UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended MARCH 31, 2000.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from N/A to N/A.
Commission File Number: 1-4785
DEL WEBB CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 86-0077724
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
6001 NORTH 24TH STREET, PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip Code)
(602) 808-8000
(Registrant's phone number, including area code)
NONE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of April 30, 2000 Registrant had outstanding 18,326,955 shares of common
stock.
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2000,
June 30, 1999 and March 31, 1999...................................... 1
Consolidated Statements of Earnings for the three and nine
months ended March 31, 2000 and 1999.................................. 2
Consolidated Statements of Cash Flows for the nine
months ended March 31, 2000 and 1999.................................. 3
Notes to Consolidated Financial Statements.............................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................. 21
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- -----------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------
Real estate inventories (Notes 2, 3 and 6) $ 1,856,368 $ 1,622,581 $ 1,579,686
Cash and short-term investments 17,006 22,669 7,343
Receivables 36,674 33,529 42,796
Property and equipment, net 91,251 72,423 48,600
Other assets 74,102 115,595 114,629
- -----------------------------------------------------------------------------------------------------
$ 2,075,401 $ 1,866,797 $ 1,793,054
=====================================================================================================
LIABILITIES AND SHAREHOLDERS EQUITY
- -----------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 1,162,014 $ 1,040,613 $ 1,038,171
Contractor and trade accounts payable 119,556 115,456 104,112
Accrued liabilities and other payables 136,413 127,980 123,009
Home sale deposits 161,118 145,362 123,616
Deferred income taxes (Note 4) 42,908 22,510 17,123
Income taxes payable (Note 4) 1,987 10,082 6,806
- -----------------------------------------------------------------------------------------------------
Total liabilities 1,623,996 1,462,003 1,412,837
- -----------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized 30,000,000 shares;
issued 18,328,258 shares at March 31, 2000, 18,221,385
shares at June 30, 1999 and 18,216,364 shares at
March 31, 1999 18 18 18
Additional paid-in capital 170,326 168,865 168,620
Retained earnings 285,535 242,075 218,351
- -----------------------------------------------------------------------------------------------------
455,879 410,958 386,989
Less deferred compensation (4,474) (6,164) (6,772)
- -----------------------------------------------------------------------------------------------------
Total shareholders' equity 451,405 404,794 380,217
- -----------------------------------------------------------------------------------------------------
$ 2,075,401 $ 1,866,797 $ 1,793,054
=====================================================================================================
See accompanying notes to consolidated financial statements.
1
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
Revenues (Note 5) $499,799 $ 324,428 $1,404,974 $947,323
- -----------------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 384,933 242,010 1,087,570 716,484
Selling, general and administrative 67,930 49,731 190,151 138,406
Interest (Note 6) 21,958 13,204 59,348 38,736
- -----------------------------------------------------------------------------------------------------
474,821 304,945 1,337,069 893,626
- -----------------------------------------------------------------------------------------------------
Earnings before income taxes 24,978 19,483 67,905 53,697
Income taxes (Note 4) 8,992 7,014 24,446 19,331
- -----------------------------------------------------------------------------------------------------
Net earnings $ 15,986 12,469 $ 43,459 $ 34,366
=====================================================================================================
Weighted average shares outstanding - basic 18,319 18,220 18,271 18,161
=====================================================================================================
Weighted average shares
outstanding - assuming dilution 18,530 18,752 18,598 18,717
=====================================================================================================
Net earnings per share - basic $ .87 $ .68 $ 2.38 $ 1.89
=====================================================================================================
Net earning per share - assuming dilution $ .86 $ .66 $ 2.34 $ 1.84
=====================================================================================================
See accompanying notes to consolidated financial statements.
2
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
March 31,
- --------------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to operating community home sales $ 1,344,579 $ 893,243
Cash received from commercial land and facility sales at operating communities 49,618 37,375
Cash paid for costs related to home construction at operating communities (866,202) (594,937)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating community sales activities 527,995 335,681
Cash paid for land acquisitions at operating communities (38,063) (20,247)
Cash paid for lot development at operating communities (231,810) (129,792)
Cash paid for amenity development at operating communities (169,865) (66,671)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating communities 88,257 118,971
Cash paid for costs related to communities in the pre-operating stage (14,716) (333,972)
Cash received from mortgage operations 5,176 7,497
Cash received from (paid for) residential land development project (1,907) 2,036
Cash paid for corporate activities (58,046) (56,567)
Interest paid (82,674) (57,840)
Cash received (paid) for income taxes (10,997) 1,502
- --------------------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (74,907) (318,373)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (13,177) (17,045)
Investments in life insurance policies (1,821) (974)
- --------------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (14,998) (18,019)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 340,797 628,996
Repayments of debt (257,319) (298,951)
Stock repurchases (3) (920)
Proceeds from exercise of common stock options 767 1,153
Dividends paid -- (905)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 84,242 329,373
- --------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (5,663) (7,019)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 22,669 14,362
- --------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 17,006 $ 7,343
==============================================================================================================
See accompanying notes to consolidated financial statements.
3
DEL WEBB CORPORATION AND SUBIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
March 31,
- -------------------------------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------------------------------
Reconciliation of net earnings to net cash used for operating activities:
Net earnings $ 43,459 $ 34,366
Amortization of non-cash common costs in costs and expenses,
excluding interest 340,937 235,684
Amortization of capitalized interest in costs and expenses 59,348 38,736
Deferred compensation amortization 4,024 1,581
Depreciation and other amortization 9,678 6,072
Deferred income taxes 13,163 12,878
Net increase in home construction costs (41,467) (92,511)
Land acquisitions (38,063) (27,549)
Lot development (231,810) (319,262)
Amenity development (169,865) (208,543)
Net change in other assets and liabilities (64,311) 175
- --------------------------------------------------------------------------------------------------------
Net cash used for operating activities $ (74,907) $(318,373)
========================================================================================================
See accompanying notes to consolidated financial statements.
4
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Del Webb
Corporation and its subsidiaries (the "Company"). In the opinion of
management, the accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments,
primarily eliminations of all significant intercompany transactions and
accounts) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. Certain financial
statement items from the prior year have been reclassified to be consistent
with the current year financial statement presentation.
The consolidated financial statements should be read in conjunction with
the consolidated financial statements and the related disclosures contained
in the Company's Annual Report on Form 10-K for the year ended June 30,
1999, filed with the Securities and Exchange Commission.
In the Consolidated Statements of Cash Flows, the Company defines operating
communities as communities generating revenues from home closings.
Communities in the pre-operating stage are those not yet generating
revenues from home closings.
The results of operations for the nine months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the full fiscal
year.
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are:
In Thousands
- ---------------------------------------------------------------------------------------------------
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- ---------------------------------------------------------------------------------------------------
Home construction costs $ 306,835 $ 265,368 $ 274,681
Unamortized improvement and amenity costs 1,158,704 977,867 971,391
Unamortized capitalized interest 103,305 85,007 80,658
Land held for housing 232,535 191,624 218,802
Land and facilities held for future development or sale 54,989 102,715 34,154
- ---------------------------------------------------------------------------------------------------
$1,856,368 $1,622,581 $1,579,686
===================================================================================================
At March 31, 2000 the Company had 329 completed homes and 823 homes under
construction that were not subject to a sales contract. These homes
represented $61.4 million of home construction costs at March 31, 2000. At
March 31, 1999 the Company had 436 completed homes and 395 homes under
construction (representing $52.1 million of home construction costs) that
were not subject to a sales contract.
5
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) REAL ESTATE INVENTORIES (CONTINUED)
Included in land and facilities held for future development or sale at
March 31, 2000 were 272 acres of commercial land that are currently being
marketed for sale at the Company's active adult communities and 470 acres
of commercial land that are currently being marketed for sale at the
Company's Anthem Arizona project. Also included in land and facilities held
for future development or sale at March 31, 2000 were 77 lots on selected
residential land parcels in the Company's Arizona family community
operations and 998 lots in the Company's Nevada family communities.
(3) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT
Notes payable, senior and subordinated debt consists of:
In Thousands
- --------------------------------------------------------------------------------------------------
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- --------------------------------------------------------------------------------------------------
9 3/4% Senior Subordinated Debentures due 2003,
net, unsecured $ 98,801 $ 98,492 $ 98,390
9% Senior Subordinated Debentures due 2006,
net, unsecured 98,381 98,176 98,107
9 3/4% Senior Subordinated Debentures due 2008,
net, unsecured 146,217 145,854 145,733
9 3/8% Senior Subordinated Debentures due 2009,
net, unsecured 195,763 195,413 195,297
10 1/4% Senior Subordinated Debentures due 2010,
net, unsecured 144,073 143,622 143,409
Notes payable to banks under a revolving credit
facility and short-term lines of credit, unsecured 393,334 301,000 308,200
Real estate and other notes, primarily secured 85,445 58,056 49,035
- -------------------------------------------------------------------------------------------------
$1,162,014 $1,040,613 $1,038,171
=================================================================================================
At March 31, 2000 the Company had $370.0 million outstanding under its $500
million senior unsecured revolving credit facility and $23.3 million
outstanding under its $25 million of short-term lines of credit.
At March 31, 2000, under the most restrictive of the covenants in the
Company's debt agreements, $65.2 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.
6
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) INCOME TAXES
The components of income taxes are:
In Thousands
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- --------------------------------------------------------------------------------
2000 1999 2000 1999
- --------------------------------------------------------------------------------
Current:
Federal $ (6,752) $ (1,312) $ 3,731 $ 6,064
State (329) (149) 317 389
- --------------------------------------------------------------------------------
(7,081) (1,461) 4,048 6,453
- --------------------------------------------------------------------------------
Deferred
Federal 17,398 7,881 21,207 11,749
State (1,325) 594 (809) 1,129
- --------------------------------------------------------------------------------
16,073 8,475 20,398 12,878
- --------------------------------------------------------------------------------
$ 8,992 $ 7,014 $24,446 $19,331
================================================================================
(5) REVENUES AND COSTS AND EXPENSES
The components of revenues and costs and expenses are:
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ----------------------------------------------------------------------------------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------
Revenues:
Homebuilding:
Active adult communities $ 305,682 $ 238,658 $ 916,909 $ 704,434
- ----------------------------------------------------------------------------------------------
Family and country club communities 157,066 67,045 393,056 188,194
- ----------------------------------------------------------------------------------------------
462,748 305,703 1,309,965 892,628
Models/vacation getaway homes with
long-term leaseback * 6,538 -- 30,602 --
- ----------------------------------------------------------------------------------------------
Total homebuilding 469,286 305,703 1,340,567 892,628
Land and facility sales 24,040 12,333 49,689 42,011
Other 6,473 6,392 14,718 12,684
- ----------------------------------------------------------------------------------------------
$ 499,799 $ 324,428 $ 1,404,974 $ 947,323
==============================================================================================
* For the three and nine months ended March 31, 2000, revenues from the sale
of models/vacation getaway homes with long-term leasebacks are net of
deferred profits of $3,549,000 and $13,659,000, respectively. These
deferred profits are being amortized as reductions of selling, general and
administrative expenses over the leaseback periods.
7
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) REVENUES AND COSTS AND EXPENSES (CONTINUED)
In Thousands
(Unaudited)
- -------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
Costs and expenses:
Home construction and land:
Active adult communities $ 231,768 $ 178,184 $ 693,027 $ 524,380
Family and country club communities 123,005 53,826 312,969 152,848
- -----------------------------------------------------------------------------------------------------
354,773 232,010 1,005,996 677,228
Models/vacation getaway homes with
long-term leaseback 6,538 -- 30,602 --
- -----------------------------------------------------------------------------------------------------
Total homebuilding 361,311 232,010 1,036,598 677,228
Cost of land and facility sales 19,393 8,683 40,950 34,227
Other cost of sales 4,229 1,317 10,022 5,029
- -----------------------------------------------------------------------------------------------------
Total home construction, land and other 384,933 242,010 1,087,570 716,484
Selling, general and administrative 67,930 49,731 190,151 138,406
Interest 21,958 13,204 59,348 38,736
- -----------------------------------------------------------------------------------------------------
$ 474,821 $ 304,945 $ 1,337,069 $ 893,626
=====================================================================================================
(6) INTEREST
The following table shows the components of interest:
In Thousands
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
Interest incurred and capitalized $ 26,171 $ 22,346 $ 77,646 $ 57,939
=====================================================================================================
Amortization of capitalized interest
in costs and expenses $ 21,958 $ 13,204 $ 59,348 $ 38,736
=====================================================================================================
Unamortized capitalized interest
included in real estate inventories
at period end $ 103,305 $ 80,658
================================================= ======================
Interest income $ 205 $ 194 $ 639 $ 831
=====================================================================================================
Interest income is included in other revenues.
8
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) SEGMENT INFORMATION
The Company conducts its operations in two primary segments in Arizona,
California, Florida, Illinois, Nevada, South Carolina and Texas. Active
adult communities (primarily its Sun City communities) are generally
large-scale, master planned communities with extensive amenities for people
age 55 and over. Family and country club communities are open to people of
all ages and are generally developed in metropolitan or market areas in
which the Company is developing active adult communities. Within its
communities, the Company is usually the exclusive builder of homes.
Both of the Company's primary segments generate their revenues through the
sale of homes (and, to a much lesser extent, land and facilities) to
external customers in the United States. The Company is not dependent on
any major customer.
Information as to the operations of the Company in different business
segments is set forth below based on the nature of the Company's
communities and their customers. Certain information has not been included
by segment due to the immateriality of the amount to the segments or in
total. The Company evaluates segment performance based on several factors,
of which the primary financial measure is earnings before interest and
taxes ("EBIT"). The accounting policies of the business segments are the
same as those for the Company. There are no significant intersegment
transactions.
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------------
Revenues:
Active adult communities $ 319,471 $ 244,741 $ 957,164 $ 719,817
Family and country club communities 179,190 75,492 444,381 218,875
Corporate and other 1,138 4,195 3,429 8,631
- ----------------------------------------------------------------------------------------------------
$ 499,799 $ 324,428 $ 1,404,974 $ 947,323
====================================================================================================
EBIT:
Active adult communities $ 43,024 $ 36,673 $ 131,381 $ 109,596
Family and country club
communities 22,989 9,140 50,657 24,184
Corporate and other (19,077) (13,126) (54,785) (41,347)
- ----------------------------------------------------------------------------------------------------
$ 46,936 $ 32,687 $ 127,253 $ 92,433
====================================================================================================
Amortization of Capitalized Interest:
Active adult communities $ 15,061 $ 9,989 $ 42,211 $ 29,687
Family and country club communities 6,897 3,215 17,137 9,049
Corporate and other -- -- -- --
- ----------------------------------------------------------------------------------------------------
$ 21,958 $ 13,204 $ 59,348 $ 38,736
====================================================================================================
Assets at Period End:
Active adult communities $ 1,421,647 $ 1,276,430
Family and country club communities 515,583 425,830
Corporate and other 138,171 90,794
- ------------------------------------------ ----------------------------
$ 2,075,401 $ 1,793,054
========================================== ============================
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of the results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto and the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1999, filed with the Securities and Exchange
Commission.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
Three Months Nine Months
Ended Ended
March 31, Change March 31, Change
- -----------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -----------------------------------------------------------------------------------------------------------------
OPERATING DATA:
Number of net new orders:
Active adult communities:
Sun Cities Phoenix 407 387 20 5.2% 976 933 43 4.6%
Sun Cities Las Vegas 391 378 13 3.4% 877 910 (33) (3.6%)
Sun City Palm Desert 162 123 39 31.7% 322 353 (31) (8.8%)
Sun Cities Northern California 206 232 (26) (11.2%) 480 556 (76) (13.7%)
Sun City Hilton Head 97 141 (44) (31.2%) 272 332 (60) (18.1%)
Sun City Texas 105 104 1 1.0% 242 237 5 2.1%
Sun City at Huntley 71 130 (59) (45.4%) 264 505 (241) (47.7%)
Florida communities 97 86 11 12.8% 246 246 -- --
Other communities 89 82 7 8.5% 294 183 111 60.7%
- ----------------------------------------------------------------------------------------------------------------
Total active adult communities 1,625 1,663 (38) (2.3%) 3,973 4,255 (282) (6.6%)
- ----------------------------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 127 148 (21) (14.2%) 233 148 85 57.4%
Nevada country club communities 112 60 52 86.7% 223 164 59 36.0%
Arizona family communities 324 502 (178) (35.5%) 763 913 (150) (16.4%)
Nevada family communities 107 149 (42) (28.2%) 224 407 (183) (45.0%)
- ----------------------------------------------------------------------------------------------------------------
Total family and country club
communities 670 859 (189) (22.0%) 1,443 1,632 (189) (11.6%)
- ----------------------------------------------------------------------------------------------------------------
Total 2,295 2,522 (227) (9.0%) 5,416 5,887 (471) (8.0%)
================================================================================================================
Included in net new orders for the three and nine months ended March 31, 2000
are models and vacation getaway homes sold with long-term leasebacks. The Sun
Cities Phoenix had 17 such net new orders for the three month period and 162 for
the nine month period. The Sun Cities Las Vegas had 5 and 32 for the three and
nine months, respectively. The Nevada country club communities had 13 for the
nine month period.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
Three Months Nine Months
Ended Ended
March 31, Change March 31, Change
- -------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------------------------
OPERATING DATA:
Number of home closings:
Active adult communities:
Sun Cities Phoenix 323 304 19 6.3% 1,080 910 170 18.7%
Sun Cities Las Vegas 328 323 5 1.5% 840 833 7 0.8%
Sun City Palm Desert 118 109 9 8.3% 367 344 23 6.7%
Sun Cities Northern California 214 165 49 29.7% 554 518 36 6.9%
Sun City Hilton Head 81 71 10 14.1% 294 238 56 23.5%
Sun City Texas 56 84 (28) (33.3%) 189 268 (79) (29.5%)
Sun City at Huntley 120 N/A 120 N/A 534 N/A 534 N/A
Florida communities 64 89 (25) (28.1%) 193 334 (141) (42.2%)
Other communities 103 61 42 68.9% 253 161 92 57.1%
- -------------------------------------------------------------------------------------------------------------
Total active adult communities 1,407 1,206 201 16.7% 4,304 3,606 698 19.4%
- -------------------------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 132 N/A 132 N/A 239 N/A 239 N/A
Nevada country club communities 48 13 35 269.2% 171 13 158 1,215.4%
Arizona family communities 383 220 163 74.1% 935 724 211 29.1%
Nevada family communities 81 74 7 9.5% 332 187 145 77.5%
- -------------------------------------------------------------------------------------------------------------
Total family and country club
communities 644 307 337 109.8% 1,677 924 753 81.5%
- -------------------------------------------------------------------------------------------------------------
Total 2,051 1,513 538 35.6% 5,981 4,530 1,451 32.0%
=============================================================================================================
Included in home closings for the three and nine months ended March 31, 2000 are
models and vacation getaway homes sold with long-term leasebacks. Profits on the
closings of these units are deferred and amortized as reductions of selling,
general and administrative expenses over the leaseback periods. The Sun Cities
Phoenix had 35 such home closings for the three months and 160 for the nine
months. The Sun Cities Las Vegas had 5 and 32 for the three and nine months,
respectively. The Nevada country club communities had 13 for the nine months.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
At March 31, Change
- -------------------------------------------------------------------------------------------
2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------
BACKLOG DATA:
Homes under contract:
Active adult communities:
Sun Cities Phoenix 630 692 (62) (9.0%)
Sun Cities Las Vegas 582 625 (43) (6.9%)
Sun City Palm Desert 239 274 (35) (12.8%)
Sun Cities Northern California 334 420 (86) (20.5%)
Sun City Hilton Head 172 263 (91) (34.6%)
Sun City Texas 211 160 51 31.9%
Sun City at Huntley 235 505 (270) (53.5%)
Florida communities 186 187 (1) (0.5%)
Other communities 209 124 85 68.5%
- -------------------------------------------------------------------------------------------
Total active adult communities 2,798 3,250 (452) (13.9%)
- -------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 238 148 90 60.8%
Nevada country club communities 187 151 36 23.8%
Arizona family communities 555 674 (119) (17.7%)
Nevada family communities 141 304 (163) (53.6%)
- -------------------------------------------------------------------------------------------
Total family and country club communities 1,121 1,277 (156) (12.2%)
- -------------------------------------------------------------------------------------------
Total 3,919 4,527 (608) (13.4%)
===========================================================================================
Aggregate contract sales amount
(dollars in millions) $1,009 $1,026 $ (17) (1.7%)
===========================================================================================
Average contract sales amount per home
(dollars in thousands) $ 258 $ 227 $ 31 13.7%
===========================================================================================
Included in backlog at March 31, 2000 at the Sun Cities Phoenix were 2 models
and vacation getaway homes sold with long term leasebacks.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
Three Months Ended Nine Months Ended
March 31, Change March 31, Change
- -------------------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE REVENUE PER HOME CLOSING:
Active adult communities:
Sun Cities Phoenix $188,600 $174,900 $ 13,700 7.8% $178,000 $175,700 $ 2,300 1.3%
Sun Cities Las Vegas 224,900 204,900 20,000 9.8% 227,500 204,200 23,300 11.4%
Sun City Palm Desert 272,400 251,400 21,000 8.4% 275,400 243,500 31,900 13.1%
Sun Cities Northern California 275,200 249,100 26,100 10.5% 277,000 237,300 39,700 16.7%
Sun City Hilton Head 201,300 183,500 17,800 9.7% 199,500 187,600 11,900 6.3%
Sun City Texas 241,300 201,500 39,800 19.8% 231,100 214,100 17,000 7.9%
Sun City at Huntley 222,700 N/A N/A N/A 230,100 N/A N/A N/A
Florida communities 139,900 117,700 22,200 18.9% 138,300 110,500 27,800 25.2%
Other communities 204,000 169,700 34,300 20.2% 203,000 179,000 24,000 13.4%
Average active adult communities 221,900 197,900 24,000 12.1% 218,700 195,400 23,300 11.9%
Family and country club communities:
Arizona country club communities 289,500 N/A N/A N/A 272,100 N/A N/A N/A
Nevada country club communities 459,400 325,400 134,000 41.2% 431,600 325,400 106,200 32.6%
Arizona family communities 216,500 218,500 (2,000) (0.9%) 211,700 203,600 8,100 4.0%
Nevada family communities 171,500 199,200 (27,700) (13.9%) 188,600 195,400 (6,800) (3.5%)
Average family and country club
communities 243,900 218,400 25,500 11.7% 238,200 203,700 34,500 16.9%
Total average 228,800 202,100 26,700 13.2% 224,100 197,000 27,100 13.8%
=========================================================================================================================
Average revenue per home closing for the models and vacation getaway homes with
long-term leasebacks at the Sun Cities Phoenix was $132,700 and $100,000 for the
three and nine months respectively ended March 31, 2000. At the Sun Cities Las
Vegas, the average revenue for these home closings was $378,600 for the three
months and $256,200 for the nine months. At the Nevada country club communities,
the average revenue for these home closings was $492,100 for the nine months.
OPERATING STATISTICS:
Costs and expenses as a percentage of
revenues:
Home construction, land and other 77.0% 74.6% 2.4% 3.2% 77.4% 75.6% 1.8% 2.4%
Selling, general and administrative 13.6% 15.3% (1.7%) (11.1%) 13.5% 14.6% (1.1%) (7.5%)
Interest 4.4% 4.1% 0.3% 7.3% 4.2% 4.1% 0.1% 2.4%
Ratio of home closings to homes under
contract in backlog at beginning of
period 55.8% 43.0% 12.8% 29.8% 133.4% 142.9% (9.5%) (6.6%)
=========================================================================================================================
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
NOTES:
New orders are net of cancellations. The Company recognizes revenue at close of
escrow.
The Sun Cities Phoenix includes Sun City West, which is built out, and Sun City
Grand.
The Sun Cities Las Vegas include Sun City Summerlin, Sun City MacDonald Ranch
and Sun City Anthem. The Company began taking new home sales orders at Sun City
Anthem in July 1998. Home closings began at Sun City Anthem in December 1998.
The Sun Cities Northern California include Sun City Roseville and Sun City
Lincoln Hills. The Company began taking new home sales orders at Sun City
Lincoln Hills in February 1999. Home closings began at Sun City Lincoln Hills in
July 1999.
The Company began taking new home sales orders at Sun City at Huntley in
September 1998. Home closings began at Sun City at Huntley in April 1999.
Other active adult communities represent two smaller-scale communities in
Arizona and California.
The Company began taking new home sales orders at Anthem Country Club (an
Arizona country club community near Phoenix) in February 1999. Home closings
began at Anthem Arizona Country Club in September 1999.
The Company began taking new home sales orders at Anthem Country Club (a Nevada
country club community near Las Vegas) in July 1998. Home closings began at
Anthem Las Vegas Country Club in February 1999.
A substantial majority of the backlog at March 31, 2000 is currently anticipated
to result in revenues in the next 12 months. However, a majority of the backlog
is contingent primarily upon the availability of financing for the customer and,
in certain cases, sale of the customer's existing residence or other factors.
Also, as a practical matter, the Company's ability to obtain damages for breach
of contract by a potential home buyer is limited to retaining all or a portion
of the deposit received. In the nine months ended March 31, 2000 and 1999,
cancellations of home sales orders as a percentage of new home sales orders
written during the period were 14.5 percent and 13.8 percent, respectively.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
REVENUES. Total revenues increased to $499.8 million for the three months ended
March 31, 2000 from $324.4 million for the three months ended March 31, 1999.
Total active adult community homebuilding revenues increased to $312.2 million
for the 2000 quarter from $238.7 million for the 1999 quarter. The Company
believes that the principal reasons for this increase were:
* The Company's Sun City at Huntley community near Chicago, which had
not yet begun home closings in the 1999 quarter, contributed $26.7
million to the increase.
* An increase in the average revenue per home closing contributed $24.5
million to the increase.
* The Sun Cities Northern California, which had not yet begun home
closings at Sun City Lincoln Hills in the 1999 quarter, contributed
$17.7 million to the increase.
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Total family and country club community homebuilding revenues increased to
$157.1 million for the 2000 quarter from $67.0 million for the 1999 quarter. The
Company believes that the principal reasons for this increase were:
* The Company's Arizona country club communities, which had not yet
begun home closings at Anthem Arizona in the 1999 quarter, contributed
$38.2 million to the increase.
* The Company's Arizona family communities, which had not yet begun home
closings at Anthem Arizona in the 1999 quarter, contributed $26.9
million to the increase.
* An increase in the average revenue per home closing contributed $11.6
million to the increase.
* The Company's Nevada country club communities, which had just begun
home closings at Anthem Las Vegas in the 1999 quarter, contributed
$11.4 million to the increase.
Revenues from land and facility sales increased to $24.0 million for the 2000
quarter from $12.3 million for the 1999 quarter. The increase was primarily due
to the sale of land parcels in the Company's Nevada family community operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $384.9 million for the 2000 quarter from $242.0 million for
the 1999 quarter was largely due to the increase in home closings. As a
percentage of revenues, these costs increased to 77.0 percent for the 2000
quarter from 74.6 percent for the 1999 quarter.
This total cost increase as a percentage of revenues was largely due to a
decline in homebuilding gross margin from 24.1 percent for the 1999 quarter to
23.0 percent for the 2000 quarter. Of this 1.1 percent decline in homebuilding
gross margin, 0.3 percent was attributable to deferred profit recognition in the
2000 quarter on the sale and long-term leaseback of 40 model and vacation
getaway homes at two of the Company's communities. The balance was largely
attributable to changes in the mix of home closings between the Company's
various communities (in part due to the dilutive effect of lower initial pricing
at some of the Company's newer communities) and increased common cost
amortization at a number of the Company's active adult communities.
Also contributing to the cost increase as a percentage of revenues were
low-margin land sales in the Company's Nevada family communities in the 2000
quarter and a high-margin gain on an equipment sale in the 1999 quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses decreased to 13.6 percent for the
2000 quarter from 15.3 percent for the 1999 quarter. This decrease resulted from
spreading corporate overhead over significantly greater revenues.
INTEREST. As a percentage of revenues, amortization of capitalized interest
increased to 4.4 percent for the 2000 quarter from 4.1 percent for the 1999
quarter. This increase was primarily due to an increase in debt levels (see
"Liquidity and Financial Condition of the Company").
INCOME TAXES. The increase in income taxes to $9.0 million for the 2000 quarter
from $7.0 million in the 1999 quarter was proportionate to the increase in
earnings before income taxes. The effective tax rate in both quarters was 36
percent.
NET EARNINGS. The increase in net earnings to $16.0 million for the 2000 quarter
from $12.5 million for the 1999 quarter was primarily attributable to the
increase in home closings and homebuilding revenues and the decrease in selling,
general and administrative expenses as a percentage of revenues. These
improvements were partially offset by the decline in homebuilding gross margin
and the increase in interest as a percentage of revenues.
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in the 2000 quarter were 9.0
percent lower than in the 1999 quarter. The Company believes that this decrease
may be primarily attributable to the following:
* Sun City at Huntley, which the Company believes was still experiencing
significant pent-up demand in the 1999 quarter and has yet to
establish a normalized sales pattern, had a 45.4 percent decrease. The
Company also believes that lack of a full complement of product
offerings, which will be expanded in the future, contributed to the
low level of net new orders at this community in the 2000 quarter.
* The 35.5 percent decrease at the Arizona family communities was due to
a reduction in the number of subdivisions in the Phoenix area and to
the fact that the Company was experiencing significant pent-up demand
at its Anthem Arizona community in the 1999 quarter.
* Sun City Hilton Head, which experienced a higher-than-normal level of
net new orders in the 1999 quarter, had a 31.2 percent decrease.
* The 28.2 percent decrease at the Nevada family communities may be
largely attributable to the fact that the Company is selling a
substantial portion of its remaining lots at these communities to
other home builders, rather than building homes on them to sell.
* The Company had several communities which had net new orders in the
1999 quarter but have subsequently sold out and had no or minimal net
new orders in the 2000 quarter.
The Company has recently opened new recreational amenities at many of its
communities, which may help increase future sales activity at these communities.
Based on the factors mentioned above, the sale of family community land parcels
on which homes will not be built and sold by the Company (see "Liquidity and
Financial Condition of the Company"), increases in mortgage interest rates,
decreases in home resales nationally, and the fact that the Company's net new
orders in fiscal 1999 benefited from grand opening sales at a number of new
communities and were the highest in the Company's history, the Company currently
anticipates that its level of net new orders for fiscal 2000 will be below the
level for fiscal 1999.
The number of homes under contract at March 31, 2000 was 13.4 percent lower than
at March 31, 1999. The backlog decreases at Sun City at Huntley, the Arizona
family communities and the Nevada family communities were attributable to the
declines in net new orders discussed above. The Company believes that the
backlog decreases at most of the other active adult communities may be
attributable in part to increased sales prices, reduced advertising expenditures
in the first half of fiscal 2000, increased mortgage interest rates, decreased
home resales nationally and the pending opening of new recreational amenities at
many communities, all of which may have contributed to levels of net new orders
being below levels of home closings.
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
REVENUES. Total revenues increased to $1.40 billion for the nine months ended
March 31, 2000 from $947.3 million for the nine months ended March 31, 1999.
Total active adult community homebuilding revenues increased to $941.1 million
for the 2000 period from $704.4 million for the 1999 period. The Company
believes that the principal reasons for this increase were:
* The Company's Sun City at Huntley community near Chicago, which had
not yet begun home closings in the 1999 period, contributed $122.9
million to the increase.
* An increase in the average revenue per home closing contributed $62.1
million to the increase.
* The Sun Cities Northern California, which had not yet begun home
closings at Sun City Lincoln Hills in the 1999 period, contributed
$28.8 million to the increase.
* $24.2 million was attributable to revenues from models and vacation
getaway homes sold with a long-term leaseback.
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Total family and country club community homebuilding revenues increased to
$399.5 million for the 2000 period from $188.2 million for the 1999 period. The
Company believes that the principal reasons for this increase were:
* The Company's Arizona country club communities, which had not yet
begun home closings at Anthem Arizona in the 1999 period, contributed
$65.1 million to the increase.
* The Company's Nevada country club communities, which had just begun
home closings at Anthem Las Vegas late in the 1999 period, contributed
$51.4 million to the increase.
* An increase in the average revenue per home closing contributed $36.8
million to the increase.
* The Company's Arizona family communities, which had not yet begun home
closings at Anthem Arizona in the 1999 period, contributed $32.6
million to the increase.
* The Company's Nevada family communities, which had just begun home
closings at Anthem Las Vegas late in the 1999 period, contributed
$25.4 million to the increase.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $1.09 billion for the 2000 period from $716.5 million for the
1999 period was largely due to the increase in home closings. As a percentage of
revenues, these costs increased to 77.4 percent for the 2000 period from 75.6
percent for the 1999 period. Large, low-margin land sales in the 2000 period at
the Company's Nevada family community operations contributed to the increase, as
did a high-margin gain on an equipment sale in the 1999 period.
This total cost increase as a percentage of revenues was also due to a decline
in homebuilding gross margin from 24.1 percent for the 1999 period to 22.7
percent for the 2000 period. Of this 1.4 percent decline in homebuilding gross
margin, 0.5 percent was attributable to deferred profit recognition in the 2000
period on the sale and long-term leaseback of 205 model and vacation getaway
homes at three of the Company's communities. The balance of the decline in
homebuilding gross margin was largely attributable to changes in the mix of home
closings between the Company's various communities (in part due to the dilutive
effect of lower initial pricing at some of the Company's newer communities) and
increased common cost amortization at a number of the Company's active adult
communities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses decreased to 13.5 percent for the
2000 period from 14.6 percent for the 1999 period. This decrease resulted from
spreading corporate overhead over significantly greater revenues.
INTEREST. As a percentage of revenues, amortization of capitalized interest
increased slightly to 4.2 percent for the 2000 period from 4.1 percent for the
1999 period. This increase was primarily due to an increase in debt levels (see
"Liquidity and Financial Condition of the Company").
INCOME TAXES. The increase in income taxes to $24.4 million for the 2000 period
from $19.3 million in the 1999 period was due to the increase in earnings before
income taxes. The effective tax rate in both periods was 36 percent.
NET EARNINGS. The increase in net earnings to $43.5 million for the 2000 period
from $34.4 million for the 1999 period was primarily attributable to the
increase in home closings and homebuilding revenues and the decrease in selling,
general and administrative expenses as a percentage of revenues, partially
offset by the decline in gross margin.
17
NET NEW ORDER ACTIVITY. Net new orders in the 2000 period were 8.0 percent lower
than in the 1999 period. The Company believes that this decrease was primarily
attributable to the following:
* The Company reduced advertising expenditures in the first half of
fiscal 2000. In January 2000 it launched its new national
brand-building campaign. The reduced advertising expenditures may have
contributed to decreases in the Company's sales traffic and vacation
getaway program occupancy rates during the first half of the current
fiscal year.
* Sun City at Huntley, which the Company believes was experiencing
significant pent-up demand in the 1999 period and has yet to establish
a normalized sales pattern, had a 47.7 percent decrease.
* The 45.0 percent decrease at the Nevada family communities may be
largely attributable to the fact that the Company is selling a
substantial portion of its remaining lots at these communities to
other home builders, rather than building homes on them to sell.
* The 16.4 percent decrease at the Arizona family communities was due to
a reduction in the number of subdivisions in the Phoenix area.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
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, acquiring large tracts of land, obtaining development
approvals, developing land and lots and constructing project infrastructure
(such as roads and utilities), large recreation centers, golf courses, model
homes and sales facilities. 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 earnings reported for financial statement purposes, as
costs and expenses include amortization charges for substantial amounts of
previously expended costs.
During the 2000 period the Company generated $528.0 million of net cash from
operating community sales activities, used $439.7 million for land and lot and
amenity development at operating communities, paid $14.7 million for costs
related to communities in the pre-operating stage and used $148.5 million for
interest, income taxes and other operating activities. The resulting $74.9
million of net cash used for operating activities was funded mainly through
borrowings under the Company's $500 million senior unsecured revolving credit
facility (the "Credit Facility") and $25 million short-term lines of credit
(together with the Credit Facility, the "Credit Facilities").
Real estate development is dependent on, among other things, the availability
and cost of financing. In periods of significant growth, the Company requires
significant additional capital resources, whether from issuances of equity or by
increasing its indebtedness. In fiscal 1999 and the first nine months of fiscal
2000, the Company had under development, among other projects: (i) Sun City
Lincoln Hills, the successor community to Sun City Roseville; (ii) Anthem Las
Vegas, which includes Sun City Anthem, country club and family communities;
(iii) Anthem Arizona, which includes country club and family communities; and
(iv) Sun City at Huntley. Given its assessment of market conditions and
appropriate timing for these new communities, the Company decided to engage in
substantial development at these communities and permit its indebtedness and
leverage to increase substantially.
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
To date, material cash expenditures have been made for these communities. The
Company anticipates that it will make material additional development and
housing construction expenditures at these communities through the balance of
fiscal 2000. In order to provide adequate capital to meet the Company's
operating requirements, the Company in February 1999 completed a $150 million
public debt offering and negotiated an increase in the amount of its Credit
Facility from $450 million to $500 million. At March 31, 2000 the Company had
$393.3 million outstanding under the Credit Facilities. A portion of the unused
capacity under the Credit Facilities is expected to be unavailable at June 30,
2000; however, the unavailable portion is not expected to have an impact on the
Company's planned future expenditures.
As a result of public debt offerings and borrowings to fund development
expenditures, described above, the Company has considerably more indebtedness
and was considerably more highly leveraged at March 31, 2000 than it has been in
recent years. However, the Company reduced its leverage from September 30, 1999,
with debt to total capitalization declining from 72.5 percent at that date to
72.0 percent at March 31, 2000. The Company currently intends to further reduce
its ratio of debt to total capitalization to approximately 67 percent or lower
before incurring material development (excluding land acquisition) expenditures
for any significant new communities. The Company's current goal is to reach
approximately 67 percent debt to total capitalization by June 30, 2001.
The Company expects to have adequate capital resources to meet its needs for the
next 12 months. In addition, the Company is selling to other home builders
certain land parcels in its Arizona family community operations and a
substantial portion of the remaining lots in its Nevada family communities and
is planning to otherwise manage its expenditures to meet its needs and available
resources over this time period. If there is a significant downturn in the
Company's anticipated operations, however, the Company will need to further
modify its business plan to operate with lower capital resources. Modifications
of the business plan could include, among other things, delaying development
expenditures at its communities.
The Company's indebtedness and leverage from time to time will affect its
interest incurred and capital resources, which could limit its ability to
capitalize on business opportunities or withstand adverse changes. Additionally,
the availability and cost of debt financing depends on governmental policies and
other factors outside the Company's control. If the Company cannot at any time
obtain sufficient capital resources to fund its development and expansion
expenditures, its projects may be delayed, resulting in cost increases, adverse
effects on the Company's results of operations and possible material adverse
effects on the Company. No assurance can be given as to the terms, availability
or cost of any future financing the Company may need. If the Company is at any
time unable to service its debt, refinancing or obtaining additional financing
may be required and may not be available or available on terms acceptable to the
Company.
At March 31, 2000, under the most restrictive of the covenants in the Company's
debt agreements, $65.2 million of the Company's retained earnings was available
for payment of cash dividends and the acquisition by the Company of its common
stock.
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that are not historical results are forward
looking statements. They involve risks and uncertainties. Certain forward
looking statements are based on assumptions as to future events. Some of these
assumptions will prove inaccurate; actual results will differ from those set
forth or implied in the forward looking statements and the variances may be
material. Risks and uncertainties include: financing and leverage; the
development of future communities, including in new geographic markets;
governmental regulation, including growth management controls; environmental
considerations; competition; the geographic concentration of the Company's
operations; the cyclical nature of real estate operations; interest rate
increases; fluctuations in labor and material costs; natural risks in certain
market areas; and other matters in the Company's Annual Report on Form 10-K for
the year ended June 30, 1999.
20
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 3.1 Amendments Resolution for Bylaws of Del Webb Corporation
effective April 2000.
Exhibit 10.1 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and John A. Spencer.
Exhibit 10.2 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and Charles T. Roach.
Exhibit 10.3 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and David G. Schreiner.
Exhibit 10.4 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and Frank D. Pankratz.
Exhibit 10.5 Not used
Exhibit 10.6 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and
Charles T. Roach.
Exhibit 10.7 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and David G.
Schreiner.
Exhibit 10.8 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and Frank D.
Pankratz.
Exhibit 10.9 Second Amendment to Employment and Consulting Agreement
entered into as of February 28, 2000 between Del Webb
Corporation and Philip J. Dion.
Exhibit 27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the period covered
by this report.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, who are duly authorized to do so.
DEL WEBB CORPORATION
(REGISTRANT)
Date: May 9, 2000 /s/ Leroy C. Hanneman, Jr.
----------- ----------------------------------------------------
LeRoy C. Hanneman, Jr.
Chief Executive Officer
Date: May 9, 2000 /s/ John A. Spencer
----------- ----------------------------------------------------
John A. Spencer
Executive Vice President and Chief Financial Officer
22