEVELOPMENTS
On August 12, 1997, the Company announced a reorganization of its
homebuilding operations intended to strengthen management focus on key customer
groups and to generate increased operating efficiencies. The reorganization
created a new position of Executive Vice President and Chief Operating Officer
with responsibility for all of Pulte's homebuilding businesses, and appointed
senior Pulte executives to head the Company's domestic homebuilding and active
adult/retirement operations. The reorganization replaced Pulte's existing
homebuilding structure comprised of three geographically-based operating
companies with a structure focused more closely on specific customer segments.
The reorganization may involve headcount reductions and relocation of Company
personnel between existing markets.
On October 8, 1997, the Company and Fleetwood Enterprises, Inc. announced
that they will jointly form a new corporation that will own and operate
manufactured home retail centers. The Company will own 51 percent of the new
corporation and Fleetwood will own 49 percent. The new company will initially
focus on retail sales of manufactured homes and related activities such as home
financing and insurance services. It is expected that growth will come through a
combination of selective acquisitions of existing high-quality retail operations
and development of new retail locations.
In addition, the Company from time to time considers various possible
acquisition opportunities. Currently, the Company is engaged in confidential
discussions concerning certain possible acquisitions of one or more homebuilders
(none of which would be considered a "significant subsidiary" for purposes of
the Commission's rules); these discussions could potentially lead to one or more
acquisition transactions, although there is no assurance that any such
transactions will ultimately take place.
S-2
<PAGE> 3
SELECTED CONSOLIDATED FINANCIAL INFORMATION(1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT AVERAGE SALES PRICES)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Homebuilding...................... $1,078,154 $1,363,278 $1,637,306 $1,934,403 $2,319,734 $ 980,003 $ 990,350
Mortgage banking (PMC)............ 35,187 44,933 56,165 42,924 31,320 15,058 11,733
Other financial services and
Corporate....................... 110,882 82,589 62,442 51,813 33,229 25,814 5,932
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues................ 1,224,223 1,490,800 1,755,913 2,029,140 2,384,283 1,020,875 1,008,015
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pre-tax income (loss):
Homebuilding...................... 49,632 78,456 94,479 84,462 114,061 36,791 37,249
Mortgage banking (PMC)............ 6,346 8,350 18,913 13,930 3,360 551 675
Other financial services and
Corporate....................... 2,244 4,233 (9,804) (16,368) (14,958) (1,177) (15,313)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total pre-tax income.......... 58,222 91,039 103,588 82,024 102,463 36,165 22,611
Income taxes........................ 5,700 35,583 41,219 33,185 39,252 14,656 8,705
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing operations
before extraordinary item and
cumulative effect of change in
accounting principle.............. 52,522 55,456 62,369 48,839 63,211 21,509 13,906
Income from discontinued
operations........................ 19,666 22,309 102,988 9,507 116,432 3,765 2,204
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary item and
cumulative effect of change in
accounting principle.............. 72,188 77,765 165,357 58,346 179,643 25,274 16,110
Extraordinary loss from early
extinguishment of debt............ (2,084) (3,397) (2,589) -- -- -- --
Cumulative effect of change in
accounting for income taxes....... -- 5,000 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.................... $ 70,104 $ 79,368 $ 162,768 $ 58,346 $ 179,643 $ 25,274 $ 16,110
========== ========== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Assets:
Homebuilding...................... $ 577,968 $ 729,802 $ 965,553 $1,124,088 $1,341,728 $1,261,589 $1,484,360
Mortgage banking (PMC)............ 269,330 305,185 155,948 196,690 187,191 154,732 138,764
Other financial services and
Corporate....................... 930,901 591,672 571,242 570,120 312,146 279,317 210,857
Discontinued operations........... 1,927,345 2,184,231 248,612 156,617 144,076 155,462 138,682
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets.................. $3,705,544 $3,810,890 $1,941,355 $2,047,515 $1,985,141 $1,851,100 $1,972,663
========== ========== ========== ========== ========== ========== ==========
Indebtedness (including current
maturities):
Homebuilding...................... $ 67,422 $ 84,746 $ 47,920 $ 57,836 $ 73,248 $ 54,244 $ 179,684
Mortgage-banking (PMC)............ 178,733 169,052 75,731 140,578 154,136 117,897 117,974
Other financial services and
Corporate....................... 864,721 590,598 539,201 564,552 384,669 396,550 380,668
Discontinued operations........... 611,159 677,585 127,000 121,440 83,480 83,680 55,570
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total indebtedness............ $1,722,035 $1,521,981 $ 789,852 $ 884,406 $ 695,533 $ 652,371 $ 733,896
========== ========== ========== ========== ========== ========== ==========
Shareholders' equity................ $ 481,395 $ 556,314 $ 710,589 $ 761,003 $ 829,273 $ 715,971 $ 770,959
========== ========== ========== ========== ========== ========== ==========
SUMMARY OF OPERATING DATA:
Ratio of earnings to fixed
charges(2)...................... 1.54 2.18 2.40 2.31 3.00 2.29 1.81
Number of homes closed............ 8,028 9,798 11,142 12,445 14,613 6,263 6,263
Average sales price............... $ 134,000 $ 139,000 $ 147,000 $ 155,000 $ 159,000 $ 156,000 $ 158,000
Backlog of sales
contracts--units................ 2,416 2,868 2,287 3,662 3,448 5,235 5,510
Backlog of sales contracts--dollar
value........................... $ 340,167 $ 419,978 $ 386,848 $ 602,000 $ 596,000 $ 886,000 $ 951,000
</TABLE>
- -------------------------
(1) Certain items in the Selected Consolidated Financial Information for the
1992 through 1996 periods presented have been reclassified to conform to the
1997 financial presentation.
(2) The ratios of earnings to fixed charges set forth above are computed on a
total enterprise basis of the Company, except for the Company's discontinued
thrift operations, which are excluded. Fixed charges include interest
incurred, one-third of estimated rent expense of the Company as
representative of the interest factor and amortization of debt expense.
S-3
<PAGE> 4
USE OF PROCEEDS
The Company will use a portion of the net proceeds of the sale of the
Senior Notes to repay short-term borrowings of $76.5 million under an unsecured
revolving bank credit arrangement with a variety of floating interest rates
which averaged 6.10% over the most recent 20 business days. Such credit
arrangement expires on January 5, 2002. The remaining net proceeds from the sale
of the Senior Notes will be added to the Company's general funds and used for
general corporate purposes which may include, but are not limited to, capital
contributions to the Company's subsidiaries to strengthen such subsidiaries'
continuing operations and to fund acquisitions. Pending such uses, the net
proceeds will be invested in short-term investments.
CAPITALIZATION
The following table sets forth (a) the unaudited historical consolidated
capitalization of the Company as of June 30, 1997, as derived from the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, and (b) the
unaudited historical consolidated capitalization of the Company, as adjusted to
reflect the sale of the Senior Notes and the application of the net proceeds
therefrom as described under "Use of Proceeds." The following information should
be read in conjunction with the consolidated financial statements and notes to
consolidated financial statements contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997 and the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997, which are incorporated
herein by reference. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, 1997
------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
INDEBTEDNESS (INCLUDING CURRENT MATURITIES)(1):
Corporate:
Unsecured revolving bank credit arrangement............. $ 107,390 $ --
7% Senior Notes due 2003................................ 99,730 99,730
8 3/8% Senior Notes due 2004............................ 114,749 114,749
7 3/10% Senior Notes due 2005........................... 124,929 124,929
Senior Notes offered hereby............................. -- 150,000
---------- ----------
Total corporate.................................... 446,798 489,408
Homebuilding(2)(3):
Guarantor Senior Indebtedness:
Notes and land contracts payable, principally limited
recourse............................................. 49,889 49,889
Guarantor Senior Subordinated Indebtedness:
10.125% unsecured senior subordinated debentures due
1999, issued by Pulte................................ 22,405 22,405
Financial services(4)..................................... 159,234 159,234
Discontinued operations(5)................................ 55,570 55,570
---------- ----------
Total indebtedness (including current
maturities)...................................... 733,896 776,506
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 25,000,000 shares
authorized, none issued.................................
Common stock, $.01 par value; 100,000,000 shares
authorized, 21,016,705 shares issued(6)................. 210 210
Additional paid-in capital................................ 54,293 54,293
Unrealized gains.......................................... 1,510 1,510
Retained earnings......................................... 714,946 714,946
---------- ----------
Total shareholders' equity......................... 770,959 770,959
---------- ----------
Total capitalization............................. $1,504,855 $1,547,465
========== ==========
</TABLE>
- -------------------------
(1) The Company, Pulte and Pulte Diversified Companies, Inc. ("PDCI"), a
wholly-owned subsidiary of the Company and the owner of 100% of the capital
stock of Pulte, are jointly obligated under a $250,000 unsecured revolving
bank credit arrangement. At June 30, 1997, there were $97,390 outstanding
borrowings under the unsecured revolving bank credit arrangement, which
borrowings constitute Company Senior Indebtedness and Guarantor Senior
Indebtedness, respectively.
(2) Pulte has a $10,000 uncommitted line of credit which was fully drawn at June
30, 1997. Borrowings pursuant to this line of credit constitute Guarantor
Senior Indebtedness.
(3) Upon consummation of the offering of the Senior Notes offered hereby, the
Senior Guarantees thereof by the Guarantors will constitute Guarantor Senior
Indebtedness in the amount of $150,000. The Guarantors' Senior Guarantees of
the Company's 7% Senior Notes due 2003, the Company's 8 3/8% Senior Notes
due 2004 and the Company's 7 3/10% Senior Notes due 2005 constitute
Guarantor Senior Indebtedness in the aggregate amount of $340,000.
(4) Financial services includes Indebtedness of PFCI and PMC.
(5) First Heights is reflected as discontinued operations.
(6) Does not include 2,976,450 shares covered by outstanding stock options or
860,000 additional shares reserved for issuance under the Company's stock
option plans, as of June 30, 1997.
S-4
<PAGE> 5
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the Senior Notes
offered hereby supplements and, to the extent inconsistent therewith, supersedes
the description of the general terms of the Senior Debt Securities set forth
under the heading "Description of Debt Securities" in the accompanying
Prospectus, which should be read in conjunction herewith. Capitalized terms used
below have the meanings set forth in the Senior Indenture.
GENERAL
The Senior Notes constitute a single series of Senior Debt Securities for
purposes of the Senior Indenture and are limited to an aggregate principal
amount of $150,000,000. The Senior Notes will mature on October 15, 2017.
Interest on the Senior Notes will accrue from October 15, 1997 and will be
payable semi-annually on April 15 and October 15, beginning April 15, 1998, and
at maturity to the persons in whose names the Senior Notes are registered at the
close of business on the April 1 or October 1 prior to the applicable payment
date, at the annual rate set forth on the cover page of this Prospectus
Supplement.
The Senior Notes will be issued only in book-entry form through the
facilities of the Depository, and will be in denominations of $1,000 and
integral multiples thereof. Transfers or exchanges of beneficial interests in
the Senior Notes in book-entry form may be effected only through a participating
member of the Depository. Under certain limited circumstances, the Senior Notes
may be issued in certificated form in exchange for the Global Securities. See
"--Global Securities" below and "Description of Debt Securities--Global
Securities" in the accompanying Prospectus.
Payments on Senior Notes will be made to the Depository. The Senior Notes
will not be listed on any securities exchange. The Senior Notes will be a new
issue of securities with no established trading market and there can be no
assurance as to whether any market will develop, the liquidity of any markets
that may develop or the prices at which Holders would be able to sell the Senior
Notes.
RANKING
The Senior Notes will rank pari passu with all existing and future Company
Senior Indebtedness, and senior to all existing and future Company Subordinated
Indebtedness. As of June 30, 1997, the Company had outstanding $340,000,000
aggregate principal amount of Senior Indebtedness, as described under
"Capitalization."
GUARANTORS
The Senior Notes are guaranteed on a senior basis pursuant to the Senior
Guarantees of the Guarantors, and the Senior Guarantees rank pari passu with all
Guarantor Senior Indebtedness. As of June 30, 1997, the Guarantors had
outstanding $49,889,000 aggregate principal amount of Guarantor Senior
Indebtedness, in addition to (i) their Senior Guarantee obligations with respect
to $100,000,000 aggregate principal amount of the Company's 7% Senior Notes due
2003, $115,000,000 aggregate principal amount of the Company's 8 3/8% Senior
Notes due 2004 and $125,000,000 aggregate principal amount of the Company's
7 3/10% Senior Notes due 2005 and (ii) the other Indebtedness as described under
"Capitalization".
REDEMPTION
The Senior Notes are not redeemable prior to their stated maturity and do
not provide for any sinking fund.
GLOBAL SECURITIES
The Senior Notes will be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf of, the
Depository and registered in the name of a nominee of the Depository. Global
Securities may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any nominee to a
successor of the Depository or a nominee of such successor. A further
description of the Depository's procedures with respect to Global Securities
representing the Senior Notes is set forth in the accompanying Prospectus under
"Description of Debt Securities--Global Securities." The
S-5
<PAGE> 6
Depository has confirmed to the Company, the Underwriters and the Trustee that
it intends to follow such procedures.
The Depository has advised the Company and the Underwriters as follows: the
Depository is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. The Depository holds securities that its participants
("participants") deposit with the Depository. The Depository also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depository is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depository's system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or indirectly.
The rules applicable to the Depository and its participants are on file with the
Securities and Exchange Commission (the "Commission").
RESTRICTIVE COVENANTS
The Senior Notes will be subject to the covenants described under
"Description of Debt Securities--Restrictions on Secured Debt," "--Restrictions
on Sale and Leaseback Transactions" and "--Restrictions on Mergers,
Consolidations and Transfer of Assets," and the defeasance provisions described
under "Description of Debt Securities--Discharge, Defeasance and Covenant
Defeasance" in the accompanying Prospectus.
PURCHASE OF THE SENIOR NOTES AT THE OPTION OF THE HOLDER
In the event any Change in Control Triggering Event in respect of the
Company occurs on or prior to maturity, each Holder of Senior Notes will have
the right, at the Holder's option, subject to the terms and conditions of the
Senior Indenture, to require the Company to purchase all or any part (provided
that the principal amount is $1,000 or an integral multiple thereof) of such
Holder's Senior Notes on the date that is 30 business days after the occurrence
of such Change in Control Triggering Event (the "Change in Control Purchase
Date") at a cash price equal to the principal amount thereof plus accrued
interest to the Change in Control Purchase Date, as described under "Description
of Debt Securities--Purchase of the Debt Securities at the Option of the Holder"
in the accompanying Prospectus.
TRUSTEE
The trustee under the Senior Indenture is the First National Bank of
Chicago, a national banking association.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Senior Notes will be made by the Underwriters in
immediately available funds. All payments of principal and interest in respect
of the Senior Notes will be made by the Company in immediately available funds.
Secondary trading in the long-term notes and debentures of corporate
issuers is generally settled in clearing house or next-day funds. In contrast,
the Senior Notes will trade in the Depository's Same-Day Funds Settlement System
until maturity or until the Senior Notes are issued in certificated form, and
secondary market trading activity in the Senior Notes will therefore be required
by the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Senior Notes.
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<PAGE> 7
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Underwriting Agreement") among the Company and Merrill Lynch, Pierce Fenner &
Smith Incorporated, Lehman Brothers and SBC Warburg Dillon Read Inc.
(collectively, the "Underwriters"), the Company has agreed to sell to each of
the Underwriters named below, and each of the Underwriters has severally agreed
to purchase from the Company, the principal amount of Senior Notes set forth
opposite its name in the table below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER ---------
<S> <C>
Merrill Lynch, Pierce Fenner & Smith
Incorporated................................... $ 50,000,000
Lehman Brothers............................................. 50,000,000
SBC Warburg Dillon Read Inc. ............................... 50,000,000
------------
Total.......................................... $150,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Senior Notes if any are
purchased.
The Underwriters have advised the Company that they propose initially to
offer the Senior Notes to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of .5% of the principal amount. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company does not intend to list the Senior Notes on any exchange. The
Company has been advised by the Underwriters that they intend to make a market
in the Senior Notes, but they are not obligated to do so and may discontinue
making a market at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Senior Notes.
Until the distribution of the Senior Notes is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the Senior Notes. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the Senior Notes. Such transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the Senior Notes.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriters may be required to make
in respect thereof.
From time to time in the past, each of the Underwriters has performed
investment banking services to the Company for customary fees.
LEGAL MATTERS
The validity of the issuance of the Senior Notes and certain other legal
matters in connection with the Securities offered hereby will be passed upon for
the Company by Honigman Miller Schwartz and Cohn, Detroit, Michigan. Mayer,
Brown & Platt, New York, New York, will pass upon certain legal matters for the
Underwriters, and may rely, as to matters relating to Michigan law, on the
opinion of Honigman Miller Schwartz and Cohn. Honigman Miller Schwartz and Cohn
serves as counsel to the Company and its subsidiaries. A partner of Honigman
Miller Schwartz & Cohn, Alan E. Schwartz, is a director of the Company. As of
October 1, 1997 approximately 4 attorneys at Honigman Miller Schwartz & Cohn
beneficially owned an aggregate of approximately 53,100 shares of Common Stock
of the Company.
S-7
<PAGE> 8
PROSPECTUS
$250,000,000
PULTE CORPORATION
DEBT SECURITIES AND COMMON STOCK
Pulte Corporation, formerly PHM Corporation (the "Company"), may offer from
time to time (i) shares of its common stock, par value $.01 per share (the
"Common Stock"); (ii) its debt securities consisting of senior unsecured
indebtedness such as debentures and notes (the "Senior Debt Securities"); (iii)
subordinated unsecured indebtedness (the "Subordinated Debt Securities" and,
together with the Senior Debt Securities, the "Debt Securities"). The Debt
Securities may be convertible into Common Stock. The Debt Securities may be
offered as separate series in amounts, at prices and on terms to be determined
at the time of sale and to be set forth in an accompanying supplement to this
Prospectus (a "Prospectus Supplement"). The Debt Securities may be offered in
one or more series with the same or various maturities, at par or with an
original issue discount, and may be denominated either in U.S. Dollars or
foreign currencies, including the European Currency Unit ("ECU").
The Senior Debt Securities will be guaranteed on a senior basis (the
"Senior Guarantees") by Pulte Home Corporation ("Pulte"), a second-tier,
wholly-owned subsidiary of the Company, and certain other wholly-owned,
homebuilding and related subsidiaries of Pulte; all of the Additional
Registrants will guarantee such Debt Securities (Pulte and such other
subsidiaries are collectively referred to as the "Guarantors"). The Subordinated
Debt Securities will be guaranteed on a subordinated basis by the Guarantors
(the "Subordinated Guarantees" and, together with the Senior Guarantees, the
"Guarantees"). The Company is a holding company which conducts homebuilding
operations exclusively through the Guarantors.
The Debt Securities, Common Stock and Guarantees are collectively referred
to herein as the "Securities." The Securities may be sold directly, through
agents designated from time to time or through one or more underwriters or
dealers. See "Plan of Distribution."
Certain terms of or other information relating to the Securities in respect
of which this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement or Supplements, including (i) in the case of Debt
Securities, the specific designation, currency in which the Debt Securities are
denominated, aggregate principal amount, denominations, maturity (which may be
fixed or extendable), interest rate or rates (which may be fixed or variable),
if any, time of payment of interest, if any, terms for redemption at the option
of the Company or the holder, terms for conversion or exchange into Common Stock
at the option of the Company or the holder thereof, if any, terms for sinking or
purchase fund payment, if any, and the application, if any, of certain
restrictive covenants and other covenants or events of default that are in
addition to or different from those described herein, the public offering price,
the names of any underwriters, dealers or agents, the amounts to be purchased by
and the compensation of such underwriters, dealers or agents, any listing on a
securities exchange and the other terms in connection with the offering and sale
of the Debt Securities; and (ii) in the case of Common Stock, the designation,
number of shares, public offering price, names of any underwriters or agents,
compensation of such underwriters or agents and other applicable terms of the
offering. The Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to the Debt Securities covered by the Prospectus Supplement. All or a
portion of the Debt Securities may be issued in permanent or temporary global
form (each, a "Global Security").
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol PHM.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT APPLICABLE TO SUCH SECURITIES.
The date of this Prospectus is September 29, 1995
<PAGE> 9
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Public Reference Room of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the public reference
facilities maintained by the Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington
D.C. 20549. Documents filed by the Company with the Commission can also be
inspected at the offices of the New York Stock Exchange, Inc. (the "New York
Stock Exchange"), 20 Broad Street, New York, New York 10005, on which the Common
Stock is traded.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company and the Guarantors with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the Securities offered hereby. This Prospectus omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company, the Guarantors and the Securities
offered hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and in each case reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
The Guarantors do not expect that they will be required to file separate
reports with the Commission pursuant to Section 15(d) of the Exchange Act. In
this regard, the Guarantors will not make available separate annual reports to
security holders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (file no.
1-9804) are incorporated in this Prospectus by reference and hereby made a part
hereof:
1. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995, filed with the Commission on August 11, 1995;
2. The Company's Amendment to Quarterly Report on Form 10-Q/A for the
fiscal quarter ended June 30, 1995, filed with the Commission on September
8, 1995 (the "June 30, 1995 10-Q");
3. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1995, filed with the Commission on May 8, 1995;
4. The Company's Amendment to Quarterly Report on Form 10-Q/A for the
fiscal quarter ended March 31, 1995, filed with the Commission on September
8, 1995;
5. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, filed with the Commission on March 20, 1995;
6. The Company's Amendment to Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1994, filed with the Commission on September
8, 1995 (the "1994 10-K"); and
7. The description of the Company's Common Stock contained in Item 1
of the Company's Registration Statement on Form 8-A filed with the
Commission on May 17, 1983, Item 4 of the Company's Registration Statement
on Form 8-B filed with the Commission on May 16, 1985 and Item 4 of the
Company's Registration Statement on Form 8-B filed with the Commission on
December 18, 1987, each pursuant to Section 12 of the Exchange Act.
2
<PAGE> 10
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Securities shall
be deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such reports and documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus or any Prospectus Supplement to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus and the accompanying Prospectus Supplement are delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated herein by reference, other than exhibits to such
documents (except for exhibits that are specifically incorporated by reference
herein or into such incorporated documents). Requests for such copies should be
directed to the Company's principal executive offices located at 33 Bloomfield
Hills Parkway, Suite 200, Bloomfield Hills, Michigan 48304, Attention: Director
of Investor Relations (telephone: (810) 647-2750).
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED IN THIS PROSPECTUS OR IN
THE PROSPECTUS SUPPLEMENT.
3
<PAGE> 11
THE COMPANY
The Company is the parent company of several wholly-owned subsidiaries
which conduct operations in two primary business segments: homebuilding, through
Pulte, and financial services, principally through the Company's mortgage
banking and financing operations. The Company was incorporated on September 17,
1987. (Pulte, which was founded by William J. Pulte in 1950, was incorporated in
1956.) The Company's executive offices are located at 33 Bloomfield Hills
Parkway, Suite 200, Bloomfield Hills, Michigan 48304; telephone (810) 647-2750.
THE GUARANTORS
The Guarantors will consist of Pulte, Builders' Supply & Lumber Co., Inc.;
Cambridge Software, Inc.; Canterbury Communities, Inc.; Ceiba Homes Inc.;
Charlotte Classic Homes, Inc.; Dean Realty Company; Greensboro Classic Homes,
Inc.; Gulf Partners, Inc.; Gurabo Homes Inc.; Halifax Corporation; James T.
Lynch, Inc.; Monroe Two, Inc.; Palmville Development Corp.; PBW Corporation; PHM
Realty, Inc.; PHSF, Inc.; Preserve I, Inc.; Preserve II, Inc.; Pulte Development
Corporation; Pulte Home Caribbean Corporation; Pulte Home Corporation of The
Delaware Valley; Pulte Home Corporation of Massachusetts; Pulte Home Corporation
of Texas; Pulte Homes, Inc.; Pulte Homes of Greater Kansas City, Inc.; Pulte
Homes of Michigan Corporation; Pulte Homes of Minnesota Corporation; Pulte Homes
of Ohio Corporation; Pulte Homes of South Carolina, Inc.; Pulte LFC Corporation;
Pulte Lifestyle Communities, Inc.; Raleigh Classic Homes, Inc.; Salinas
Builders, Inc.; Salinas Homes, Inc.; Sean/Christopher Homes, Inc.; TQM Services,
Inc.; and Wil Corporation. The Guarantors comprise all of the homebuilding
operations, business and assets of the Company. Pulte is the wholly-owned
subsidiary of Pulte Diversified Companies, Inc. ("PDCI"), a wholly-owned
subsidiary of the Company, and the other Guarantors are all wholly-owned
subsidiaries of Pulte. Each of the Guarantors will fully and unconditionally
guarantee on a joint and several basis the Company's obligations under the Debt
Securities, subject (a) in the case of the Subordinated Guarantees, to any
subordination provisions described in the Prospectus Supplement, and (b) in the
case of the Guarantees generally, to such Guarantee not constituting or
resulting in a violation of any applicable fraudulent conveyance or similar law
of any relevant jurisdiction, in which case, the liability of the Guarantor
under its Guarantee will be reduced to the maximum amount, after giving effect
to all other contingent and fixed liabilities of such Guarantor (which generally
consists of indebtedness and other obligations of such Guarantor, including
trade payables), permissible under applicable fraudulent conveyance or similar
law. For certain financial information relating to the Guarantors, see Note 12
of Notes to Consolidated Financial Statements for the year ended December 31,
1994, as set forth in the 1994 10-K and Note 7 of Notes to Condensed
Consolidated Financial Statements for the six months ended June 30, 1995, as set
forth in the June 30, 1995 10-Q.
The Guarantors' executive offices are located at 33 Bloomfield Hills
Parkway, Suite 200, Bloomfield Hills, Michigan 48304; telephone: (810) 647-2750.
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, net proceeds from
the sale of the Securities will be added to the Company's general funds and used
for general corporate purposes, which may include, but are not limited to,
capital contributions to the Company's subsidiaries to strengthen such
subsidiaries' continuing operations. The Company and its Board of Directors
considers from time to time (and therefore proceeds could be used to finance) a
broad range of financial and strategic alternatives, including potential
acquisitions, divestitures, consolidations, investments, business combinations,
recapitalizations and other business and financial transactions.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
(i) the Company as a whole, except for its discontinued thrift operations, which
are excluded, and (ii) the Company, excluding earnings and fixed charges of the
discontinued thrift operations and Pulte Financial Companies, Inc. ("PFCI"),
which
4
<PAGE> 12
are not comparable to the Company's core business. Fixed charges include
interest incurred, one-third of estimated rent expense as representative of the
interest factor and amortization of debt expense.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges -- Company,
excluding discontinued thrift operations.... 1.39 2.34 2.40 2.18 1.54 1.25 1.08
Ratio of Earnings to Fixed Charges --
excluding discontinued thrift operations and
PFCI operations............................. 1.74 4.46 5.10 5.30 3.22 1.64 *
</TABLE>
- -------------------------
* Earnings were inadequate to cover fixed charges by $2.9 million for the year
ended December 31, 1990.
BUSINESS
PULTE CORPORATION
The Company conducts operations in two primary business segments:
homebuilding, through Pulte and its homebuilding subsidiaries, and financial
services, principally through the Company's mortgage banking subsidiary (ICM).
The Guarantors would consist of Pulte and its homebuilding subsidiaries (Pulte
and its homebuilding subsidiaries are referred to collectively in "Business" and
"Properties" as "Pulte"). ICM and the Company's financial services subsidiaries
will not be Guarantors.
HOMEBUILDING OPERATIONS (GUARANTORS)
Pulte builds a wide variety of homes, including detached units, townhouses,
condominium apartments and duplexes, with varying prices, models, options and
lot sizes. Its homes are sold for use as principal residences. As of December
31, 1994, Pulte offered homes for sale in 357 subdivisions (288 and 186 at
December 31, 1993 and 1992, respectively) at sales prices ranging from $50,000
to over $600,000. Sales prices of homes currently offered for sale in 224 (63%
of the total) of Pulte's subdivisions fall within the range of $75,000 to
$175,000. Sales of single-family detached homes, as a percentage of Pulte's
total unit sales, were 75% in 1994, 81% in 1993 and 80% in 1992.
Presently, Pulte operates in 39 markets within the following geographic
areas:**
<TABLE>
<CAPTION>
NORTH CENTRAL SOUTH WEST
- ----- ------- ----- ----
<S> <C> <C> <C> <C>
Delaware Illinois Missouri Georgia Arizona
Maryland Indiana Ohio Florida California
Massachusetts Kansas Texas North Carolina Colorado
New Jersey Michigan Wisconsin Puerto Rico Nevada
Pennsylvania Minnesota South Carolina Utah
Virginia
</TABLE>
- -------------------------
** The following Additional Registrants have operations in the North region:
Canterbury Communities, Inc.; Monroe Two, Inc.; PBW Corporation; Preserve I,
Inc.; Preserve II, Inc.; Pulte Home Corporation; Pulte Home Corporation of
the Delaware Valley; Pulte Home Corporation of Massachusetts; Pulte Homes,
Inc.; Pulte Lifestyle Communities, Inc.; TQM Services, Inc.; and Wil
Corporation.
The following Additional Registrants have operations in the Central region:
Canterbury Communities, Inc.; Dean Realty Company; Gulf Partners, Inc.; James
T. Lynch, Inc.; Pulte Home Corporation; Pulte Home Corporation of Texas;
Pulte Homes of Greater Kansas City, Inc.; Pulte Homes of Michigan
Corporation; Pulte Homes of Minnesota Corporation; Pulte Homes of Ohio
Corporation; and Sean/Christopher Homes, Inc.
The following Additional Registrants have operations in the South region:
Canterbury Communities, Inc.; Charlotte Classic Homes, Inc.; Dean Realty
Company; Greensboro Classic Homes, Inc.; PHM Realty, Inc.; PHSF, Inc.; Pulte
Home Caribbean Corporation; Pulte Home Corporation; Pulte Homes of South
Carolina, Inc.; and Raleigh Classic Homes, Inc.
The following Additional Registrants have operations in the West region:
Canterbury Communities, Inc.; Dean Realty Company; and Pulte Home
Corporation.
The following Additional Registrants have operations which are not considered
part of any of the above described regions: Builders' Supply and Lumber Co.,
Inc.; Cambridge Software, Inc.; Ceiba Homes, Inc.; Gurabo Homes Inc.; Halifax
Corporation; Palmville Development Corp.; Pulte Development Corporation;
Pulte Home Corporation; Pulte LFC Corporation; Salinas Builders, Inc.; and
Salinas Homes, Inc.
5
<PAGE> 13
The following table sets forth for-sale housing unit sales (settlements),
average sales prices, net new orders and backlog of orders (any of which may be
cancelled):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- --------------------
1994 1993 1992 1991 1990 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Settlements:
North............... 2,003 1,863 1,651 1,082 979 864 884
South............... 2,734 2,050 1,632 1,512 1,211 1,321 1,062
Central............. 3,577 3,432 2,827 2,731 2,619 1,702 1,556
West................ 2,828 2,453 1,918 1,361 939 1,117 1,396
-------- -------- -------- -------- -------- -------- --------
Total unit
settlements......... 11,142 9,798 8,028 6,686 5,748 5,004 4,898
======== ======== ======== ======== ======== ======== ========
Average sales price... $147,000 $139,000 $134,000 $133,000 $135,000 $154,000 $145,000
======== ======== ======== ======== ======== ======== ========
Net new orders:
North............... 2,003 1,848 1,704 1,232 912 1,270 1,106
South............... 2,589 2,317 1,782 1,516 1,207 1,762 1,286
Central............. 3,410 3,420 3,130 2,652 2,709 2,580 1,767
West................ 2,559 2,665 2,156 1,480 945 1,303 1,500
-------- -------- -------- -------- -------- -------- --------
Total net new
orders.............. 10,561 10,250 8,772 6,880 5,773 6,915 5,659
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
-------------------------------------------------------- --------------------
1994 1993 1992 1991 1990 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Backlog:
North............... 445 445 460 407 257 851 667
South............... 555 700 433 283 279 996 924
Central............. 747 914 926 623 702 1,625 1,125
West................ 540 809 597 359 240 726 913
-------- -------- -------- -------- -------- -------- --------
Total backlog......... 2,287 2,868 2,416 1,672 1,478 4,198 3,629
======== ======== ======== ======== ======== ======== ========
Backlog, in thousands
of dollars.......... $386,848 $419,978 $340,167 $239,198 $210,527 $683,000 $560,000
======== ======== ======== ======== ======== ======== ========
Backlog average sales
price............... $169,000 $146,000 $141,000 $143,000 $142,000 $163,000 $154,000
======== ======== ======== ======== ======== ======== ========
</TABLE>
Unit sales (settlements) and net new orders in any year are strongly
influenced by national and regional, as well as local, market economic
conditions.
Land Acquisition and Development
Land acquisition is undertaken only after consideration of such factors as
proximity to developed areas, population growth patterns and, if applicable,
estimated development costs. Pulte controls land in desirable locations by
outright acquisition and option agreements or other means which assist the
Company in managing risk.
Pulte's policy has been to acquire land with the intent to complete sales
of housing units within 24 months from the date of acquisition. As a result,
land is generally purchased after it is properly zoned and developed or is ready
for development. In addition, Pulte occasionally disposes of land not required
in its business.
Where Pulte develops land, it engages directly in many phases of the
development process, including land and site planning, obtaining environmental
and other regulatory approvals, and constructing roads, sewers, water and
drainage facilities, and other amenities. Pulte uses its staff and the services
of independent engineers
6
<PAGE> 14
and consultants in its land development activities. Land development work is
done primarily by subcontractors and local government authorities which
construct sewer and water systems in some areas.
At December 31, 1994, Pulte owned approximately 20,000 lots in subdivisions
in which homes are being constructed. In addition, Pulte had approximately
13,700 lots under option.
Sales and Marketing
Pulte believes that it is an innovator in the design of its homes, and it
views its design capacity as an integral aspect of its marketing strategy.
Pulte's in-house architectural services teams and management, supplemented by
outside consultants, have been successful in creating distinctive design
features, both in exterior facades, and interior options and features. One of
Pulte's strategies in certain markets has been to offer "the complete house" in
which all features shown in the home are included in the sales price. Standard
features typically offered include vaulted ceilings, flooring, carpet and
appliances, with the buyer having selection options as to the type of flooring
and carpet.
Typically, Pulte's own sales team, together with outside sales brokers, are
responsible for the sales of its homes. Fully furnished and landscaped model
homes are used to showcase Pulte's homes and their distinctive design features.
Pulte has great success with the first-time buyer in the low to moderate price
range; in such cases, financing under United States Government-insured and
guaranteed programs is often used and is facilitated through ICM. Pulte also
enjoys strong sales to the move-up buyer and, in certain markets, offers
semi-custom homes in higher price ranges. Pulte introduces its homes to
prospective buyers through a variety of media advertising, illustrated brochures
and other advertising displays. Customers also are obtained through referrals
from other Pulte customers.
Construction
Pulte normally designs the homes it sells and builds such homes under the
supervision of its on-site construction superintendents. The construction work
is usually performed by subcontractors under contracts which, in many instances,
cover both labor and materials on a fixed-price basis.
Pulte attempts to maintain efficient operations by using standard materials
and components from a variety of sources and, when feasible, by building on
contiguous lots. To minimize the effects of changes in construction costs, the
subcontracting and purchasing of building supplies, materials and major
appliances are generally negotiated at or near the time when related sales
contracts are signed. Pulte cannot determine the extent to which necessary
building materials will be available at reasonable prices in the future and has,
on occasion, experienced shortages of skilled labor in certain trades and of
building materials in some markets.
Additionally, one of Pulte's subsidiaries which is also a Guarantor
(Builders' Supply & Lumber Co., Inc. ("BSL")) operates facilities in
metropolitan Washington, D.C., Charlotte and Orlando, which facilities provide
building materials to certain Pulte operating divisions as well as unaffiliated
customers.
Competition and Other Factors
The housing industry in the United States is highly competitive. In each of
Pulte's market areas, there are numerous homebuilders with which it competes.
Any provider of housing units, for-sale or to rent, including apartment
builders, may be considered a competitor of Pulte. Conversion of apartments to
condominiums further provides certain segments of the population an alternative
to traditional housing. Pulte competes primarily on the basis of reputation,
price, location, design and quality of its homes.
The housing industry is cyclical and is affected by a number of economic
and other factors including: (1) significant national and world events which
impact consumer confidence; (2) changes in interest rates; (3) changes in other
costs associated with home ownership, such as property taxes and energy costs;
(4) various demographic factors; (5) changes in federal income tax laws; and (6)
changes in government mortgage financing programs. In addition to these factors,
Pulte's business and operations could be affected by unanticipated shifts in
demand for new homes.
7
<PAGE> 15
Pulte's operations are subject to building, environmental and other
regulations of various state and local authorities. For its homes to qualify for
Federal Housing Administration (FHA) or Veterans Administration (VA) mortgages,
Pulte must satisfy valuation standards and site, material and construction
requirements of those agencies.
Compliance by Pulte with federal, state and local laws relating to
protection of the environment has had, to date, no material effect upon capital
expenditures, earnings or the competitive position of Pulte. More stringent
requirements could be imposed in the future on homebuilders and developers,
thereby increasing the cost of compliance.
FINANCIAL SERVICES OPERATIONS (NOT GUARANTORS)
The Company's financial services operations, which will not be Guarantors,
are conducted by its mortgage banking and other financial subsidiaries.
Mortgage Banking
ICM Mortgage Corporation ("ICM") is a full service mortgage banker which
arranges financing through the origination of mortgage loans to buyers of
Pulte's homes and to the general public and engages in the sale of such loans to
outside investors. ICM has provided mortgage loan servicing for the Government
National Mortgage Association (GNMA), Federal National Mortgage Association
(FNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and investors who
purchase or invest in mortgage loans. Servicing involves the collection of
principal, interest, taxes and insurance premiums from the borrower and the
remittance of such funds to the mortgage holder, local taxing authorities and
insurance companies.
ICM is a lender approved by the FHA and VA and is a seller/servicer
approved by GNMA, FNMA, FHLMC and other investors. In its conventional mortgage
lending activities, ICM generally follows underwriting guidelines established by
FNMA and FHLMC.
In originating mortgage loans, ICM initially uses its own funds and
borrowings made available to it pursuant to various credit arrangements.
Subsequently, ICM sells such mortgage loans and mortgage-backed securities to
outside investors. In 1994, 1993 and 1992, it originated mortgage loans for 49%,
56% and 52%, respectively, of the homes sold by Pulte. Such originations
represented 41%, 28% and 29%, respectively, of total ICM originations.
Approximately 49%, 45% and 37% of the total loans originated by ICM during the
years ended December 31, 1994, 1993 and 1992, respectively, were insured by the
FHA or partially guaranteed by the VA.
ICM has completed the sale of its core mortgage servicing portfolio (which
began in the third quarter of 1994) and now expects to continue to sell
originated mortgage servicing rights on a "flow" basis as part of normal
operations on a three to five month lag from the time of origination. (See the
1994 10-K and the June 30, 1995 10-Q: Management's Discussion and Analysis of
Financial Condition and Results of Operations.)
The mortgage industry in the United States is highly competitive. ICM
competes with other mortgage companies and financial institutions to provide
attractive mortgage financing to both Pulte customers and the general public.
ICM, in originating and servicing mortgage loans, is subject to rules and
regulations of the FHA, VA, GNMA, FNMA and FHLMC.
Other Financial Subsidiaries
Other financing activities are conducted by the limited purpose
subsidiaries of Pulte Financial Companies, Inc. ("PFCI"). Such subsidiaries
previously engaged in the acquisition of mortgage loans and mortgage-backed
securities from ICM and unrelated parties financed principally through long-term
bonds which are secured only by such mortgage loans and mortgage-backed
securities. Such bonds are the obligations of the applicable PFCI issuer
subsidiary; they are neither obligations of, nor guaranteed by, the Company,
Pulte or
8
<PAGE> 16
its parent corporation Pulte Diversified Companies, Inc. ("PDCI"), ICM or PFCI.
(See the 1994 10-K: Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Other Financial Subsidiaries and Note 6 of Notes to
Consolidated Financial Statements.)
CORPORATE
Corporate is a nonoperating segment and consists principally of Pulte
Corporation and PDCI. The Company and PDCI are holding companies. The Company
also lends funds (primarily on an interest-bearing basis) to Pulte on an
unsecured basis. For further information regarding such activities, see the 1994
10-K and the June 30, 1995 10-Q: Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Corporate.
ORGANIZATION/EMPLOYEES
All subsidiaries and operating divisions operate in an autonomous fashion
with respect to day-to-day operations. All homebuilding real estate purchases
and other significant homebuilding, mortgage banking, financing activities and
similar operating decisions must be approved by senior corporate management.
At December 31, 1994, the Company employed approximately 3,400 persons, of
which approximately 2,800 were employed by the Guarantors. Employees of the
Company and its subsidiaries, including Pulte, are not represented by any union.
Subcontracted work, however, may be performed by union subcontractors.
Homebuilding division, mortgage banking and financing management personnel are
paid performance bonuses based on individual performance and incentive
compensation based on the performance of the applicable division or subsidiary.
The Company's corporate management personnel are paid incentive compensation
based on overall performance of the Company (see Note 8 of Notes to Consolidated
Financial Statements in the 1994 10-K). Each subsidiary is given autonomy
regarding employment of personnel, although the Company's senior corporate
management acts in an advisory capacity in the employment of subsidiary
officers. The Company considers its employee and subcontractor relations to be
satisfactory.
PROPERTIES
The Company's and Pulte's corporate offices are located at 33 Bloomfield
Hills Parkway, Suite 200, Bloomfield Hills, Michigan 48304 where 34,600 square
feet of office space is leased. ICM's and PFCI's corporate offices are located
at 6061 South Willow Drive, Greenwood Village, Colorado 80111. At this location,
47,400 square feet of office space is leased. Pulte building divisions and ICM
branch operations generally lease office space for their day-to-day operations.
BSL owns two warehouses totaling 155,000 square feet and leases 61,000 square
feet of warehouse space in metropolitan Washington, D.C., owns a 58,000 square
foot warehouse facility in Charlotte, and leases an additional 44,000 square
feet of warehouse space in Orlando.
Because of the nature of Pulte's homebuilding operations, significant
amounts of property are held as inventory in the ordinary course of its
homebuilding business. Such properties are not included in this section.
LEGAL PROCEEDINGS
On July 7, 1995, a lawsuit was filed in the United States District Court,
Eastern District of Michigan, by the Federal Deposit Insurance Corporation
against the Company, PDCI and First Heights.
The lawsuit seeks a declaration of rights under the assistance agreement
entered into between First Heights and the Federal Savings and Loan Insurance
Corporation (FSLIC). The FDIC is the successor to FSLIC. The FDIC and the
Company disagree about the proper interpretation of provisions in the assistance
agreement which provide for sharing of certain tax benefits achieved in
connection with First Heights' 1988 acquisition from FSLIC, and First Heights'
ownership of, five failed Texas thrifts. The lawsuit also includes certain other
claims relating to the foregoing, including claims resulting from the Company's
and First Heights' amendment of a tax sharing and allocation agreement between
the Company and First Heights. The Company disputes the FDIC's claims and
believes that a proper interpretation of the assistance agreement
9
<PAGE> 17
limits the FDIC's participation in the tax benefits to amounts established on
First Heights' books. The Company expects to file an answer and counter-claim in
this case and intends to vigorously defend itself and pursue its counter-claims.
The Company and Pulte are also involved in various other litigation
incidental to their business. Management does not believe that such litigation
will have a material adverse impact on the Company's financial condition or
results from operations. See Note 6 of Notes to Condensed Consolidated Financial
Statements in the June 30, 1995 10-Q and Note 10 of Notes to Consolidated
Financial Statements in the 1994 10-K.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities will be issued under an indenture (the "Senior
Indenture"), among the Company, as issuer, the Guarantors and the trustee named
in the applicable Prospectus Supplement, as trustee ("the Senior Trustee"), a
copy of which is filed as an exhibit to the Registration Statement. The
Subordinated Debt Securities will be issued under an indenture (the
"Subordinated Indenture," and, together with the Senior Indenture, the
"Indentures"), among the Company, as issuer, the Guarantors and the trustee
named in the applicable Prospectus Supplement, as trustee (the "Subordinated
Trustee"), a copy of which is filed as an exhibit to the Registration Statement.
(As used herein, "Trustee" shall refer to either the Senior Trustee or the
Subordinated Trustee, or both, as applicable.)
The following summary of certain important provisions of the Debt
Securities and Indentures is qualified in its entirety by the terms of the
Indentures, Debt Securities and Guarantees, which are filed as exhibits to the
Registration Statement or will be included in supplements to the Indentures.
Capitalized terms not otherwise defined under this section "Description of Debt
Securities" (including under "-- Certain Definitions", below) have the meaning
given to them in the Indentures. As used in this section "Description of Debt
Securities," unless the context indicates otherwise, the term "Company" means
Pulte Corporation and does not include any of its subsidiaries, and section
references, unless otherwise specified, are to sections of both Indentures.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The operations of the Company are conducted through subsidiaries and,
therefore, the Company is primarily dependent on the earnings and cash flows of
its subsidiaries to meet its debt service obligations. Except as described in
this paragraph, there currently are no restrictions on the ability of the
Company's subsidiaries (including the subsidiaries that are not Guarantors) to
provide funds to the Company to meet the Company's debt service obligations. Any
right of the Company and its creditors to participate in the assets of any of
the Company's subsidiaries upon any liquidation or reorganization of any such
subsidiary will be subject to the prior claims of that subsidiary's creditors,
including trade creditors. Accordingly, the Debt Securities issued will also be
effectively subordinated to the creditors of the Company's subsidiaries. The
Debt Securities will, however, have the benefit of the Guarantees from the
Guarantors, which consist of some, but not all, of the Company's subsidiaries.
The Company's subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the Debt
Securities or to make any funds available therefor, whether by dividends, loans
or other payments, other than as expressly provided in the Guarantees. The
payment of dividends or the making of loans and advances to the Company by its
subsidiaries are subject to contractual, statutory or regulatory restrictions,
are contingent upon the earnings of those subsidiaries and are subject to
various business considerations. See "-- Guarantees."
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Reference is made to the Prospectus Supplement for the following terms of
the offered Debt Securities (to the extent such terms are applicable to such
Debt Securities):
(i) the title of such Debt Securities or the particular series
thereof;
(ii) any limit on the aggregate principal amount of such Debt
Securities;
(iii) the date or dates, or the method by which such date or dates
will be determined, on which the principal of such Debt Securities will be
payable;
(iv) the rate or rates at which the Debt Securities shall bear
interest, if any, or the method by which such rate or rates shall be
determined, the interest payment dates on which any such interest on such
Debt Securities will be payable, the record date for any interest payable
on Debt Securities, or the method by which such date or dates shall be
determined and the basis upon which interest shall be calculated if other
than on the basis of a 360-day year of twelve 30-day months;
(v) each place or places where the principal of and any interest on
such Debt Securities will be payable and each office or agency where such
Debt Securities may be presented for registration of transfer or exchange;
(vi) the person to whom any interest on any Debt Security of such
series will be payable, if other than the person in whose name such Debt
Security (or one or more predecessor Debt Securities) is registered at the
close of business on the record date for such interest;
(vii) if other than the principal amount of such Debt Securities, the
portion of the principal amount of such Debt Securities which shall be
payable upon declaration of acceleration of the maturity thereof or
provable in bankruptcy;
(viii) any mandatory or optional sinking fund, redemption or analogous
provisions;
(ix) the application, if any, of the right of the holder to convert
the Debt Securities into Common Stock, the initial conversion price per
share or conversion rate at which such Debt Securities will be convertible
into Common Stock, any specific terms relating to the adjustment thereof
that are in addition to or different from those described herein and the
period during which such offered Debt Securities may be so converted;
(x) the application, if any, of the right of the holder of Debt
Securities to require the Company to purchase all or any part of such
holder's Debt Securities upon a Change in Control Triggering Event;
(xi) the date, if any, after which and the price or prices at which
such Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed, in whole or in part, and the other detailed terms
and provisions of any such optional or mandatory redemption provisions;
(xii) the denominations in which such Debt Securities which are
Registered Securities will be issuable, if other than denominations of U.S.
$1,000 and any integral multiple thereof;
(xiii) the currency or currencies of payment of principal of and any
premium and interest on such Debt Securities;
(xiv) any index used to determine the amount of payments of principal
of and any interest on such Debt Securities;
(xv) the application, if any, of the restrictive covenants described
under "-- Restrictions on Secured Debt," "-- Restrictions on Sale and
Leaseback Transactions" and "-- Restrictions on Mergers, Consolidations and
Transfers of Assets";
(xvi) the application, if any, of any restrictive covenants or Events
of Default that are in addition to or different from those described
herein;
(xvii) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
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(xviii) the application, if any, and any provisions in modification
of, in addition to or in lieu of, any of the provisions described under "--
Discharge, Defeasance and Covenant Defeasance";
(xix) the provisions, if any, granting special rights to the holders
of such Debt Securities upon the occurrence of such events as may be
specified; and
(xx) any other terms and provisions of such Debt Securities not
inconsistent with the terms and provisions of the applicable Indenture.
Any such Prospectus Supplement will also describe any special provisions
for the payment of additional amounts with respect to such Debt Securities. Debt
Securities of any series may be issued in one or more series or tranches as
described in the applicable Prospectus Supplement.
If the purchase price of any of the offered Debt Securities is denominated
in a foreign currency or currencies or foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement.
The Indentures provide that the Debt Securities may be issued in one or
more series thereunder, in each case as authorized from time to time by the
Board of Directors of the Company. The Indentures also provide that there may be
more than one Trustee under the Indentures, each with respect to one or more
different series of Debt Securities. See "-- Resignation of Trustee" below. In
the event that there is more than one Trustee under an Indenture, the powers and
trust obligations of each Trustee as described herein shall extend only to the
one or more series of Debt Securities for which it is Trustee. If more than one
Trustee is acting under an Indenture, the Debt Securities (whether of one or
more than one series) for which each Trustee is acting shall in effect be
treated as if issued under separate indentures.
GUARANTEES
In order to enable the Company to obtain more favorable interest rates and
terms, payment of principal of, premium, if any, and interest on the Senior Debt
Securities will be guaranteed, jointly and severally, on a senior basis by all
of the Guarantors pursuant to the Senior Guarantees; provided that the Senior
Guarantees will not be applicable to or guarantee the Company's obligations with
respect to the conversion of the Senior Debt Securities into Common Stock if
applicable, as described under "-- Conversion." Each Senior Guarantee will be an
unsecured senior obligation of each Guarantor issuing such Senior Guarantee,
ranking pari passu in right of payment with all existing and future Guarantor
Senior Indebtedness.
In order to enable the Company to obtain more favorable interest rates and
terms, payment of principal of, premium, if any, and interest on the
Subordinated Debt Securities will be guaranteed, jointly and severally, on a
subordinated basis by all of the Guarantors pursuant to the Subordinated
Guarantees; provided that the Subordinated Guarantees will not be applicable to
or guarantee the Company's obligations with respect to the conversion of the
Subordinated Debt Securities into Common Stock if applicable, as described under
"--Conversion." Each Subordinated Guarantee will be an unsecured subordinated
obligation of each Guarantor, ranking junior in right of payment to all existing
and future Guarantor Senior Indebtedness and Guarantor Senior Subordinated
Indebtedness and ranking pari passu with all other existing and future Guarantor
Subordinated Indebtedness. The indebtedness evidenced by each Subordinated
Guarantee will be subordinated on the same general basis to Guarantor Senior
Indebtedness as the Subordinated Debt Securities are subordinated to Company
Senior Indebtedness.
The Indentures provide that, in the event any Guarantee would constitute or
result in a violation of any applicable fraudulent conveyance or similar law of
any relevant jurisdiction, the liability of the Guarantor under such Guarantee
shall be reduced to the maximum amount, after giving effect to all other
contingent and other liabilities of such Guarantor, permissible under the
applicable fraudulent conveyance or similar law. (Section 1619 of the
Subordinated Indenture and Section 1605 of the Senior Indenture).
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GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Debt Securities (a "Global Security") that will
be deposited with a depository (a "Depository") or with a nominee for a
Depository identified in the Prospectus Supplement relating to such series and
registered in the name of the Depository or a nominee thereof. In such case, one
or more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding registered Debt Securities of the series to be represented by such
Global Security or Global Securities. Unless and until it is exchanged in whole
or in part for Debt Securities in definitive registered form, a Global Security
may not be transferred except as a whole by the Depository for such Global
Security to a nominee of such Depository or by a nominee of such Depository to
such Depository or another nominee of such Depository or by such Depository or
any such nominee to a successor of such Depository or a nominee of such
successor. The Depository currently accepts only Debt Securities that are
denominated in U.S. dollars.
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the Prospectus Supplement relating to such series. The
Company anticipates that the following provisions will apply to all depository
arrangements.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depository for such Global Security. The
Depository for such Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Global Security beneficially
owned by such participants. The accounts to be credited will be designated by
any dealers, underwriters or agents participating in the distribution of such
Debt Securities. Ownership of beneficial interests will be effected only through
records maintained by the depository for such Global Security (with respect to
interests of participants) and on the records of participants (with respect to
interest of persons holding through participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and laws may impair the ability to
own, transfer or pledge beneficial interests in Global Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have the Debt Securities represented by
such Global Security registered in their names, and will not receive or be
entitled to receive physical delivery of such Debt Securities in definitive form
and will not be considered the owners or Holders thereof, under the Indentures.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depository for such Global Security and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a Holder under the
Indentures. The Company understands that under existing industry practices, if
the Company requests any action of Holders or if any Holder is entitled to give
or take any action under the Indentures, the Depository for such Global Security
would authorize the participants holding Debt Securities of the relevant
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instruction of beneficial owners holding through
them.
Payments of principal of, premium, if any, and any interest on Debt
Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to such Depository or its nominee, as the
case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any other agent of the Company or agent of the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depository for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium on, if
any, or any interest in respect of such Global Security, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interest in such Global Security as shown on the records
of such Depository. The Company also expects that payments by participants to
owners of beneficial interests in such Global Security held through
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<PAGE> 21
such participants will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants.
If the Depository for any Debt Securities represented by a Global Security
notifies the Company that it is at any time unwilling or unable to continue as
Depository or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depository registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, the Company will issue such
Debt Securities in definitive form in exchange for such Global Security or
Global Securities representing such Debt Securities. Any Debt Securities issued
in definitive form in exchange for a Global Security will be registered in such
name or names as the Depository shall instruct the Trustee. It is expected that
such instructions will be based upon directions received by the Depository from
participants with respect to ownership of beneficial interests in such Global
Security.
RESTRICTIONS ON SECURED DEBT
If so provided in the Prospectus Supplement, the Company will not, and will
not cause or permit a Restricted Subsidiary to, create, incur, assume or
guarantee any Secured Debt unless the Debt Securities will be secured equally
and ratably with (or prior to) such Secured Debt, with certain exceptions. The
foregoing restrictions do not prohibit the creation, incurrence, assumption or
guarantee of Secured Debt which is secured by (i) Security Interests on model
homes, homes held for sale, homes that are under contract for sale, contracts
for the sale of homes, land (improved or unimproved), manufacturing plants,
warehouses or office buildings and fixtures and equipment located thereat, or
thereon, (ii) Security Interests on property at the time of its acquisition by
the Company or a Restricted Subsidiary, which Security Interests secure
obligations assumed by the Company or a Restricted Subsidiary, or on the
property of a corporation or other entity at the time it is merged into the
Company or a Restricted Subsidiary (other than a Security Interest created in
contemplation of the acquisition of such property or the consummation of such a
merger), (iii) Security Interests arising from conditional sales agreements or
title retention agreements with respect to property acquired by the Company or a
Restricted Subsidiary and (iv) Security Interests securing Indebtedness of a
Restricted Subsidiary owing to the Company or to another Restricted Subsidiary
that is wholly-owned (directly or indirectly) by the Company or Security
Interests securing Indebtedness of the Company owing to a Guarantor.
Additionally, such permitted Secured Debt includes any amendment, restatement,
supplement, renewal, replacement, extension or refunding in whole or in part, of
Secured Debt permitted at the time of the original incurrence thereof. (Section
1006)
In addition to the foregoing, the Company and its Restricted Subsidiaries
may create, incur, assume or guarantee Secured Debt, without equally and ratably
securing the Debt Securities, if immediately thereafter the sum of (i) the
aggregate principal amount of all Secured Debt outstanding (excluding Secured
Debt permitted under clauses (i) through (iv) of the immediately preceding
paragraph and any Secured Debt in relation to which the Debt Securities have
been equally and ratably secured) and (ii) all Attributable Debt in respect of
Sale and Leaseback Transactions (excluding Attributable Debt in respect of Sale
and Leaseback Transactions as to which the net proceeds of the property sold or
transferred are applied to retire Indebtedness or to the purchase of property as
described under "-- Restrictions on Sale and Leaseback Transactions") as of the
date of determination would not exceed 20% of Consolidated Net Tangible Assets.
(Section 1006)
The provisions described above with respect to limitations on Secured Debt
are not applicable to Non-Recourse Land Financing by virtue of the definition of
Secured Debt, and will not restrict or limit the ability of the Company and its
Restricted Subsidiaries to create, incur, assume or guarantee any unsecured
Indebtedness, or of any subsidiary which is not a Restricted Subsidiary to
create, incur, assume or guarantee any secured or unsecured Indebtedness.
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
If so provided in the Prospectus Supplement, the Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction, unless notice is promptly given to the Trustee of
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<PAGE> 22
the Sale and Leaseback Transaction, fair value is received by the Company or the
relevant Restricted Subsidiary for the property sold (as determined in good
faith pursuant to a resolution of the Board of Directors of the Company
delivered to the Trustee) and the Company or a Restricted Subsidiary, within 365
days after the completion of the Sale and Leaseback Transaction, applies an
amount equal to the net proceeds therefrom either (i)(A) with respect to Senior
Debt Securities, to the redemption or retirement of Senior Debt Securities of
any series, Company Senior Indebtedness or Guarantor Senior Indebtedness (not
including Guarantor Senior Subordinated Indebtedness), or (B) with respect to
Subordinated Debt Securities, to the redemption or retirement of Debt Securities
of any series or Indebtedness of the Company or any Guarantor, or (ii) to the
purchase by the Company or any Restricted Subsidiary of property substantially
similar to the property so sold or transferred. In lieu of applying all or any
part of such amount to the redemption or retirement of Debt Securities or
Indebtedness, the Company may deliver Debt Securities to the Trustee for
cancellation and thereby reduce the amount to be applied to the redemption of
Debt Securities or retirement of Indebtedness by an amount equal to the
aggregate principal amount of Debt Securities delivered. (Section 1007)
In addition to the foregoing, the Company and its Restricted Subsidiaries
may enter into a Sale and Leaseback Transaction if immediately thereafter the
sum of (i) the aggregate amount of all Secured Debt outstanding (excluding
Secured Debt permitted under clauses (i) through (iv) described in "--
Restrictions on Secured Debt," above or Secured Debt in relation to which Debt
Securities have been equally and ratably secured) and (ii) all Attributable Debt
in respect of Sale and Leaseback Transactions (excluding Attributable Debt in
respect of Sale and Leaseback Transactions as to which the net proceeds of the
property sold or transferred are applied to retire Indebtedness or to the
purchase of property as described in clause (ii) of the immediately preceding
paragraph) as of the date of determination would not exceed 20% of Consolidated
Net Tangible Assets. (Section 1007)
RESTRICTIONS ON MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS
If so provided in the Prospectus Supplement, none of the Company, the
Guarantors and the Restricted Subsidiaries will consolidate or merge into or
sell, assign, transfer or lease all or substantially all of its assets to
another person unless (i) the person is a corporation organized under the laws
of the United States of America or any state thereof, (ii) the person assumes by
supplemental indenture all the obligations of the Company or such Guarantor or
Restricted Subsidiary, as the case may be, relating to the Debt Securities, the
Guarantees and the Indentures, as the case may be, and (iii) immediately after
the transaction no Event of Default exists; provided that this clause (iii)
shall not restrict or be applicable to a merger, consolidation or liquidation of
a Restricted Subsidiary or Guarantor with or into the Company or another
subsidiary that is wholly-owned, directly or indirectly, by the Company that is,
or concurrently with the completion of such merger, consolidation or liquidation
becomes, a Guarantor or a Restricted Subsidiary that is wholly-owned, directly
or indirectly, by the Company. (Section 801) Upon any such consolidation,
merger, sale, assignment or transfer, the successor corporation will be
substituted for the Company or such Guarantor or Restricted Subsidiary
(including any merger or consolidation described in the proviso at the end of
the immediately preceding sentence), as applicable, under the Indentures. The
successor corporation may then exercise every power and right of the Company or
such Guarantor or Restricted Subsidiary under the Indentures, and the Company or
such Guarantor or Restricted Subsidiary, as applicable, will be released from
all of its liabilities and obligations in respect of the Debt Securities and the
Indentures. In the event the Company or any Guarantor or Restricted Subsidiary
leases all or substantially all of its assets, the lessee corporation will be
the successor to the Company or such Guarantor or Restricted Subsidiary and may
exercise every power and right of the Company or such Guarantor or Restricted
Subsidiary, as the case may be, under the Indentures, but the Company or such
Guarantor or Restricted Subsidiary, as the case may be, will not be released
from its obligations to pay the principal of and premium, if any, and interest,
if any, on the Debt Securities. (Section 802)
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CONVERSION
If so provided in the Prospectus Supplement, the Debt Securities will be
convertible at their principal amount or any portion thereof which is an
integral multiple of $1,000 at any time prior to their maturity (other than Debt
Securities with respect to which a Change in Control Purchase Notice, if
applicable, has been given and has not been withdrawn), into shares of the
Company's Common Stock at the conversion price set forth in the applicable
Prospectus Supplement, subject to adjustment as described below. The Company
will not be required to issue fractional shares of Common Stock but will pay a
cash adjustment in lieu thereof. Except as otherwise provided in the Prospectus
Supplement, interest accrued shall not be paid on Debt Securities converted. If
any Debt Security not called for redemption is converted between a record date
for the payment of interest and the next succeeding interest payment date, such
Debt Security must be accompanied by funds equal to the interest payable on such
interest payment date on the principal amount so converted. (Sections 1801,
1802, 1803)
The conversion price is subject to adjustment in certain events, including
(i) the subdivision, combination or reclassification of the outstanding Common
Stock, (ii) the payment in shares of Common Stock of a dividend or distribution
on any class of Capital Stock of the Company, (iii) the issuance of rights or
warrants to all holders of Common Stock entitling them to acquire shares of
Common Stock at a price per share less than the Current Market Price, or (iv)
the distribution to holders of Common Stock of shares of Capital Stock other
than Common Stock, evidences of Indebtedness or assets (including securities,
but excluding distributions exclusively in cash, and excluding dividends or
distributions paid exclusively in Common Stock, rights and warrants referred to
above). There will be no upward adjustment in the conversion price except in the
event of a reverse stock split. The Company is not required to make any
adjustment in the conversion price of less than $0.01, but the same will be
carried forward and taken into account in the computation of any subsequent
adjustment. (Sections 1806 through 1808) The conversion price will not be
subject to adjustment under any circumstances not referred to in this paragraph,
such as tender offers, open market purchases or other acquisitions of shares of
Common Stock by the Company and/or its subsidiaries, unless otherwise provided
with respect to any particular series of Debt Securities in the applicable
Prospectus Supplement.
Conversion price adjustments or omissions in making such adjustments may,
under certain circumstances, be deemed to be distributions that could be taxable
as dividends to Holders of Debt Securities or to holders of Common Stock.
In case of any reclassification (excluding those referred to above),
merger, consolidation or sale of substantially all the assets of the Company as
an entirety, the Holder of each outstanding convertible Debt Security shall have
the right to convert such Debt Security only into the kind and amount of shares
of stock and other securities and property (including cash) receivable by a
holder of the number of shares of Common Stock into which such Debt Security
might have been converted immediately prior to the effective date of the
transaction. (Section 1807) The Guarantees will not be applicable to or
guarantee the Company's obligations with respect to the conversion of the Debt
Securities into Common Stock if applicable, see "-- Guarantees," and the
Guarantees will be automatically terminated and discharged as to any Debt
Security converted into Common Stock. (Section 1601)
PURCHASE OF THE DEBT SECURITIES AT THE OPTION OF THE HOLDER
If so provided in the applicable Prospectus Supplement, in the event of any
Change in Control Triggering Event of the Company occurring on or prior to
maturity, each Holder of Debt Securities will have the right, at the Holder's
option, subject to the terms and conditions of the applicable Indenture, to
require the Company to purchase all or any part (provided that the principal
amount is $1,000 or an integral multiple thereof) of such Holder's Debt
Securities on the date that is not less than 30 nor more than 60 business days
after the occurrence of such Change in Control Triggering Event (the "Change in
Control Purchase Date") at a cash price equal to the principal amount thereof
plus accrued interest to the Change in Control Purchase Date (the Change in
Control Purchase Price"). (Section 1701)
Within 15 business days after the Change in Control Triggering Event, the
Company is obligated to mail to the Trustee and to all Holders at their
addresses shown in the Securities Register (and to beneficial owners
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<PAGE> 24
as required by applicable law) a notice regarding the Change in Control
Triggering Event, which notice shall state, among other things: (i) the date by
which the Change in Control Purchase Notice (as defined below) must be given by
such Holder, (ii) the Change in Control Purchase Price, (iii) the Change in
Control Purchase Date, (iv) the name and address of the Trustee and of any other
office or agency maintained for the purpose of the surrender of Debt Securities
for purchase, (v) the procedures for withdrawing a Change in Control Purchase
Notice and (vi) the procedures that Holders must follow to exercise these
rights. The Company will cause a copy of such notice to be published in a dally
newspaper of national circulation. (Section 1701)
To exercise this right, the Holder must deliver written notice (a "Change
in Control Purchase Notice") to the Trustee or to any other office or agency
maintained for such purpose, of the exercise of such right prior to the close of
business on the business day immediately prior to the Change in Control Purchase
Date. (Section 1701) The Change in Control Purchase Notice must state (i) the
certificate number of the Debt Security to be delivered by the Holder for
purchase by the Company; (ii) the portion of the principal amount of Debt
Securities to be purchased, which portion must be $1,000 or an integral multiple
thereof; and (iii) that such Debt Securities will be submitted for purchase by
the Company on the Change in Control Purchase Date pursuant to the applicable
provisions of the Debt Securities. (Section 1701)
Any Change in Control Purchase Notice may be withdrawn by the Holder by a
written notice of withdrawal delivered to the Trustee or to any other office or
agency maintained for such purpose on the business day immediately prior to the
Change in Control Purchase Date. The notice of withdrawal shall state the
principal amount and the certificate numbers of the Debt Securities as to which
the withdrawal notice relates and the principal amount, if any, which remains
subject to the original Change in Control Purchase Notice. (Section 1702)
Payment of the Change in Control Purchase Price for a Debt Security for
which a Change in Control Purchase Notice has been delivered and not withdrawn
is conditioned upon delivery of such Debt Security (together with any
endorsements) to the Trustee or to any other office or agency maintained for
such purpose, at any time (whether prior to, on or after the Change in Control
Purchase Date) after delivery of such Change in Control Purchase Notice. Payment
of the Change in Control Purchase Price for such Debt Security will be made
promptly following the later of the Change in Control Purchase Date or the time
of delivery of such Debt Security. (Section 1703) If the Company has deposited
with the Trustee, in accordance with the Indentures, money sufficient to pay the
Change in Control Purchase Price of such Debt Security on the Change in Control
Purchase Date, then, on and after the Change in Control Purchase Date, such Debt
Security shall cease to be outstanding and interest on such Debt Security will
cease to accrue, whether or not such Debt Security is delivered to the Trustee
or to any other office or agency maintained for such purpose, and all other
rights of the Holder shall terminate (other than the right to receive the Change
in Control Purchase Price upon delivery of the Debt Security). In accordance
with the Indentures, no Debt Securities may be purchased pursuant to a Change in
Control Triggering Event if there has occurred and is continuing an Event of
Default described below under "Events of Default" (other than a default in the
payment of the Change in Control Purchase Price with respect to such Debt
Securities). (Section 1701)
The Company shall make all filings required under and comply with all
federal and state securities laws regulating the purchase of Debt Securities at
the option of Holders upon a Change in Control Triggering Event, including, if
applicable, Section 14(e) of the Exchange Act and Rule 14e-1 promulgated
thereunder and any other applicable tender offer rules. (Section 1704)
The Change in Control Triggering Event purchase feature of the Debt
Securities may in certain circumstances make more difficult or discourage a
takeover of the Company and, thus, the removal of incumbent management. If such
a Change in Control Triggering Event were to occur, there can be no assurance
that the Company would have sufficient funds to pay the Change in Control
Purchase Price for all Debt Securities tendered by the Holders thereof. A
default by the Company on its obligation to pay the Change in Control Purchase
Price could result in acceleration of the payment of other Indebtedness of the
Company at the time outstanding.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
If permitted by the terms of any Debt Securities, the Company may terminate
certain of its obligations under the Indenture with respect to such Debt
Securities, including its obligations to comply with the restrictive covenants
described in this Prospectus, on the terms and subject to the conditions
contained in such Indenture, by depositing in trust with the Trustee money or
obligations of, or guaranteed by, the United States sufficient to pay the
principal of, premium, if any, and interest, if any, on such Debt Securities to
maturity (or earlier redemptions) (Section 401 and Article Fourteen)
The Prospectus Supplement sets forth the specific provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within a particular series.
EVENTS OF DEFAULT
An Event of Default with respect to any series of Debt Securities is
defined in the Indentures as being: (a) default by the Company for 30 days in
the payment of any installment of interest on the Debt Securities of such
series; (b) default by the Company in the payment of any principal on the Debt
Securities of such series, including purchase upon redemption, if applicable, or
a Change in Control Triggering Event, if applicable, as described under
"Purchase of the Debt Securities at the Option of the Holder"; (c) default in
the deposit of any sinking fund payment when and as due by the terms of the
Indentures; (d) default by the Company in the performance of any of the
agreements in the applicable Indenture contained therein for the benefit of the
Debt Securities of such series which shall not have been remedied within a
period of 60 days after receipt of written notice by the Company from the
Trustee for such series of Debt Securities or by the Company and such Trustee
from the Holders of not less than 25% in principal amount of the Debt Securities
of such series then outstanding; (e) any Guarantee in respect of such series of
Debt Securities shall for any reason cease to be, or be asserted in writing by
any Guarantor thereof or the Company not to be, in full force and effect, and
enforceable in accordance with its terms (other than by reason of the
termination of the applicable Indenture or the release or discharge of any such
Guarantee in accordance with the applicable Indenture), provided, however, that
if the Company or any Guarantor asserts in writing that any such Guarantee is
not in full force and effect and enforceable in accordance with its terms, such
assertion shall not constitute an Event of Default for purposes of this
paragraph (if (i) such written assertion is accompanied by an opinion of counsel
to the effect that, as a matter of law, the defect or defects rendering such
Guarantee unenforceable can be remedied within 10 days of the date of such
assertion, (ii) the Company or such Guarantor delivers an officers' certificate
to the effect that the Company or such Guarantor represents that such defect or
defects shall be so remedied within such 10-day period, and (iii) such defect or
defects are in fact so remedied within such 10-day period); (f) certain events
of bankruptcy, insolvency or reorganization of the Company or any Guarantor that
is a Significant Subsidiary; and (g) any other Event of Default established in
accordance with the applicable Indenture with respect to any series of Debt
Securities. (Section 501)
The Indentures provide that if an Event of Default (other than an Event of
Default described in clause (g) in the immediate preceding paragraph) with
respect to any series of Debt Securities shall have occurred and be continuing,
either the Trustee with respect to the Debt Securities of that series or the
Holders of at least 25% in aggregate principal amount of Debt Securities of that
series then outstanding may declare the principal amount (or, if the Debt
Securities of that series were sold at an original issue discount, such portion
of the principal amount as may be specified in the terms of that series) of all
the Debt Securities of that series and interest, if any, accrued thereon to be
due and payable immediately, but upon certain conditions such declaration may be
annulled and past defaults (except, unless theretofore cured, a default in
payment of principal of or interest on Debt Securities of that series) may be
waived by the Holders of a majority in principal amount of the Debt Securities
of that series then outstanding. If an Event of Default described in clause (g)
in the immediately preceding paragraph occurs and is continuing, then the
principal amount of all the Debt Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. (Section 502)
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The Indentures contain a provision entitling the Trustee with respect to
any series of Debt Securities, subject to the duty of the Trustee during default
to act with the required standard of care, to be indemnified by the Holders of
the relevant Debt Securities of such series before proceeding to exercise any
right or power under the applicable Indenture at the request of the Holders of
such Debt Securities. The Indentures also provide that the Holders of a majority
in principal amount of the outstanding Debt Securities of any series may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee for such series of Debt Securities, or exercising any trust or
power conferred on such Trustee the Debt Securities of such series. The
Indentures contain a covenant that the Company will file annually with the
Trustee a certificate as to the absence of any default or specifying any default
that exists. (Section 503)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the applicable Indenture or for any
remedy thereunder, unless such Holder shall have previously given the Trustee
for such series of Debt Securities written notice of an Event of Default with
respect to Debt Securities of that series and unless also the Holders of at
least 25% in aggregate principal amount of the Securities of that series shall
have made written request, and offered reasonable indemnity, to such Trustee to
institute such proceeding as trustee, and such Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. However, any
right of a Holder of any Debt Security to receive payment of the principal of
and any interest on such Debt Security on or after the dates expressed in such
Debt Security and to institute suit for the enforcement of any such payment on
or after such dates shall not be impaired or affected without the consent of
such Holder. (Section 507)
RESIGNATION OF TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect to
such series. In the event that two or more persons are acting as Trustee with
respect to different series of Debt Securities under a single indenture, each
such Trustee shall be a Trustee of a trust under the applicable Indenture
separate and apart from the trust administered by any other such Trustee, and
any action described herein to be taken by the "Trustee" may then be taken by
each such Trustee with respect to, and only with respect to, the one or more
series of Debt Securities for which it is Trustee. (Section 608)
MODIFICATION OF THE INDENTURES
The Indentures contain provisions permitting the Company and the Trustee,
with the consent of the Holders of a majority of the principal amount of the
Debt Securities of each series then outstanding under the applicable Indenture,
to execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the applicable Indenture or modifying the
rights of the Holders of the Debt Securities of such series, except that no such
supplemental indenture may, among other things, (i) extend the final maturity of
any Debt Security, or reduce the rate or extend the time of payment of interest
thereon, or reduce the principal amount thereof, impair the right to institute
suit for payment thereof or reduce any amount payable upon any redemption
thereof or modify any conversion rights as described under "-- Conversion," if
applicable, without the consent of the Holder of the Debt Security so affected,
or (ii) reduce the aforesaid percentage of Debt Securities, the consent of the
Holders of which is required for any such supplemental indenture, without the
consent of the Holders of all outstanding Debt Securities. The Board of
Directors of the Company does not have the power to waive any of the covenants
of the Indentures including those relating to consolidation, merger or sale of
assets. (Section 902)
Modification and amendment of the Indentures may be made by the Company and
Trustee without the consent of any Holder for any of the following purposes: (i)
to evidence the succession of another Person to the Company as obligor under the
Indentures and the Debt Securities; (ii) to add to the covenants of the Company
for the benefit of the Holders of all or any series of Debt Securities or to
surrender any right or power conferred upon the Company by the Indentures; (iii)
to add Events of Default for the benefit of the Holders of all or any series of
Debt Securities; (iv) to change or eliminate any provisions of the Indentures,
provided that any such change or elimination shall become effective only when
there are no outstanding Debt
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Securities of any series created prior thereto which are entitled to the benefit
of such provision; (v) to establish the form or terms of the Debt Securities of
any series; (vi) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the Indentures by
more than one Trustee; (vii) to close the Indentures to authentication and
delivery of additional series of Debt Securities, and to cure any ambiguity,
defect or inconsistency in the Indentures, provided such action does not
adversely affect the interests of Holders of Debt Securities of any series in
any material respect; or (viii) to supplement any of the provisions of the
Indentures to the extent necessary to permit or facilitate defeasance and
discharge of any series of Debt Securities, provided that such action shall not
adversely affect the interests of the Holders of any Debt Securities in any
material respect. (Section 901)
CERTAIN DEFINITIONS
Set forth below is a summary of certain terms used in the Indenture.
Reference is made to the Indentures for the full definition of all such terms:
"Attributable Debt" means, in respect of a Sale and Leaseback Transaction,
the present value (discounted at the weighted average effective interest cost
per annum of the outstanding Debt Securities of all series, compounded
semi-annually) of the obligation of the lessee for rental payments during the
remaining term of the lease included in such transaction, including any period
for which such lease has been extended or may, at the option of the lessor, be
extended or, if earlier, until the earliest date on which the lessee may
terminate such lease upon payment of a penalty (in which case the obligation of
the lessee for rental payments shall include such penalty), after excluding all
amounts required to be paid on account of maintenance and repairs, insurance
taxes, assessments, water and utility rates and similar charges.
"Change in Control" means, with regard to the Company, the occurrence of
(i) any consolidation, share exchange or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Company's voting stock would be converted into cash, securities or other
property, other than, in any case, a merger of the Company in which the holders
of the Company's voting stock immediately prior to the merger have the same or
greater proportionate ownership directly or indirectly, of the voting stock of
the surviving corporation immediately after the merger as they had of the voting
stock of the Company immediately before the merger, or (ii) any person,
including affiliates of the Company (other than the Company, its Restricted
Subsidiaries, employee stock ownership plans or employee benefit plans of the
Company or its subsidiaries, or a Permitted Holder) filing a Schedule 13D or
14D-1 (or any successor schedule, form or report under the Exchange Act)
disclosing that such person has become the beneficial owner of 50% or more of
the Company's voting stock.
In view of such definition, a Change in Control in respect of the Company
will not occur, and a Change in Control Triggering Event will not arise in
connection with, among other things, any Permitted Holder becoming the
beneficial owner of 50% or more of the Company's voting stock.
"Change in Control Triggering Event" means the occurrence of both a Change
in Control and Rating Decline.
"Consolidated Net Tangible Assets" means the total amount of assets which
would be included on a combined balance sheet of the Restricted Subsidiaries
(not including the Company) together with the total amount of assets that would
be included on the Company's balance sheet, not including its subsidiaries,
under generally accepted accounting principles (less applicable reserves and
other properly deductible items) after deducting therefrom: (i) all short-term
liabilities, except for liabilities payable by their terms more than one year
from the date of determination (or renewable or extendible at the option of the
obligor for a period ending more than one year after such date) and liabilities
in respect of retiree benefits other than pensions for which the Company or the
Restricted Subsidiaries are required to accrue pursuant to Statement of
Financial Accounting Standards No. 106, (ii) investments in subsidiaries that
are not Restricted Subsidiaries, including, without limitation, ICM, and (iii)
all goodwill, trade names, trademarks, patents, unamortized debt discount,
unamortized expense incurred in the issuance of debt and other tangible assets.
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"Investment Grade" means a rating of BBB- or higher by S&P and Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's.
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Non-Recourse Land Financing" means any Indebtedness of the Company or any
Restricted Subsidiary for which the holder of such Indebtedness has no recourse,
directly or indirectly, to the Company or such Restricted Subsidiary for the
principal of, premium, if any, and interest on such Indebtedness, and for which
the Company or such Restricted Subsidiary is not, directly or indirectly,
obligated or otherwise liable for the principal of, premium, if any, and
interest on such Indebtedness, except pursuant to mortgages, deeds of trust or
other Security Interests or other recourse, obligations or liabilities in
respect of specific land or other real property interests of the Company or such
Restricted Subsidiary; provided that recourse, obligations or liabilities of the
Company or such Restricted Subsidiary solely for indemnities, covenants or
breach of warranty representation or covenant in respect of any Indebtedness
will not prevent Indebtedness from being classified as Non-Recourse Land
Financing.
"Permitted Holder" means (i) either of William J. Pulte and James Grosfeld,
(ii) any of their respective affiliates, parents, spouses, descendants, and
spouses of descendants, or (iii) any trusts or other entities controlled by Mr.
Pulte or Mr. Grosfeld and their respective estates, heirs, administrators or
personal representatives.
"Rating Agency" means (i) S&P, (ii) Moody's, or (iii) if S&P or Moody's or
both shall not make a rating of the Debt Securities publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Company, which shall be substituted for S&P or Moody's or both,
as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C- and D (or equivalent successor categories), (ii)
respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and D (or
equivalent successor categories), and (iii) the equivalent of any such category
of S&P or Moody's used by another Rating Agency. In determining whether the
rating of the Debt Securities has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in rating from BB+ to BB will constitute a
decrease of one gradation).
"Rating Date" means the date which is 30 days prior to the earliest of (i)
a Change in Control, (ii) public notice of the occurrence of a Change in Control
and (iii) public notice of the intention by the Company to effect a Change in
Control.
"Rating Decline" means the occurrence on or within 30 days after the
earlier of the date of public notice of the occurrence of a Change in Control or
the public announcement of the intention by the Company to effect a Change in
Control (which period shall be extended so long as the rating of the Debt
Securities is under publicly announced consideration for possible downgrade by
any of the Rating Agencies) of: (a) in the event the Debt Securities are rated
by either Moody's or S&P on the Rating Date as Investment Grade, the rating of
the Debt Securities by both such Rating Agencies below Investment Grade, or (b)
in the event the Debt Securities are rated below Investment Grade by both such
Rating Agencies on the Rating Date, the rating of the Debt Securities by either
Rating Agency is decreased by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories).
"Restricted Subsidiary" means any Guarantor and any other subsidiary of the
Company as of the date of the Indentures and any successor to such Guarantor or
subsidiary other than (i) First Heights Bank, Pulte Financial Companies, Inc.,
ICM Mortgage Corporation, PHCC, PDCI or North American Builders Indemnity
Corporation and (ii) any successor to any of the subsidiaries described in
clause (i).
"S&P" means Standard & Poor's Corporation and its successors.
"Sale and Leaseback Transaction" means a sale or transfer made by the
Company or a Restricted Subsidiary (except a sale or transfer made to the
Company or another Restricted Subsidiary) of any property which is either (a) a
manufacturing facility, office building or warehouse whose book value exceeds 1%
of
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Consolidated Net Tangible Assets as of the date of determination or (b) another
property (not including a model home) which exceeds 5% of Consolidated Net
Tangible Assets as of the date of determination, if such sale or transfer is
made with the agreement, commitment or intention of leasing such property to the
Company or a Restricted Subsidiary.
"Secured Debt" means any Indebtedness which is secured by (i) a Security
Interest in any property of the Company or any Restricted Subsidiary or (ii) a
Security Interest in shares of stock owned directly or indirectly by the Company
or a Restricted Subsidiary in a corporation or in equity interests owned by the
Company or a Restricted Subsidiary in a partnership or other entity not
organized as a corporation or in the rights of the Company or a Restricted
Subsidiary in respect of Indebtedness of a corporation, partnership or other
entity in which the Company or a Restricted Subsidiary has an equity interest;
provided that "Secured Debt" shall not include Non-Recourse Land Financing that
consists exclusively of "land under development, "land held for future
development" or "improved lots and parcels," as such categories of assets are
determined in accordance with generally accepted accounting principles. The
securing in the foregoing manner of any such Indebtedness which immediately
prior thereto was not Secured Debt shall be deemed to be the creation of Secured
Debt at the time security is given.
"Security Interest" means any mortgage, pledge, lien, encumbrance or other
security interest which secures the payment or performance of an obligation.
DESCRIPTION OF CAPITAL STOCK
The following general summary of the Company's capital stock and certain
provisions of the Michigan Business Corporation Act ("MBCA") is qualified in its
entirety by reference to the Company's Articles of Incorporation, as amended
(the "Articles of Incorporation"), and the MBCA.
The Company is authorized by the Articles of Incorporation to issue
100,000,000 shares of Common Stock. On March 31, 1995, 26,969,955 shares of
Common Stock were issued and outstanding.
At March 31, 1995, the Company had 3,130,800 shares of Common Stock
reserved for issuance upon the exercise of outstanding options to purchase
shares of Common Stock at prices ranging from $7.93 to $42.00 per share. An
additional 998,800 shares of Common Stock have been reserved for issuance
pursuant to the Company's stock option plans.
The holders of the Common Stock are entitled to receive dividends when, as
and if declared by the Board of Directors of the Company out of funds legally
available therefor, subject to the rights of any Preferred Stock (as hereinafter
defined) at the time outstanding.
The holders of the Common Stock are entitled to one vote for each share on
all matters voted on by shareholders, including election of directors. The
holders of the Common Stock do not have any cumulative voting, conversion,
redemption, sinking fund or preemptive rights. In the event of dissolution,
liquidation or winding up of the Company, holders of the Common Stock will be
entitled to share ratably in any assets remaining after the satisfaction in full
of the prior rights of creditors, including holders of the Company's
Indebtedness, and the aggregate liquidation preference of any Preferred Stock
then outstanding.
The Common Stock is listed on the New York Stock Exchange. The Company
intends to apply to the New York Stock Exchange to list the additional shares of
Common Stock offered hereby and issuable upon conversion of convertible Debt
Securities, if any. State Street Bank and Trust Company is the transfer agent
and registrar for the Common Stock.
The Company is also authorized by the Articles of Incorporation to issue
25,000,000 shares of preferred stock, par value $.01 per share (the "Preferred
Stock"), none of which have been issued. The Board of Directors has authority to
divide the 25,000,000 shares of Preferred Stock into series and to fix the
rights and preferences of any series so established. Variations between
different series may be created by the Board of Directors with respect to such
matters as voting rights, rate of dividend, priority of payment, rights of
accumulation, redemption or signing fund terms, preferences upon liquidation or
dissolution, conversion rights and any other preferences or rights.
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The Articles of Incorporation provide that the Board of Directors will be
divided into three classes, as nearly equal in number as possible, with the term
of office of one class expiring each year. The present Board of Directors
consists of eight persons who were elected to the Board of Directors for terms
of three years each by the Company's shareholders. The Articles of Incorporation
also provide that to the extent holders of Preferred Stock are given the right,
voting separately or by class or series, to elect directors, such directors
shall not be divided into the foregoing classes.
The Articles of Incorporation require, in addition to any vote required by
law, the affirmative vote of the holders of at least 69.3% of the shares voting
at a meeting of shareholders in connection with (i) any merger or consolidation
of the Company or any subsidiary with any "Interested Shareholder," as defined
therein, or any corporation which is, or after the merger or consolidation would
be, an "Affiliate," as defined therein, of an Interested Shareholder that was an
Interested Shareholder prior to the transaction; (ii) certain transfers to any
Interested Shareholder or Affiliate of an Interested Shareholder, other than the
Company or any of its subsidiaries, of any assets of the Company or any
subsidiary having an aggregate book value of 10% or more of its consolidated net
worth; (iii) certain transfers by the Company or any subsidiary of "Equity
Securities," as defined therein, of the Company or any subsidiary which have an
aggregate market value of 5% or more of the total market value of the
outstanding shares of the Company to any Interested Shareholder or Affiliate of
an Interested Shareholder, other than the Company or its subsidiaries (subject
to certain exceptions); (iv) the adoption of any plan or proposal for
liquidation or dissolution of the Company proposed by or on behalf of an
Interested Shareholder or any Affiliate of an Interested Shareholder; (v) any
reclassification of securities or recapitalization of the Company, or any
merger, consolidation or share exchange of the Company with any of its
subsidiaries which has the effect of increasing the proportionate amount of the
outstanding shares of any class of Equity Securities of the Company or any
subsidiary which is owned by an Interested Shareholder or any Affiliate of an
Interested Shareholder (each of the transactions referred to in clauses (i)
through (v), a "Business Combination"); or (vi) any agreement, contract or
arrangement providing for one or more of the foregoing. An "Interested
Shareholder" generally includes any beneficial owner of 10% or more of the
voting power of the Company or any Affiliate of the Company that at any time
within the two year period prior to the date in question was the beneficial
owner of 10% or more of the voting power of the Company.
The foregoing supermajority vote is not required if (i) the Board of
Directors approves such Business Combination and either the Interested
Shareholder has been an Interested Shareholder for at least two years prior to
the date of the Board approval or such proposed transaction was approved by the
Board prior to the time the Interested Shareholder became an Interested
Shareholder or (ii) a majority of the outstanding stock of such other
corporation is owned by the Company or its subsidiaries.
The foregoing supermajority provisions may only be amended by the
affirmative vote of 69.3% of the shares voting on the proposed amendment at a
meeting of shareholders, in addition to any vote otherwise required by law.
CERTAIN PROVISIONS OF THE MICHIGAN BUSINESS CORPORATION ACT
Chapters 7A and 7B of the MBCA may affect attempts to acquire control of
the Company. Pursuant to the Articles of Incorporation, the Company has
expressly elected not to be subject to the provisions of Chapter 7A of the MBCA;
however, the Board of Directors may terminate this election in whole or in part
by action of the majority of directors then in office. Chapter 7A applies to
"Business Combinations," defined to include, among other transactions, certain
mergers, substantial sales of assets or securities and recapitalizations between
covered Michigan business corporations or their subsidiaries and an "Interested
Shareholder" (generally a beneficial owner of 10% or more of the voting power of
the Company's outstanding voting stock). In general, Chapter 7A requires, for
any Business Combination, an advisory statement from the Board of Directors, the
approval of holders of at least 90% of each class of the shares entitled to vote
and the approval of holders of at least two-thirds of such voting shares not
held by the Interested Shareholder, its affiliates and associates. These
requirements do not apply, however, where the Interested Shareholder satisfies
certain "fair price," form of consideration and other requirements and at least
five years have elapsed after the person involved became an Interested
Shareholder. The Board of Directors has the power to elect to be subject to
Chapter 7A as to specifically identified or unidentified Interested
Shareholders.
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Pursuant to its Bylaws, the Company has also expressly elected not to be
subject to the provisions of Chapter 7B of the MBCA; however, the Board of
Directors may terminate this election by action of the majority of directors
then in office. Generally, under Chapter 7B an entity that acquires "Control
Shares" of the Company may vote the Control Shares on any matter only if a
majority of all shares, and of all non "Interested Shares," of each class of
shares entitled to vote as a class, approve such voting rights. In general,
"Interested Shares" are shares owned by employee-directors of the Company, all
its officers, or the entity making the "Control Share Acquisition." "Control
Shares" are shares that, when added to those already owned by an entity, would
give the entity voting power in the election of directors over any of three
thresholds: one-fifth, one-third and a majority. If Control Shares acquired in a
Control Share Acquisition are accorded full voting rights and the acquiror of
such Control Shares has acquired a majority of all voting power of the Company,
Chapter 7B would afford special dissenters' rights to Company shareholders other
than the acquiring person, unless otherwise provided in the Articles of
Incorporation or Bylaws before the Control Share Acquisition occurs. The effect
of the statute is to condition the acquisition of voting control of the
corporation on the approval of a majority of the pre-existing disinterested
shareholders. The Board of Directors may amend the Bylaws before a Control Share
Acquisition occurs to provide that Chapter 7B applies to the Company. The Board
of Directors currently has no plans to effect any such amendment, nor is it
aware of any other plans or proposals to do so by a shareholder.
PLAN OF DISTRIBUTION
The Company may sell the Securities: (i) through underwriters or dealers;
(ii) through agents; (iii) directly to one or more purchasers; or (iv) through a
combination of any such method of sale. The Prospectus Supplement with respect
to the Securities will set forth the terms of the offering of such Securities,
including the name or names of any underwriters, dealers or agents, the purchase
price of such Securities and the proceeds to the Company from such sale, any
underwriter discounts and other items constituting compensation to underwriters,
dealers or agents, any initial public offering price, any discounts or
concessions allowed or reallowed or paid by underwriters or dealers to other
dealers and any securities exchanges on which such Securities may be listed.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them, and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is delivered. If underwriters or dealers are used in the sale, the
Securities will be acquired by the underwriters or dealers for their own
accounts and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price, which may
be changed, or at varying prices determined at the time of sale. The Securities
may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more of such firms.
Unless otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase such Securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all of such
Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities under the Securities Act, or to contribution by the Company to
payments they may be required to make in respect thereof. Underwriters, dealers
and agents may be customers of, engage in transactions with, or perform services
for the Company in the ordinary course of business.
The place and time of delivery for, and manner for determining the price
of, Securities will be set forth in the Prospectus Supplement.
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LEGAL MATTERS
The validity of the issuance of the Securities and certain other legal
matters in connection with the Securities offered hereby will be passed upon for
the Company by Honigman Miller Schwartz and Cohn, Detroit, Michigan, and for the
underwriters, if any, by counsel named in the applicable Prospectus Supplement.
Honigman Miller Schwartz and Cohn serves as counsel to the Company and its
subsidiaries. A partner of Honigman Miller Schwartz and Cohn, Alan E. Schwartz,
is a Director of the Company. As of June 15, 1995 approximately four attorneys
at Honigman Miller Schwartz and Cohn beneficially owned an aggregate of
approximately 56,100 shares of Common Stock of the Company.
EXPERTS
The consolidated financial statements of Pulte Corporation appearing in
Pulte Corporation's Annual Report (Form 10-K/A) for the year ended December 31,
1994 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS; AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH THEY RELATE OR AN OFFER TO BUY
SUCH SECURITY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT
THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company............................. S-2
Recent Developments..................... S-2
Selected Consolidated Financial
Information........................... S-3
Use of Proceeds......................... S-4
Capitalization.......................... S-4
Description of Senior Notes............. S-5
Underwriting............................ S-7
Legal Matters........................... S-7
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
The Company............................. 4
The Guarantors.......................... 4
Use of Proceeds......................... 4
Ratio of Earnings to Fixed Charges...... 4
Business................................ 5
Properties.............................. 9
Legal Proceedings....................... 9
Description of Debt Securities.......... 10
Description of Capital Stock............ 22
Plan of Distribution.................... 24
Legal Matters........................... 25
Experts................................. 25
</TABLE>
======================================================
======================================================
$150,000,000
PULTE CORPORATION
7 5/8% SENIOR NOTES
DUE OCTOBER 15, 2017
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SBC WARBURG DILLON READ INC.
OCTOBER 9, 1997
======================================================
