-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TpkJSwpXrLVEJ6mgI+y/yOJkb/UgYs9Dl5W+Tx5i5UcsVS+oHlHz0f11KxdyC6mu JK088s7YejORcaKDDNYLqQ== 0000950147-95-000062.txt : 19950509 0000950147-95-000062.hdr.sgml : 19950509 ACCESSION NUMBER: 0000950147-95-000062 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950508 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBB DEL CORP CENTRAL INDEX KEY: 0000105189 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 860077724 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14585 FILM NUMBER: 95535409 BUSINESS ADDRESS: STREET 1: 2231 E CAMELBACK RD CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 6028088000 MAIL ADDRESS: STREET 1: 2231 E CAMELBACK ROAD STREET 2: SUITE 400 CITY: PHOENIX STATE: AZ ZIP: 85016 FORMER COMPANY: FORMER CONFORMED NAME: WEBB DEL E CORP DATE OF NAME CHANGE: 19880728 10-Q 1 FORM 10-Q 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 period ended March 31, 1995. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from N/A to N/A . --- --- Commission File Number: 1-4785 DEL WEBB CORPORATION (Exact name of registrant as specified in its charter) Delaware 86-0077724 (State or other jurisdiction (IRS Employer Identification Number) of incorporation or organization) 6001 North 24th Street, Phoenix, Arizona 85016 (Address of principal executive offices) (Zip Code) (602) 808-8000 (Registrant's phone number, including area code) NONE - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ---- As of April 30, 1995 Registrant had outstanding 14,875,843 shares of common stock. DEL WEBB CORPORATION FORM 10-Q FOR THE QUARTER ENDED March 31, 1995 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements: Consolidated Balance Sheets as of March 31, 1995, June 30, 1994 and March 31, 1994............................... 1 Consolidated Statements of Earnings for the three and nine months ended March 31, 1995 and 1994........................... 2 Consolidated Statements of Cash Flows for the nine months ended March 31, 1995 and 1994........................... 3 Notes to Consolidated Financial Statements....................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K................................ 16 Separate financial statements of the Company's subsidiaries that are guarantors of the Company's 10 7/8 % Senior Notes due 2000 are not included because those subsidiaries are jointly and severally liable as guarantors of the Notes and the aggregate assets, liabilities, earnings and equity of those subsidiaries are substantially equivalent to the assets, liabilities, earnings and equity of the Company and its subsidiaries on a consolidated basis. DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Data) March 31, June 30, March 31, 1995 1994 1994 (Unaudited) (Unaudited) - ------------------------------------------------------------------------------- Assets - ------------------------------------------------------------------------------- Real estate inventories (Notes 2, 3 and 6) ........... $ 818,255 $ 662,613 $ 598,989 Cash and short-term investments 9,930 6,474 9,594 Receivables .................... 10,583 10,385 19,146 Property and equipment, net (Note 1) ..................... 27,391 36,773 12,968 Deferred income taxes .......... -- 11,604 15,255 Other assets ................... 27,684 30,575 29,968 - ------------------------------------------------------------------------------- $ 893,843 $ 758,424 $ 685,920 =============================================================================== Liabilities and Shareholders' Equity - ------------------------------------------------------------------------------- Notes payable, senior and subordinated debt (Note 3) ... $ 493,993 $ 395,676 $ 363,984 Subcontractor and trade accounts payable ............. 55,893 45,443 33,280 Accrued liabilities and other payables ............... 36,349 39,905 26,605 Home sale deposits ............. 79,749 62,797 53,478 Income taxes payable ........... 3,092 7,155 6,626 Deferred income taxes .......... 1,096 -- -- Net liabilities of discontinued operations ...... 4,150 6,124 6,664 - ------------------------------------------------------------------------------- Total liabilities ........ 674,322 557,100 490,637 - ------------------------------------------------------------------------------- Shareholders' equity: Common stock, $.001 par value at March 31, 1995, without par value at June 30, 1994 and March 31, 1994. Authorized 30,000,000 shares; issued 15,798,884 shares at March 31, 1995, 15,828,940 shares at June 30, 1994 and 15,829,077 shares at March 31, 1994 (Note 7) 16 112,944 112,947 Additional paid-in capital (Note 7) .................... 121,120 8,333 8,351 Retained earnings ............. 113,316 96,630 90,980 - ------------------------------------------------------------------------------- 234,452 217,907 212,278 Less cost of common stock in treasury, 922,904 shares at March 31, 1995, 1,132,065 shares at June 30, 1994 and 1,137,160 shares at March 31, 1994 ............. (11,636) (14,600) (14,678) Less deferred compensation ... (3,295) (1,983) (2,317) - ------------------------------------------------------------------------------- Total shareholders' equity 219,521 201,324 195,283 - ------------------------------------------------------------------------------- $ 893,843 $ 758,424 $ 685,920 =============================================================================== See accompanying notes to consolidated financial statements. DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (In Thousands Except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, - -------------------------------------------------------------------------------- 1995 1994 1995 1994 - -------------------------------------------------------------------------------- Revenues (Note 5) .............. $195,383 $136,259 $534,323 $349,356 Cost of sales (Note 5) ......... 156,274 107,862 427,574 277,713 Selling, general and administrative expenses ...... 28,348 21,340 77,655 55,280 - -------------------------------------------------------------------------------- Operating earnings ......... 10,761 7,057 29,094 16,363 Income tax expense (Note 4) ..................... 3,766 2,470 10,183 5,727 - -------------------------------------------------------------------------------- Net earnings ............... $ 6,995 $ 4,587 $ 18,911 $ 10,636 ================================================================================ Weighted average shares outstanding ........... 15,324 15,001 15,130 15,059 ================================================================================ Net earnings per share ......... $ .46 $ .31 $ 1.25 $ .71 ================================================================================ See accompanying notes to consolidated financial statements. DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine Months Ended March 31, - -------------------------------------------------------------------------------- 1995 1994 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers related to community home sales ................ $ 402,806 $ 280,035 Cash received from commercial land sales ..................................... 1,599 2,762 Cash paid for costs related to community home construction ................. (272,637) (199,567) - -------------------------------------------------------------------------------- Net cash provided by community sales activities ............................. 131,768 83,230 Cash paid for land acquisitions at operating communities ....................... (3,495) (5,212) Cash paid for lot development at operating communities .......................... (43,326) (30,358) Cash paid for amenity development at operating communities ....................... (21,198) (25,789) - -------------------------------------------------------------------------------- Net cash provided by operating communities ..... 63,749 21,871 Cash paid for costs related to communities in the pre-operating stage ..................... (68,616) (61,075) Cash received from customers related to conventional homebuilding ...................... 103,205 52,248 Cash paid for land, development, construction and other costs related to conventional homebuilding ................... (112,142) (72,345) Cash received from customers related to residential land development project ........ 14,364 11,493 Cash paid for costs related to residential land development project ....................... (11,365) (7,540) Cash paid for corporate activities ............... (23,248) (20,782) Interest paid .................................... (37,971) (26,373) Cash received (paid) for income taxes ............ (1,546) 17 Net operating activities of discontinued operations ..................................... (474) (1,837) - -------------------------------------------------------------------------------- NET CASH USED FOR OPERATING ACTIVITIES ......... (74,044) (104,323) - -------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment .............. (9,914) (5,040) Investments in life insurance policies ........... (1,101) (1,799) - -------------------------------------------------------------------------------- NET CASH USED FOR INVESTING ACTIVITIES ......... (11,015) (6,839) - -------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings ....................................... 562,000 262,714 Repayments of debt ............................... (470,030) (156,682) Purchases of treasury stock ...................... (7) (13,326) Proceeds from exercise of stock options ........................................ 277 119 Dividends paid ................................... (2,225) (2,247) Net financing activities of discontinued operations ........................ (1,500) (3,500) - -------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES ...... 88,515 87,078 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS ....................... 3,456 (24,084) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD ........................... 6,474 33,678 - -------------------------------------------------------------------------------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD ................................. $ 9,930 $ 9,594 ================================================================================ See accompanying notes to consolidated financial statements. DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In Thousands) (Unaudited) Nine Months Ended March 31, - ------------------------------------------------------------------------------- 1995 1994 - ------------------------------------------------------------------------------- Reconciliation of net earnings to net cash used for operating activities: Net earnings ................................... $ 18,911 $ 10,636 Allocation of non-cash costs to cost of sales, excluding interest ............ 120,880 76,306 Amortization of capitalized interest included in cost of sales .................... 20,386 12,228 Deferred compensation amortization ............. 1,212 981 Depreciation and other amortization ............ 3,870 2,699 Deferred income tax expense .................... 12,700 5,410 Net change in home construction costs .......... (45,548) (36,049) Land acquisitions .............................. (30,563) (52,773) Lot development ................................ (112,379) (55,901) Amenity development ............................ (49,895) (39,827) Pre-acquisition costs .......................... (2,770) (4,219) Net change in other assets and liabilities ..... (10,374) (21,977) Net operating activities of discontinued operations ................................... (474) (1,837) - -------------------------------------------------------------------------------- Net cash used for operating activities ...... $ (74,044) $(104,323) ================================================================================ See accompanying notes to consolidated financial statements. DEL WEBB CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) Basis of Presentation The consolidated financial statements include the accounts of Del Webb Corporation and its subsidiaries ("Company"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, primarily eliminations of all significant intercompany transactions and accounts) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. At June 30, 1994 the Company classified the unamortized cost of its vacation apartments (aggregating $16.6 million) as property and equipment as a result of its intent to operate the apartments. At October 1, 1994 the Company decided to return to marketing the apartments for sale as individual units. Accordingly, the apartments were reclassified from property and equipment to real estate inventories. The Company's continuing operations include its communities, conventional homebuilding operations and residential land development project. The Company's communities are large-scale, master-planned residential communities at which the Company controls all phases of the master plan development process from land selection through the construction and sale of homes. Within its communities, the Company is the exclusive developer of homes. The Company's conventional homebuilding operations encompass the construction and sale of homes in subdivisions. The Company's residential land development project operations include the sale of individual land parcels and lots to other builders and developers for conventional housing and related commercial development. The Company's commercial land development projects are accounted for as discontinued operations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related disclosures contained in the Company's Annual Report on Form 10-K for the year ended June 30, 1994, filed with the Securities and Exchange Commission. In the Consolidated Statements of Cash Flows, the Company defines operating communities as communities generating revenue through home closings. Communities in the pre-operating stage are those not currently generating home sales revenues. The results of operations for the nine months ended March 31, 1995 are not necessarily indicative of the results to be expected for the full fiscal year. (2) Real Estate Inventories The components of real estate inventories are as follows: In Thousands --------------------------------------------------------------------------- March 31, June 30, March 31, 1995 1994 1994 (Unaudited) (Unaudited) --------------------------------------------------------------------------- Home construction costs ........... $145,337 $ 99,789 $101,646 Unamortized improvement and amenity costs ............... 338,930 246,536 221,411 Unamortized capitalized interest ........................ 54,079 40,357 36,245 Land held for housing ............. 216,336 210,700 149,567 Land held for future development or sale ............. 63,573 65,231 90,120 --------------------------------------------------------------------------- $818,255 $662,613 $598,989 =========================================================================== At March 31, 1995 the Company had 341 completed homes (excluding models and vacation apartments) and 482 homes under construction that were not subject to a sales contract. These homes represented $24.1 million and $12.2 million, respectively, of home construction costs at March 31, 1995. At March 31, 1994 the Company had 228 completed homes and 364 homes under construction (representing $14.6 million and $10.1 million, respectively, of home construction costs) that were not subject to a sales contract. Included in land held for future development or sale at March 31, 1995 were 228 acres of residential land, 392 acres of commercial land and 44 acres of worship sites that are currently being marketed for sale at the Company's communities and conventional homebuilding operations. Also included in land held for future development or sale at March 31, 1995 were 549 acres of residential land and 40 acres of commercial land at the Company's residential land development project. (3) Notes Payable, Senior and Subordinated Debt Notes payable, senior and subordinated debt consists of the following: In Thousands --------------------------------------------------------------------------- March 31, June 30, March 31, 1995 1994 1994 (Unaudited) (Unaudited) --------------------------------------------------------------------------- Senior Notes, net .................... $ 96,615 $ 96,098 $ 95,926 9 3/4% Senior Subordinated Debentures, net .................... 96,745 96,436 96,334 9% Senior Subordinated Debentures, net .................... 97,013 96,879 97,010 Subordinated Swiss Franc Bonds, net ................... 12,735 12,704 12,694 Notes payable to banks under a revolving credit agreement and short-term lines of credit.............................. 110,600 18,000 14,500 Real estate and other notes .......... 80,285 75,559 47,520 --------------------------------------------------------------------------- $493,993 $395,676 $363,984 =========================================================================== At March 31, 1995 the Company had $74.0 million and $10.4 million of unused borrowing capacity under a $175 million unsecured revolving credit facility and $20 million of short-term lines of credit, respectively. In November 1994 the Company negotiated an amendment to its unsecured revolving credit facility to increase the amount of the facility from $125 million to $175 million. At March 31, 1995, under the most restrictive of the covenants in the Company's debt agreements, $20.9 million of the Company's retained earnings was available for payment of cash dividends and for the acquisition by the Company of its common stock. The Company does not trade in derivative financial instruments. It has two derivative financial instruments for purposes other than trading. The Company has a currency exchange agreement entered into with a major bank in 1986 simultaneously with the issuance outside of the United States of 50 million Subordinated Swiss Franc Bonds ($24 million) due February 1996. The agreement was entered into to eliminate the Company's exposure to foreign currency fluctuations. As of March 31, 1995 the outstanding Bonds and the currency exchange agreement have been reduced to 26.7 million Swiss Francs ($12.8 million). The estimated fair value at March 31, 1995 of the foreign currency exchange agreement reflects an unrealized gain of $14.2 million, although this is mostly offset by a $10.5 million increase in the fair value over the book value of the subordinated Swiss Franc bonds. The Company also has an interest rate swap agreement which calls for an interest rate conversion with a notional amount of $20 million. This swap agreement was entered into to manage the Company's interest rate risk. It requires fixed interest payments on the notional amount at a rate of 10.5 percent annually until February 1996. The Company receives semi-annual interest payments based on the six-month London interbank offered rate (LIBOR) until February 1996. As a result of this agreement, the Company incurred net interest of $776,000 for the nine months ended March 31, 1995. A one percent decrease (increase) in the LIBOR would have resulted in a $150,000 increase (decrease) in interest for the nine-month period. The estimated fair value at March 31, 1995 of the interest rate swap agreement reflects an unrealized loss of $687,000. (4) Income Taxes Components of Income Tax Expense The components of income tax expense attributable to operating earnings are: In Thousands (Unaudited) --------------------------------------------------------------------------- Three Months Ended Nine Months Ended March 31, March 31, --------------------------------------------------------------------------- 1995 1994 1995 1994 --------------------------------------------------------------------------- Current: Federal ........... $ (3,027) $ (191) $ (3,119) $ 56 State ............. (534) (44) 602 261 --------------------------------------------------------------------------- (3,561) (235) (2,517) 317 --------------------------------------------------------------------------- Deferred: Federal ........... 6,081 2,188 11,400 4,576 State ............. 1,246 517 1,300 834 --------------------------------------------------------------------------- 7,327 2,705 12,700 5,410 --------------------------------------------------------------------------- Total ............... $ 3,766 $ 2,470 $ 10,183 $ 5,727 =========================================================================== (5) Revenues and Cost of Sales The components of revenues and cost of sales are: In Thousands (Unaudited) --------------------------------------------------------------------------- Three Months Ended Nine Months Ended March 31, March 31, --------------------------------------------------------------------------- 1995 1994 1995 1994 --------------------------------------------------------------------------- Revenues: Home sales - communities ........ $148,408 $100,890 $413,466 $279,152 Home sales - conventional homebuilding ....... 36,271 27,025 96,230 51,387 Land sales and other .............. 10,704 8,344 24,627 18,817 --------------------------------------------------------------------------- $195,383 $136,259 $534,323 $349,356 =========================================================================== Cost of Sales: Home sales - communities ........ $116,515 $ 79,269 $324,837 $219,757 Home sales - conventional homebuilding ....... 31,314 23,138 82,238 44,235 Land sales and other .............. 8,445 5,455 20,499 13,721 --------------------------------------------------------------------------- $156,274 $107,862 $427,574 $277,713 =========================================================================== (6) Interest The following table shows the components of interest: In Thousands (Unaudited) --------------------------------------------------------------------------- Three Months Ended Nine Months Ended March 31, March 31, --------------------------------------------------------------------------- 1995 1994 1995 1994 --------------------------------------------------------------------------- Interest incurred ............... $12,128 $ 8,841 $34,108 $23,790 Less capitalized interest ...................... 12,128 8,841 34,108 23,790 --------------------------------------------------------------------------- Interest expense ............ -- -- -- -- =========================================================================== Amortization of capitalized interest included in cost of sales ...................... $ 7,818 $ 4,770 $20,386 $12,228 =========================================================================== Unamortized capitalized interest included in real estate inventories at period end .................... $54,079 $36,245 =========================================================================== Interest income ................. $ 115 $ 341 $ 346 $ 926 =========================================================================== (7) Reincorporation On November 3, 1994 the Company changed its state of incorporation from Arizona to Delaware. In connection with this reincorporation, the common stock changed from common stock without par value to common stock with a par value of $.001 per share, which resulted in a consolidated balance sheet reclassification within shareholders' equity from common stock to additional paid-in capital. There was no impact on total shareholders' equity as a result of the reincorporation. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the results of operations and financial condition should be read in conjunction with the accompanying financial statements and notes thereto and the Company's Annual Report on Form 10-K for the year ended June 30, 1994, filed with the Securities and Exchange Commission. CONSOLIDATED FINANCIAL AND OPERATING DATA
Three Months Ended Nine Months Ended March 31, Change March 31, Change - --------------------------------------------------------------------------------------------------------------------------- 1995 1994 Amount Percent 1995 1994 Amount Percent - --------------------------------------------------------------------------------------------------------------------------- OPERATING DATA : Number of net new orders: 1 Sun City West 283 385 (102) (26.5%) 707 897 (190) (21.2%) Sun City Tucson 81 102 (21) (20.6%) 248 260 (12) (4.6%) Sun City Las Vegas 187 212 (25) (11.8%) 571 617 (46) (7.5%) Sun City Palm Springs 63 94 (31) (33.0%) 184 215 (31) (14.4%) Sun City Roseville 2 17 N/A 17 N/A 297 N/A 297 N/A Sun City Hilton Head 3 26 N/A 26 N/A 85 N/A 85 N/A Terravita 4 125 208 (83) (39.9%) 342 300 42 14.0% Coventry Homes 349 234 115 49.1% 719 565 154 27.3% - --------------------------------------------------------------------------------------------------------------------------- Total 1,131 1,235 (104) (8.4%) 3,153 2,854 299 10.5% =========================================================================================================================== Number of home closings: Sun City West 235 284 (49) (17.3%) 874 855 19 2.2% Sun City Tucson 89 68 21 30.9% 297 223 74 33.2% Sun City Las Vegas 193 209 (16) (7.7%) 618 565 53 9.4% Sun City Palm Springs 70 77 (7) (9.1%) 202 190 12 6.3% Sun City Roseville 2 82 N/A 82 N/A 82 N/A 82 N/A Terravita 4 108 N/A 108 N/A 264 N/A 264 N/A Coventry Homes 229 196 33 16.8% 629 398 231 58.0% - --------------------------------------------------------------------------------------------------------------------------- Total 1,006 834 172 20.6% 2,966 2,231 735 32.9% =========================================================================================================================== BACKLOG DATA : Homes Under Contract at March 31, Change - --------------------------------------------------------------------------------------------------------------------------- 1995 1994 Amount Percent - --------------------------------------------------------------------------------------------------------------------------- Sun City West 493 707 (214) (30.3%) Sun City Tucson 234 305 (71) (23.3%) Sun City Las Vegas 432 483 (51) (10.6%) Sun City Palm Springs 144 150 (6) (4.0%) Sun City Roseville 2 564 N/A 564 N/A Sun City Hilton Head 3 85 N/A 85 N/A Terravita 4 409 300 109 36.3% Coventry Homes 5 488 378 110 29.1% - ------------------------------------------------------------------------------ Total 2,849 6 2,323 526 22.6% ============================================================================== Aggregate contract sales amount (dollars in millions) $ 560 6 $ 396 $ 164 41.4% ============================================================================== Average contract sales amount per home (dollars in thousands) $ 197 $ 170 $ 27 15.9% ==============================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) CONSOLIDATED FINANCIAL AND OPERATING DATA(Continued)
Three Months Ended Nine Months Ended March 31, Change March 31, Change - ------------------------------------------------------------------------------------------------------------------------------- 1995 1994 Amount Percent 1995 1994 Amount Percent - ------------------------------------------------------------------------------------------------------------------------------- AVERAGE REVENUE PER HOME CLOSING: Sun City West $ 154,900 $ 147,000 $ 7,900 5.4% $ 150,600 $ 140,400 $ 10,200 7.3% Sun City Tucson 164,700 155,000 9,700 6.3% 164,300 155,900 8,400 5.4% Sun City Las Vegas 181,300 161,100 20,200 12.5% 178,700 157,200 21,500 13.7% Sun City Palm Springs 225,100 193,900 31,200 16.1% 211,900 187,000 24,900 13.3% Sun City Roseville 2 219,500 N/A N/A N/A 219,500 N/A N/A N/A Terravita 4 264,700 N/A N/A N/A 234,100 N/A N/A N/A Coventry Homes 158,400 137,900 20,500 14.9% 153,000 129,100 23,900 18.5% Total weighted average 183,600 153,400 30,200 19.7% 171,800 148,200 23,600 15.9% =============================================================================================================================== OPERATING STATISTICS: Cost of sales as a percentage of revenues 80.0% 79.2% 0.8% 1.0% 80.0% 79.5% 0.5% 0.6% Selling, general and administrative expenses as a percentage of revenues 14.5% 15.7% (1.2%) (7.6%) 14.5% 15.8% (1.3%) (8.2%) Operating earnings as a percentage of revenues 5.5% 5.2% 0.3% 5.8% 5.4% 4.7% 0.7% 14.9% Ratio of home closings to homes under contract in backlog at beginning of period 36.9% 43.4% (6.5%) (15.0%) 111.4% 131.2% (19.8%) (15.1%) =============================================================================================================================== 1 Net of cancellations. The Company recognizes revenue at close of escrow. 2 The Company began taking new home sales orders at Sun City Roseville in May 1994. Home closings at Sun City Roseville began in February 1995. 3 The Company began taking new home sales orders at Sun City Hilton Head in November 1994. 4 The Company began taking new home sales orders at Terravita in November 1993. Home closings at Terravita began in July 1994. 5 The Coventry Homes backlog at March 31, 1995 was generated by 17 subdivisions in the Phoenix area, 3 subdivisions in Tucson, 1 subdivision in Las Vegas and 2 subdivisions in Southern California. 6 A majority of this backlog is currently anticipated to result in revenues in the next 12 months. However, a majority of the home sales orders reflected in backlog at March 31, 1995 are contingent upon the availability of financing for the customer, sale of the customer's existing residence or other factors. Also, as a practical matter, the Company's ability to obtain damages for breach of contract by a potential home buyer is limited to retaining all or a portion of the deposit received. In the nine months ended March 31, 1995 and 1994, cancellations of home sales orders as a percentage of new home sales orders written during the period were 18.8 percent and 15.4 percent, respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1995 AND 1994 REVENUES. (Dollars in Millions) - ------------------------------------------------------------------------------- Three Months Ended March 31, Change - ------------------------------------------------------------------------------- 1995 1994 Amount Percent - ------------------------------------------------------------------------------- $195.4 $136.3 $59.1 43.4% Home closings at Terravita and Sun City Roseville accounted for $28.6 million and $18.0 million, respectively, of the increase in revenues for the three months ended March 31, 1995 compared to the three months ended March 31, 1994. The Company had not yet begun delivering homes at these communities in the 1994 quarter. Decreased home closings (resulting from the decreased net new order activity for the nine months ended March 31, 1995 as compared to the nine months ended March 31, 1994) at the Company's more mature active adult communities (Sun City West, Sun City Tucson, Sun City Las Vegas and Sun City Palm Springs) resulted in a $7.9 million decrease in revenues. Increased home closings (resulting from the expansion of operations in Tucson, Las Vegas and Southern California) for Coventry Homes, the Company's conventional homebuilding operation, resulted in a $4.5 million increase in revenues. Increases in the average revenue per home closing at the Company's more mature active adult communities and Coventry Homes accounted for $8.8 million and $4.7 million, respectively, of the increase in revenues. These increases in average revenues per home closing were partially due to sales price increases implemented by the Company and partially due to market-driven changes in product mix. Land sales and other revenues were $2.4 million higher in the 1995 quarter than in the 1994 quarter. COST OF SALES. The increase in cost of sales to $156.3 million in the 1995 quarter compared to $107.9 million in the 1994 quarter was primarily due to the increase in home closings. As a percentage of revenues, cost of sales increased to 80.0 percent for the 1995 quarter compared to 79.2 percent for the 1994 quarter. This increase was primarily due to (i) increased amortization of capitalized interest to cost of sales and (ii) decreased base housing margins at Sun City Tucson. Increased borrowings and higher interest rates resulted in an increase in amortization of capitalized interest to 5.0 percent of total cost of sales for the 1995 quarter compared to 4.4 percent for the 1994 quarter. Pricing strategies employed by the Company to facilitate the completion of Sun City Tucson resulted in a decrease in base housing margins at that community. On a period-to-period basis, cost of sales as a percentage of revenues will vary due to, among other things, changes in product mix, differences between individual communities, lot premiums, upgrades and extras, price increases, changes in construction costs and changes in the amortization of capitalized interest and other common costs. Management currently anticipates that continued increases in the amortization of capitalized interest to cost of sales, and changes in estimates on which the amortization of other common costs is based, will result in a greater percentage of common costs being amortized to cost of sales in the future. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling, general and administrative expenses to $28.3 million in the 1995 quarter as compared to $21.3 million for the 1994 quarter, $2.5 million was attributable to higher sales and marketing expenses and $1.3 million was attributable to increased commissions on the increased revenues. The balance of the increase was attributable to a variety of general and administrative expenses. Since a significant portion of selling, general and administrative expenses are fixed, the increase in revenues for the 1995 quarter resulted in a decrease in these expenses as a percentage of revenues as compared to the 1994 quarter. INCOME TAX EXPENSE. The increase in income tax expense to $3.8 million in the 1995 quarter as compared to $2.5 million in the 1994 quarter was due to the increase in operating earnings. The effective tax rate in both quarters was 35 percent. NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders decreased 8.4 percent in the 1995 quarter as compared to the 1994 quarter. This decrease was primarily attributable to the Company's more mature active adult communities, which had a 22.6 percent decline in net new orders in the 1995 quarter compared to the 1994 quarter. Management believes that increased interest rates, a slower national home resale market and price increases implemented by the Company have generally softened demand at these communities from the comparable period one year ago (the results for which were positively impacted by low interest rates and generally favorable economic conditions), and may continue to do so in the future. Management also believes that net new orders at Sun City Palm Springs continue to be adversely affected by the current Southern California real estate market and the Southern California economy generally. Net new orders at Terravita were 39.9 percent lower in the 1995 quarter than in the 1994 quarter. Management believes that decreased lot availability negatively impacted net new order activity in the 1995 quarter compared to the 1994 quarter and is expected to continue to cause fluctuations in net new orders on a quarter-to-quarter basis in the future. Net new orders for Coventry Homes were 49.1 percent higher in the 1995 quarter than in the 1994 quarter, due both to an increase in Phoenix-area operations and to the expansion of operations in Tucson, Las Vegas and Southern California. The Company had 26 and 17 net new orders at Sun City Hilton Head and Sun City Roseville, respectively, in the 1995 quarter. The Company had not yet begun taking new sales orders at these communities in the 1994 quarter. New orders at Sun City Hilton Head were impacted by earlier heavy rains, which delayed development activity and limited the ability of prospective buyers to visit home sites. At Sun City Roseville, heavy rains created lot inaccessibility and delayed infrastructure development, resulting in minimal new orders for the 1995 quarter. At both communities, the heavy rains delayed construction activity for homes under contract. The number of homes under contract at March 31, 1995 was 22.6 percent higher than at March 31, 1994. This increase was primarily attributable to the new sales orders at Sun City Roseville and the expansion of Coventry Homes operations, partially offset by the decreased new order activity at the Company's more mature active adult communitites. NINE MONTHS ENDED MARCH 31, 1995 AND 1994 REVENUES. (Dollars in Millions) - -------------------------------------------------------------------------------- Nine Months Ended March 31, Change - ------------------------------------------------------------------------------- 1995 1994 Amount Percent - ------------------------------------------------------------------------------- $534.3 $349.4 $184.9 52.9% Home closings at Terravita and Sun City Roseville accounted for $61.8 million and $18.0 million, respectively, of the increase in revenues for the nine months ended March 31, 1995 compared to the nine months ended March 31, 1994. The Company had not yet begun delivering homes at these communities in the 1994 period. Increased home closings (due to a higher beginning backlog) at the Company's more mature active adult communities and Coventry Homes accounted for $24.8 million and $29.8 million, respectively, of the increase in revenues for the 1995 period compared to the 1994 period. Increases in the average revenue per home closing at the Company's more mature active adult communities and Coventry Homes accounted for $29.7 million and $15.0 million, respectively, of the increase in revenues. These increases in average revenues per home closing were partially due to sales price increases implemented by the Company and partially due to market-driven changes in product mix. Land sales and other revenues were $5.8 million higher in the 1995 period than in the 1994 period. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) COST OF SALES. The increase in cost of sales to $427.6 million in the 1995 period compared to $277.7 million in the 1994 period was primarily due to increased home closings at all locations. The Company also experienced an increase in its cost of sales as a percentage of revenues from the 1994 period to the 1995 period, primarily reflecting the impact of (i) increased amortization of capitalized interest to cost of sales and (ii) decreased base housing margins at Sun City Tucson. See "Three Months Ended March 31, 1995 and 1994 -- Cost of Sales." SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling, general and administrative expenses to $77.7 million in the 1995 period as compared to $55.3 million for the 1994 period, $6.6 million was attributable to higher sales and marketing expenses and $4.5 million was attributable to increased commissions on the increased revenues. The balance of the increase was attributable to a variety of general and administrative expenses. Since a significant portion of selling, general and administrative expenses are fixed, the increase in revenues for the 1995 period resulted in a decrease in these expenses as a percentage of revenues as compared to the 1994 period. INCOME TAX EXPENSE. The increase in income tax expense to $10.2 million in the 1995 period as compared to $5.7 million in the 1994 period was due to the increase in operating earnings. The effective tax rate in both periods was 35 percent. NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 10.5 percent in the 1995 period as compared to the 1994 period. The number of homes under contract at March 31, 1995 was 22.6 percent higher than at March 31, 1994. These increases were primarily attributable to new sales orders at Sun City Roseville and the growth and expansion of Coventry Homes operations, partially offset by the decreased new order activity at the Company's more mature active adult communities. See "Three Months Ended March 31, 1995 and 1994 -- Net New Order Activity and Backlog." Cancellations of home sales orders as a percentage of new home sales orders written increased to 18.8 percent for the 1995 period compared to 15.4 percent for the 1994 period. The increase is primarily attributable to Sun City Roseville and Terravita, which experienced strong new order activity but higher cancellation percentages than the Company's more mature active adult communities. Management believes that cancellations at these new communities may have been negatively impacted by extended home delivery periods resulting from new orders taken prior to site and amenity development. LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY At March 31, 1995 the Company had $9.9 million of cash and short-term investments and $74.0 million and $10.4 of unused borrowing capacity under its $175 million unsecured revolving credit facility and $20 million of short-term lines of credit, respectively. In November 1994 the Company negotiated an amendment to its unsecured revolving credit facility to increase the amount of the facility from $125 million to $175 million. The Company is currently negotiating an additional amendment to its unsecured revolving credit facility to increase the amount of the facility to $300 million. This amendment, if effected, will require the Company to repay its separate Coventry Homes project debt ($55.6 million at March 31, 1995) and will provide greater flexibility in the nature and timing of future development expenditures. Management believes that the Company's current borrowing capacity, when combined with existing cash and short-term investments and currently anticipated cash flows from the Company's operating communities, conventional homebuilding activities and residential land development project, will provide the Company with adequate capital resources to fund the Company's currently anticipated operating requirements for the next 12 months. However, cash flows from the Company's operating communities are expected to be negatively impacted by the decline in net new order activity and backlog at the Company's more mature active adult communities The Company's unsecured revolving credit facility and the indentures for the Company's publicly held debt contain restrictions which could, depending on the circumstances, affect the Company's ability to borrow in the future. If the Company at any time is not successful in obtaining sufficient capital to fund its then planned development and expansion expenditures, some or all of its projects may be significantly delayed. Any such delay could result in cost increases and may adversely affect the Company's results of operations. The cash flow for each of the Company's communities can differ substantially from reported earnings, depending on the status of the development cycle. The initial years of development or expansion require significant cash outlays for, among other things, land acquisition, obtaining master plan and other approvals, construction of amenities (including golf courses and recreation centers), model homes, sales and administration facilities, major roads, utilities, general landscaping and interest. Since these costs are capitalized, this can result in income reported for financial statement purposes during those initial years significantly exceeding cash flow. However, after the initial years of development or expansion, when these expenditures are made, cash flow can significantly exceed income reported for financial statement purposes, as costs of sales includes amortization of charges for substantial amounts of previously expended costs. During the nine months ended March 31, 1995 the Company generated $131.8 million of net cash from community sales activities, used $68.0 million of cash for land and lot and amenity development at operating communities, paid $68.6 million for costs related to communities in the pre-operating stage, used $8.9 million of net cash for conventional homebuilding operations and used $60.3 million of cash for other operating activities. The Company believes that, of the $596.0 million of cash spent by the Company during the nine months ended March 31, 1995 for land acquisitions, lot and amenity development, home construction and other operating activities, approximately $93.3 million was to some extent discretionary as to timing and precedes the actual construction of homes from which cash can be generated upon closing of home sale contracts. This $93.3 million was comprised of $68.6 million related to projects in the pre-operating stage and $24.7 million for land acquisitions and amenity development at operating communities. At March 31, 1995, under the most restrictive of the covenants in the Company's debt agreements, $20.9 million of the Company's retained earnings was available for payment of cash dividends and for the acquisition by the Company of its common stock. ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY In March 1995 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which will be effective for the Company in its fiscal year ending June 30, 1997. Management is currently assessing the impact, if any, that this new accounting standard, when adopted, will have on the Company's financial position and results of operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10.0 Sample Directors and Officers Indemnification Agreement between the Company and those directors and officers set forth in Exhibit 10.0, dated as of February 1, 1995 Exhibit 27.0 Financial Data Schedule (b) The Company did not file any reports on Form 8-K during the period covered by this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DEL WEBB CORPORATION (Registrant) Date: May 8, 1995 /s/ Philip J. Dion ------------------ ------------------------------------- Philip J. Dion Chairman and Chief Executive Officer Date: May 8, 1995 /s/ John A. Spencer ------------------ -------------------------------------- John A. Spencer Senior Vice President and Chief Financial Officer EX-10 2 EXHIBIT 10.0 Attached hereto is a sample form copy of the Company's Directors and Officers Indemnification Agreement which the Company has provided to the following directors and officers effective February 1, 1995. DIRECTORS D. Kent Anderson Robert Bennett Hugh F. Culverhouse, Jr. Philip J. Dion Kenny C. Guinn J. Russell Nelson Peter A. Nelson Michael E. Rossi C. Anthony Wainwright Sam Yellen OFFICERS Joseph F. Contadino John H. Gleason LeRoy C. Hanneman, Jr. Robertson C. Jones Anne L. Mariucci Donald V. Mickus Frank D. Pankratz David E. Rau Charles T. Roach David G. Schreiner M. Lynn Schuttenberg John A. Spencer Robert R. Wagoner J. Dennis Wilkins DIRECTORS and OFFICERS INDEMNIFICATION AGREEMENT This Indemnification Agreement (the "Agreement") is entered into as of the 1st day of February, 1995, between Del Webb Corporation, a Delaware corporation (the "Company"), and ___________, a(n) _____________ of the Company (the "Indemnitee"). RECITALS WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; WHEREAS, Indemnitee is a director or officer of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; WHEREAS, the Amended and Restated Certificate of Incorporation ("Certificate of Incorporation") of the Company requires the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted by law and the Indemnitee has been serving and continues to serve as a director or officer of the Company in part in reliance on such Certificate of Incorporation; WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the Certificate of Incorporation, and in part to provide Indemnitee with specific contractual assurance that the protection promised by the Certificate of Incorporation will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; and THEREFORE, in consideration of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows: Indemnification Agreement 1. Certain Definitions: (a) Action: any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other. (b) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities (as defined below), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all the Company's assets. (c) Derivative Action: an Action by or in the right of the Company. (d) Expenses: include reasonable attorneys' fees, court costs, deposition costs, court reporter fees, travel and all other costs, expenses and obligations actually paid to another or incurred in connection with investigating the facts underlying the Action, preparing to defend and defending the Action, preparation for and participating in the Action as a witness, or any of the foregoing expenses incurred on appeal, or any other reasonable expenses incurred by Indemnitee in participating in any Indemnifiable Action or Indemnifiable Derivative Action. (e) Indemnifiable Action or Indemnifiable Derivative Action: any Action or Derivative Action arising out of or relating, directly or indirectly, to the fact that Indemnitee is or was a Director, Indemnitee, employee, agent or fiduciary of the Company, or a subsidiary of the Company, or is or was serving at the request of the Company as a Director, Indemnitee, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity. (f) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (iii) any person other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding Voting Securities, increases such person's beneficial ownership of such securities by five percentage points (5%) or more over the percentage so owned by such person; or (iv) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (g) Voting Securities: any securities of the Company which vote generally in the election of directors. 2. No Pending Actions. Indemnitee represents to Company that to Indemnitee's actual knowledge, (i) there is no Indemnifiable Action or Indemnifiable Derivative Action involving Indemnitee as of the date of this Agreement and (ii) no facts exist that may form the basis for such Action involving Indemnitee. 3. Indemnification For Actions Other Than Derivative Actions. In the event Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in, an Indemnifiable Action other than an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, judgments, fines, penalties, and amounts paid in settlement of such Action. 4. Indemnification For Derivative Actions. (a) Basic Indemnification. In the event Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, but not judgments, fines, or, except as set forth below, amounts paid in settlement of such Derivative Action. (b) Adjudication of Liability in Derivative Actions. Notwithstanding Paragraph 4(a), no indemnification shall be made in respect of any claim, issue, or matter as to which Indemnitee shall have been adjudged (by final judicial determination from which there is no further right to appeal) to be liable to the Company unless and only to the extent that the court in which such Derivative Action was brought shall determine upon application by Indemnitee that despite the adjudication of liability and in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnification which such court shall deem proper. (c) Settlement of Derivative Actions. Notwithstanding Paragraph 4(a), the court in which such Derivative Action was brought may determine upon application of Indemnitee that, in view of all circumstances of the case, indemnity for amounts paid in settlement is proper and may order indemnity for the amounts so paid in settlement and for the Expenses actually and reasonably paid in connection with such application, to the extent the court deems proper. 5. Limits on Indemnification. Except as stated in Paragraph 6, there shall be no indemnification pursuant to this Indemnification Agreement: (a) to the extent that payment for the same claims or amounts are actually made to the Indemnitee under a valid and collectible insurance policy; provided, however, that if it should subsequently be determined that the Indemnitee is not legally entitled to retain any such payment, the restriction on indemnification pursuant to this subparagraph (a) shall no longer apply; (b) to the extent that the Indemnitee is indemnified or receives a recovery for the same claims or amounts otherwise than pursuant to this Indemnification Agreement; provided, however, that if it should subsequently be determined that the Indemnitee is not legally entitled to retain any such recovery, the restriction on indemnification pursuant to this subparagraph (b) shall no longer apply; (c) on account of any violation of Section l6(b) of the Securities Exchange Act of l934, as amended, and rules promulgated thereunder; (d) on account of any violation of Section l0(b) of the Securities Exchange Act of l934, as amended (the "Exchange Act"), and any rules promulgated thereunder, or similar state law, to the extent that such violation is based on (i) the purchase or sale of a security by Indemnitee or a person affiliated with Indemnitee while Indemnitee is in possession of material nonpublic information about the Company, or (b) the communication of material nonpublic information about the Company in connection with any transaction on or through the facilities of a national securities exchange or from or through a broker or dealer, other than as part of a securities offering by the Company; (e) with respect to any transaction from which the Indemnitee derived an improper personal benefit to which he or she is not legally entitled; (f) for the return of any remuneration paid to the Indemnitee that is held by any court in a final judgment to have been illegal or improper; (g) to the extent that the Indemnitee acted or failed to act (i) not in good faith, or (ii) not in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, or (iii) with respect to any criminal Action, with reasonable cause to believe his or her conduct was unlawful; or (h) if a final nonappealable decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. 6. Partial and Mandatory Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company of some or a portion of the Expenses, judgments, fines, penalties and amounts paid in settlement of an Action but not for the total amount, the Company shall indemnify Indemnitee for the portion to which Indemnitee is entitled. To the extent that Indemnitee has been successful on the merits or otherwise (including dismissal with or without prejudice) in defense of any Indemnifiable Action or Indemnifiable Derivative Action, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by him in connection therewith, except as stated in Paragraph 5(a) or 5(b). 7. Notification of Indemnifiable Action or Indemnifiable Derivative Action. Indemnitee shall promptly notify the Company of any Indemnifiable Action or Indemnifiable Derivative Action promptly after receipt by Indemnitee of notice of the commencement of such Indemnifiable Action or Derivative Action. With respect thereto: (a) The Company will be entitled to participate therein at its own expense. (b) Except as otherwise provided below, the Company jointly with any other indemnifying party may assume the defense thereof, with counsel reasonably satisfactory to Indemnitee to be chosen or approved by the Company. After notice from the Company to Indemnitee of its election to so assume the defense thereof, the Company will not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or participation in any Action or Derivative Action (including travel expenses) or as otherwise provided below. Indemnitee shall have the right to employ independent counsel in such Action or Derivative Action; however, the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless: (i) the employment of independent counsel by Indemnitee has been authorized by the Company; (ii) counsel employed by the Company to represent the Indemnitee shall have reasonably concluded that there may be a conflict of interest in the conduct of the defense of such action that prevents such counsel from representing Indemnitee; or (iii) the Company shall not in fact have employed counsel to assume the defense of such Action or Derivative Action on behalf of Indemnitee. The fees and expenses of independent counsel of Indemnitee in subparagraphs 7(b)(i), (ii) and (iii) shall be borne by the Company. (c) If the Company has assumed the defense of the Indemnitee pursuant to subparagraph (b) above, the Company shall not be liable to indemnify Indemnitee under this Agreement for any amount paid in settlement of any Action or Derivative Action effected without its written consent, the Company shall not settle any Action or Derivative Action in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent, and neither the Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement. 8. Establishment of Trust. In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a trust for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund such trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any Indemnifiable Action or Indemnifiable Derivative Action, and any and all judgments, fines, penalties and settlement amounts of any and all Indemnifiable Actions or Indemnifiable Derivative Action from time to time actually paid or claimed, reasonably anticipated or proposed to be paid; provided, however, that in no event shall more than $250,000 be required to be deposited in any trust created hereunder in excess of amounts deposited in respect of reasonably anticipated Expenses. The terms of the trust shall provide that upon a Change in Control (i) the trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the trustee shall advance, within ten (10) business days of a written request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 9(b) of this Agreement), (iii) the trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in such trust shall revert to the Company upon a final determination by the Indemnitee or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. Trustee shall be chosen by the Board of Directors. Nothing in this Section 8 shall relieve the Company of any of its obligations under this Agreement. 9. Advance of Expenses; Failure to Pay Claim. (a) Written Request. If so requested by Indemnitee in writing, the Company shall (subject to the Expense Advance Rules hereinafter described) advance to Indemnitee (an "Expense Advance") any and all Expenses incurred in connection with the investigation and preparation of the Indemnitee's participation in any Indemnifiable Action or Indemnifiable Derivative Action, whether as a witness or a party, pursuant to this Agreement. The Company shall comply with the Indemnitee's written request for an Expense Advance within ten (10) business days of receipt of such written request together with the reimbursement commitment referred to in subparagraph (b) below. In the event the Company does not honor Indemnitee's request for an Expense Advance, Indemnitee may bring an action in any court of competent jurisdiction to enforce the right to an Expense Advance, and the Company shall have the burden of proof in such action to demonstrate that the Expense Advance is not payable. (b) Reimbursement by Indemnitee. The obligation of the Company to make an Expense Advance shall be subject to the condition that, if it is ultimately determined (by final judicial determination from which there is no further right to appeal) that there are matters to which Indemnitee is not entitled to indemnity under this Agreement, the Company shall be entitled to be reimbursed by Indemnitee for all such amounts. Prior to obtaining the initial Expense Advance, Indemnitee must confirm such reimbursement obligation by delivery to Company of a signed undertaking in the form of Exhibit A or in such other form as Company may reasonably accept. (c) Expense Advance Rules. Expenses in all cases must be reasonable and comply with existing or future billing procedures of the Company so that the Company can reasonably monitor and audit such Expenses. With respect to attorneys' fees, the Company will give reasonable consideration to requests for specific counsel and to requests for the grouping of individuals for joint defense purposes. Any attorney representing more than one individual may be requested to render separate statements to each individual or otherwise allocate billings by individual. (d) Failure to Pay Claim. If loss has been incurred and a claim for indemnification under this Agreement is not paid by the Company within ten (10) business days after a written claim has been received by the Company, Indemnitee may at any time thereafter bring suit against the Company to recover any unpaid amount of the claim. 10. Burden of Proof. In connection with any determination as to whether Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. 11. No Presumption. For purposes of this Agreement, the termination of any action, suit or proceeding by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not payable under this Indemnification Agreement or permitted by applicable law. 12. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Certificate of Incorporation, or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company's Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 13. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing Directors' and Officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company Director, Officer or Indemnitee. In the event Indemnitee incurs any Expenses in tendering the defense of the Action to the insurance company providing the Directors and Officers insurance, such Expenses shall be considered indemnifiable Expenses. 14. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern. 15. No Right To Continued Employment. Nothing contained in this Indemnification Agreement is intended to, or shall, create any right to continued employment by the Company. 16. Amendments and Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto; provided, however, that if any provision of this Agreement is challenged as being unlawful, the parties agree that the court in which such challenge is litigated may modify such provision so that it is enforceable to the maximum extent permitted by law and may enforce the Agreement as so modified. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 17. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 18. Binding Effect. Etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, heirs, and assigns. l9. Termination by Company. This Agreement shall continue in full force and effect, regardless of whether Indemnitee continues to serve as an officer or director of the Company or any other enterprise at the Company's request, unless terminated pursuant to this Paragraph. By giving written notice to Indemnitee at his or her address according to Company records, the Company, prior to a Potential Change of Control or Change of Control, may terminate its obligations under this Indemnification Agreement as to any act or omission of Indemnitee after such written notice is given. Notice is deemed given when actually received or two days after being sent by registered or certified mail, whichever is earlier. 20. Severability. The provisions of this Agreement shall be severable and, in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law, including the provisions that have been modified by a court pursuant to Paragraph 16 hereof. 21. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. 22. Prior Agreements. This Agreement supersedes all prior Indemnification Agreements between the Company and Indemnitee. DEL WEBB CORPORATION By: -------------------------------------- Its: -------------------------------------- -------------------------------------- Indemnitee -------------------------------------- EXHIBIT A , l995 - --------- --- DEL WEBB CORPORATION Attention: General Counsel 6001 North 24th Street Phoenix, Arizona 85016 Re: Indemnification Agreement Dated February 1, 1995 (the "Agreement") Gentlemen: I am the beneficiary of the above Agreement and am a defendant, witness, or other participant in the following legal action: - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------. A copy of the Complaint in this action is attached for your information. Pursuant to Paragraph 9 of the Agreement, I hereby request that Del Webb Corporation advance my Expenses as such term is used in the Agreement, subject to the Expense Advance Rules, as such Rules are applied in the Agreement. I hereby confirm that I will reimburse Del Webb Corporation for all the amounts advanced to me that are ultimately determined (by final judicial determination from which there is no further right to appeal) to be associated with matters to which I am not entitled to indemnity under the Agreement. If any additional information is needed, my address and telephone number are listed below: Address: ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ Telephone Number: ------------------------------------------------------------ Very truly yours, EX-27 3 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S.DOLLARS JUN-30-1995 JUL-01-1994 MAR-31-1995 9-MOS 1 9,930 0 10,583 0 818,255 0 43,971 16,580 893,843 0 493,993 16 0 0 219,505 893,843 530,659 534,323 427,535 427,574 77,655 0 0 29,094 10,183 18,911 0 0 0 18,911 1.25 0
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