UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1998
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MONTEREY HOMES CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 1-9977 86-0611231
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6613 North Scottsdale Road, Suite 200, Scottsdale, Arizona 85250
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 998-8700
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NONE
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On June 15, 1998, Monterey Homes Corporation ("Monterey") signed a
definitive agreement with Sterling Communities, S.H. Capital, Inc., Sterling
Financial Investments, Inc., Steve Hafener and W. Leon Pyle (together, the
"Sterling Entities"), to acquire substantially all of the assets of Sterling
Communities ("Sterling"), a northern California homebuilding business with
operations in the San Francisco Bay and Sacramento areas. The transaction was
effective as of July 1, 1998.
The consideration for the assets and stock acquired consisted of $6.8
million in cash (paid out of working capital and subject to final accounting
adjustments) and deferred contingent payments for the four years following the
close of the transaction. The deferred contingent payments will be equal to 20%
of the pre-tax income of the Northern California division of Monterey. In
addition, Monterey assumed certain liabilities of Sterling, including
indebtedness of approximately $8.0 million.
The assets purchased from the Sterling Entities principally consist of
real property and other residential home building assets located in the San
Francisco Bay and Sacramento areas of California. Monterey will continue the
operations of Sterling under the name Meritage Homes of Northern California.
In connection with the transactions, Steve Hafener has entered into a
four-year employment agreement with Monterey pursuant to which he has been
appointed Vice President and Division Manager of Monterey's newly acquired
Northern California operations.
During the year ended December 31, 1997, Sterling closed 105 homes,
generating revenues of approximately $31.0 million, and earned approximately
$2.7 million before taxes and distributions to its partners.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Any statements set forth above that are not historical in nature
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Potential risks
and uncertainties include such factors as the strength and competitive pricing
environment of the single-family housing market, changes in the availability and
pricing of residential mortgages, changes in the availability and pricing or
real estate in the markets in which Monterey operates, demand for and acceptance
of Monterey's products, the success of planned marketing and promotional
campaigns, the ability of Monterey and acquisition candidates, including
Sterling, to successfully integrate their operations, and other factors.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MONTEREY HOMES CORPORATION
Date: July 15, 1998 By: /s/ Larry W. Seay
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Larry W. Seay
Vice President of Finance and
Chief Financial Officer
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