-----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, QtQfx6qhoPgiKidk+mxgEUHFo8SVrC0q0Eih0k11xu01fgpKyn2Q1BqQ0gZIK/lO OQUlgTeEKj50U1Df3Qvn3w== 0000950153-95-000207.txt : 19950814 0000950153-95-000207.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950153-95-000207 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950811 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: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 033-60089 FILM NUMBER: 95561555 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 424B5 1 FINAL PROSPECTUS SUPPLEMENT OF DEL WEBB CORP 1 Rule 424(b)(5) File No. 33-60089 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 21, 1995 2,350,000 SHARES DEL WEBB CORPORATION COMMON STOCK The 2,350,000 shares of common stock (the "Common Stock") offered hereby are being offered by Del Webb Corporation (the "Company"). The Common Stock is listed on the New York Stock Exchange and Pacific Stock Exchange under the symbol "WBB." On August 10, 1995 the closing sale price of the Common Stock on the New York Stock Exchange was $19 5/8 per share. See "Price Range of Common Stock and Dividend Policy." FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE "RISK FACTORS" AT PAGE S-8. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS* COMPANY+ Per Share.......................... $19.50 $1.02 $18.48 Total++............................ $45,825,000 $2,397,000 $43,428,000
- --------------- * The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. See "Underwriting." + Before deducting expenses of the offering payable by the Company estimated to be $250,000. ++ The Company has granted the Underwriters a 30-day option to purchase up to 352,500 additional shares of Common Stock on the same terms per share solely to cover over-allotments, if any. If such option is exercised in full, the total price to public will be $52,698,750, the total underwriting discounts and commissions will be $2,756,550 and the total proceeds to Company will be $49,942,200. See "Underwriting." ------------------------ The Common Stock is being offered by the Underwriters as set forth under "Underwriting" herein. It is expected that the delivery of certificates therefor will be made at the offices of Dillon, Read & Co. Inc., New York, New York, on or about August 16, 1995, against payment therefor in New York funds. The Underwriters include: DILLON, READ & CO. INC. MONTGOMERY SECURITIES The date of this Prospectus Supplement is August 10, 1995 2 [DESCRIPTION OF INSIDE FRONT COVER PHOTOS] Top Photo: A photo showing one of the golf holes at Highland Falls Golf Club at Sun City Las Vegas Second Row: The first photo is the Woodworking Studio at Sun City West. The second photo shows the biking trail at Sun City Las Vegas. Third Row: The first photo shows one of the models at Sun City Roseville. The second photo shows one of the models at Sun City Palm Springs. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 PROSPECTUS SUPPLEMENT SUMMARY The following summary should be read in conjunction with and is qualified in its entirety by the information and financial statements (including the notes thereto) appearing elsewhere or incorporated by reference in this Prospectus Supplement or the accompanying Prospectus. As used in this Prospectus Supplement, the "Company" means Del Webb Corporation and its subsidiaries unless the context requires otherwise. Statements in this Prospectus Supplement as to acreage, mileage, square feet, number and years supply of future home sites and number of residents are approximations. THE COMPANY Del Webb Corporation is one of the nation's leading developers of age-restricted active adult communities. The Company has extensive experience in the active adult community business, having built and sold more than 50,000 homes at its Sun City communities over the past 35 years. The Company is also delivering homes at Terravita, a gate-guarded, amenity-rich, master-planned residential community in north Scottsdale, Arizona, that is not age-restricted. The Company designs, develops and markets these large-scale, master-planned residential communities, primarily for active adults age 55 and over, controlling 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 also has significant conventional subdivision homebuilding operations, which it conducts under the name "Coventry Homes," in the Phoenix, Tucson and Las Vegas areas and southern California. BUSINESS STRATEGY AND GROWTH The Company has achieved significant growth in recent years and believes that the strong demographics of its target market, adults age 55 and over, will continue to present attractive future opportunities. The Company believes its growth is attributable in large part to its business strategy of providing an attractive lifestyle to residents through the development and sale of high-quality homes in communities that offer a physically active and socially rewarding environment. Key elements of this strategy include: - Engaging in extensive research on potential sites and related demographic characteristics to identify community locations with significant growth potential; - Designing and developing attractive, amenity-rich, large-scale, master-planned communities in each of its markets; - Making significant investments to create substantial amenities in the early stage of community development so as to enhance marketing efforts and resident satisfaction; - Providing active and continuing support of community residents to ensure lifestyle satisfaction and promote referrals of potential new homebuyers; - Focusing growth opportunities by expanding in markets where the Company has successful communities and into new areas where the Company's research indicates significant potential and opportunity to be the market leader; and - Building on its market knowledge and organizational resources in existing markets to take advantage of conventional subdivision homebuilding opportunities. COMMUNITY DEVELOPMENT The Company's communities feature extensive amenities, including one or more golf courses and large recreation centers that contain activity rooms, athletic facilities, swimming pools and tennis S-3 4 courts. At its active adult communities, the Company builds numerous styles of contemporary homes (primarily detached, single-family residences) tailored to the preferences of the active adult market and offered in a wide range of prices. The Company currently offers homes for sale at eight communities. Selected information with respect to these communities is shown below:
BACKLOG HOMES (HOMES UNDER DELIVERED CONTRACT) AT APPROXIMATE FIRST HOME HOMES AT AT JUNE 30, JUNE 30, COMMUNITY LOCATION CLOSING COMPLETION 1995 1995 - -------------------- ----------------------- -------------- ---------- ----------- ------------ Sun City West Phoenix, Arizona January 1978 16,500 14,247 502 Sun City Tucson Tucson, Arizona February 1987 2,500 2,092 149 Sun City Las Vegas Las Vegas, Nevada March 1989 7,700 4,994 402 Sun City Palm Palm Springs, October 1992 4,800 885 147 Springs California Terravita Scottsdale, Arizona July 1994 1,400 425 298 Sun City Roseville Sacramento, California February 1995 3,000 293 571 Sun City Hilton Head Hilton Head Island, Scheduled 8,000 -- 149 South Carolina Summer 1995 Sun City Austin, Texas Anticipated 9,500 -- 122 Georgetown........ Spring 1996
The Company is developing Sun City MacDonald Ranch, which is planned for 2,300 homes on 600 acres in Henderson, Nevada (near Las Vegas). The Company currently anticipates taking home sale orders at Sun City MacDonald Ranch beginning in the Fall of 1995. The Company is also developing Sun City Grand, which is planned for 9,500 homes on 4,000 acres adjacent to Sun City West. Development of Sun City Grand will be coordinated with the build out of Sun City West, the Company's most mature community, to maximize the combined home closings of both communities and minimize duplicative expenses of operating two adjacent communities. In 1992, the Company acquired 5,600 acres located 25 miles north of downtown Phoenix as the site for a possible master-planned community. In April 1995 the Company received a general plan amendment and development master plan approval for 16,500 homes on this property. Development of this property, however, is subject to a number of uncertainties and the planning, entitlement and permitting process is in a relatively early stage. CONVENTIONAL HOMEBUILDING The Company has conventional subdivision homebuilding operations, primarily in those geographic market areas in which it is developing active adult communities. To date, the Company has generally targeted first-time and move-up buyers. The Company expects homes in this price range to be its main target segment in the future, but it intends to remain flexible when reviewing potential sites in order to pursue attractive opportunities. For the year ended June 30, 1995, conventional homebuilding operations represented 18 percent of the Company's revenues. S-4 5 THE OFFERING Common Stock(1)........................... 2,350,000 shares Common Stock to be outstanding after the Offering(1)(2).......................... 17,270,921 shares Listing................................... New York Stock Exchange and Pacific Stock Exchange New York Stock Exchange and Pacific Stock Exchange Symbol......................... WBB Use of Proceeds........................... To repay a portion of the indebtedness outstanding under the Company's senior unsecured revolving credit agreement and short-term lines of credit. After completion of the offering made hereby (the "Offering"), the Company intends to reborrow under its senior unsecured revolving credit agreement and short-term lines of credit as necessary from time to time to fund development of existing and new projects and for other general corporate purposes. See "Use of Proceeds" and "Capitalization."
- --------------- (1) Assumes that the Underwriters' over-allotment option is not exercised. (2) Represents the number of shares of Common Stock outstanding at June 30, 1995, as adjusted to give effect to the Offering. Excludes 1,440,570 shares subject to options outstanding under the Company's stock option plans as of June 30, 1995. S-5 6 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA In the fiscal year ended June 30, 1995 the Company achieved record high revenues, earnings from continuing operations, net earnings, earnings per share from continuing operations and net earnings per share. In addition, the Company's 4,534 net new orders, its 4,316 home closings and its backlog of 2,880 homes ($565 million) were each also record highs. Summary consolidated financial and operating data, including such data for the fiscal year ended June 30, 1995, are set forth below. For a discussion of certain factors that may affect reported earnings for the 1996 fiscal year, see "Use of Proceeds" and "Management's Discussion and Analysis of Financial Conditions and Results of Operations -- Results of Operations -- Fiscal Years Ended June 30, 1994 and 1995" and "-- Liquidity and Financial Condition of the Company." SUMMARY CONSOLIDATED FINANCIAL DATA (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED JUNE 30, ---------------------------------------------------- 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- STATEMENT OF EARNINGS DATA: Total revenues..................................... $228,062 $260,872 $390,586 $510,061 $803,119 Earnings from continuing operations(1)............. 7,111 14,068 16,863 17,021 28,491 Net earnings(1).................................... 12,117 17,107 24,511 17,021 28,491 Earnings per share from continuing operations...... .75 1.09 1.05 1.13 1.87 Net earnings per share............................. $ 1.28 $ 1.33 $ 1.53 $ 1.13 $ 1.87
JUNE 30, 1995 ------------------------ AS ACTUAL ADJUSTED(2) -------- ----------- BALANCE SHEET DATA: Total assets................................................................ $925,050 $ 925,050 Notes payable, senior and subordinated debt: Revolving credit facility and short-term lines............................ 160,200 117,022 Other..................................................................... 331,058 331,058 -------- ----------- Total.............................................................. $491,258 $ 448,080 Shareholders' equity........................................................ $229,342 $ 272,520
- --------------- (1) In fiscal 1993 the Company recognized a $20 million increase in net earnings as a result of a cumulative effect of an accounting change resulting from its adoption of Statement of Financial Accounting Standards No. 109. Earnings from continuing operations and net earnings for fiscal 1991 were reduced by a $5 million pre-tax valuation allowance related to the Company's residential land development project. Included in net earnings for fiscal 1993 are losses from discontinued operations, primarily consisting of additional loss provisions related to the Company's discontinued land development projects. Also included in net earnings for fiscal 1991, 1992 and 1993 are extraordinary gains resulting from the extinguishment of debt on discounted bases. (2) As adjusted to give effect to the sale of the shares of Common Stock offered hereby and the anticipated use of the estimated net proceeds, assuming no exercise of the Underwriters' over-allotment option. See "Use of Proceeds." S-6 7 SUMMARY CONSOLIDATED OPERATING DATA
YEAR ENDED JUNE 30, ---------------------------- 1993 1994 1995 ------ ------ ------ OPERATING DATA: Net new orders(1)....................................................... 3,001 4,145 4,534 Home closings........................................................... 2,564 3,183 4,316 Homes under contract at period end (backlog)(2)......................... 1,700 2,662 2,880 Dollar amount of backlog (in millions)(2)............................... $ 260 $ 471 $ 565 Average revenue per home closing (in thousands)......................... $ 144 $ 152 $ 177 Cost of sales as a percentage of revenue................................ 77.4% 79.2% 80.3% Selling, general and administrative expenses as a percentage of revenues.............................................................. 16.0% 15.6% 14.3% Earnings from continuing operations before income taxes as a percentage of revenues........................................................... 6.3% 5.1% 5.5%
- --------------- (1) Net new orders are reduced by cancellations. The Company recognizes revenues at close of escrow. (2) See footnote (4) under "Selected Consolidated Financial and Operating Data -- Selected Consolidated Operating Data." S-7 8 RISK FACTORS Set forth below is a brief discussion of certain matters that should be considered by prospective investors. FUTURE COMMUNITIES The Company's communities will be built out over time. Therefore, the medium- and long-term future of the Company will be dependent on the Company's ability to develop and market future communities successfully. Acquiring land and committing the financial and managerial resources to develop a community on that land involve significant risks. Before these communities generate any revenues, they require material expenditures for, among other things, acquiring land, obtaining development approvals and constructing project infrastructure (such as roads and utilities), recreation centers, model homes and sales facilities. It generally takes several years for communities to achieve cumulative positive cash flow. The Company believes that the development of Sun City Hilton Head presents significant new development and marketing challenges, including acquiring the necessary construction materials and labor in sufficient amounts and on acceptable terms, adapting the Company's construction methods to a different geography and climate, and attracting potential customers from areas and to a market in which the Company has not had significant experience. See "Business--Master Planned Communities --New Communities Taking Home Sales Orders--Sun City Hilton Head." The Company will incur additional risks to the extent it develops communities in climates or other geographic areas in which it does not have experience developing communities or develops a different size or style of community. Among other things, the Company believes that a significant portion of the home sales at its active adult communities is attributable to referrals from, or sales to, residents of those communities. The extent of such referrals or sales at new communities, including communities developed in other areas of the country, may be less than the Company has enjoyed at the active adult communities where it currently sells homes. See "Business--Master Planned Communities-- Communities in Earlier Stages of Development--Sun City MacDonald Ranch," "--Potential Future Communities" and "--Sales Activities." The Company currently is managing the development of a greater number of projects in a wider geographical area than it has previously developed at any given time. LONG-TERM NATURE OF PROJECTS; REAL ESTATE, ECONOMIC AND OTHER CONDITIONS; GEOGRAPHIC CONCENTRATION The Company's communities are long-term projects. Sales activity at the Company's communities varies from period to period, and the ultimate success of any community cannot necessarily be judged by results in any particular period or periods. A community may generate significantly higher sales levels at inception (whether because of local pent-up demand in the area or other reasons) than it does during later periods over the life of the community. The Company's communities and its other real estate operations are subject to substantial existing and potential competition, real estate market conditions (both where its communities, conventional homebuilding operations and other projects are located and in areas where its potential customers reside), the cyclical nature of the real estate business, general national economic conditions and changing demographic conditions. See "Business--Competition". Company data indicate that, for the past several years, a significant number of the home purchasers at its active adult communities in Arizona, Nevada and southern California, particularly Sun City Palm Springs, were from southern California. Four of the Company's conventional homebuilding subdivisions are located in California, including two in Orange County. Any of those communities, particularly Sun S-8 9 City Palm Springs, as well as the Company's southern California conventional homebuilding subdivisions, may be affected by the continuing adverse conditions in the southern California real estate market and the southern California economy generally, including the financial difficulties of certain southern California municipalities. The Company's primary business operations are concentrated in a limited number of communities in Arizona, California and Nevada. The Company's geographic concentration and limited number of projects may create increased vulnerability to regional economic downturns or other adverse project-specific matters. GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS The Company's business is subject to extensive federal, state and local regulatory requirements, the broad discretion that governmental agencies have in administering those requirements and "no growth" or "slow growth" political policies, all of which can prevent, delay, make uneconomic or significantly increase the cost of its developments. In addition, environmental concerns and related governmental requirements have affected and will continue to affect all the Company's community development operations. In connection with the development of the Company's communities and other real estate projects, particularly those located in California, numerous governmental approvals and permits are required throughout the development process and no assurance can be given as to the receipt (or timing of receipt) of these approvals or permits. In addition, third parties can file lawsuits challenging approvals or permits received, which could cause substantial uncertainties and material delays for the project and, if successful, could result in approvals or permits being voided. FINANCING; LEVERAGE Real estate development is dependent on the availability and cost of financing. It generally takes several years for new communities to achieve positive cumulative cash flow. In periods of significant growth, therefore, the Company will require significant additional capital resources, whether from issuances of equity or by incurring additional indebtedness. The Company's principal credit facility and the indentures for its publicly-held debt restrict the indebtedness the Company may incur. The availability of debt financing is also dependent on governmental policies and other factors outside the control of the Company. If the Company is at any time not successful in obtaining sufficient capital to fund its development and expansion expenditures, some or all of its projects may be significantly delayed, resulting in cost increases and adverse effects on the Company's results of operations. No assurance can be given as to the availability or cost of any future financing. In addition, the Company's degree of leverage from time to time will affect its interest incurred and may limit funds available for operations. As a result, the Company may be more vulnerable to economic downturns, which could limit its ability to withstand adverse changes or to capitalize on business opportunities. If the Company is at any time unable to generate sufficient cash flow from operations to service its debt, refinancing of all or a portion of that debt or obtaining additional financing may be required to avoid defaults (including cross defaults) on some or all of its indebtedness. There can be no assurance that any such refinancing would be possible or that any additional financing could be obtained, or obtained on terms that are favorable or acceptable to the Company. The Company's real estate operations are also dependent upon the availability and cost of mortgage financing for potential customers, to the extent they finance their purchase, and for buyers of the potential customers' existing homes. CONSTRUCTION The Company has from time to time experienced shortages of materials or qualified tradespeople or volatile increases in the cost of certain materials (particularly increases in the price of lumber and framing, which are significant components of home construction costs), resulting in longer than normal S-9 10 construction periods and increased costs not reflected in the prices of homes for which home sale contracts had been entered into up to one year in advance of scheduled closing. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Results of Operations-- Fiscal Years Ended June 30, 1993 and 1994--Cost of Sales." Generally, the Company's home sale contracts do not contain, or contain limited, provisions for price increases if the Company's costs of construction increase. The Company relies heavily on local contractors, who may be inadequately capitalized or understaffed. The inability or failure of one or more local contractors to perform may result in construction delays, increased costs and loss of some home sale contracts. NATURAL RISKS Sun City Roseville and Sun City Hilton Head are subject to significant seasonal rainfall that can cause delays in construction and development and increase costs. Both of these communities were adversely affected by significantly higher than normal rainfall in fiscal 1995. Earthquake faults, including the San Andreas fault, run through the Coachella Valley, which includes Sun City Palm Springs and the communities of Palm Springs, Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A portion of Sun City Palm Springs is also located in a flood plain. The Coachella Valley Water District has approved the Company's conceptual flood control plan for Sun City Palm Springs and has approved the Company's specific flood control plan for the first phase of this project. A major earthquake or flood could have a material adverse impact on the development of and results of operations for Sun City Palm Springs. Sun City Hilton Head is located in an area which may be subject to hurricanes. A major hurricane could have a material adverse impact on the development of and results of operations for Sun City Hilton Head. S-10 11 USE OF PROCEEDS The net proceeds from the sale of the shares of Common Stock offered hereby, which are estimated at approximately $43.2 million ($49.7 million if the Underwriter's over-allotment option is exercised in full) will be used to repay indebtedness outstanding under the Company's $300 million senior unsecured revolving credit agreement and $10 million of short-term lines of credit. See "Capitalization." These borrowings were incurred to fund development of existing and new projects and for other general corporate purposes, or to refinance indebtedness incurred for those purposes. After completion of this Offering, the Company intends to reborrow under its senior unsecured revolving credit agreement and short-term lines of credit from time to time as necessary for similar purposes. Because the Company capitalizes interest and amortizes capitalized interest as closings occur over the lives of its projects and the Company has several communities at which closings have not yet begun, a significant portion of the reduction in interest costs resulting from the use of proceeds to repay indebtedness will not be reflected in reported earnings for the Company's fiscal year ended June 30, 1996 and some portion will not be reflected in the following year. CAPITALIZATION The following table sets forth the consolidated capitalization of the Company at June 30, 1995 and as adjusted to give effect to the sale of the Common Stock offered hereby and the anticipated use of the estimated net proceeds therefrom, assuming no exercise of the Underwriters' over-allotment option.
JUNE 30, 1995 ----------------------- AS ACTUAL ADJUSTED -------- -------- (IN THOUSANDS) Notes payable, senior and subordinated debt: Revolving credit facility and short-term lines(1)................ $160,200 $117,022 Other............................................................ 331,058 331,058 -------- -------- Total.................................................... $491,258 $448,080 Shareholders' equity: Common stock and additional paid-in capital...................... $121,076 $164,254 Retained earnings................................................ 122,152 122,152 Treasury stock and deferred compensation......................... (13,886) (13,886) -------- -------- Total shareholders' equity............................... $229,342 $272,520 -------- -------- Total capitalization........................... $720,600 $720,600 ======== ========
- --------------- (1) For interest rates and maturities, see Note 5 of Notes to Consolidated Financial Statements of the Company included in its Annual Report on Form 10-K for the year ended June 30, 1994, which is incorporated in the accompanying Prospectus by reference. See "Available Information" and "Incorporation of Certain Documents by Reference" in the accompanying Prospectus. S-11 12 PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY The Common Stock is listed on the New York Stock Exchange and Pacific Stock Exchange under the trading symbol WBB. The following table sets forth the high and low prices of the Common Stock on the New York Stock Exchange for the periods shown.
HIGH LOW ---- --- 1993 Quarter Ended September 30.............................................. 16 11 3/4 December 31............................................... 16 1/2 11 5/8 1994 Quarter Ended March 31.................................................. 18 3/8 14 1/2 June 30................................................... 17 1/2 14 1/2 September 30.............................................. 17 3/8 13 5/8 December 31............................................... 17 5/8 14 1/4 1995 Quarter Ended March 31.................................................. 20 17 June 30................................................... 23 5/8 16 5/8 September 30 (through August 10).......................... 25 18 7/8
On August 10, 1995 the closing sale price of the Common Stock on the New York Stock Exchange was $19 5/8. The Company has paid regular quarterly dividends of $.05 per share for the last five fiscal years. The amount and timing of any future dividends is subject to the discretion of the Board of Directors. Among the factors the Board of Directors may consider in determining the amount and timing of dividends include the earnings, cash needs and capital resources of the Company. In addition, the Company is party to a loan agreement and various indentures that contain covenants restricting the Company's ability to pay dividends and acquire its Common Stock. Under the most restrictive of these covenants, at June 30, 1995 approximately $16.9 million of the Company's retained earnings were available for payment of cash dividends on the Common Stock and for the acquisition by the Company of its Common Stock. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA The following tables set forth selected consolidated financial data of the Company as of June 30, 1994 and 1995 and for each of the years in the five-year period ended June 30, 1995 and selected consolidated operating data of the Company as of and for each of the years in the three-year period ended June 30, 1995. They should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto in the Company's annual report on Form 10-K for its year ended June 30, 1994, which is incorporated by reference in the accompanying Prospectus, and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected consolidated financial data for each of the years in the three-year period ended June 30, 1994 and as of June 30, 1994 set forth below are derived from the Consolidated Financial Statements of the Company incorporated by reference in the accompanying Prospectus, which statements have been audited by KPMG Peat Marwick LLP, independent certified public accountants. The selected consolidated financial data for the year ended June 30, 1991 set forth below has been derived from audited consolidated financial statements of the Company, which were also audited by KPMG Peat Marwick LLP. The selected consolidated financial data as of and for the year ended June 30, 1995 set forth below are derived from unaudited consolidated financial statements and in the opinion of the management of the Company contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information therein. The fiscal 1995 financial data set forth below represent preliminary unaudited results. The audit of 1995 financial results is not yet complete, and changes could occur. S-12 13 SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED JUNE 30, -------------------------------------------------------- 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- STATEMENT OF EARNINGS DATA: Revenues: Home sales-communities.............................. $220,294 $226,014 $324,817 $405,462 $620,012 Home sales-conventional homebuilding................ 4,795 27,097 44,456 79,992 144,469 Land sales and other................................ 2,973 7,761 21,313 24,607 38,638 -------- -------- -------- -------- -------- Total revenues................................. 228,062 260,872 390,586 510,061 803,119 Cost of sales......................................... 177,728 201,427 302,300 404,202 646,052 Selling, general and administrative expenses.......... 37,816 45,583 62,566 79,673 113,235 Equity in loss of unconsolidated affiliates........... 5,686 -- -- -- -- Other expense, net.................................... -- -- 922 -- -- -------- -------- -------- -------- -------- Earnings from continuing operations before income taxes................................. 6,832 13,862 24,798 26,186 43,832 Income taxes(1)....................................... (279) (206) 7,935 9,165 15,341 -------- -------- -------- -------- -------- Earnings from continuing operations(1)......... 7,111 14,068 16,863 17,021 28,491 Discontinued operations(2)............................ -- -- (12,810) -- -- Extraordinary gain(3)................................. 5,006 3,039 458 -- -- Cumulative effect of accounting change(1)............. -- -- 20,000 -- -- -------- -------- -------- -------- -------- Net earnings(1)................................ $ 12,117 $ 17,107 $ 24,511 $ 17,021 $ 28,491 ========= ========= ========= ========= ========= Net earnings per share: Continuing operations............................... $ .75 $ 1.09 $ 1.05 $ 1.13 $ 1.87 ========= ========= ========= ========= ========= Total............................................... $ 1.28 $ 1.33 $ 1.53 $ 1.13 $ 1.87 ========= ========= ========= ========= ========= Weighted average shares outstanding................... 9,456 12,907 16,049 15,036 15,209 ========= ========= ========= ========= =========
JUNE 30, --------------------- BALANCE SHEET DATA: 1994 1995 -------- -------- Total assets............................................ $758,424 $925,050 Notes payable, senior and subordinated debt: Revolving credit facility and short-term lines........ 18,000 160,200 Other................................................. 377,676 331,058 -------- -------- Total............................................ $395,676 $491,258 Shareholders' equity.................................... $201,324 $229,342 Total debt divided by total debt and shareholders' equity................................................ 66.3% 68.2%
- --------------- (1) Earnings from continuing operations for fiscal 1993, 1994 and 1995 reflect a higher income tax rate (a rate more closely approximating the statutory rate) than for previous years as a result of the Company's adoption of Statement of Financial Accounting Standards No. 109 effective July 1, 1992. In fiscal 1993 the Company recognized a $20 million increase in net earnings as a result of a cumulative effect of an accounting change from the adoption of Statement of Financial Accounting Standards No. 109. Earnings from continuing operations and net earnings for fiscal 1991 were reduced by a $5 million pre-tax valuation allowance related to the Company's residential land development project. (2) The loss from discontinued operations for fiscal 1993 primarily consisted of additional loss provisions related to the Company's discontinued land development projects. (3) The extraordinary gains recognized by the Company in fiscal 1991, 1992 and 1993 resulted from the extinguishment of debt on discounted bases. S-13 14 SELECTED CONSOLIDATED OPERATING DATA
YEAR ENDED JUNE 30, ---------------------------- 1993 1994 1995 ------ ------ ------ NUMBER OF NET NEW ORDERS(1): Sun City West.................................................... 1,031 1,156 946 Sun City Tucson.................................................. 305 357 310 Sun City Las Vegas............................................... 801 863 770 Sun City Palm Springs(2)......................................... 450 315 267 Sun City Roseville(3)............................................ -- 349 515 Sun City Hilton Head(3).......................................... -- -- 149 Sun City Georgetown(3)........................................... -- -- 122 Terravita(3)..................................................... -- 331 392 Coventry Homes................................................... 414 774 1,063 ------ ------ ------ Total net new orders.......................................... 3,001 4,145 4,534 ====== ====== ====== NUMBER OF HOME CLOSINGS: Sun City West.................................................... 850 1,161 1,104 Sun City Tucson.................................................. 263 342 444 Sun City Las Vegas............................................... 710 815 847 Sun City Palm Springs(2)......................................... 325 278 282 Sun City Roseville(3)............................................ -- -- 293 Sun City Hilton Head(3).......................................... -- -- -- Sun City Georgetown(3)........................................... -- -- -- Terravita(3)..................................................... -- -- 425 Coventry Homes................................................... 416 587 921 ------ ------ ------ Total home closings........................................... 2,564 3,183 4,316 ====== ====== ====== BACKLOG (HOMES UNDER CONTRACT) AT END OF PERIOD: Sun City West.................................................... 665 660 502 Sun City Tucson.................................................. 268 283 149 Sun City Las Vegas............................................... 431 479 402 Sun City Palm Springs(2)......................................... 125 162 147 Sun City Roseville(3)............................................ -- 349 571 Sun City Hilton Head(3).......................................... -- -- 149 Sun City Georgetown(3)........................................... -- -- 122 Terravita(3)..................................................... -- 331 298 Coventry Homes................................................... 211 398 540 ------ ------ ------ Total homes under contract(4)................................. 1,700 2,662 2,880 ====== ====== ====== Aggregate contract sales amount (in millions)(4)................. $ 260 $ 471 $ 565 Average contract sales amount per home (in thousands)............ $ 153 $ 177 $ 196 OPERATING STATISTICS: Cost of sales as a percentage of revenues........................ 77.4% 79.2% 80.4% Selling, general and administrative expenses as a percentage of revenues...................................................... 16.0% 15.6% 14.1% Earnings from continuing operations before income taxes as a percentage of revenues........................................ 6.3% 5.1% 5.5%
- --------------- (1) Net of cancellations. The Company recognizes revenue at close of escrow. (2) New home sales orders began at Sun City Palm Springs in July 1992. Of the 450 orders taken in fiscal 1993, 235 were taken from customers who had made non-binding reservations prior to July 1, 1992. Closings began in October 1992. (3) New home sales orders began at Sun City Roseville in May 1994, at Sun City Hilton Head in November 1994, at Sun City Georgetown in June 1995 and at Terravita in November 1993. Closings at Sun City Roseville began in February 1995 and at Terravita in July 1994. (4) A majority of backlog at June 30, 1995 is expected to result in revenues in fiscal 1996. A majority of the backlog, however, is contingent upon the availability of financing for the customer, sale of the customer's existing residence or other factors. Also, the Company's ability to obtain damages for breach of contract by a potential home buyer is, practically, limited to retaining all or a portion of the deposit received. In the years ended June 30, 1993, 1994 and 1995, cancellations of homes sales orders as a percentage of new home sales orders were 14.1%, 15.6% and 18.3%, respectively. S-14 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FISCAL 1995 FINANCIAL DATA DISCUSSED BELOW REPRESENT PRELIMINARY UNAUDITED RESULTS. THE AUDIT OF 1995 FINANCIAL RESULTS IS NOT YET COMPLETE, AND CHANGES COULD OCCUR. RESULTS OF OPERATIONS FISCAL YEARS ENDED JUNE 30, 1994 AND 1995 Revenues increased 57.5 percent for the fiscal year ended June 30, 1995 compared to the fiscal year ended June 30, 1994, primarily due to home closings at Terravita and Sun City Roseville (at which the Company had not yet begun delivering homes in fiscal 1994) and the expansion of Coventry Homes' conventional subdivision homebuilding operations. Total home closings increased 35.6 percent. Net earnings increased 67.4 percent for fiscal 1995 compared to fiscal 1994, primarily due to the increase in revenues. Since a significant portion of selling, general and administrative expenses are fixed, the increase in revenues also resulted in a decrease in these expenses as a percentage of revenues from 15.6 percent in fiscal 1994 to 14.1 percent in fiscal 1995. Cost of sales as a percentage of revenues increased from 79.2 percent in fiscal 1994 to 80.4 percent in fiscal 1995. The increase was the result of a variety of factors, including changes in the mix of contributions by various communities and Coventry Homes, increased amortization of capitalized interest to cost of sales and decreased base housing margins at Sun City Tucson. Management anticipates that (i) continued increases in the amortization of capitalized interest to cost of sales resulting from higher levels of indebtedness and increases in land held for longer-term development (with respect to which land the Company cannot allocate capitalized interest) and (ii) changes in estimates on which the amortization of other common costs is based will result in a greater percentage of capitalized interest and other common costs being amortized to cost of sales in the next fiscal year than in prior years. For a discussion of the anticipated effect on earnings in fiscal 1996 of the repayment of indebtedness with the proceeds of the Offering, see "Use of Proceeds." Net new orders increased 9.4 percent in fiscal 1995 compared to fiscal 1994. This increase was primarily attributable to new sales orders at Sun City Roseville, Sun City Hilton Head and Sun City Georgetown and the expansion of Coventry Homes' conventional subdivision homebuilding operations. The Company did not have a full year of sales activity at Sun City Roseville in fiscal 1994 and began home sales activity at Sun City Hilton Head and Sun City Georgetown in fiscal 1995. At the mature communities of Sun City West, Sun City Las Vegas, Sun City Tucson and Sun City Palm Springs, net new orders decreased by 14.8 percent, due primarily to exceptionally high new order activity at Sun City West and Sun City Las Vegas in the prior year, the winding down of new order activity at Sun City Tucson and the impact on Sun City Palm Springs of continued adverse conditions in the southern California economy. The number of homes in backlog at June 30, 1995 was 8.2 percent higher than at June 30, 1994. This increase is primarily attributable to the inclusion of homes under contract at Sun City Hilton Head and Sun City Georgetown and increases in backlog at Sun City Roseville and Coventry Homes, partially offset by declines in homes under contract at the Company's more mature communities. FISCAL YEARS ENDED JUNE 30, 1993 AND 1994 REVENUES. (Dollars in Millions) ---------------------------------------------- Fiscal Fiscal 1993 Change 1994 ------ ------ ------ $390.6 30.6% $510.1 The Company believes that its home closings and net new orders in recent periods through June 30, 1994 may have been stimulated by low home mortgage interest rates in those periods and, except for S-15 16 Sun City Palm Springs, healthy housing markets in all geographic areas in which the Company operates. Increased home closings at the Company's active adult communities and Coventry Homes accounted for $60.3 million and $18.3 million, respectively, of the increase in revenues for the fiscal year ended June 30, 1994 compared to the fiscal year ended June 30, 1993. Increases in the average revenue per home closing at the Company's active adult communities and Coventry Homes accounted for $20.2 million and $17.3 million, respectively, of the increase in revenues. These increases in average revenue per home closing were partially due to sales price increases implemented by the Company (see "--Cost of Sales") and partially due to a greater percentage of sales of larger active adult community homes or at more expensive conventional homebuilding subdivisions. The Company experienced decreased home closings and average revenue per home closing at Sun City Palm Springs for fiscal 1994 compared to fiscal 1993, primarily due to a decrease in net new orders and a greater percentage of sales of smaller homes. COST OF SALES. The increase in cost of sales in fiscal 1994 compared to fiscal 1993 was primarily due to increased home closings at all locations other than Sun City Palm Springs. The Company also experienced an increase in its cost of sales as a percentage of revenues from 77.4 percent in fiscal 1993 to 79.2 percent in fiscal 1994, primarily reflecting the impact of higher lumber costs. Average framing lumber composite prices were 22 percent higher for the 12 months ended June 30, 1994 than for the 12 months ended June 30, 1993. For the Company, framing costs represented 14.8 percent of total cost of sales for fiscal 1994 compared to 12.1 percent for fiscal 1993. These lumber cost increases adversely impacted the Company because homes with fixed sales prices established in sales contracts entered into up to a year earlier were constructed and delivered at higher than anticipated costs. In an effort to reduce the effects of rising costs, the Company implemented sales price increases and entered into fixed price framing contracts for a significant portion of its homes scheduled to be constructed through December 1994. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Since a significant portion of selling, general and administrative expenses are fixed, the increase in revenues for fiscal 1994 resulted in a decrease in these expenses as a percentage of revenues as compared to fiscal 1993. Of the increase in total selling, general and administrative expenses in fiscal 1994 compared to fiscal 1993, $3.0 million was attributable to higher sales and marketing expenses and $3.8 million was attributable to higher commissions on the higher revenues. OTHER EXPENSE, NET. Included in other expense, net in fiscal 1993 was $2 million of previously capitalized costs related to an option the Company had to purchase land near Austin, Texas, as the site of a potential active adult community, partially offset by $1.1 million of other income. INCOME TAXES. For financial reporting purposes, income taxes reflect a 35 percent effective tax rate for fiscal 1994 compared to a 32 percent effective tax rate for fiscal 1993. For financial reporting and cash flow purposes, a recent tax law change could result in the Company's effective tax rate being less in future periods than it would have been without the tax law change. LOSS FROM DISCONTINUED OPERATIONS. The non-cash provision for discontinued operations recorded by the Company in fiscal 1993 was attributable to the change in carrying values of the Company's two commercial land development projects from net realizable values to market values, net of anticipated holding and disposal costs, and to the settlement of other matters. EXTRAORDINARY GAIN. The extraordinary gains recognized by the Company in fiscal 1993 resulted from the extinguishment of portions of notes payable on discounted bases. CUMULATIVE EFFECT OF ACCOUNTING CHANGE. The $20 million cumulative effect of accounting change in fiscal 1993 resulted from the Company's adoption of Statement of Financial Accounting Standards ("SFAS") No. 109 effective July 1, 1992. S-16 17 NET EARNINGS. The fiscal 1993 loss from discontinued operations, extraordinary gain, and cumulative benefit of an accounting change complicate year-to-year comparisons of net earnings. The decrease of $7.5 million in net earnings from fiscal 1993 to fiscal 1994 was primarily attributable to the $20 million cumulative effect of accounting change in fiscal 1993, the increase in cost of sales as a percentage of revenues and the increase in selling, general and administrative expenses, partially offset by the increase in revenues in fiscal 1994 and the loss from discontinued operations recognized in fiscal 1993. NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 38 percent in fiscal 1994 as compared to fiscal 1993, primarily reflecting increased sales orders for Coventry Homes (resulting from a larger number of subdivisions than in fiscal 1993), new sales orders at Sun City Roseville (at which the Company began taking new sales orders in May 1994) and new sales orders at Terravita (at which the Company began taking new sales orders in November 1993). The Company also experienced increased sales orders at all operating active adult communities except Sun City Palm Springs, where net new orders were adversely affected, and may continue to be adversely affected, by the current southern California real estate market and the southern California economy generally and by the effects of other events in southern California. The number of homes under contract at June 30, 1994 was 57 percent higher than at June 30, 1993. This increase was primarily attributable to the initial sales orders at Sun City Roseville (where home closings began in the third quarter of fiscal 1995) and Terravita (where home closings began in July 1994) and to an 89 percent increase for Coventry Homes. LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY In November 1994 the Company negotiated an amendment to its senior unsecured revolving credit facility to increase the amount of the facility from $125 million to $175 million. In June 1995 the senior unsecured revolving credit facility was amended to increase the amount of the facility to $300 million, which will provide greater flexibility in the nature and timing of future development expenditures. In connection with this amendment, the Company repaid its secured Coventry Homes bank debt and reduced the amount of its short-term lines of credit from $20 million to $10 million. At June 30, 1995 the Company had $18.9 million of cash and short-term investments and $141.5 million and $8.3 million of unused borrowing capacity under its $300 million senior unsecured revolving credit facility and $10 million of short-term lines of credit, respectively. 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. Cash flows from the Company's operating communities, however, 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 senior 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 S-17 18 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 fiscal 1995 the Company generated $212.4 million of net cash from community sales activities, used $100.3 million of cash for land and lot and amenity development at operating communities, paid $98.2 million for costs related to communities in the pre-operating stage, used $6.5 million of net cash for conventional homebuilding operations and used $65.0 million of cash for other operating activities. The Company believes that, of the $820.4 million of cash spent by the Company during fiscal 1995 for land acquisitions, lot and amenity development, home construction and other operating activities, approximately $135.9 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 $135.9 million was comprised of $98.2 million related to projects in the pre-operating stage and $37.7 million for land acquisitions and amenity development at operating communities. At June 30, 1995, under the most restrictive of the covenants in the Company's debt agreements, $16.9 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. IMPACT OF INFLATION Operations of the Company can be impacted by inflation. Home and land sales prices can increase, but inflation can also cause increases in interest costs and the costs of land, raw materials and subcontracted labor. Unless such increased costs are recovered through higher sales prices, operating margins will decrease. (See "--Results of Operations--Fiscal Years Ended June 30, 1993 and 1994-- Cost of Sales.") High mortgage interest rates may also make it more difficult for the Company's potential customers to sell their existing homes in order to move to one of the Company's communities or to finance the purchases of their new homes. ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY The Financial Accounting Standards Board recently issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which the Company will be required to implement effective for the fiscal year ending June 30, 1997. This statement requires that long-lived assets must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows (undiscounted and without interest charges) from an asset to be held and used is less than the carrying value of the asset, an impairment loss must be recognized in the amount of the difference between the carrying value and fair value. Assets to be disposed of must be valued at the lower of carrying value or fair value less costs to sell. Management believes that if this standard were to be implemented currently, there would not be an impairment loss; however, until it is implemented, management will periodically reassess the Company's situation in relation to SFAS 121. S-18 19 BUSINESS Del Webb Corporation is one of the nation's leading developers of age-restricted active adult communities. The Company has extensive experience in the active adult community business, having built and sold more than 50,000 homes at its Sun City communities over the past 35 years. The Company is also delivering homes at Terravita, a gate-guarded, amenity-rich, master-planned residential community in north Scottsdale, Arizona, that is not age-restricted. The Company designs, develops and markets these large-scale, master-planned residential communities, primarily for active adults age 55 and over, controlling 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 also has conventional subdivision homebuilding operations in the Phoenix, Tucson and Las Vegas areas and southern California. MASTER-PLANNED COMMUNITIES At June 30, 1995 the Company had six master-planned communities at which home closings were taking place, two master-planned communities at which it was taking home sales orders, but at which closings had not yet commenced, and two master-planned communities in earlier stages of development. COMMUNITIES DELIVERING HOMES The following table shows certain information concerning the six communities at which the Company was delivering homes at June 30, 1995.
------------------------------------------------------------------------------------------------------------ SUN CITY SUN CITY SUN CITY SUN CITY SUN CITY WEST TUCSON LAS VEGAS PALM SPRINGS TERRAVITA ROSEVILLE -------- -------- --------- ------------ --------- --------- First home closing...... 1978 1987 1989 1992 1994 1995 Total acres............. 7,000 1,000 2,500 1,600 800 1,200 Homes at completion..... 16,500 2,500 7,700 4,800 1,400 3,000 Home closings through June 30, 1995......... 14,247 2,092 4,994 885 425 293 Future home sites (including backlog)... 2,253 408 2,706 3,915 975 2,707 Years supply of future homes based on current or estimated absorption............ 2-3 1-2 3-4 9-15 2-3 3-5 Base price range of homes at June 30, 1995 (in thousands)........ $93-$240 $91-$224 $95-$271 $105-$291 $170-$380 $126-$272 ------------------------------------------------------------------------------------------------------------
Sun City West First home closing: January 1978 Estimated homes at completion: 16,500
Fiscal Years Ended June 30, - ----------------------------------------------------------------------------------------------------------------------- 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- Home closings...422 1,924 678 374 759 355 901 798 727 962 708 586 649 617 672 850 1,161 1,104
Sun City West is a self-contained active adult community located 25 miles northwest of downtown Phoenix, Arizona. The focal point of Sun City West is its central activities area, including a very large recreation center, the Sundome (a 7,000-seat indoor theater owned by Arizona State University), a library, a bowling alley, tennis courts, lawn bowling greens and a Company-owned 18-hole championship golf course. Sun City West also has eight other 18-hole golf courses (seven of which are owned by the residents' community association and one of which is owned by a private club owned by residents) and three smaller recreation centers. In addition, Sun City West has over 200 civic and social organizations and clubs. Sun City West had a population of 27,000 at June 30, 1995. S-19 20 Sun City Tucson First home closing: June 1987 Estimated homes at completion: 2,500
Fiscal Years Ended June 30, ------------------------------------------------------------ 1987 1989 1989 1990 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- ---- ---- ---- ---- Home closings......................... 9 286 163 148 202 235 263 342 444
Sun City Tucson is located 20 miles north of downtown Tucson, Arizona. It is developed around an 18-hole championship golf course. This active adult community's 45,000-square foot primary recreation center includes a social hall, arts and crafts rooms, a large kitchen and a sports and exercise facility. Its outdoor recreational facilities include tennis courts, a swimming pool, shuffleboard courts, bocci ball courts and a miniature golf course. Sun City Tucson also has a smaller recreation facility (including a swimming pool, tennis courts and activity rooms). Another smaller recreation center is under construction. Sun City Tucson has numerous civic and social organizations and clubs and had a population of 4,000 at June 30, 1995. Sun City Las Vegas First home closing: March 1989 Estimated homes at completion: 7,700
Fiscal Years Ended June 30, ---------------------------------------------- 1989 1990 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- ---- ---- Home closings.................................... 127 994 800 701 710 815 847
Sun City Las Vegas is located eight miles northwest of downtown Las Vegas, Nevada. It has two 18-hole championship golf courses, with a third, executive course scheduled to become operational in late 1995. Other amenities in this active adult community include 100,000 total square feet of recreation facilities at two large and one smaller recreation centers. Together, these facilities include meeting halls, arts and crafts rooms and tennis, shuffleboard, bocci ball and horseshoe courts, as well as sports and exercise complexes that include indoor and outdoor swimming pools, saunas, weight training and exercise rooms and a racquetball court. An additional 40,000 square feet of similar facilities are being designed and are currently anticipated to become operational in the Summer of 1996. Sun City Las Vegas has approximately 65 civic and social organizations and clubs and had a population of 9,000 at June 30, 1995. Sun City Palm Springs First home closing: October 1992 Estimated homes at completion: 4,800
Fiscal Years Ended June 30, ------------------ 1993 1994 1995 ---- ---- ---- Home closings......................................................... 325 278 282
Sun City Palm Springs is located 20 miles from Palm Springs and 130 miles from downtown Los Angeles. It is a gate-guarded active adult community that has an 18-hole championship golf course and a 62,000-square foot recreation center with indoor and outdoor swimming pools and therapy spas, tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts studios, a 6,300-square foot ballroom and a full-service restaurant and lounge. Sun City Palm Springs had a population of 1,600 at June 30, 1995. Terravita First home closing: July 1994 Estimated homes at completion: 1,400
Fiscal Year Ended June 30, 1995 ------------------- Home closings......................................................... 425
Terravita is a gate-guarded, amenity-rich, master-planned residential community located in north Scottsdale, Arizona, that is not age-restricted. It has an 18-hole championship golf course, a 32,000- S-20 21 square foot clubhouse and fitness center, a swimming pool, tennis courts and other recreational amenities. The Company began delivering homes at Terravita in July 1994. Terravita had a population of 1,000 at June 30, 1995. Sun City Roseville First home closing: February 1995 Estimated homes at completion: 3,000
Fiscal Year Ended June 30, 1995 ------------------- Home closings......................................................... 293
Sun City Roseville is located 20 miles northeast of downtown Sacramento, California. This active adult community is planned to include 27 holes of championship golf, nine holes of which are open and nine holes of which are currently under construction, 40 acres of parks and a 52,000-square foot recreation center with indoor and outdoor swimming pools and therapy spas, tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts studios, a ballroom and a full-service restaurant and lounge. Sun City Roseville began home closings in February 1995 and had a population of 500 at June 30, 1995. NEW COMMUNITIES TAKING HOME SALES ORDERS The following table shows information concerning the two communities at which the Company was taking home sale orders at June 30, 1995, but at which home deliveries have not commenced. - --------------------------------------------------------------------------------
SUN CITY SUN CITY HILTON HEAD GEORGETOWN ------------- ----------- Total acres.............................. 5,600 5,300 Homes at completion...................... 8,000 9,500 New orders first taken................... November 1994 June 1995 Net new orders through June 30, 1995..... 149 122 Anticipated first home closing........... Summer 1995 Spring 1996 Base price range of homes at June 30, 1995 (in thousands).................... $96-245 $101-235
- -------------------------------------------------------------------------------- Sun City Hilton Head Sun City Hilton Head is located inland 13 miles from Hilton Head Island, South Carolina. It is a gate-guarded active adult community which is currently planned for 8,000 homes, several golf courses, a complex of recreational buildings and other amenities on 5,600 acres, of which 1,920 acres are owned by the Company and 3,680 acres are subject to options expiring in various years through 2000. The Company broke ground at Sun City Hilton Head in May 1994 and began taking home sales orders in November 1994. In part because Sun City Hilton Head is located on the East Coast, distant from the Company's other communities, and because of the location of Sun City Hilton Head in relation to major metropolitan areas, there is not the same local pent-up demand for initial home sales orders at this community as has existed with certain of the Company's other communities. In addition, rains and flooding severely hampered development and marketing at this community in fiscal 1995. At June 30, 1995 the Company had a backlog of 149 home sale contracts at Sun City Hilton Head. Home closings at Sun City Hilton Head are scheduled to begin in the Summer of 1995. See "--Sales Activities." Sun City Georgetown Sun City Georgetown is an active adult community being developed 30 miles north of downtown Austin, Texas. It is currently planned for 9,500 homes on 5,300 acres, of which 1,850 acres are owned by the Company and 3,450 acres are subject to options expiring in various years through April 1999. The Company broke ground at Sun City Georgetown in the Spring of 1995 and began taking home sales S-21 22 orders at this community on June 15, 1995. At June 30, 1995 the Company had a backlog of 122 home sale contracts at Sun City Georgetown. The Company believes that this level of initial home sales activity is attributable to local pent-up demand and will not continue in the future. Delivery of the first homes at Sun City Georgetown is currently anticipated in the Spring of 1996. COMMUNITIES IN EARLIER STAGES OF DEVELOPMENT The following table shows information concerning the two communities in earlier stages of development at June 30, 1995. - --------------------------------------------------------------------------------
SUN CITY MACDONALD SUN CITY RANCH GRAND --------- -------- Total acres............................... 600 4,000 Homes at completion....................... 2,300 9,500
- -------------------------------------------------------------------------------- Sun City MacDonald Ranch Sun City MacDonald Ranch is located in Henderson, Nevada, near Las Vegas. It is being developed as an active adult community with fewer amenities (for example, an executive golf course instead of a championship golf course) and higher density than the Company's other active adult communities. This community is currently planned for 2,300 homes on 600 acres. The Company broke ground at Sun City MacDonald Ranch in the Spring of 1995 and plans to begin to take home sales orders at this community in the Fall of 1995. Home closings at Sun City MacDonald Ranch are not currently anticipated to begin before the Spring of 1996. Sun City Grand Sun City Grand is located on 4,000 acres adjacent to Sun City West. It is currently planned for 9,500 homes, several golf courses and amenities similar to those in other Sun Cities. Development began in the Spring of 1995 and is being coordinated with the build-out of Sun City West. The Company does not currently anticipate that home sales activity will begin in fiscal 1996. POTENTIAL FUTURE COMMUNITIES The Company believes that the demographic attributes of its active adult target market segment of people age 55 and over present significant opportunities for carefully selected future active adult communities. The Company's plan is to capitalize on those opportunities and its experience, expertise and reputation by developing active adult communities in strategically selected locations. The current business strategy of the Company includes conducting extensive market research on prospective areas, including consumer surveys and supply and demand analyses, in connection with its evaluation of sites for future active adult communities. At any given time, the Company may have a number of land acquisitions for potential communities under study and in various stages of investigation or negotiation. The Company is currently considering acquiring the land for communities to be located both in areas of the Country where the Company has active adult communities and in other areas, including full four-season areas (i.e., areas which experience cold winters), where it does not have experience in developing communities. In making significant land acquisitions, the Company generally endeavors to acquire options on the land to mitigate the risk of holding the land during the detailed feasibility and entitlement process. However, under certain circumstances, the Company acquires such property directly. In 1992 the Company purchased for $11 million, 5,600 acres of land north of Phoenix as the site for a possible master-planned community. In April 1995 the Company received a general plan amendment and development master plan approval (the initial governmental planning approvals required) for S-22 23 16,500 homes on this property. However, development of this property remains subject to a number of uncertainties and the planning, entitlement and permitting process is still in a relatively early stage. CONVENTIONAL HOMEBUILDING The Company began its conventional subdivision homebuilding operations in the Phoenix area in 1991. The Company expanded its conventional homebuilding operations to Tucson in fiscal 1994 and to Las Vegas and southern California in fiscal 1995. At June 30, 1995 the Company had a backlog of home sales orders at 26 subdivisions, 18 in the Phoenix area, three in Tucson, two in Las Vegas and three in southern California. In order to capitalize on its market knowledge and organizational structure, the Company's conventional homebuilding activities are primarily conducted in those metropolitan or market areas in which the Company is developing an active adult community. Through June 30, 1995 the Company's conventional homebuilding operations have generally targeted first-time and move-up buyers, with the base price of homes offered for sale at June 30, 1995 ranging from $80,000 to $316,000. The Company expects homes in this price range to be its main target segment in the future, but it intends to remain flexible when reviewing potential sites in order to pursue attractive opportunities. The Company currently expects that community development will continue to be its primary business activity. For the year ended June 30, 1995, conventional homebuilding operations represented 18 percent of the Company's revenues. PRODUCT DESIGN The Company designs homes to suit its market and endeavors to conform to the popular home design characteristics in the particular geographic market involved. Home designs are periodically reviewed and refined or changed to reflect changing homebuyer tastes in each market. Homes at the Company's communities generally range in size from 1,000 square feet to 3,900 square feet and include two to five (predominantly two and three) bedrooms, two or more baths, kitchen, living/dining area, family room or nook, two-car garages and golf cart space. Built-in appliances are included. The Company offers a program of interior and exterior upgrades, including different styles of cabinetry and floor coverings and, at its communities, a program for architectural changes to allow home buyers to further modify their homes. CONSTRUCTION The Company generally functions as its own general contractor. At all stages of production, the Company's management personnel and on-site superintendents coordinate the activities of subcontractors, consultants and suppliers and subject their work to quality and cost controls. Consulting firms assist in project planning and independent contractors are employed to perform almost all of the site development and construction work. Within its active adult communities and, generally, its conventional subdivisions, the Company is the exclusive developer of homes and does not sell vacant lots to others for residential construction purposes. The time required for construction of the Company's homes depends on the weather, time of year, local labor situations, availability of materials and supplies and other factors. The Company strives to coordinate the construction of homes with home sales orders to control the costs and risks associated with completed but unsold inventory. An inventory of unsold homes under construction is maintained for immediate sale to customers. At June 30, 1995 the Company had 366 completed homes (excluding models and vacation homes) and 388 homes under construction that were not subject to a sales contract. At June 30, 1995 these homes represented $26.3 million and $10.3 million of the Company's $142.4 million of home construction costs, which are a component of its $828.8 million of real estate inventories at that date. S-23 24 SALES ACTIVITIES At each of its communities the Company establishes a large and well-appointed sales pavilion and an extensive complex of furnished model homes. These models include a wide variety of single family homes, each of which is generally available in several exterior styles. The Company's homes are sold by its commissioned sales personnel, who are available to provide prospective home buyers with floor plans, price information, option selections and tours of models and lots. All communities have co-brokerage programs with independent real estate brokers. Homes are sold through sales contracts, some of which allow customers to purchase homes for delivery up to one year or more in the future. The sales contracts generally require an initial deposit and an additional deposit prior to commencement of construction. The Company provides to all home buyers standardized warranties subject to specified limitations. While more than one factor may contribute to a given home sale, the Company's experience indicates that a substantial portion of its home sales at its communities are attributable to follow-ups on referrals from residents of its communities and, at active adult communities, to the Company's "Vacation Getaway" program. This program enables prospective purchasers to visit an active adult community and stay (for a modest charge) in vacation homes for up to one week to experience the Sun City lifestyle prior to deciding whether to purchase a home. The Company's information is that most homebuyers at its active adult communities generally visit the community in which they purchase on more than one occasion before buying. This may affect the success or initial success of the sales effort at those communities at which a higher proportion of the potential customers do not live within a several-hour driving distance from the community. The Company also markets its communities through billboards, television and radio commercials, local and national print advertising, direct mailings and telemarketing. The Company offers mortgage financing for the purchasers of homes at its communities and conventional subdivisions. The Company sells the mortgages it generates to third parties. OTHER REAL ESTATE ACTIVITIES The Company is completing the development of The Foothills, a 4,140-acre master-planned residential land development project located in Phoenix in which individual land parcels and lots are being sold to other builder/developers for conventional housing and related commercial developments. At June 30, 1995, 424 acres remained to be sold at The Foothills. Of these acres, 401 are zoned for conventional housing and 23 are zoned for commercial development. At June 30, 1995 the Company's investment in The Foothills was $25.9 million. COMPETITION The Company believes that it maintains a leading position within the active adult community market in each of the metropolitan areas in which it has a community that is currently generating revenues. The Company believes the major competitive factors in active adult community home purchases include location, lifestyle, price, value, recreational facilities and other amenities and builder/developer reputation. The Company believes its reputation, established by building and selling more than 50,000 homes over 35 years and providing an attractive lifestyle for adults age 55 and over, enhances the Company's active adult community marketing position. All of the Company's real estate operations are subject to a high degree of competition. The Company competes with numerous homebuilders and developers, certain of which have greater financial resources than the Company. The Company also competes generally with most homebuilders and residential developers in its geographic markets and with resales of homes in the general resale market for such housing, including in its own communities. For the Company's active adult communities, there are varying degrees of direct and increasing competition from businesses engaged exclusively or primarily in the sale of homes to buyers age 55 and older and from non-age-restricted, master-planned communities in these areas. The Company competes S-24 25 with new home sales and resales at these other communities. Sun City Hilton Head competes with numerous homebuilders and community developers in the eastern seaboard, including in the Hilton Head area and Florida. A large homebuilder recently commenced developing a 1,300-home, age-restricted community in Indio, California, which is near Sun City Palm Springs. The Company believes there may be significant additional future competition in active adult community development, including competition from conventional community developers. MANAGEMENT BOARD OF DIRECTORS Set forth below is certain information with respect to the Directors of the Company.
YEARS AS NAME AGE POSITION A DIRECTOR - ----------------------------------- --- ------------------------------------------ ---------- Philip J. Dion..................... 50 Chairman of the Board and Chief Executive 8 Officer, Member of the Executive Committee and Ex-Officio Member of the Nominating Committee D. Kent Anderson................... 54 Member of the Finance Committee 1 Robert Bennett..................... 70 Member of the Finance Committee and the 10 Nominating Committee Hugh F. Culverhouse, Jr............ 46 Chairman of the Finance Committee and 5 Member of the Executive Committee Kenny C. Guinn..................... 58 Member of the Human Resources Committee 1 J. Russell Nelson.................. 65 Chairman of the Nominating Committee and 12 Member of the Audit Committee Peter A. Nelson.................... 63 Chairman of the Executive Committee and 11 Chairman of the Human Resources Committee Michael E. Rossi................... 51 Member of the Audit Committee 1 C. Anthony Wainwright.............. 61 Member of the Human Resources Committee 7 and the Nominating Committee Sam Yellen......................... 64 Chairman of the Audit Committee and Member 4 of the Nominating Committee
Mr. Dion has been the Company's Chairman of the Board and Chief Executive Officer since November 1987. Mr. Dion joined the Company in 1982 and held various positions in the Company until his appointment as Chairman of the Board and Chief Executive Officer. Mr. Anderson has served as the Chairman of the Board and Chief Executive Officer of Post Oak Bank in Houston, Texas, since 1991. Mr. Anderson previously served as Chairman of the Board and held other executive positions with First Interstate Bank of Texas, N.A. from 1988 to 1991. Mr. Bennett has been Executive Vice President with Daiwa Securities America, Inc., an investment banking firm, since July 1995 and was Senior Vice President of Daiwa Securities America, Inc. from January 1987 to July 1995. Mr. Culverhouse has been a partner in the law firm of Hugh F. Culverhouse, P.A. and its predecessor firm since 1987. Dr. Guinn served as interim President of the University of Nevada, Las Vegas, from May 1994 to May 1995 and has served as Chairman of the Boards of Directors of Southwest Gas Corporation and PriMerit Bank since 1988 and 1987, respectively. Dr. Guinn also served as Chief Executive Officer of Southwest Gas Corporation from October 1988 to May 1993 and Chief Executive Officer of PriMerit S-25 26 Bank from 1985 to 1992. Dr. Guinn is a director of Boyd Gaming Corporation and Oasis Residential, Inc. Dr. Nelson was Dean of Business and Administration of the University of Colorado from 1989 until his retirement in 1992 and was President of Arizona State University from 1981 to 1989. Mr. Nelson was Senior Vice President of Marketing with McDonald's Corporation from 1984 until his retirement in 1990. Mr. Rossi has been Vice Chairman of BankAmerica Corporation since 1993. Mr. Rossi has held various positions with BankAmerica Corporation since 1986, including Chief Credit Officer from 1990 to 1993 and Executive Vice President, Commercial Banking Division from 1988 to 1990. Mr. Wainwright has been the Chairman of the advertising agency of Harris, Drury, Cohen, Inc. since May 1995. From 1989 until April 1995 Mr. Wainwright was the Vice Chairman of the advertising agency of Campbell-Mithun-Esty. Mr. Wainwright is a director of All-Comm Media, Inc., American Woodmark Co., Gibson Greeting Cards Co. and Specialty Retail Group, Inc. Mr. Yellen was a partner with KPMG Peat Marwick LLP from 1968 until his retirement in 1990. Mr. Yellen is a director of Beverly Funding Corporation, Wedbush Corporation, Downey Savings and Loan Association and LTC Properties, Inc. EXECUTIVE OFFICERS Set forth below is certain information concerning the executive officers of the Company.
YEARS AS AN YEARS EMPLOYED NAME AGE POSITION EXECUTIVE OFFICER BY THE COMPANY - --------------------------- --- ------------------------------ ----------------- -------------- Philip J. Dion............. 50 Chairman of the Board and 13 13 Chief Executive Officer Joseph F. Contadino........ 53 Senior Vice President and 3 4 President of Coventry Homes John H. Gleason............ 53 Senior Vice President, Project 5 7 Planning and Development LeRoy C. Hanneman, Jr...... 48 Senior Vice President and 6 23 General Manager -- Sun City Las Vegas Frank D. Pankratz.......... 45 Senior Vice President and 7 8 General Manager -- Sun City Palm Springs Charles T. Roach........... 48 Senior Vice President and 6 16 General Manager -- Sun City West John A. Spencer............ 46 Senior Vice President and 10 16 Chief Financial Officer J. Dennis Wilkins.......... 50 Senior Vice President and 6 6 General Manager -- Sun City Hilton Head Robertson C. Jones......... 50 Vice President and General 3 3 Counsel Anne L. Mariucci........... 38 Vice President and General 9 11 Manager -- Terravita Donald V. Mickus........... 49 Vice President, Treasurer and 9 12 Secretary David E. Rau............... 38 Vice President and Controller 9 10 David G. Schreiner......... 42 Vice President, Marketing 2 4 M. Lynn Schuttenberg....... 52 Vice President, Human 2 9 Resources Robert R. Wagoner.......... 54 Vice President, Land 1 3 Development
S-26 27 For information concerning Mr. Dion, see "-- Board of Directors." Mr. Contadino has served as Senior Vice President since January 1994. Prior to that time he served as Vice President from November 1991 to January 1994. He became President of Coventry Homes in January 1991. From 1981 to January 1991 Mr. Contadino was the owner, Chief Executive Officer and President of Coventry Financial, Inc. ("CFI"), a Phoenix-based homebuilder. In January 1991 the Company purchased certain assets of CFI. Mr. Gleason has served as Senior Vice President, Project Planning and Development, since January 1994. Prior to that time he served as Vice President, Project Planning and Development, from June 1993 to January 1994. He became a Vice President of the Company in January 1990. Mr. Hanneman has served as a Senior Vice President of the Company since January 1994. Prior to that time he served as Vice President of the Company from January 1989 to January 1994. Since August 1987 he has served as General Manager of Sun City Las Vegas. Mr. Pankratz became General Manager of Sun City Palm Springs in February 1990. Since September 1988 he has served as Senior Vice President of the Company. Mr. Roach has served as a Senior Vice President of the Company since January 1994. Prior to that time he served as Vice President of the Company from January 1989 to January 1994. Since August 1987 he has served as General Manager of Sun City West. Mr. Spencer became Chief Financial Officer of the Company in April 1993. Since February 1991 he has served as Senior Vice President of the Company. Prior to that time he served as Vice President and Controller of the Company from January 1985 to February 1991. Mr. Wilkins has served as a Senior Vice President of the Company and General Manager of Sun City Hilton Head since January 1994. Prior to that time he served as a Vice President of the Company and General Manager of Sun City Tucson from July 1989 to January 1994. Mr. Jones became Vice President and General Counsel of the Company in January 1992. From March 1990 to November 1991 he was a partner with the law firm of Gaston & Snow. Ms. Mariucci has served as Vice President of the Company since June 1986, when she began serving as Vice President, Corporate Planning and Development. She became General Manager of Terravita in December 1992. Mr. Mickus has served as Vice President and Treasurer since November 1985 and as Secretary commencing in June 1991. Mr. Rau became Vice President and Controller in February 1991. Prior to that time he served as Vice President, Taxes and Human Resources, from May 1990 to February 1991. Mr. Schreiner became Vice President, Marketing, in December 1992. Prior to that time he served as Senior Vice President, Marketing and Operations, of Coventry Homes from October 1992 to December 1992 and Vice President, Marketing and Operations, of Coventry Homes from January 1991 to October 1992. Mr. Schreiner was employed by CFI from April 1987 to January 1991. Ms. Schuttenberg became Vice President, Human Resources, in April 1993. Prior to that time she served as Director of Human Resources from March 1992 to April 1993 and as Director of Taxes from April 1989 to March 1992. Mr. Wagoner became Vice President, Land Development, in January 1994. Prior to that time he served as Director of Land Development from January 1992 to January 1994. From 1959 to January 1992 Mr. Wagoner was employed by Collar, Williams and White Engineering in Phoenix, where he held various positions, including President. S-27 28 UNDERWRITING The names of the Underwriters of the shares of Common Stock offered hereby and the aggregate number of shares which each has severally agreed to purchase from the Company (subject to the terms and conditions specified in the Underwriting Agreement) are as follows:
NUMBER OF UNDERWRITER SHARES - ------------------------------------------------ ---------- Dillon, Read & Co. Inc. ........................ 690,000 Montgomery Securities........................... 690,000 Alex. Brown & Sons Incorporated................. 45,000 Auerbach Pollak & Richardson Inc. .............. 15,000 Bear, Stearns & Co. Inc. ....................... 45,000 CS First Boston Corporation..................... 45,000 Crowell, Weedon & Co. .......................... 25,000 Dean Witter Reynolds Inc. ...................... 45,000 A.G. Edwards & Sons, Inc. ...................... 45,000 Furman Selz Incorporated ....................... 25,000 Janney Montgomery Scott Inc. ................... 25,000 Edward D. Jones & Co. .......................... 25,000 Ladenburg, Thalmann & Co. Inc. ................. 25,000 Lazard Freres & Co. LLC ........................ 45,000 Legg Mason Wood Walker, Incorporated............ 25,000 Lehman Brothers Inc. ........................... 45,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated.................................. 45,000 Morgan Stanley & Co. Incorporated............... 45,000 David A. Noyes & Company........................ 15,000 Oppenheimer & Co., Inc. ........................ 45,000 PaineWebber Incorporated........................ 45,000 Peacock, Hislop, Staley & Given................. 15,000 Pennsylvania Merchant Group Ltd................. 15,000 Piper Jaffray Inc. ............................. 25,000 Principal Financial Securities, Inc. ........... 25,000 Prudential Securities Incorporated.............. 45,000 Rauscher Pierce Refsnes, Inc. .................. 25,000 The Robinson-Humphrey Company, Inc. ............ 25,000 Salomon Brothers Inc ........................... 45,000 Schroder Wertheim & Co. Incorporated............ 45,000 The Seidler Companies Incorporated.............. 15,000 Wellington (H.G.) & Co. Inc. ................... 15,000 --------- Total....................................... 2,350,000 =========
The Managing Underwriters are Dillon, Read & Co. Inc. and Montgomery Securities. If any shares of Common Stock offered hereby are purchased by the Underwriters, all such shares will be so purchased. The Underwriting Agreement contains certain provisions whereby if any Underwriter defaults in its obligation to purchase such shares and if the aggregate obligations of the Underwriters so defaulting do not exceed 10% of the shares offered hereby, the remaining Underwriters, or some of them, must assume such obligations. The shares of Common Stock offered hereby are being offered severally by the Underwriters for sale at the price set forth on the cover page hereof, or at such price less a concession not to exceed $0.60 per share on sales to certain dealers. The Underwriters may allow, and such dealers may reallow, a concession not to exceed $0.10 per share on sales to certain dealers. The offering of the shares of Common Stock is made for delivery when, as, and if accepted by the Underwriters and subject to prior sale and to withdrawal, cancellation or modification of the offer without notice. The Underwriters reserve the right to reject any order for the purchase of the shares. After the shares are released for sale to the public, the public offering price, the concession and the reallowance may be changed by the Underwriters. The Company has granted to the Underwriters an option to purchase up to an additional 352,500 shares of Common Stock on the same terms per share. If the Underwriters exercise this option, each of the Underwriters will have a firm commitment, subject to certain conditions, to purchase approximately the same proportion of the aggregate shares so purchased as the number of shares to be purchased by it shown in the above table bears to the total number of shares in such table. The Underwriters may exercise such option on or before the thirtieth day from the date of the public offering of the shares offered hereby and only to cover overallotments made of the shares in connection with this Offering. The Company and certain of its directors and executive officers have agreed not to offer, sell or otherwise dispose of any shares of Common Stock of the Company for a period of 90 days after the date of this Prospectus Supplement without the prior written consent of Dillon, Read & Co. Inc., except that the Company may, without that consent, issue shares of Common Stock pursuant to its existing stock and benefit plans. The Company has agreed in the Underwriting Agreement to indemnify the Underwriters against certain civil liabilities, including liabilities under the Securities Act, or to contribute to payments that the Underwriters may be required to make in respect thereof. CERTAIN LEGAL MATTERS Certain legal matters with respect to the Common Stock will be passed upon for the Underwriters by Latham & Watkins. See "Certain Legal Matters" in the accompanying Prospectus. S-28 29 PROSPECTUS $200,000,000 DEL WEBB CORPORATION DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND STOCK PURCHASE WARRANTS ------------------------ Del Webb Corporation (the "Company") may offer and issue from time to time its: debt securities (the "Debt Securities") in one or more series, consisting of debentures, notes or other evidences of indebtedness and having such prices and terms as are determined at the time of sale; preferred stock, which may be issued in one or more series (the "Preferred Stock"); common stock (the "Common Stock"); and Stock Purchase Warrants to purchase Preferred Stock or Common Stock (the "Warrants" and, together with the Debt Securities, Preferred Stock and Common Stock, the "Securities"). The Securities may be issued as Units (the "Units") and in any combination, the Debt Securities may or may not be convertible into Preferred Stock or Common Stock and the Preferred Stock may or may not be convertible into Common Stock or exchangeable for Debt Securities. The accompanying Prospectus Supplement sets forth: the ranking of the Debt Securities covered thereby as senior, senior subordinated or subordinated (including junior subordinated) and the specific designation, aggregate principal amount, purchase price, maturity, interest rate (or manner of calculation thereof), time of payment of interest (if any), right to defer interest (if any), convertibility (if any) and, if applicable, Securities into which convertible and conversion price and any other specific terms of the Debt Securities; the rights, privileges and preferences of the Preferred Stock covered thereby, including whether and on what terms such Preferred Stock may be convertible into Common Stock or exchangeable for Debt Securities, and whether the Company has elected to offer any Preferred Stock in the form of depositary shares; the Preferred Stock or Common Stock for which any Warrants covered thereby will be exercisable and the exercise price; whether the Securities covered thereby will be issued in Units and, if so, the Securities which are part thereof; whether the Securities covered thereby are listed on a securities exchange; and the name of and compensation to each dealer, underwriter or agent (if any) involved in the sale of the Securities covered thereby. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------ Prior to issuance there will have been no market for the Debt Securities, Preferred Stock or Warrants, and there can be no assurance that a secondary market for the Debt Securities, Preferred Stock or Warrants will develop. This Prospectus may not be used to consummate sales of Securities unless accompanied by a Prospectus Supplement. The Securities may be offered through one or more different plans of distribution, including offerings through underwriters. See "Plan of Distribution." ------------------------ The date of this Prospectus is July 21, 1995 30 IN CONNECTION WITH THE OFFERINGS OF THE DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK OR WARRANTS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK OR WARRANTS, OR ANY OF THEM, AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Debt Securities, Preferred Stock, Common Stock and Warrants. This Prospectus, which constitutes part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the Rules and Regulations of the Commission. For further information with respect to the Company, reference is made to the Registration Statement. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. The Registration Statement, as well as such reports, proxy statements and other information filed by the Company, may be inspected and copied (at prescribed rates) at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the Commission's Regional Offices located at Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048. In addition, such reports, proxy statements and other information concerning the Company may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and the Pacific Stock Exchange, 115 Sansome Street, Suite 1104, San Francisco, California 94104. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for its fiscal year ended June 30, 1994 and its Quarterly Reports on Form 10-Q for the Quarters ended September 30, 1994, December 31, 1994 and March 31, 1995, which have been filed with the Commission, are incorporated in this Prospectus by reference. Pages 15-21 of the Company's proxy statement for the annual meeting of its shareholders held on November 2, 1994, which is incorporated by reference in, and Exhibit 99.0 (the Company's Amended and Restated Certificate of Incorporation) to, the Company's Quarterly Report on Form 10-Q for the Quarter ended December 31, 1994, are both also specifically incorporated herein by reference. They contain a description of and provisions with respect to the Common Stock and Preferred Stock of the Company. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering made hereby are incorporated by reference in this Prospectus and made a part hereof from the date such documents are filed. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, in the Prospectus Supplement or in any subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of each document incorporated herein by reference (not including the exhibits to those documents, unless the exhibits are specifically incorporated by reference therein or herein). Requests for such copies should be directed to: Del Webb Corporation, 6001 North 24th Street, Phoenix, Arizona 85016, Attention: Secretary. Telephone requests may be directed to (602) 808-8000. 2 31 THE COMPANY Del Webb Corporation is one of the nation's leading developers of age-restricted (age 55 and over) active adult communities, having built and sold approximately 50,000 homes at its active adult Sun City communities over the past 35 years. The Company currently offers homes for sale at eight communities, each of which, except Terravita, is an active adult community: Sun City West (near Phoenix), Sun City Tucson and Terravita (in Scottsdale) in Arizona; Sun City Las Vegas in Nevada; Sun City Palm Springs and Sun City Roseville (near Sacramento) in California; Sun City Hilton Head in South Carolina; and Sun City Georgetown (near Austin), in Texas. The Company is in various stages of developing two other Sun City active adult communities: Sun City McDonald Ranch (near Las Vegas) in Nevada, and Sun City Grand, near Sun City West, in Arizona. The Company designs, develops and markets these large-scale, master-planned residential communities, controlling all phases of the master plan development process from land selection through construction and selling homes. Within its active adult communities, the Company is the exclusive developer of homes. The Company also conducts conventional subdivision homebuilding operations in the Phoenix, Tucson and Las Vegas areas and Southern California. The Company is also in the preliminary development process for a potential master-planned development near Phoenix, Arizona, located on approximately 5,600 acres. However, development of this project remains subject to a number of uncertainties and the planning, entitlement and permitting processing is still in a relatively early stage. The Company was incorporated in 1946 under Arizona law and reincorporated in Delaware in 1994. The Company's principal executive offices are located at 6001 North 24th Street, Phoenix, Arizona 85016 and its telephone number is (602) 808-8000. The Company conducts substantially all of its activities through subsidiaries and, as used in this Prospectus and the accompanying Prospectus Supplement, the term the "Company" includes Del Webb Corporation and its subsidiaries, unless the context indicates otherwise. USE OF PROCEEDS Unless otherwise set forth in the accompanying Prospectus Supplement, the net proceeds from the sale of the Securities will be used to reduce outstanding balances under the Company's senior unsecured revolving credit facility, to fund land acquisitions and development of new projects and for general corporate purposes. Amounts so repaid under the revolving credit facility may be reborrowed in the future. CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the consolidated ratio of earnings to fixed charges of the Company for the periods indicated.
NINE MONTHS ENDED MARCH FISCAL YEAR ENDED JUNE 30, 31, ------------------------------------ ------------ 1990 1991 1992 1993 1994 1994 1995 ---- ---- ---- ---- ---- ---- ---- Ratio of earnings to fixed charges (unaudited)........................ 1.81x 1.38x 1.59x 1.63x 1.30x 1.19x 1.44x
The ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges. For this purpose "earnings" means earnings (loss) from continuing operations before income taxes plus (a) fixed charges and interest amortized to cost of sales (including the proportionate share thereof of unconsolidated affiliates and discontinued operations) minus (b) capitalized interest (including the proportionate share thereof of unconsolidated affiliates and discontinued operations). "Fixed charges" means total interest, whether capitalized or expensed (including the proportionate share thereof of unconsolidated affiliates and discontinued operations and the portion of rent expense representative of interest costs), plus (i) debt-related fees and (ii) amortization of deferred financing costs. 3 32 DESCRIPTION OF DEBT SECURITIES The Debt Securities will constitute senior, senior subordinated or subordinated (including, if applicable, junior subordinated) debt of the Company and will be issued under a Senior Debt Securities Indenture (the "Senior Debt Indenture"), a Senior Subordinated Debt Securities Indenture (the "Senior Subordinated Debt Indenture") or a Subordinated Debt Securities Indenture (the "Subordinated Debt Indenture"), in each case between the Company and a Trustee (the "Trustee"). The Senior Debt Indenture, Senior Subordinated Debt Indenture and the Subordinated Debt Indenture are sometimes referred to below individually as an "Indenture" and collectively as the "Indentures." Unless otherwise stated in the Prospectus Supplement, the Trustee under the first Indenture under which Debt Securities will be issued will be The First National Bank of Boston. Unless otherwise stated in the applicable Prospectus Supplement, The First National Bank of Boston may also be the Trustee under more than one of the other Indentures. (See "Concerning the Trustee.") The Debt Securities offered by this Prospectus and the accompanying Prospectus Supplement are referred to below as the "Offered Debt Securities." If and to the extent set forth in the accompanying Prospectus Supplement, the Offered Debt Securities will be convertible into Preferred or Common Stock of the Company or issued as part of Units of Offered Debt Securities and other Securities. If the Offered Debt Securities are to be issued as part of Units of Debt Securities and other Securities or may be issued in exchange for Preferred Stock, the Prospectus Supplement will describe any applicable material federal income tax consequences. The following summaries of certain provisions of the Indentures and the Debt Securities do not purport to be complete. Except to the extent set forth in the Prospectus Supplement with respect to a particular issue of Debt Securities, the Indentures are substantially identical, except for the provisions relating to subordination, including the fact that senior subordinated Debt Securities will rank senior to the subordinated Debt Securities. GENERAL The Indenture for the Offered Debt Securities will not limit the amount of additional indebtedness the Company or any of its subsidiaries may incur, except as may be provided in the accompanying Prospectus Supplement. The Debt Securities will be unsecured senior, senior subordinated or subordinated obligations of the Company, as set forth in the accompanying Prospectus Supplement. The Company is a holding company, which currently conducts its operations through subsidiaries. In addition to the subordination described under "Subordination of Senior Subordinated and Subordinated Debt Securities" below and as may be described in the accompanying Prospectus Supplement, this effectively subordinates the Debt Securities to all indebtedness (including trade payables) of the Company's subsidiaries. Therefore, the Company's rights and the rights of its creditors, including holders of Debt Securities, to participate in the assets of any subsidiary upon the latter's liquidation or recapitalization will be subject to the prior claims of the subsidiary's creditors (including third persons who have the benefit of guarantees given by the subsidiary), except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. However, in that case the claims of the Company would still be effectively junior to any indebtedness of the subsidiary to the extent the holders of that indebtedness are entitled to the benefit of security interests in the assets of the subsidiary, as well as to any indebtedness of that subsidiary which is senior to any debt or other claims held by the Company. In addition, the Company's $100 million of Senior Notes due 2000 and amounts which may from time to time be outstanding under the Company's $300 million principal debt facility are guaranteed by subsidiaries of the Company that hold substantially all of its consolidated assets. The Debt Securities, including any senior Debt Securities, will not be so guaranteed. As a result, the holders of that other debt may have a claim against the assets of the Company's subsidiaries before those assets are available to make payments due on the Debt Securities. Also, because the Company is a holding company, it is dependent on dividends or other distributions from its subsidiaries to make payments on its indebtedness, including the Debt Securities. Such dividends or other distributions to the Company may be subject to state law, which can restrict the ability of a corporation to pay dividends or make other distributions to its shareholders and which protect the rights of creditors of a corporation, including third persons who have the benefit of 4 33 guarantees given by the corporation, in the event of improperly made dividends or distributions, as well as to present or future contractual or regulatory restrictions that could materially restrict the ability of the subsidiaries to make such payments to the Company. The accompanying Prospectus Supplement discloses, to the extent material to the Company, any contractual restrictions on the ability of the subsidiaries of the Company to make dividends, loans or advances to the Company that exist at the date of that Prospectus Supplement. Except as may be described in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will not restrict the Company's ability to enter into contracts in the future that limit the ability of the Company's subsidiaries to make dividends, loans or advances to it. Payments to the Company from its subsidiaries also are contingent upon the earnings of such subsidiaries and are subject to various business considerations, such as the working capital needs of the subsidiaries. Reference is made to the accompanying Prospectus Supplement for the following terms of and information relating to the Offered Debt Securities (to the extent such terms are applicable to such Debt Securities): (a) the specific designation, aggregate principal amount, purchase price and denomination; (b) the date of maturity; (c) the interest rate or rates (or the method by which such rate will be determined), if any; (d) the date from which interest will accrue and dates on which any such interest will be payable; (e) the rights of the Company to defer interest, if any; (f) the place or places where the principal of, premium, if any, and interest, if any, on the Offered Debt Securities will be payable; (g) whether the Offered Debt Securities are senior, senior subordinated or subordinated (including junior subordinated) Debt Securities; (h) any redemption, repayment or sinking fund provisions; (i) any obligation of the Company to offer to purchase the Offered Debt Securities in the event of a Change of Control (as defined) of the Company; (j) whether the Offered Debt Securities are convertible into Preferred Stock or Common Stock and, if so, the terms of the security into which they are convertible (see "Description of Capital Stock"), the conversion price, other terms related to conversion and any anti-dilution protections; (k) whether the Offered Debt Securities will be sold as part of Units consisting of Offered Debt Securities and other Securities; (l) any applicable material federal income tax consequences; and (m) any other material specific terms of the Offered Debt Securities, including any material additional events of default or covenants provided for with respect to the Offered Debt Securities and any material terms that may be required by or advisable under applicable laws or regulations. Debt Securities may bear interest at a fixed rate or a floating rate. Debt Securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate or as part of Units consisting of Debt Securities and other Securities may be sold or deemed to be sold at a discount below their stated principal amount. With respect to any Debt Securities as to which the Company has the right to defer interest, the holders of such Debt Securities may be allocated interest income for federal and state income tax purposes without receiving equivalent, or any, interest payments. The material federal income tax considerations applicable to any such discounted Debt Securities or to certain Debt Securities issued at par that are treated as having been issued at a discount for federal income tax purposes will be described in the Prospectus Supplement. GLOBAL DEBT SECURITIES If any Debt Securities are represented by one or more Global Securities, the applicable Prospectus Supplement will describe the terms of the depositary arrangement with respect to such Global Securities. SUBORDINATION OF SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES The senior subordinated and subordinated Debt Securities will be subordinate and junior in right of payment, to the extent and in the manner to be set forth in the Indenture, to all "Senior Debt" of the Company. Except to the extent set forth in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities that are senior subordinated or subordinated Debt Securities will define "Senior Debt" as all present or future "Indebtedness" (defined below) created, incurred, assumed or, to the extent described below, guaranteed by the Company (and all renewals, extensions or refundings thereof), unless the instrument under which such Indebtedness is created, incurred, assumed or guaranteed provides that such Indebtedness is not senior or superior in right of payment to the Offered 5 34 Debt Securities in question; provided, however, that Senior Debt shall not include (a) any Indebtedness of the Company to any of its subsidiaries, (b) any trade payables of the Company or (c) except to the extent set forth or referred to in the accompanying Prospectus Supplement, guarantees by the Company of Indebtedness outstanding at the date hereof or that may be outstanding in the future. Each Senior Subordinated Debt Indenture will provide that the Company will not issue any Indebtedness that is subordinated in right of payment to any Senior Debt of the Company and is senior in right of payment to the Debt Securities covered by the Senior Subordinated Debt Indenture. No Subordinated Debt Indenture will contain a similar provision. Except as may otherwise be provided in the accompanying Prospectus Supplement, "Indebtedness" will be defined in the Indenture for the Offered Debt Securities to mean any indebtedness of a person, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), evidenced by bonds, notes, debentures or similar instruments or letters of credit or representing the balance deferred and unpaid of the purchase price of any property or interest therein (except any such balance that constitutes a trade payable), all capitalized lease obligations and all direct or indirect obligations that arise as a result of claims under or drawings pursuant to surety, performance, completion or maintenance bonds. By reason of such subordination, in the event of dissolution, insolvency, bankruptcy or other similar proceedings, upon any distribution of assets: (a) holders of Senior Debt will be entitled to be paid in full before payments may be made on senior subordinated and subordinated Debt Securities and the holders of senior subordinated and subordinated Debt Securities will be required to pay over their share of such distributions to the holders of Senior Debt until such Senior Debt is paid in full (except to the extent, if at all, that holders of senior subordinated and subordinated Debt Securities may receive securities that are subordinated to the same extent the senior subordinated and subordinated Debt Securities are subordinated to Senior Debt); (b) in addition, holders of senior subordinated debt will be entitled to be paid in full before payments may be made on subordinated Debt Securities and holders of subordinated Debt Securities will be required to pay over their share of such distributions to the holders of senior subordinated debt until such senior subordinated debt is paid in full (except to the extent, if at all, that holders of subordinated Debt Securities may receive securities that are subordinated to the same extent the subordinated Debt Securities are subordinated to senior subordinated debt); and (c) creditors of the Company who are not holders of senior subordinated or subordinated Debt Securities may recover less, ratably, than holders of Senior Debt and may recover more, ratably, than the holders of the senior subordinated or subordinated Debt Securities, and creditors of the Company who are not holders of subordinated Debt Securities may recover less, ratably, than holders of Senior Debt and may recover more, ratably, than holders of subordinated Debt Securities. Accordingly, such subordination may result in a reduction or elimination of payments to the holders of all senior subordinated and subordinated Debt Securities or all subordinated Debt Securities. Except as may otherwise be described in the accompanying Prospectus Supplement, no payment of principal or interest with respect to any of the Offered Debt Securities that are senior subordinated or subordinated Debt Securities may be made, nor may the Company acquire any Offered Debt Securities that are senior subordinated or subordinated Debt Securities, in each case except as set forth in the Indenture for such Offered Debt Securities, if any default with respect to Senior Debt that permits the acceleration of the maturity of any Senior Debt occurs and is continuing and such default is either the subject of judicial proceedings or the Company receives notice (a "Default Notice") of the default from a holder of Senior Debt entitled to give such a notice. By reason of these provisions, in the event of a default on any Senior Debt of the Company that is presently existing or may be incurred in the future, payments of principal of and interest and premium, if any, on the Offered Debt Securities that are senior subordinated or subordinated Debt Securities may not be permitted until such Senior Debt is paid in full. However, except as may otherwise be described in the accompanying Prospectus Supplement, the Company may resume payments in respect of the Offered Debt Securities that are senior subordinated or subordinated Debt Securities and may acquire such senior subordinated or subordinated Debt Securities if (a) 179 days pass after the Default Notice is given, if the default with respect to such Senior Debt is not then the subject of judicial proceedings, or (b) the default with respect to such Senior Debt is cured or waived and, in each case described in the foregoing clauses (a) and (b), the terms of the Indenture otherwise permit the payment or acquisition of such Offered Debt 6 35 Securities at the time in question. The Indenture for the Company's $100 million of 10 7/8% Senior Notes and the Company's $300 million senior unsecured revolving credit agreement restrict the acquisition by the Company of its subordinated indebtedness, including any senior subordinated or subordinated Debt Securities, prior to April 1, 2000 (for the Indenture for the Senior Notes) and the term of the principal credit facility as it may be extended from time to time, respectively, and the Indentures for the Company's $100 million of 9 3/4% Senior Subordinated Debentures and $100 million of 9% Senior Subordinated Debentures restrict the acquisition, prior to March 1, 2003 and February 15, 2006, respectively, of subordinated Debt Securities issued pursuant to the Subordinated Debt Indenture. The Prospectus Supplement for the Offered Debt Securities or the information incorporated herein by reference sets forth the approximate amount of Senior Debt and Senior Subordinated Debt outstanding as of the end of the most recent fiscal quarter of the Company. CERTAIN COVENANTS OF THE COMPANY AFFIRMATIVE COVENANTS. In addition to such other covenants, if any, as may be described in the accompanying Prospectus Supplement and except as may otherwise be set forth therein, the Indenture for the Offered Debt Securities will require the Company, subject to certain limitations described therein, to, among other things, do the following: (a) deliver to the Trustee copies of all reports filed with the Commission; (b) deliver to the Trustee annual officers' certificates with respect to the Company's compliance with its obligations under that Indenture; (c) maintain its corporate existence subject to the provisions described below relating to mergers and consolidations; and (d) pay its taxes when due except where such taxes are being contested in good faith. Except as may be set forth in the accompanying Prospectus Supplement, the Indentures will not restrict the business or operations of the Company or its subsidiaries, limit their indebtedness or prohibit any liens, charges or other encumbrances on any properties or other assets they may have from time to time. DIVIDENDS AND OTHER PAYMENTS. Except as may otherwise be provided in the accompanying Prospectus Supplement and except as may otherwise be set forth in the Indenture for the Offered Debt Securities, that Indenture will generally prohibit the Company from making a "Restricted Payment" (defined below) if, at the time of the Restricted Payment, (a) an Event of Default (as defined) has occurred under the Indenture and is continuing or would occur as a consequence of the Restricted Payment or (b) if, upon giving effect to the Restricted Payment, the aggregate amount expended for all Restricted Payments exceeds the sum of (i) a specified percentage of the aggregate consolidated net earnings of the Company accrued during certain fiscal quarters, (ii) the aggregate net proceeds received by the Company from the issuance or sale of capital stock of the Company, (iii) the amount expended by the Company for the purchase, redemption or other acquisition or retirement for value of any preferred stock of the Company plus (iv) the amount set forth in the accompanying Prospectus Supplement. Except as may be otherwise provided in the accompanying Prospectus Supplement, a "Restricted Payment" will be defined as any of the following: (1) declaring or paying any dividend on, or making any distribution to the holders of, any shares of the Company's capital stock, other than dividends or distributions payable in "Equity Interests" (defined as equity securities or securities with a right to acquire equity securities (other than convertible debt securities) of the Company) or (2) purchasing, redeeming or otherwise acquiring or retiring for value any Equity Interests. CHANGE OF CONTROL. Except as may otherwise be set forth in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will provide that, if a Change of Control occurs, the Company will be obligated to offer to purchase all outstanding Offered Debt Securities at a purchase price equal to 100 percent of the aggregate principal amount of the Debt Securities, plus accrued and unpaid interest to the date of purchase. Any offer to purchase Offered Debt Securities upon a Change of Control will be conducted in compliance with applicable regulations under the federal securities laws, including Exchange Act Rule 14e-1. Any limitations on the Company's financial ability to purchase Offered Debt Securities upon a Change of Control will be described in the accompanying Prospectus Supplement. Except as may be otherwise provided in the accompanying Prospectus Supplement, a "Change of Control" will be defined in the Indenture for the Offered Debt Securities as any of the following: (a) all or substantially all of the Company's assets are sold as an entirety to any person or it engages in any merger, consolidation, sale of capital stock, sale of beneficial ownership interests or any other transactions as a result of which its shareholders immediately prior to such 7 36 transactions own, directly or indirectly, in the aggregate less than 50 percent of the total voting power entitled to vote in the election of (i) its directors, if it is the surviving entity, or (ii) the directors, managers or trustees of (1) the surviving entity or (2) the purchaser of all or substantially all of its assets; or (b) any person acquires more than 50 percent of the total voting power entitled to vote for directors of the Company. Except as may otherwise be set forth in the accompanying Prospectus Supplement, the Company's failure to comply with the Change of Control covenant as to the Offered Debt Securities will be an Event of Default under the Indenture for the Offered Debt Securities, as specified in the accompanying Prospectus Supplement. See "Events of Default" below. The meaning of the term "all or substantially all of the assets" has not been definitely established and is likely to be interpreted by reference to applicable state law if and at the time the issue arises and will be dependent on the facts and circumstances existing at the time. Accordingly, there may be uncertainty as to whether a holder of Offered Debt Securities can determine whether a Change of Control has occurred and exercise any remedies such holder may have upon a Change of Control. Except as described above with respect to a Change of Control or as described in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will not afford holders of the Debt Securities protection in the event of a highly leveraged transaction, takeover, reorganization, restructuring, recapitalization, merger or similar transaction involving the Company that may adversely affect holders of the Debt Securities. MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE. Except as may otherwise be provided in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will provide that the Company will not merge or consolidate with or into any other person and will not sell, lease or convey all or substantially all of its assets to any person, unless it is the continuing corporation, or the successor corporation or person that acquires all or substantially all of its assets is a corporation organized and existing under the laws of the United States or a State thereof or the District of Columbia and expressly assumes all of the Company's obligations under the Offered Debt Securities and the Indenture for the Offered Debt Securities and, immediately after such merger, consolidation, sale, lease or conveyance, such person or such successor corporation is not in default in the performance of the covenants and conditions in the Indenture for the Offered Debt Securities. With respect to possible uncertainties concerning the meaning of the term "all or substantially all of the assets", the possible lack of protection in a highly leveraged merger or other transaction and related possible effects on holders of the Debt Securities, see "Change of Control" above. REDEMPTION If and to the extent set forth in the accompanying Prospectus Supplement, the Company will have the right to redeem the Offered Debt Securities, in whole or from time to time in part, after the date and at the redemption prices set forth in the accompanying Prospectus Supplement. EVENTS OF DEFAULT Except as may be described in the accompanying Prospectus Supplement, an "Event of Default" will be defined under the Indenture for the Offered Debt Securities as being: (a) default for 30 days in payment of any interest on the Offered Debt Securities; (b) default in payment of any principal of the Offered Debt Securities, either at maturity (or upon any redemption), by declaration or otherwise; (c) default for 60 days after written notice in the performance of any other agreements or covenants in, or provisions of, the Offered Debt Securities or the Indenture for the Offered Debt Securities; (d) an event of default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company and certain of its subsidiaries (or the payment of which is guaranteed by the Company), other than non-recourse Indebtedness, if (i) either (1) such event of default results from the failure to pay any such Indebtedness at maturity or (2) as a result of such event of default, the maturity of such Indebtedness has been accelerated prior to its expressed maturity and such default has not been cured or such acceleration rescinded and (ii) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at maturity or the maturity of which has been so accelerated and the acceleration of which has not been rescinded, equals or exceeds the amount specified in the accompanying Prospectus Supplement; (e) failure for 60 days to discharge 8 37 final judgments against the Company and certain of its subsidiaries for the payment of money aggregating the amount specified in the accompanying Prospectus Supplement or more; and (f) certain events of bankruptcy, insolvency or reorganization. The Indenture for the Offered Debt Securities will provide that if an Event of Default (other than an Event of Default due to certain events of bankruptcy, insolvency or reorganization) has occurred and is continuing, either the Trustee or the holders of not less than 25 percent in principal amount of the Offered Debt Securities outstanding under the Indenture for the Offered Debt Securities, or such other amount as may be specified in the Prospectus Supplement, may then declare the principal of all Offered Debt Securities under that Indenture and interest accrued thereon to be due and payable immediately. Except to the extent otherwise stated in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will contain a provision entitling the Trustee, subject to the duty of the Trustee during a default to act with the required standard of care, to be indemnified by the holders of Offered Debt Securities before proceeding to exercise any right or power under that Indenture at the request of such holders. Subject to such provisions in the Indenture for the Offered Debt Securities for the indemnification of the Trustee and certain other limitations, the holders of a majority in principal amount of the Offered Debt Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Except to the extent otherwise stated in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will provide that no holder of Offered Debt Securities may institute any action against the Company under the Indenture (except actions for payment of overdue principal or interest) unless (a) such holder previously has given the Trustee written notice of the default and continuance thereof, (b) the holders of not less than 25 percent in principal amount of the Offered Debt Securities then outstanding have requested the Trustee to institute such action and offered the Trustee reasonable indemnity, (c) the Trustee has not instituted such action within 60 days of the request and (d) the Trustee has not received direction inconsistent with such written request from the holders of a majority in principal amount of the Offered Debt Securities then outstanding under the Indenture. The Indentures and the Debt Securities will provide that no director, officer, employee or shareholder of the Company, as such, will have any liability for any obligations of the Company under the Debt Securities or the Indentures. The Indentures and the Debt Securities will also each provide that each holder of the Debt Securities, by accepting the Debt securities, waives and releases all such liability. DEFEASANCE AND DISCHARGE Except as may otherwise be provided in the accompanying Prospectus Supplement, the Company can discharge or defease its obligations under the Indenture for the Offered Debt Securities as set forth below. Under terms satisfactory to the Trustee, the Company may discharge certain obligations to holders of the Offered Debt Securities that have not already been delivered to the Trustee for cancellation and that have either become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by irrevocably depositing with the Trustee cash or United States Government Obligations (as defined in the Indenture for the Offered Debt Securities), or a combination thereof, as trust funds in an amount certified to be sufficient to pay at maturity (or upon redemption) the principal of and interest on such Offered Debt Securities. The Company may also discharge any and all of its obligations to holders of the Offered Debt Securities at any time ("defeasance"), but may not thereby avoid its duty to register the transfer or exchange of the Offered Debt Securities, to replace any temporary, mutilated, destroyed, lost or stolen Offered Debt Securities or to maintain an office or agency in respect of such Offered Debt Securities and certain other obligations. Alternatively, the Company may be released with respect to the Offered Debt Securities from the obligations imposed by specific portions of the Indenture for the Offered Debt Securities (including the covenant described above limiting consolidations, mergers, asset sales and leases) and omit to comply with such provisions without creating an Event of Default ("covenant 9 38 defeasance"). Defeasance or covenant defeasance may be effected only if, among other things: (a) the Company irrevocably deposits with the Trustee cash or United States Government Obligations, or a combination thereof, as trust funds in an amount certified to be sufficient to pay at maturity the principal of and interest on all outstanding Offered Debt Securities; (b) no Event of Default under the Indenture for the Offered Debt Securities has occurred and is then continuing; (c) the defeasance or covenant defeasance will not result in an event of default under any agreement to which the Company is a party or by which it is bound; and (d) the Company delivers to the Trustee an opinion of counsel to the effect that the holders of Debt Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and that such defeasance or covenant defeasance will not otherwise alter such holders' federal income tax treatment of principal and interest payments on the Offered Debt Securities. MODIFICATIONS TO THE INDENTURES Except as may otherwise be set forth in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities will provide that the Company and the Trustee may enter into supplemental indentures without the consent of the holders of Offered Debt Securities to, among other things: (a) add covenants, conditions and restrictions for the protection of the holders of Offered Debt Securities or to surrender any right of the Company; (b) cure any ambiguity or correct any inconsistency in the Indenture for the Offered Debt Securities; (c) make any change that does not adversely affect the legal rights of holders of Offered Debt Securities; (d) modify, eliminate or add to the provisions of the Indenture for the Offered Debt Securities to the extent necessary to qualify that Indenture under applicable federal statutes; or (e) make any other changes in the Indenture before Offered Debt Securities are issued thereunder, provided that such changes are not prohibited by the Trust Indenture Act of 1939, as amended. Except as may otherwise be set forth in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities also will contain provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in principal amount of Offered Debt Securities outstanding, to add any provision to, change in any manner or eliminate any of the provisions of the Indenture for the Offered Debt Securities or modify in any manner the rights of the holders of the Offered Debt Securities so affected; provided that the Company and the Trustee may not, without the consent of the holder of each outstanding Offered Debt Security affected thereby, do, among other things, any of the following: (a) reduce the amount of Offered Debt Securities whose holders must consent to an amendment, supplement or waiver with respect to the Indenture; (b) reduce the rate of or change the time for payment of interest on any Offered Debt Security; (c) reduce the principal of or change the fixed maturity of any Offered Debt Security; or (d) waive a default in the payment of the principal of, or interest on, any Offered Debt Security. The Indentures for senior subordinated or subordinated Offered Debt Securities may not be amended to alter the subordination of any outstanding senior subordinated or subordinated Debt Securities without the consent of each holder of Senior Debt and, as to subordinated Debt Securities, also senior subordinated debt then outstanding that would be adversely affected thereby. CONCERNING THE TRUSTEE An affiliate of The First National Bank of Boston is a lender to the Company under the Company's principal credit facility, and it or any other Trustee, or their respective affiliates, may from time to time have lender or other business arrangements with the Company. The Indenture will contain certain limitations on the rights of the Trustee, should it or its affiliates then be creditors of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee and its affiliates will be permitted to engage in other transactions; however, if they acquire any conflicting interest, the conflict must be eliminated or the Trustee must resign. The Holders of a majority in principal amount of the then outstanding Debt Securities issued under any Indenture will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee under that Indenture, subject to certain exceptions. Unless otherwise stated in the applicable Prospectus Supplement, the Indentures will provide that in 10 39 case an Event of Default occurs and is not cured, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his, her or its affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under any Indenture at the request of any Holder, unless such Holder has offered the Trustee security and indemnity satisfactory to the Trustee. GOVERNING LAW Unless otherwise specified in the accompanying Prospectus Supplement, the Indenture for the Offered Debt Securities and the Offered Debt Securities will be governed by New York law. DESCRIPTION OF WARRANTS GENERAL The Warrants will be issued in fully registered form under a Warrant Agreement between the Company and the Warrant Agent named in the accompanying Prospectus Supplement (the "Warrant Agent"). The statements in this Prospectus relating to the Warrants and the Warrant Agreement are summaries and do not purport to be complete. Each Warrant will entitle the registered owner (the "Warrantholder") to purchase one share of Preferred or Common Stock, as set forth in the accompanying Prospectus Supplement, subject to the call provisions referred to below, from the time the Warrants are separately transferable until the date set forth in the accompanying Prospectus Supplement. The initial per share exercise price of the Warrants and the date on which the Warrants become separately transferable will be set forth in the applicable Prospectus Supplement. The Warrants can be exercised by surrendering to the Warrant Agent a Warrant certificate signed by the Warrantholder or his, her or its duly authorized agent indicating the Warrantholder's election to exercise all or a portion of the Warrants evidenced by the certificate. Surrendered Warrant certificates must be accompanied by payment of the aggregate exercise price of the Warrants to be exercised (the "Warrant Price"), which payment may be made in the form of cash or a cashier's check equal to the exercise price or, if and to the extent set forth in the accompanying Prospectus Supplement, the surrender of Debt Securities in denominations at least equal to the aggregate Warrant Prices or, if applicable, any combination of cash and such denominations of Debt Securities. If the principal amount of Debt Securities surrendered is in excess of the aggregate Warrant Price so paid, only a portion of such surrendered principal amount shall be accepted against payment of the Warrant Price and new Debt Securities shall be issued in the principal amount not so applied against the aggregate Warrant Price, provided that the amount of such excess is $1,000 or an integral multiple thereof. Certificates evidencing duly exercised Warrants shall be delivered by the Warrant Agent to the transfer agent for the Preferred or Common Stock, as applicable. Upon receipt thereof, the transfer agent will be obligated to deliver or cause to be delivered, to or upon the written order of the exercising Warrantholders, certificates representing the number of shares of Preferred or Common Stock so purchased. If fewer than all of the Warrants evidenced by any certificate are exercised, the Warrant Agent will be obligated to deliver to the exercising Warrantholder a new Warrant certificate representing the unexercised Warrants. To the extent set forth in the accompanying Prospectus Supplement, the Warrant Price and the number of shares of Preferred or Common Stock purchasable upon the exercise of each Warrant are subject to adjustment in certain events, including: (i) the issuance of a stock dividend to holders of Preferred Stock or Common Stock (whichever the Warrants are exercisable for) or a combination, subdivision or reclassification of the Preferred Stock or the Common Stock (whichever the Warrants are exercisable for); (ii) the issuance of rights, warrants or options or securities convertible into, or exchangeable for, the Preferred Stock or the Common Stock (whichever the Warrants are exercisable for), that are distributed to all holders of the Company's outstanding Preferred or Common Stock (whichever the Warrants are exercisable for) entitling them to subscribe for or purchase Preferred or Common Stock; and (iii) any distribution by the Company to the holders of its Preferred or Common Stock (whichever the Warrants are exercisable for) of evidences of indebtedness of the Company or of assets (excluding, if and to the extent set forth in the accompanying Prospectus Supplement, certain 11 40 cash dividends or distributions). To the extent set forth in the accompanying Prospectus Supplement, no adjustment in the number of shares purchasable upon exercise of the Warrants or in the Warrant Price will be required until cumulative adjustments require an adjustment of at least one percent thereof. In addition, unless the accompanying Prospectus Supplement states to the contrary, the Company may, at its option, reduce the Warrant Price at any time. No fractional shares will be issued upon exercise of Warrants, but the Company will pay the cash value of any fractional shares otherwise issuable. Notwithstanding the foregoing, unless the accompanying Prospectus Supplement states to the contrary, in case of any consolidation, merger or sale or conveyance of the property of the Company and its subsidiaries as a whole, including a consolidation or merger in which the Company is the continuing corporation and in which all or a majority of the Preferred and Common Stock outstanding immediately prior to the consolidation or merger is converted into consideration other than capital stock (or the right to receive such consideration), the holder of each outstanding Warrant shall have the right to exercise the Warrant for the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Preferred and Common Stock for which such Warrant was exercisable immediately prior thereto. Adjustments to the Warrant Price (and, possibly, adjustment to the number of shares of Preferred or Common Stock purchasable upon the exercise of each Warrant), or the failure to make such adjustments, may in certain circumstances result in distributions that could be taxable as dividends under the Internal Revenue Code of 1986, as amended, to holders of the Warrants or to holders of shares of Preferred or Common Stock issued upon exercise thereof. The Company will reserve the right (but will not be obligated) to make such adjustments to the Warrant Price or in the number of shares of Preferred or Common Stock purchasable upon the exercise of each Warrant, in addition to those required in the foregoing provisions, as it shall determine to be advisable in order that certain stock-related distributions which may be made by the Company to its stockholders after the date of the applicable Prospectus Supplement are not taxable to them. If all or any portion of the Warrants are callable at the option of the Company, the call provisions, including the call price and the date through which the Warrants may be exercised, will be set forth in the accompanying Prospectus Supplement. If upon expiration the unexercised Warrants will convert into Preferred or Common Stock, the manner and rate of such conversion will be set forth in the accompanying Prospectus Supplement. Holders of Warrants are not entitled, by virtue of being holders, to receive dividends or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter, to vote at any such meeting or to exercise any rights whatsoever as stockholders of the Company. The Warrant Agreement and the Warrants will provide that no director, officer, employee or shareholder of the Company, as such, will have any liability under the Warrants or the Warrant Agreement. The Warrant Agreement and the Warrants will also each provide that each holder of the Warrants, by accepting the Warrants, waives and releases all such liability. Unless otherwise specified in the accompanying Prospectus Supplement, the Warrant Agreement and the Warrants will be governed by New York law. DESCRIPTION OF CAPITAL STOCK The authorized capital stock of the Company consists of 30,000,000 shares of Common Stock, $.001 par value, and 10,000,000 shares of Preferred Stock, $.001 par value, of which 14,920,921 shares of Common Stock (exclusive of treasury shares) were issued and outstanding on June 30, 1995. No shares of Preferred Stock were outstanding at that date. COMMON STOCK Subject to the rights of holders of any outstanding Preferred Stock, the holders of outstanding shares of Common Stock are entitled to share ratably in dividends declared out of assets legally available therefor at such time and in such amounts as the Board of Directors may from time to time lawfully determine. At the date of this Prospectus the payment of dividends on the Common Stock is 12 41 limited by provisions of the indentures (the "Public Debt Indentures") for the Company's $100 million of 10 7/8% Senior Notes due April 1, 2000, its $100 million of 9 3/4% Senior Subordinated Debentures due March 1, 2003 and its $100 million of 9% Senior Subordinated Debentures due February 15, 2006 and the provisions of the Company's principal credit facility. Each holder of Common Stock is entitled to one vote for each share held by him, her or it. Holders of Common Stock are not entitled to cumulate votes for the election of directors. The Common Stock is not entitled to conversion or preemptive rights and is not subject to redemption or assessment. Subject to the rights of holders of any outstanding Preferred Stock, upon liquidation, dissolution or winding up of the Company, any assets legally available for distribution to shareholders as such are to be distributed ratably among the holders of the Common Stock at that time outstanding. The Common Stock presently outstanding is, and the Common Stock issued upon conversion of the Debt Securities, exercise of the Warrants (upon payment in full of the Warrant exercise price) or conversion of any convertible Preferred Stock offered hereby, as the case may be, will be, fully paid and nonassessable. See "Incorporation of Certain Documents by Reference" and "Available Information." PREFERRED STOCK The authorized shares of Preferred Stock are issuable, without further shareholder approval, in one or more series as determined by the Board of Directors, with such rights, privileges and preference as are fixed by the Board of Directors, including dividend, liquidation and other rights preferred over the Common Stock, subject to the restrictions in the Public Debt Indentures and the credit facility referred to above. The Preferred Stock issuable upon exercise of any Warrants exercisable for Preferred Stock (upon payment in full of the Warrant exercise price) or conversion of any Debt Securities convertible into Preferred Stock will be fully paid and nonassessable. The Preferred Stock may be convertible and, if so convertible, may be converted into one or both of Common Stock and Debt Securities. The Preferred Stock may also be exchangeable, at the option of the Company, for Debt Securities (see "Description of Debt Securities"). If Preferred Stock or Warrants exercisable for Preferred Stock are being offered or if the Preferred Stock is exchangeable for Debt Securities, the accompanying Prospectus Supplement will describe the rights, privileges, preferences and restrictions of such Preferred Stock (including, without limitation, the designation, the number of authorized shares of the series in question, the dividend rate (or method of calculation), any voting rights, conversion rights, anti-dilution protections, exchangeability provisions and terms of the Debt Securities that are exchangeable for the Preferred Stock, any redemption provisions, liquidation preferences and any sinking fund provisions). If fractional interests in shares of Preferred Stock may be issued, there will be a depositary for the shares of Preferred Stock involved and the applicable Prospectus Supplement will describe the terms of the depositary arrangement and related matters. See "Incorporation of Certain Documents by Reference" and "Available Information." PLAN OF DISTRIBUTION The Company may sell the Securities to one or more underwriters for public offering and sale by them or may sell the Securities to investors directly or through agents. Any such underwriter or agent involved in the offer and sale of the Securities will be named in the applicable Prospectus Supplement. The Company may sell Securities directly to investors on its own behalf in those jurisdictions where it is authorized to do so. Underwriters may offer and sell the Securities at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Company also may, from time to time, authorize dealers, acting as Company agents, to offer and sell the Securities upon such terms and conditions as may be set forth in the Prospectus Supplement. In connection with the sale of the Securities, underwriters may receive compensation from the Company in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the Securities for whom they may act as agent. Underwriters may sell the Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for which they may act as agents. 13 42 Any underwriting compensation paid by the Company to underwriters or agents in connection with the offering of the Securities, and any discounts or concessions or commissions allowed by underwriters to participating dealers, will be set forth in the applicable Prospectus Supplement. Dealers and agents participating in the distribution of the Securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the Securities may be deemed to be underwriting discounts and commissions. Underwriters, dealers and agents may be entitled, under agreements entered into with the Company, to indemnification against and contribution toward certain civil liabilities. The Debt Securities, the Preferred Stock and the Warrants will be new issues of securities with no established trading market. Any underwriters or agents to or through which Securities are sold by the Company for public offering and sale may make a market in such Securities, but such underwriters or agents will not be obligated to do so and any of them may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of or trading market for any Debt Securities, Preferred Stock or Warrants. CERTAIN LEGAL MATTERS Gibson, Dunn & Crutcher has rendered an opinion (filed as an exhibit to the Registration Statement) with respect to the validity of the Debt Securities, Preferred Stock, Common Stock and Warrants covered by this Prospectus. The partner of Gibson, Dunn & Crutcher who has primary responsibility for the work of that firm in connection with this Registration Statement beneficially owns $225,000 in principal amount of the 10 7/8% Senior Notes due 2000 of the Company. Certain legal matters in connection with offerings made by this Prospectus may be passed on for any underwriters by counsel named in the Prospectus Supplement. EXPERTS The consolidated financial statements and schedules of Del Webb Corporation and subsidiaries as of June 30, 1994 and 1993, and for each of the years in the three-year period ended June 30, 1994, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering the June 30, 1993 consolidated financial statements refers to a change in the method of accounting for income taxes. 14 43 [DESCRIPTION OF INSIDE BACK COVER PHOTOS] Top Row: The first photo shows a model at Terravita. The second photo shows the indoor pool at Sun City Palm Springs. Second Row: This photo shows the Recreation Center at Sun City Las Vegas. Third Row: This photo shows the Sales Ofice at Sun City Roseville. 44 =============================================================================== NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES OF COMMON STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ------------------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ----- Prospectus Supplement Summary......... S-3 Risk Factors.......................... S-8 Use of Proceeds....................... S-11 Capitalization........................ S-11 Price Range of Common Stock and Dividend Policy..................... S-12 Selected Consolidated Financial and Operating Data...................... S-12 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... S-15 Business.............................. S-19 Management............................ S-25 Underwriting.......................... S-28 Certain Legal Matters................. S-28
PROSPECTUS Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 The Company........................... 3 Use of Proceeds....................... 3 Consolidated Ratio of Earnings to Fixed Charges....................... 3 Description of Debt Securities........ 4 Description of Warrants............... 11 Description of Capital Stock.......... 12 Plan of Distribution.................. 13 Certain Legal Matters................. 14 Experts............................... 14
=============================================================================== =============================================================================== DEL WEBB CORPORATION ------------------------------ 2,350,000 SHARES COMMON STOCK PROSPECTUS SUPPLEMENT AUGUST 10, 1995 ------------------------------ DILLON, READ & CO. INC. MONTGOMERY SECURITIES ================================================================================ -----END PRIVACY-ENHANCED MESSAGE-----