UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1997
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MONTEREY HOMES CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 1-9977 86-0611231
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6613 North Scottsdale Road, Suite 200, Scottsdale, Arizona 85250
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 998-8700
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NONE
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On May 29, 1997, Monterey Homes Corporation ("Monterey") signed a
definitive agreement with Legacy Homes, Ltd., Legacy Enterprises, Inc., and John
Landon and Eleanor Landon (together, the "Legacy Entities"), to acquire
substantially all of the assets of Legacy Homes, Ltd. and Legacy Enterprises,
Inc. and a related mortgage banking business. The transaction was effective as
of July 1, 1997.
The consideration for the assets and stock acquired consisted of
$1,581,685 in cash (paid out of working capital and subject to final accounting
adjustments), 666,667 shares of Monterey common stock and deferred contingent
payments for the four years following the close of the transaction. The deferred
contingent payments will be equal to 12% of the pre-tax income of Monterey and
20% of the pre-tax income of the Texas division of Monterey. In no event will
the total of the deferred contingent payments exceed $15 million. In addition,
Monterey assumed substantially all the liabilities of the Legacy Entities,
including indebtedness that was incurred prior to the closing of the
transactions to fund distributions to the shareholders of Legacy Homes that
reduced its book value to less than $200,000.
The assets purchased from the Legacy Entities principally consist of
real property and other residential home building assets located in the
Dallas/Ft. Worth, Houston and Austin metropolitan areas. Monterey will continue
the operations of the Legacy Entities.
In connection with the transactions, John Landon has entered into a
four-year employment agreement with Monterey pursuant to which he has been
appointed Chief Operating Officer and Co-Chief Executive Officer of Monterey,
and President and Chief Executive Officer of Monterey's newly acquired Texas
operations. Mr. Landon has also been granted an option to purchase 166,667
shares of Monterey's common stock, exercisable in equal annual increments over
three years, commencing July 1, 1998. In addition, Monterey has agreed to use
reasonable best efforts to cause Mr. Landon to be elected to its Board of
Directors.
Monterey officials believe that actual 1997 revenues, factoring in the
Legacy acquisition, could reach $150 million, and earnings could reach $10
million, or approximately $1.61 per share. Company officials also estimate that
pro forma 1997 revenues (giving effect to the transaction as if it had occurred
on January 1, 1997) could reach $200 million.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Any statements set forth above that are not historical in nature
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Potential risks
and uncertainties
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include such factors as the strength and competitive pricing environment of the
single-family housing market, changes in the availability and pricing of
residential mortgages, changes in the availability and pricing or real estate in
the markets in which Monterey operates, demand for and acceptance of Monterey's
products, the success of planned marketing and promotional campaigns, the
ability of Monterey and acquisition candidates, including the Legacy Entities,
to successfully integrate their operations, and other factors identified in
Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements Page
It is impractical to file the Report with the
financial statements required by Item 7(a) of Form
8-K. Such statements will be filed by amendment as
soon as completed and available, but in no event
later than 60 days after the date from which this
Report is required to be filed.
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(b) Pro Forma Financial Information
It is impractical to file this Report with the pro
forma financial information required by Item 7(b) of
Form 8-K. Such information will be filed by amendment
as soon as completed and available, but in no event
later than 60 days after the date from which this
Report is required to be filed.
(c) Exhibits
Exhibit No. Description Page
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2 Agreement of Purchase and Sale of Assets, Incorporated
dated as of May 29, 1997, by and among by reference
Monterey, Legacy Homes, Ltd., Legacy to Form 8-
Enterprises, Inc. and John and Eleanor Landon K/A, dated
June 18, 1997
99 Private Securities Litigation Reform Act of
1995 Safe Harbour Compliance Statement for
Forward-Looking Statements
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MONTEREY HOMES CORPORATION
Date: July 15, 1997 By: /s/ Larry W. Seay
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Larry W. Seay
Vice President of Finance and
Chief Financial Officer
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