<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to________
Commission File Number: 1-11749
PACIFIC GREYSTONE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4337490
(State of incorporation) (I.R.S Employer Identification No.)
6767 FOREST LAWN DRIVE, SUITE 300
LOS ANGELES, CALIFORNIA 90068-1027
(213) 436-6300
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to the filing requirements for the past 90 days.
YES /X/ NO / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of shares of common stock, par value $.01 per share, outstanding
as of July 31, 1996 was 14,959,741.
<PAGE>
PACIFIC GREYSTONE CORPORATION
FORM 10-Q
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income -
Three and Six Months Ended June 30, 1996 and 1995 3
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 4
Consolidated Statement of Shareholders' Equity -
Six Months Ended June 30, 1996 5
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
INDEX TO EXHIBITS 18
2
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PACIFIC GREYSTONE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -------------------
1996 1995 1996 1995
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues $ 92,112 $ 62,283 $ 155,647 $ 97,016
Cost of sales (77,222) (54,087) (129,062) (83,356)
-------- -------- --------- --------
Gross margin 14,890 8,196 26,585 13,660
Equity in pretax (loss) income
of unconsolidated joint ventures (86) 1,349 (234) 2,008
Selling, general and administrative expenses (9,850) (7,164) (18,352) (13,134)
Interest and other, net 174 334 333 705
-------- -------- --------- --------
Pretax income 5,128 2,715 8,332 3,239
Income tax (provision) benefit (2,092) 3,204 (3,399) 3,204
-------- -------- --------- --------
Net income $ 3,036 $ 5,919 $ 4,933 $ 6,443
-------- -------- --------- --------
-------- -------- --------- --------
Pro forma earnings available
to holders of common shares $ 3,036 $ 1,607 $ 4,933 $ 1,917
-------- -------- --------- --------
-------- -------- --------- --------
Pro forma earnings per share $ 0.20 $ 0.11 $ 0.33 $ 0.13
-------- -------- --------- --------
-------- -------- --------- --------
Pro forma weighted average
number of shares outstanding 14,960 14,960 14,960 14,960
-------- -------- --------- --------
-------- -------- --------- --------
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
PACIFIC GREYSTONE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Cash and cash equivalents $ 21,135 $ 41,254
Escrow proceeds receivable 10,213 8,040
Housing inventories 274,803 215,043
Deferred tax asset 12,472 15,498
Other assets 10,864 10,135
--------- ---------
Total assets $329,487 $289,970
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and other liabilities $ 25,287 $ 26,738
Notes payable 41,274 12,337
Senior unsecured notes payable 125,000 125,000
--------- ---------
Total liabilities 191,561 164,075
Shareholders' equity:
Series A cumulative senior preferred stock -- 44,747
Series C cumulative convertible preferred stock -- 20,000
Common stock, $.01 par value; 35,000,000 shares
authorized; 14,959,741 shares issued
and outstanding in 1996 150 41
Additional paid-in capital 132,482 27,898
Retained earnings 5,294 33,209
--------- ---------
Total shareholders' equity 137,926 125,895
--------- ---------
Total liabilities and shareholders' equity $329,487 $289,970
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
PACIFIC GREYSTONE CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands - unaudited)
<TABLE>
<CAPTION>
SERIES A SERIES C
CUMULATIVE CUMULATIVE
SENIOR CONVERTIBLE ADDITIONAL
PREFERRED PREFERRED COMMON PAID-IN RETAINED
STOCK STOCK STOCK CAPITAL EARNINGS TOTAL
---------- ----------- ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ 44,747 $ 20,000 $ 41 $ 27,898 $ 33,209 $125,895
Stock split, 1.4282 to 1.00 -- -- 17 (17) -- --
Initial public offering of common
stock -- -- 46 54,270 -- 54,316
Redemption of preferred stock (44,747) -- -- -- -- (44,747)
Payment of a portion of the accrued
dividends on the Series A cumulative
senior preferred stock through the
issuance of common stock -- -- 17 20,531 (20,548) --
Conversion of the Series C cumulative
convertible preferred stock including
a portion of the accrued dividends
into common stock -- (20,000) 29 29,800 (9,829) --
Cash dividends paid on preferred stocks -- -- -- -- (2,471) (2,471)
Net income -- -- -- -- 4,933 4,933
--------- --------- ----- -------- -------- --------
Balance at June 30, 1996 $ -- $ -- $ 150 $132,482 $ 5,294 $137,926
--------- --------- ----- -------- -------- --------
--------- --------- ----- -------- -------- --------
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
PACIFIC GREYSTONE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 4,933 $ 6,443
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 414 344
Reduction of deferred tax asset valuation allowance -- (4,500)
Deferred portion of provision for income taxes 3,026 1,296
Equity in pretax loss (income) of unconsolidated
joint ventures 234 (2,008)
Net changes in operating assets and liabilities:
Escrow proceeds receivable (2,173) (5,744)
Housing inventories (54,161) (10,218)
Other assets (1,431) (871)
Accounts payable and accrued liabilities (1,451) (3,679)
-------- --------
Net cash used in operating activities (50,609) (18,937)
INVESTING ACTIVITIES:
Distributions from unconsolidated joint ventures 54 2,211
-------- --------
Net cash provided by investing activities 54 2,211
FINANCING ACTIVITIES:
Net proceeds from common stock issuance 54,316 --
Redemption of preferred stock (44,747) --
Cash dividends paid on preferred stocks (2,471) --
Net proceeds from (payments on) revolving credit facility 25,000 (3,000)
Proceeds from notes payable -- 3,495
Repayments of notes payable (1,662) (3,721)
-------- --------
Net cash provided by (used in) financing activities 30,436 (3,226)
-------- --------
Net decrease in cash and cash equivalents (20,119) (19,952)
Cash and cash equivalents at beginning of period 41,254 36,026
-------- --------
Cash and cash equivalents at end of period $ 21,135 $ 16,074
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 373 $ --
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Housing inventories acquired through seller financing $ 5,599 $ 3,150
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES
6
<PAGE>
PACIFIC GREYSTONE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF PACIFIC GREYSTONE CORPORATION
Pacific Greystone Corporation (the "Company") is a leading regional
builder of high quality, single family homes primarily targeted to first time
and move-up homebuyers throughout Northern and Southern California, as well
as Las Vegas, Nevada and Phoenix, Arizona. The Company also provides
mortgage brokerage services to its customers.
On June 20, 1996, the Company completed its initial public offering (the
"Offering") and sold 5,000,000 shares of common stock, of which, 4,562,900
and 437,100 shares were sold by the Company and certain stockholders of the
Company, respectively. The Offering was priced at $13.00 per share and the
net proceeds were used to redeem the Series A cumulative senior preferred
stock ("Series A Preferred") and the remainder to temporarily reduce amounts
outstanding under the revolving credit facility.
In connection with the Offering, the Company declared a dividend on the
Series A Preferred equal to the accrued dividends thereon to the date of the
closing of the Offering. The Company and holders of the Series A Preferred
agreed that accrued dividends through March 31, 1996, aggregating
approximately $20,548,000, would be paid through the issuance of common stock
valued at a per share price equal to the initial offering price per share in
the Offering less underwriting discounts and commissions. Dividends on the
Series A Preferred from April 1, 1996 to the closing of the Offering,
aggregating approximately $1,650,000, were paid in cash. In addition, all
outstanding shares of the Series C cumulative convertible preferred stock
("Series C Preferred") plus accrued dividends thereon through March 31, 1996
were converted into common stock at a price equal to 80% of the initial
offering price per share in the Offering. Dividends on the Series C Preferred
from April 1, 1996 to the closing of the Offering, aggregating approximately
$821,000, were paid in cash.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission for reporting on Form 10-Q. Accordingly, certain
information and footnote disclosures required by generally accepted
accounting principles for complete financial statements have been condensed
or omitted. In the opinion of the Company's management, all adjustments,
which include normal recurring accruals, considered necessary for a fair
presentation have been included. These consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
The Company historically has experienced, and expects to continue to
experience, variability in quarterly sales and revenues. The consolidated
results of operations for the three and six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the 1995 financial information to
conform to the current period presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Estimates made by management relate primarily to warranty
accruals, project budgets, and the valuation of certain real estate. Actual
results could differ from those estimates.
7
<PAGE>
PACIFIC GREYSTONE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" effective January 1,
1996. In accordance with this pronouncement, the Company records impairment
losses on long-lived assets held and used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than their related carrying amounts. The
adoption of SFAS No. 121 had no impact on the Company's consolidated
financial position and results of operations.
4. PER SHARE DATA
PRO FORMA EARNINGS PER SHARE
Pro forma earnings available to holders of common shares for purposes of
this calculation is historical pretax income less an assumed provision for
income taxes at an effective tax rate of 40.8% and excludes the effect of the
preferred dividend requirements.
PRO FORMA WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Pro forma weighted average number of shares outstanding was calculated
as if (a) the Offering was consummated on January 1, 1995 and (b) the changes
in the capital structure discussed in Note 1 and Note 7 occurred on such date.
HISTORICAL PER SHARE DATA
Historical per share data calculated in accordance with Accounting
Principles Board Opinion ("APB") No. 15 was not presented on the statements
of income since such data was not considered relevant to the new common
shareholders. In calculating historical per share data under APB No. 15, the
preferred dividend requirements were deducted from net income and the
weighted average number of shares outstanding were adjusted to give effect to
the Offering and the stock split as discussed in Note 7. Historical per share
data was $0.08 and ($0.02) for the three and six months ended June 30, 1996.
5. HOUSING INVENTORIES
As of June 30, 1996 and December 31, 1995, the finished homes and
completed model portion of housing inventories was $62,917,000 and
$52,519,000, respectively. An analysis of interest incurred is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest incurred $ 4,715 $ 4,132 $ 8,627 $ 8,172
Less: interest capitalized (4,607) (4,132) (8,408) (8,150)
------- ------- ------- -------
Net interest expense $ 108 $ -- $ 219 $ 22
------- ------- ------- -------
------- ------- ------- -------
Interest paid $ 1,178 $ 780 $ 8,481 $ 8,128
------- ------- ------- -------
------- ------- ------- -------
Amortization of capitalized interest
included in cost of sales $ 4,184 $ 3,405 $ 6,264 $ 5,178
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
8
<PAGE>
PACIFIC GREYSTONE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. UNSECURED REVOLVING CREDIT FACILITY
The terms under the unsecured revolving credit facility (the "Facility")
as amended on April 10, 1996 provide for a total commitment not to exceed
$100,000,000. The amendment extends the maturity date to July 31, 1999 and
includes a provision for a 12-month amortization of outstanding principal
starting July 31, 1998. The Facility provides for interest on borrowings at
either the bank reference rate or the London Interbank Offered Rate plus an
applicable spread based on the Company's senior long-term debt rating.
7. STOCK SPLIT
The Board of Directors authorized a 1.4282 to 1.00 stock split of the
Company's common stock immediately prior to the Offering. The Company's par
value of $.01 remained unchanged and an amount equal to the par value of the
shares outstanding prior to the Offering has been transferred from additional
paid-in capital to common stock. In addition, the authorized number of common
shares were increased from 12,100,000 to 35,000,000 while the preferred
shares were decreased from 7,100,000 to 5,000,000. All references in the
financial statements to number of shares and per share amounts have been
restated to reflect the stock split.
8. STOCK OPTIONS
The Company has a 1996 stock option and award plan (the "Plan") to grant
options and other awards to employees. The Plan provides for the granting of
a maximum of 825,000 shares subject to options or other awards. On June 20,
1996, 299,195 stock options were awarded to the certain executive officers of
the Company pursuant to the Plan. These options are first exercisable on
December 20, 1996 and expire on June 20, 2006. On June 24, 1996, additional
options to purchase an aggregate of 295,000 shares were granted to other
management of the Company. These options have a term of ten years and will
vest in equal annual installments over three years. All stock options were
granted at the initial offering price to the public in the Offering.
9. SUPPLEMENTAL INFORMATION ON GREYSTONE HOMES, INC.
Summarized consolidated financial information for Greystone Homes, Inc.
("Greystone") is presented below. In accordance with the Company's management
agreement, corporate general and administrative expenses are allocated based
upon the gross revenues of the companies. Such allocation of corporate
general and administrative expenses is included in Greystone's selling,
general and administrative expenses presented below.
9
<PAGE>
PACIFIC GREYSTONE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
9. SUPPLEMENTAL INFORMATION ON GREYSTONE HOMES, INC. (CONTINUED)
SUMMARY CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
Cash and cash equivalents $ 5,177 $ 31,973
Escrow proceeds receivable 10,213 8,040
Housing inventories 274,803 215,043
Deferred tax asset 12,472 15,498
Other assets 10,489 9,668
-------- ---------
Total assets $313,154 $280,222
-------- ---------
-------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Accounts payable and other liabilities $ 19,966 $ 21,200
Intercompany payable to the Company 2,679 2,314
Notes payable 41,274 12,337
Senior unsecured notes payable 125,000 125,000
-------- ---------
Total liabilities 188,919 160,851
Shareholder's equity 124,235 119,371
-------- ---------
Total liabilities and shareholder's equity $313,154 $280,222
-------- ---------
-------- ---------
</TABLE>
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------ -------------------
1996 1995 1996 1995
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues $ 91,795 $ 61,994 $ 155,015 $ 96,590
Cost of sales (77,222) (54,087) (129,062) (83,356)
-------- -------- --------- --------
Gross margin 14,573 7,907 25,953 13,234
Equity in pretax (loss) income
of unconsolidated joint ventures (86) 1,349 (234) 2,008
Selling, general and administrative expenses (9,559) (6,866) (17,723) (12,592)
Interest and other, net 120 248 267 520
-------- -------- --------- --------
Pretax income 5,048 2,638 8,263 3,170
Income tax (provision) benefit (2,092) 3,204 (3,399) 3,204
-------- -------- --------- --------
Net income $ 2,956 $ 5,842 $ 4,864 $ 6,374
-------- -------- --------- --------
-------- -------- --------- --------
</TABLE>
Greystone is a wholly owned subsidiary of the Company and is the obligor
on the Senior Unsecured Notes Payable (the "Notes"). The Notes are fully and
unconditionally guaranteed by the Company, except for certain subsidiaries of
the Company which are considered inconsequential individually and in the
aggregate to the Company on a consolidated basis. Separate financial
statements and other related disclosures for Greystone are not presented, as
the Company's management does not consider the information material to
investors.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS REPORT CONTAIN FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. SUCH RISKS, UNCERTAINTIES AND
OTHER FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE RISKS DISCUSSED HEREIN,
CHANGES IN THE GENERAL ECONOMIC CONDITIONS, FLUCTUATIONS IN INTEREST RATES,
INCREASES IN RAW MATERIALS AND LABOR COSTS, LEVELS OF COMPETITION AND OTHER
FACTORS DESCRIBED IN DETAIL IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1995 AND OTHER DOCUMENTS FILED BY THE COMPANY
WITH THE SECURITIES AND EXCHANGE COMMISSION FROM TIME TO TIME.
RESULTS OF OPERATIONS
The following tables present certain selected operating data of the
Company including unconsolidated joint ventures (dollar amounts in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1996 1995 1996 1995
-------- ------- -------- --------
<S> <C> <C> <C> <C>
OPERATING DATA:
Homes closed:
Northern California 155 143 268 225
Southern California 181 133 290 208
Outside California 83 -- 164 --
Joint Ventures 2 47 5 117
-------- ------- -------- --------
Total 421 323 727 550
-------- ------- -------- --------
-------- ------- -------- --------
Net new orders (net of cancellations):
Northern California 209 180 397 332
Southern California 224 172 422 276
Outside California 210 -- 315 --
Joint Ventures 1 28 2 83
-------- ------- -------- --------
Total 644 380 1,136 691
-------- ------- -------- --------
-------- ------- -------- --------
Backlog (at period end):
Northern California 197 192
Southern California 241 132
Outside California 296 --
Joint Ventures -- 19
-------- -------
Total 734 343
-------- -------
-------- -------
Sales value of backlog (at period end) $147,807 $84,997
-------- -------
-------- -------
</TABLE>
Operating results in the second quarter of 1996 benefited from the
Company's expansion outside of California, as well as the improved market
conditions within California, the Company's principal market. Housing
revenues increased by 55% from the year-earlier period reflecting a 52%
increase in the number of homes closed and a 17% increase in the average
sales price in California. The gross margin percentage for the second quarter
of 1996 was 16.2% compared to 13.2% in the year-earlier period. Pretax income
for the second quarter of 1996 increased by 89% to $5.1 million compared to
$2.7 million for the comparable prior year quarter. Total net new orders
increased by 69% during the quarter ended June 30, 1996 over the comparable
quarter in 1995 due principally to a greater number of active selling
projects in the current period. At June 30, 1996, the Company's backlog of
homes under contract was 734 units which was 114% above backlog level at June
30, 1995.
11
<PAGE>
The following table sets forth, for the periods indicated, certain
income statement data as a percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales (83.8) (86.8) (82.9) (85.9)
----- ----- ----- -----
Gross margin 16.2 13.2 17.1 14.1
Equity in pretax (loss) income
of unconsolidated joint ventures (0.1) 2.2 (0.2) 2.0
Selling, general and administrative expenses (10.7) (11.5) (11.8) (13.5)
Interest and other, net 0.2 0.5 0.2 0.7
----- ----- ----- -----
Pretax income 5.6 4.4 5.3 3.3
----- ----- ----- -----
Income tax (provision) benefit (2.3) 5.1 (2.2) 3.3
----- ----- ----- -----
Net income 3.3% 9.5% 3.1% 6.6%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Total revenues for the three months ended June 30, 1996 increased to
$92.1 million from $62.3 million for the three months ended June 30, 1995.
Housing revenues for the quarter increased by $32.6 million to $91.6 million
on 419 homes closed from $59.0 million on 276 homes closed in the
year-earlier period, largely due to a 52% increase in the number of homes
closed. For the quarter ended June 30, 1996, the Company's California
operations produced strong operating results with housing revenues and homes
closed increasing by 42% and 22%, respectively, as compared to the same
period in 1995. The Company's diversification efforts outside of California,
which include the Las Vegas and Phoenix acquisition in December 1995,
contributed a combined 83 homes that resulted in total revenues of $7.9
million. The overall average sales price on homes closed increased to
$219,000 for the quarter ended June 30, 1996 from $214,000 for the quarter
ended June 30, 1995, largely reflecting a 17% increase in the average sales
price in California offset by the lower-priced homes closed outside of
California. There were no land sales for the second quarter of 1996 while the
Company recorded land sales totaling $2.7 million in the second quarter of
1995.
In the second quarter of 1996, the gross margin increased to $14.9
million as compared to $8.2 million for the same period in 1995. As a
percentage of revenues, the Company's gross margin was 16.2% in the second
quarter of 1996, up from 13.2% in the second quarter of 1995. The increase in
the gross margin percentage reflected improved market conditions within
California which were adversely affected in the second quarter of last year
by inclement weather conditions.
During the quarter ended June 30, 1996, the Company sold its remaining
two joint venture housing units. For the three months ended June 30, 1996,
joint ventures reported housing revenues of $0.4 million compared to $12.2
million for the same period in 1995. The decline was attributable to a 96%
decrease in the number of joint venture closings as compared to the prior
year's period. The Company may consider entering into joint venture
arrangements in the future in areas of land scarcity or to diversify risk
with capital intensive projects.
Selling, general and administrative expenses as a percentage of revenues
decreased to 10.7% for the second quarter of 1996 from 11.5% for the same
period in 1995. Selling expenses as a percentage of revenues for the three
months ended June 30, 1996 and 1995 were 5.8% and 6.2%, respectively. The
percentage fluctuation in selling is primarily a result of lower advertising
costs as a percentage of revenues in the current quarter as compared to the
same period in 1995. In the second quarter of last year, the Company incurred
increased advertising costs required to stimulate housing sales particularly
in the Southern California region. General and administrative expenses as a
percentage of revenues for the three months ended June 30, 1996 and 1995 were
4.9% and 5.3%, respectively. The reduction in general and administrative
expenses as a percentage of revenues is largely attributable to the increased
revenues in 1996.
12
<PAGE>
For the quarter ended June 30, 1996, interest and other, net decreased
to $0.2 million from $0.3 million in the comparable period. Included in
interest and other, net is interest incurred, less amounts capitalized to
housing inventories; interest income; and minority interest in pretax income
of a consolidated joint venture. Interest and other, net for the three months
ended June 30, 1996 was similar to that in the comparable 1995 period.
The Company's effective tax rate was 40.8% for the quarter ended June
30, 1996. For the quarter ended June 30, 1995, the Company reduced its
deferred tax asset valuation allowance by $4.3 million as a result of
increased visibility of anticipated future earnings. The net change after
applying a 40% effective tax rate on pretax income for the quarter ended June
30, 1995 resulted in a $3.2 million tax benefit for the quarter.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Total revenues for the six months ended June 30, 1996 increased to
$155.6 million from $97.0 million for the six months ended June 30, 1995, an
increase of 60%, while homes closed increased to 722 from 433, an increase of
67%. Housing revenues and homes closed increased in both the Company's
Northern and Southern California regions. The Company's expansion outside of
California contributed a combined 164 homes that resulted in total revenues
of $15.6 million. The Company's average sales price on homes closed for the
six months ended June 30, 1996 and 1995 was flat at $215,000. This was due
mainly to a 16% increase in the average sales price of homes closed in
California offset entirely by the lower-priced homes closed outside of
California. There were no land sales for the first six months of 1996 while
the Company recorded land sales totaling $2.7 million for the first six
months of 1995.
The gross margin increased to $26.6 million or 17.1% of revenues for the
six months ended June 30, 1996 from $13.7 million or 14.1% in the
year-earlier period. The gross margin percentage has shown improvement as a
result of changes in the product mix which produced a greater proportion of
homes closed from new, higher margin projects in California. During the first
half of last year, the gross margin percentage in California was negatively
impacted by the severe rain conditions in early 1995.
Joint ventures reported combined housing revenues of $1.0 million on
five homes closed in the first six months of 1996 compared to $32.2 million
on 117 homes closed for the same period in 1995. For the six months ended
June 30, 1996, the Company had a $0.2 million equity loss on its
unconsolidated joint ventures compared to a $2.0 million pretax profit in the
prior year's period. This decrease can largely be attributed to the lower
number of joint venture closings and approximately $0.9 million included in
the second quarter of last year from the completion of a joint venture
project.
Selling, general and administrative expenses as a percentage of revenues
decreased to 11.8% for the first half of 1996 from 13.5% for the same period
in 1995. Selling expenses as a percentage of revenues for the six months
ended June 30, 1996 and 1995 were 6.0% and 6.6%, respectively. The decline in
selling expenses as a percentage of revenues is principally attributable to
increased advertising costs as a percentage of revenues during 1995, as well
as a higher 1996 revenue base. General and administrative expenses as a
percentage of revenues for the six months ended June 30, 1996 and 1995 were
5.8% and 6.9%, respectively. The reduction in general and administrative
expenses as a percentage of revenues is largely attributable to the increased
revenues in 1996.
The Company's effective tax rate was 40.8% for the six months ended June
30, 1996. For the six months ended June 30, 1995, the Company reduced its
deferred tax asset valuation allowance by $4.5 million as a result of
increased visibility of anticipated future earnings. The net change after
applying a 40% effective tax rate on pretax income for the six months ended
June 30, 1995 resulted in a $3.2 million tax benefit for the period.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Entering 1996, management's outlook for California's housing markets
turned more positive and, as a result, the Company increased the number of
active selling projects in California. During the first six months of 1996,
the Company raised its housing inventory level through the acquisition of 17
residential projects which included the Company's expansion efforts outside
of California. As a result, the Company's housing inventory increased 28% to
$274.8 million at June 30, 1996 from $215.0 million at December 31, 1995. At
June 30, 1996, the Company had 39 active selling projects which represented a
35% increase since December 1995.
On June 20, 1996, the Company successfully completed its Offering of
5,000,000 shares of common stock. The net proceeds from the Offering were
used to redeem the Series A Preferred and the remainder to temporarily reduce
amounts outstanding under the Facility. At June 30, 1996, the Company's ratio
of debt to total capital was 55%.
At June 30, 1996, the Company's debt to equity ratio increased to 1.21
to 1.00 from 1.09 to 1.00 at the beginning of 1996. The increase was largely
a result of the increased level of borrowings associated with the new
projects acquired in the first six months of 1996. The Company also improved
its inventory turnover ratio for the 12 months ended June 30, 1996 to 1.24
from 1.04 for the comparable period last year. This is due primarily to the
increased number of homes closed during the first six months of 1996 as
compared to the same period in 1995, as well as the Company's efforts to
closely monitor its housing inventory level.
The Company's principal cash requirements are for the acquisition,
development, construction and marketing of its residential projects.
Historically, these activities have been financed through internally
generated operating results and external sources of debt and equity financing.
The Company's operating activities for the first six months of 1996 and
1995 used $50.6 million and $18.9 million in cash, respectively. For the six
months ended June 30, 1996, the Company used cash to fund the following:
$54.2 million in housing inventories; $2.2 million in escrow proceeds
receivable; $1.4 million in other assets; and $1.4 million in accounts
payable and accrued liabilities. The use of cash was partially offset by 1996
six months' earnings of $4.9 million and various noncash adjustments from net
income totaling $3.7 million.
For the six months ended June 30, 1995, cash was used in operating
activities for a net investment of $10.2 million in housing inventories; $5.7
million in escrow proceeds receivable; $0.9 million in other assets; and $3.7
million in accounts payable and accrued liabilities. The use of cash was
partially offset by 1995 six months' earnings of $6.4 million and various
noncash adjustments from net income totaling $4.8 million. Housing
inventories increased as the Company purchased new projects and continued its
construction development on existing projects.
Cash provided by investing activities was primarily distributions
received from the Company's investment in unconsolidated joint ventures
totaling $0.1 million and $2.2 million in the first six months of 1996 and
1995, respectively.
Net cash flow received from financing activities in the first half of
1996 was $30.4 million while financing activities in the first half of 1995
provided net cash flows of $3.2 million. In the first six months of 1996, the
sources of financing were primarily the Offering and the Facility providing
net proceeds of $54.3 million and $25.0 million, respectively. For the six
months ended June 30, 1995, cash was used largely to reduce the Facility's
outstanding borrowings to zero and to repay existing indebtedness, as a
result of the Company's strategy of maintaining liquidity. As the Company
continues to expand in its existing markets and evaluates opportunities to
enter new markets, it may be required to seek additional capital in the form
of equity or debt financing.
14
<PAGE>
On April 10, 1996, the Company increased its Facility commitment to $100
million from $60 million. The amended Facility also provides for lower
borrowing and administrative costs. Participants in the amended Facility
include Bank of America NT&SA; Guaranty Federal Bank, F.S.B.; and Bank of
Boston. The amended Facility extends the maturity date to July 31, 1999 and
includes a provision for a 12-month amortization of outstanding principal
starting July 31, 1998. Interest on borrowings is based on the bond rating on
the Notes which was upgraded to B1 by Moody's Investors Service on June 3,
1996. See Note 6 to the Consolidated Financial Statements.
At June 30, 1996, approximately $48.2 million was available for future
use under the provisions of the amended Facility. The Notes and the Facility,
as well as other construction and development loans, contain certain
restrictive covenants including limitations on additional indebtedness,
minimum liquidity and net worth requirements and limitations on the amount of
debt to equity. The indentures with respect to the Notes limit the ability of
Greystone to pay cash dividends or make loans and advances to the Company. At
June 30, 1996, under the terms of the indentures, Greystone could pay cash
dividends or make loans or advances to the Company in an amount of $34
million. The Notes are fully and unconditionally guaranteed by the Company.
In the normal conduct of the Company's business, it guarantees on an
unsecured basis certain debt obligations of its joint ventures of which it is
the general partner. Generally these obligations are pro rata with the other
partners and the underlying obligations are secured by the assets of the
joint venture. At June 30, 1996, the Company had no liability for such
obligations. The indentures with respect to the Notes and the Facility impose
restrictions on the amount of such guarantees and obligations.
The Company has utilized, and will continue to utilize, options as a
method of controlling and subsequently acquiring land. By controlling land,
through options on the future discretionary purchase of land, the Company
attempts to minimize its cash outlays and reduce its risk from changing
market conditions. While the Company attempts to prudently manage its
acquisition and development of residential lots, the development of such
projects can have a negative impact on liquidity due to the timing of
acquisition and development activities. The Company believes that cash on
hand, cash generated from operations and funds available under the Facility
will be sufficient to meet the Company's working capital and capital
expenditure requirements for at least the next 18 months. Currently, the
Company does not have any material commitments for capital expenditures.
BACKLOG
Backlog excluding unconsolidated joint ventures at June 30, 1996
consisted of 734 units with an aggregate sales value of $147.8 million,
representing 127% and 84% increases, respectively, over comparable figures at
June 30, 1995. The Company's Southern California region provided strong
growth in backlog levels with the sales value increasing by 92% to $59.8
million on 241 units at June 30, 1996 from $31.2 million on 132 units at June
30, 1995. This growth reflected a 53% increase in net new orders in the first
half of 1996 compared to the first half of 1995. The Company's operations
outside of California contributed a combined 296 sales in backlog with an
aggregate sales value of $35.0 million.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
The adoption of SFAS No. 121 has caused several publicly traded
homebuilders to write-off significant portions of their land inventory value.
From inception, the Company has implemented conservative land acquisition
policies designed to reduce the risks associated with changing market
conditions. Prior to the adoption of SFAS No. 121, the Company reviewed its
housing inventory, on a periodic basis, and recorded net realizable value
adjustments to specific projects as considered necessary. As a result, the
Company's implementation of SFAS No. 121 effective January 1, 1996 had no
impact on the Company's consolidated financial position and results of
operations.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At June 10, 1996, the shareholders by unanimous written consent (1)
approved the Restated Certificate of Incorporation, (2) approved the amended
Bylaws of the Company, (3) approved the election of directors, including the
classification of directors, (4) approved the amendment to the 1995 Eligible
Directors' Stock Option Plan, (5) approved the 1996 Stock Option and Award
Plan, (6) approved the grant of 299,195 stock options to certain executive
officers of the Company under the 1996 Stock Option and Award Plan as
approved in (5) above, (7) approved the 1996 Employee Stock Purchase Plan,
(8) ratified and approved the employment agreements with Jack R. Harter and
Antonio B. Mon, and (9) approved agreements with the holders of the Series A
Preferred and Series C Preferred as described in Note 1 to Consolidated
Financial Statements.
ITEM 5. OTHER INFORMATION
Subsequent to the Offering, the Company filed registration statements on
Form S-8 pertaining to the Amended and Restated 1995 Eligible Directors'
Stock Option Plan, 1996 Employee Stock Option and Award Plan and 1996
Employee Stock Purchase Plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
- --------
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company.
3.3 Amendments to the Bylaws of the Company.
9.1 Termination of Voting Trust Agreement.
10.1 Agreement between the Company and Warburg, Pincus Investors, L.P.
10.2 Amended and Restated 1995 Eligible Directors' Stock Option Plan,
filed as an exhibit to the Company's registration statement No.
333-07117 on Form S-8 dated June 28, 1996, and incorporated by
reference herein.
10.3 1996 Employee Stock Option and Award Plan, filed as an exhibit to
the Company's registration statement No. 333-07115 on Form S-8 dated
June 28, 1996, and incorporated by reference herein.
10.4 1996 Employee Stock Purchase Plan, filed as an exhibit to the
Company's registration statement No. 333-06985 on Form S-8 dated
June 27, 1996, and incorporated by reference herein.
27 Financial Data Schedule.
Reports on Form 8-K
- -------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
16
<PAGE>
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 thereunto duly authorized.
PACIFIC GREYSTONE CORPORATION
August 1, 1996 /s/ Jack R. Harter
-----------------------------------------
Jack R. Harter
Chairman, President and Chief
Executive Officer
August 1, 1996 /s/ Antonio B. Mon
-----------------------------------------
Antonio B. Mon
Vice Chairman and Chief Financial Officer
17
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company.
3.3 Amendments to the Bylaws of the Company.
9.1 Termination of Voting Trust Agreement.
10.1 Agreement between the Company and Warburg, Pincus
Investors, L.P.
27 Financial Data Schedule.
18
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PACIFIC GREYSTONE CORPORATION
PACIFIC GREYSTONE CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY THE FOLLOWING:
FIRST: The name of the Corporation is PACIFIC GREYSTONE CORPORATION.
The Corporation was originally incorporated under the name PACIFIC CLASSIC
CORPORATION, and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on September 6,
1991.
SECOND: This Restated Certificate of Incorporation which restates and
further amends the provisions of the Certificate of Incorporation of the
Corporation was duly adopted pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
THIRD: By written consent of the Board of Directors of the Corporation
as of June 10, 1996, resolutions were duly adopted setting forth the following
restatement of and further amendment to the Certificate of Incorporation of
the Corporation, declaring such restatement and amendments to be advisable
and, in
<PAGE>
accordance with Section 242 of the General Corporation Law of the State of
Delaware, that such restated and further amended Certificate of Incorporation
be considered by the stockholders of the Corporation.
FOURTH: Thereafter, by written consent of the holders of the issued and
outstanding shares of Common Stock and Preferred Stock of the Corporation,
such written consent obtained in accordance with Section 228 of the General
Corporation Law of the State of Delaware, the following restatement of and
further amendment to the Certificate of Incorporation of the Corporation was
consented to and authorized by holders of the necessary number of shares
required by statute and the Certificate of Incorporation of the Corporation.
FIFTH: The text of the Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
"ARTICLE I
The name of the corporation is:
Pacific Greystone Corporation
ARTICLE II
The address of its registered office in the State of Delaware is 1013
Centre Road, in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Prentice-Hall Corporation System, Inc.
2
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ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the corporation
shall have authority to issue is Forty Million (40,000,000), consisting of
Thirty Five Million (35,000,000) shares of Common Stock, par value $.01 per
share, and Five Million (5,000,000) shares of Preferred Stock, par value $.01
per share. Upon amendment of this Article IV as hereinabove set forth, each
outstanding share of Common Stock is converted into 1.4282 shares of Common
Stock; provided, however, that no fractional shares shall be issued to
stockholders, but instead cash shall be distributed to each stockholder who
would otherwise be entitled to a fractional share, and the amount of cash to
be distributed shall be based upon a value of $13.00 per share of Common Stock.
The Board of Directors is authorized, subject to limitations prescribed
by law, to provide for the issuance of the shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on
shares of that series;
(c) whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting
rights;
(d) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision
3
<PAGE>
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
(e) whether the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or
date upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(f) whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of
such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(h) any other relative rights, preferences and limitations of that
series.
ARTICLE V
No action shall be taken by the stockholders of the corporation except at
an annual or special meeting of stockholders called in accordance with the
bylaws, and no action shall be taken by the stockholders by written consent.
ARTICLE VI
Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the corporation shall be given in the manner provided in the
bylaws of the corporation.
ARTICLE VII
Election of directors need not be by written ballot unless the bylaws of
the corporation shall so provide.
4
<PAGE>
ARTICLE VIII
The Board of Directors shall consist of such number of Directors as shall
be determined from time to time in the manner provided by the bylaws, and in
the absence of such determination, the number of directors shall be seven (7).
The Board of Directors shall be and is divided into three classes, Class
I, Class II and Class III, which shall be as nearly equal in number as
possible. Each director shall serve for a term ending on the date of the
third annual meeting following the annual meeting at which such director is
elected; PROVIDED, HOWEVER, that each initial director of Class I shall hold
office until the annual meeting of stockholders in 1997; each initial director
of Class II shall hold office until the annual meeting of stockholders in
1998; and each initial director in Class III shall hold office until the
annual meeting of stockholders in 1999.
In the event of any increase or decrease in the authorized number of
directors, (i) each director then serving as such shall nevertheless continue
as a director of the class of which he or she is a member until the expiration
of his or her current term, or his or her prior death, retirement, resignation
or removal, and (ii) the newly created or eliminated directorships resulting
from such increase or decrease shall be apportioned by the Board of Directors
among the three classes of directors so as to maintain such classes as nearly
equal as possible.
Notwithstanding any of the foregoing provisions of this Article VIII,
each director shall serve until his or her successor is elected and qualified,
or until his or her death, retirement, resignation or removal. Should a
vacancy occur or be created, whether arising through death, resignation or
removal of a director, or through an increase in the number of directors of
any class, such vacancy shall be filled by a majority vote of the remaining
directors of the class in which such vacancy occurs or by the sole remaining
director of that class if only one such director remains, or by the majority
vote of the members of the remaining classes if no such director remains. A
director so elected to fill a vacancy shall serve for the remainder of the
then present term of office of the class to which he or she is elected.
Notwithstanding any of the provisions of this Certificate of
Incorporation, whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors of the corporation by the
provisions of this Certificate of Incorporation, or any resolution or
resolutions of the Board of Directors fixing the terms and provisions of such
class or series, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by the sole remaining
director so elected.
5
<PAGE>
Any director may be removed by the holders of a majority of the shares of
the corporation then entitled to vote for the election of directors but only
for cause.
ARTICLE IX
No director of this corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the General
Corporation Law of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit.
ARTICLE X
(A) The corporation reserves the right to repeal, alter, amend or
rescind any provision contained in the Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, except as provided in paragraph
(B) of this Article X, and all rights conferred on stockholders herein are
granted subject to this reservation.
(B) Notwithstanding any other provision of the Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, the
Certificate of Incorporation or any designation of Preferred Stock, the
affirmative vote of the holders of at least 75% of the voting of the
then-outstanding shares of the Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal Article V, Article VI,
Article VIII or this Article X.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to adopt, amend or repeal the
bylaws of the corporation."
6
<PAGE>
IN WITNESS WHEREOF, PACIFIC GREYSTONE CORPORATION has caused this
Restated Certificate of Incorporation to be signed by Jack R. Harter, its
President, and attested by Robert W. Garcin, its Secretary, this 24th day of
June 1996.
PACIFIC GREYSTONE CORPORATION
By: /s/ JACK R. HARTER
-------------------------
Jack R. Harter,
President
ATTEST:
/s/ ROBERT W. GARCIN
- -----------------------------
Robert W. Garcin
Secretary
7
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
PACIFIC GREYSTONE CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover, County of
Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders shall be held at any place within or
outside the State of Delaware designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the corporation.
Section 2. The annual meeting of stockholders shall be held each year on
a date and a time designated by the Board of Directors. At each annual
meeting directors shall be elected and any other proper business may be
transacted.
Section 3. A majority of the stock issued and outstanding and entitled
to vote at any meeting of
<PAGE>
stockholders, the holders of which are present in person or represented by
proxy, shall constitute a quorum for the transaction of business except as
otherwise provided by law, by the Certificate of Incorporation, or by these
Bylaws. A quorum, once established, shall not be broken by the withdrawal of
enough votes to leave less than a quorum and the votes present may continue
to transact business until adjournment. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, a majority of
the voting stock represented in person or by proxy may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such adjourned meeting at
which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled
to vote thereat.
Section 4. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
2
<PAGE>
statutes, or the Certificate of Incorporation, or these Bylaws, a different
vote is required in which case such express provision shall govern and
control the decision of such question.
Section 5. At each meeting of the stockholders, each stockholder having
the right to vote may vote in person or may authorize another person or
persons to act for him by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three years
prior to said meeting, unless said instrument provides for a longer period.
All proxies must be filed with the Secretary of the corporation at the
beginning of each meeting in order to be counted in any vote at the meeting.
Each stockholder shall have one vote for each share of stock having voting
power, registered in his name on the books of the corporation on the record
date set by the Board of Directors as provided in Article V, Section 6
hereof. All elections shall be had and all questions decided by a plurality
vote.
Section 6. Special meetings of the stockholders, for any purpose, or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or the Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders
3
<PAGE>
owning a majority in amount of the entire capital stock of the corporation
issued and outstanding, and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in
the notice.
Section 7. Whenever stockholders are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given which
notice shall state the place, date and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. The written notice of any meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation.
Section 8. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
4
<PAGE>
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 9. Unless otherwise provided in the Certificate of
Incorporation, any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted and shall be delivered
to the corporation by delivery to its registered office in Delaware, its
principal place of business, or to an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Every
5
<PAGE>
written consent shall bear the date of signature of each stockholder who
signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this Section 9 to
the corporation, written consents signed by a sufficient number of holders to
take action are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business or to an officer or agent
of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall be seven (7). The directors need not be stockholders. The
directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 2 of this Article, and each director elected shall
hold office until his successor is elected and qualified; provided,
6
<PAGE>
however, that unless otherwise restricted by the Certificate of Incorporation
or by law, any director or the entire Board of Directors may be removed,
either with or without cause, from the Board of Directors at any meeting of
stockholders by a majority of the stock represented and entitled to vote
thereat.
Section 2. Vacancies on the Board of Directors by reason of death,
resignation, retirement, disqualification, removal from office, or otherwise,
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director. The
directors so chosen shall hold office until the next annual election of
directors and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of the whole
Board (as constituted immediately prior to any such increase) , the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to
be held to
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fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office.
Section 3. The property and business of the corporation shall be managed
by or under the direction of its Board of Directors. In addition to the
powers and authorities by these Bylaws expressly conferred upon them, the
Board may exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation
or by these Bylaws directed or required to be exercised or done by the
stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The directors may hold their meetings and have one or more
offices, and keep the books of the corporation outside of the State of
Delaware.
Section 5. Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time be
determined by the Board.
Section 6. Special meetings of the Board of Directors may be called by
the President on forty-eight hours' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
President or the Secretary in like manner and on like notice on the written
request of two directors unless the Board consists of only one director; in
which case special meetings shall be called by the
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President or Secretary in like manner or on like notice on the written
request of the sole director.
Section 7. At all meetings of the Board of Directors a majority of the
authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which there is a quorum,
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these Bylaws. If a quorum shall not be present at any meeting of the Board
of Directors the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a
quorum shall be present. If only one director is authorized, such sole
director shall constitute a quorum.
Section 8. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
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Section 9. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting
of the Board of Directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 10. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers
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and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all
of the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending
the Bylaws of the corporation; and, unless the resolution or the Certificate
of Incorporation expressly so provide, no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of stock.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and
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may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
INDEMNIFICATION
Section 13. (a) The corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of
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any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contenders or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
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unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which such Court of Chancery or such other
court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation shall be successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) , or in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, or (2) if such a quorum is not obtainable, or, even
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if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Section 13. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other paragraphs of this Section 13 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
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(g) The Board of Directors may authorize, by a vote of a majority of a
quorum of the Board of Directors, the corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Section 13.
(h) For the purposes of this Section 13, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same
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position under the provisions of this Section with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 13 shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
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ARTICLE IV
OFFICERS
Section 1. The officers of this corporation shall be chosen by the Board
of Directors and shall include a Chairman or Vice-Chairman of the Board of
Directors or a President and a Secretary. The corporation may also have at
the discretion of the Board of Directors such other officers as are desired,
including a Chief Executive Officer, a Treasurer, one or more Vice
Presidents, one or more Assistant Secretaries and Assistant Treasurers, and
such other officers as may be appointed in accordance with the provisions of
Section 3 hereof. In the event there are two or more Vice Presidents, then
one or more may be designated as Executive Vice President, Senior Vice
President, or other similar or dissimilar title. At the time of the election
of officers, the directors may by resolution determine the order of their
rank. Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these Bylaws otherwise provide.
Section 2. The Board of Directors, at its first meeting after each
annual meeting of stockholders, shall choose the officers of the corporation.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such
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powers and perform such duties as shall be determined from time to time by
the Board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. If the office of
any officer or officers becomes vacant for any reason, the vacancy shall be
filled by the Board of Directors.
CHAIRMAN OF THE BOARD
Section 6.The Chairman of the Board, if such an officer be elected,
shall, if present, preside at all meetings of the Board of Directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by these Bylaws. If
there is no President, the Chairman of the Board shall in addition be the
Chief Executive Officer of the corporation and shall have the powers and
duties prescribed in Section 7 of this Article IV.
PRESIDENT
Section 7. Subject to such supervisory powers, if any, as may be given
by the Board of Directors to the Chairman of
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the Board, if there be such an officer, the President shall be the Chief
Executive Officer of the corporation and shall, subject to the control of the
Board of Directors, have general supervision, direction and control of the
business and officers of the corporation. He shall preside at all meetings
of the stockholders and, in the absence of the Chairman of the Board, or if
there be none, at all meetings of the Board of Directors. He shall be an
ex-officio member of all committees and shall have the general powers and
duties of management usually vested in the office of President and Chief
Executive Officer of corporations, and shall have such other powers and
duties as may be prescribed by the Board of Directors or these Bylaws.
VICE PRESIDENTS
Section 8. In the absence or disability of the President, the Vice
Presidents in order of their rank as fixed by the Board of Directors, or if
not ranked, the Vice President designated by the Board of Directors, shall
perform all the duties of the President, and when so acting shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice Presidents shall have such other duties as from time to time may be
prescribed for them, respectively, by the Board of Directors.
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SECRETARY AND ASSISTANT SECRETARY
Section 9. The Secretary shall attend all sessions of the Board of
Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for the standing committees when required by the Board of
Directors. He shall give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or these Bylaws. He
shall keep in safe custody the seal of the corporation, and when authorized
by the Board, affix the same to any instrument requiring it, and when so
affixed it shall be attested by his signature or by the signature of an
Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors, or
if there be no such determination, the Assistant Secretary designated by the
Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such
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other powers as the Board of Directors may from time to time prescribe.
TREASURER AND ASSISTANT TREASURER
Section 11. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys, and other valuable effects in the name and to the credit of the
corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered
by the Board of Directors, taking proper vouchers f or such disbursements,
and shall render to the Board of Directors, at its regular meetings, or when
the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the corporation. If required by
the Board of Directors, he shall give the corporation a bond, in such sum and
with such surety or sureties as shall be satisfactory to the Board of
Directors, for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
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Section 12. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the Board of
Directors, or if there be no such determination, the Assistant Treasurer
designated by the Board of Directors, shall, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as the Board
of Directors may from time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Every holder of stock of the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by, the
Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer of the corporation, certifying the number
of shares represented by the certificate owned by such stockholder in the
corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such
certificate
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is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
Section 3. If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the
qualification, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or
series of stock, provided that, except as otherwise provided in section 202
of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock,
a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.
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LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the corporation, or the transfer agent of
the corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
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entitled thereto, cancel the old certificate and record the transaction upon
its books.
FIXING RECORD DATE
Section 6. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of the stockholders, or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board of Directors may fix a record date
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim or
interest in such
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share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws of the State
of Delaware.
ARTICLE VI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Before payment of any dividend there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve.
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CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers as the Board of Directors may
from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
NOTICES
Section 6. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these Bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram.
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Section 7. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ANNUAL STATEMENT
Section 8. The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
ARTICLE VII
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed or new
Bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the Certificate of
Incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
Bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the
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Certificate of Incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal Bylaws.
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CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting secretary of Pacific
Greystone Corporation, a Delaware corporation; and
(2) That the foregoing bylaws constitute the bylaws of said corporation
as duly adopted by the written consent of the incorporator of said
corporation as of September 6, 1991.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 6th day of
September, 1991.
/s/John D. Santoleri
- --------------------
John D. Santoleri
Secretary
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AMENDMENTS TO
BYLAWS OF
PACIFIC GREYSTONE CORPORATION
1. Article II, Section 6 of the Bylaws of Pacific Greystone Corporation
(the "corporation") is hereby amended in its entirety to read as follows:
"Section 6. Special meetings of the stockholders, for any purpose,
or purposes, unless otherwise prescribed by statute or by the Certificate
of Incorporation, may be called by the President and shall be called by
the President or the Secretary at the request in writing of a majority of
the Board of Directors. Such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting of
stockholders shall be limited to the purpose stated in the notice."
2. Article II, Section 9 of the Bylaws of the corporation is hereby
amended in its entirety to read as follows:
"Section 9. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting business
must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before the
meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the corporation, not less
than 60 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than
the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be
<PAGE>
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear
on the corporation's books, of the stockholder proposing such business,
(c) the class and number of shares of the corporation which are
beneficially owned by the stockholder, and (d) any material interest of
the stockholder in such business. Notwithstanding anything in the Bylaws
to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this Section 9.
The Chairman of the annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before
the meeting and in accordance with the provisions of this Section 9, and
if he should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be
transacted."
3. Article III, Section 1 of the Bylaws of the corporation is hereby
amended in its entirety to read as follows:
"Section 1. The number of directors which shall constitute the whole
Board shall be determined from time to time by resolution of a majority
of the number of directors constituting the entire Board of Directors at
such time, and in the absence of such determination, the number of
directors shall be seven. The directors shall be elected and any
vacancies may be filled only in accordance with Article VIII of the
corporation's Certificate of Incorporation. Any director or the entire
Board may be removed, but only for cause."
4. Article III, Section 2 of the Bylaws of the corporation is hereby
amended in its entirety to read as follows:
"Section 2. Only persons who are nominated in accordance with the
procedures set forth in this Section 2 shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors
of the corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the
corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 2.
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the corporation. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive
offices of the corporation not less than 60 days nor more than 90 days
prior to the meeting; provided, however, that
2
<PAGE>
in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a
director, (i) the name, age, business address and residence address of
such person, (ii) the principal occupation or employment of such person,
(iii) the class and number of shares of the corporation which are
beneficially owned by such person and (iv) any other information relating
to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (including without limitation such persons' written consent to
being named in the proxy statement as a nominee and to serving as a
director if elected); and (b) as to the stockholder giving the notice (i)
the name and address, as they appear on the corporation's books, of such
stockholder and (ii) the class and number of shares of the corporation
which are beneficially owned by such stockholder. At the request of the
Board of Directors any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the corporation
that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in
accordance with the procedures set forth in this Section 2. The Chairman
of the meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded."
3
<PAGE>
EXHIBIT 9.1
TERMINATION OF
VOTING TRUST AGREEMENT
The undersigned constitute all the parties to a Voting Trust Agreement,
dated as of October 10, 1991, as amended by the Amendment to Voting Trust
Agreement, dated November 3, 1995 (as amended, the "Voting Trust Agreement"),
relating to certain securities of Pacific Greystone Corporation. The
undersigned hereby agree that the Voting Trust Agreement is hereby terminated
and the Stock (as defined in the Voting Trust Agreement) deposited with the
Trustees (as defined in the Voting Trust Agreement) shall be distributed to
the appropriate Stockholders (as defined in the Voting Trust Agreement).
Dated: June 26, 1996
TRUSTEES: STOCKHOLDERS:
/s/ JACK R. HARTER Harter 1991 Trust No. 1
- -----------------------
Jack R. Harter, Trustee
By: /s/ KAREN MOULTON
-----------------------------
/s/ ANTONIO B. MON Harter 1991 Trust No. 2
- -----------------------
Antonio B. Mon, Trustee
By: /s/ JANICE MEEKER
-----------------------------
Irrevocable Mon Family Trust
By: /s/ DEAN MON
-----------------------------
/s/ ROBERT W. GARCIN
--------------------------------
Robert W. Garcin
/s/ PETER J. KIESECKER
--------------------------------
Peter J. Kiesecker
/s/ JACK R. HARTER
--------------------------------
Jack R. Harter
<PAGE>
/s/ ANTONIO B. MON
-------------------------------
Antonio B. Mon
/s/ DENIS G. CULLUMBER
-------------------------------
Denis G. Cullumber
/s/ RICHARD D. BAKER
-------------------------------
Richard D. Baker
/s/ BRUCE E. GROSS
-------------------------------
Bruce E. Gross
/s/ STEVEN G. DELVA
-------------------------------
Steven G. Delva
/s/ TODD PALMAER
--------------------------------
Todd Palmaer
/s/ CHUCK DRAGICEVICH
--------------------------------
Chuck Dragicevich
2
<PAGE>
EXHIBIT 10.1
AGREEMENT
This Agreement ("AGREEMENT") is entered into as of this 26th day of June,
1996 by and between Warburg, Pincus Investors, L.P., a Delaware corporation
("WARBURG"), and Pacific Greystone Corporation, a Delaware Corporation (the
"COMPANY").
W I T N E S S E T H
WHEREAS, Warburg owns 8,411,854 shares of Common Stock, par value $.01
per share, of the Company, such stock representing in excess of 50% of the
voting power of the Company's voting stock;
WHEREAS, the parties hereto have been advised by the Company's
independent public accountants that pooling of interests accounting treatment
is generally unavailable for a transaction involving a company that within
two years prior to the transaction had a shareholder that controlled more
than 50% of the voting power of such company; and
WHEREAS, the parties have been further advised by the Company's
independent public accountants that upon execution of this Agreement, Warburg
will be deemed to have divested itself of voting power in excess of the 50%
limitation for the purposes of the pooling of interest accounting rules
referred to above;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party, the parties hereto, intending to be legally
bound, agree as follows:
1. VOTING
At any time when a matter is brought to the vote of the Company's
shareholders and Warburg beneficially owns shares of the Company voting stock
representing more than 50% of th voting power of the Company's shares
entitled to vote on such matter (the "LIMIT"), then:
(a) Warburg may vote shares up to the Limit in its discretion; and
(b) Warburg shall vote shares beneficially owned by it in excess of
the Limit in the same proportion as the shares voted by holders other than
Warburg are voted on such matter.
<PAGE>
2. AMENDMENT OR TERMINATION
Except as set forth in paragraph 3 below, this Agreement may not be
amended or terminated without the concurrence of:
(a) a majority of the Directors of the Board of the Company that are
not officers, employees or partners of Warburg or the Company; or
(b) a majority of the votes of the shares of the Company voting stock
voting on the matter at a meeting duly called other than shares of Company
voting stock beneficially owned by Warburg.
3. ADDITIONAL RIGHT TO TERMINATION
This Agreement shall also be terminated by either Warburg or the
Company if it shall have received an opinion from a certified public
accounting firm contrary to the advice referred to in the third "Whereas"
clause hereto and such opinion is delivered to all the parties hereto.
4. COUNTERPARTS
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5. NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing, shall be given by one of the methods specified
below, and shall be deemed to have been duly given (i) on the date of service
if served personally on the party to whom notice is to be given, (ii) on the
second business day after delivery to an overnight courier service, provided
receipt of delivery has been confirmed, or (iii) upon receipt by the
transmitting party of confirmation or answer-back if delivery is by telex or
telefax.
If to Warburg:
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: John Santoleri
Telephone: (212) 878-9382
Facsimile: (212) 878-9351
2
<PAGE>
If to the Company:
Pacific Greystone Corporation
6767 Forest Lawn Drive, Suite 300
Los Angeles, California 90068-1027
Attention: Jack R. Harter
Telephone: (213) 436-6300
Facsimile: (213) 876-3866
6. GOVERNING LAW
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it as of the date set forth above.
WARBURG, PINCUS INVESTORS, L.P.
By: /s/ JOHN D. SANTOLERI
----------------------------
Name: JOHN D. SANTOLERI
Title: MANAGING DIRECTOR
PACIFIC GREYSTONE CORPORATION
By: /s/ JACK R. HARTER
-----------------------------
Name: JACK R. HARTER
Title: PRESIDENT
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 21,135
<SECURITIES> 0
<RECEIVABLES> 10,213
<ALLOWANCES> 0
<INVENTORY> 274,803
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 329,487
<CURRENT-LIABILITIES> 0
<BONDS> 125,000
0
0
<COMMON> 150
<OTHER-SE> 137,776
<TOTAL-LIABILITY-AND-EQUITY> 137,926
<SALES> 155,647
<TOTAL-REVENUES> 155,980
<CGS> 129,062
<TOTAL-COSTS> 129,062
<OTHER-EXPENSES> 18,352<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,332
<INCOME-TAX> 3,399
<INCOME-CONTINUING> 4,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,933
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<FN>
<F1>Other Expenses are comprised of selling, general and administrative
expenses.
<F2>Included in Company's financial statements are pro forma earnings
per share. Item 601(c)(1)(vi) of Regulation S-K excludes pro forma
information from this schedule.
</FN>
</TABLE>
