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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant To Section 13 or 15(D)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2001
MERITAGE CORPORATION
(Exact name of registrant as specified in charter)
Maryland 1-9977 86-0611231
(State or Other Jurisdiction of (Commission (IRS Employer of
Incorporation) File Number) Identification No.)
6613 North Scottsdale Road
Suite 200
Scottsdale, Arizona 85250
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (877) 400-7888
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
REFERENCES TO "WE," "OUR" AND "US" IN THIS CURRENT REPORT ON FORM 8-K/A
REFER TO MERITAGE CORPORATION AND ITS CONSOLIDATED SUBSIDIARIES. THE FOLLOWING
INFORMATION IS IN ADDITION TO THE INFORMATION INCLUDED IN CURRENT REPORT ON
FORM 8-K FILED ON MAY 9, 2001 WHICH IS INCORPORATED BY REFERENCE HEREIN.
On May 7, 2001, we entered into a definitive agreement to acquire
substantially all of the homebuilding and related assets of HC Builders, Inc.
and Hancock Communities, L.L.C. (collectively, "Hancock"), subject to customary
closing conditions. We have proposed to raise $150 million in senior notes
through a private placement to finance the acquisition and to repay some of our
existing indebtedness.
Subject to various assumptions, we believe that if we complete the
acquisition by May 31, 2001, for fiscal 2001 on a combined basis, we could
-- achieve revenues of $708.0 million on 3,207 home closings, and
-- be operating 81 active communities at year end.
FORWARD LOOKING STATEMENTS
Certain of the matters discussed in this Current Report may constitute
forward-looking statements. In general, forward-looking statements can be
identified by use of words such as "expect," "believe," "estimate," "project,"
"forecast," "anticipate," "plan" and similar expressions. In this Current
Report, forward-looking statements address such matters as, but are not limited
to, our ability to consummate the Hancock acquisition and to complete our
planned debt offering, our ability to enter the entry-level and affordable
age-restricted adult communities markets through Hancock and at the times
projected, anticipated benefits of the Hancock acquisition, including our
ability to expand our demographic reach and product offerings, acquire
additional revenue and cash flow streams and acquire and retain Hancock's
management team, the anticipated purchase price of the Hancock acquisition, the
terms of the notes we are offering to finance the Hancock acquisition and to
repay some of our existing indebtedness, the accuracy of the assumptions and
adjustments in the pro forma combined financial information included in this
Current Report, and projections of revenues, home closings and operating
communities, as well as assumptions related to the foregoing. Forward-looking
statements express expectations of future events. All forward-looking statements
are inherently uncertain as they are based on various expectations and
assumptions concerning future events and they are subject to numerous known and
unknown risks and uncertainties which could cause actual events or results to
differ materially from those projected. Our past performance or past or present
economic conditions in our housing markets are not indicative of future
performance or conditions. Due to these inherent uncertainties, investors or
potential investors in our securities
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are urged not to place undue reliance on forward-looking statements or on the
financial statements or pro forma financial statements included herein. In
addition, we undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of anticipated or
unanticipated events or changes to projections over time. Important factors
currently known to management that could cause actual results to differ
materially from those in forward-looking statements and that could affect our
business generally (including our combined business with Hancock if the
acquisition is consummated) include, but are not limited to, changes in national
and local economic and other conditions, such as employment levels, availability
of mortgage financing, interest rates, consumer confidence, and housing demand;
risks inherent in homebuilding activities, including delays in construction
schedules, cost overruns, changes in government regulation, increases in real
estate taxes and other local fees; changes in costs or availability of land,
materials, and labor; fluctuations in real estate values; the timing of home
closings and land sales; our ability to continue to acquire additional land or
options to acquire additional land on acceptable terms; a relative lack of
geographic diversification of our operations, especially when real estate
analysts are predicting that new home sales in certain markets may slow during
2001; our inability to obtain sufficient capital on terms acceptable to us to
fund our planned capital and other expenditures; changes in local, state and
federal rules and regulations governing real estate development and homebuilding
activities and environmental matters, including "no growth" or "slow growth"
initiatives, building permit allocation ordinances and building moratoriums;
expansion by us into new geographic or product markets in which we have little
or no operating experience; our inability to identify acquisition candidates
that will result in successful combinations; our failure to make acquisitions on
terms acceptable to us, or to successfully integrate acquired operations, such
as Hancock, into Meritage; and the loss of key employees of Meritage or any
acquired companies, including Steven J. Hilton and John R. Landon; as well as
those factors described in our Amended Report on Form 10-K for the year ended
December 31, 2000 under the captions "Factors That May Affect Our Future Results
and Financial Condition," "Special Note of Caution Regarding Forward-Looking
Statements," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and in the notes to our financial statements.
In addition, the Hancock acquisition and our issuance of the notes are
subject to the following risks and uncertainties:
The integration of Hancock with our operations may present challenges.
The integration of Hancock into our operations following the
acquisition will involve a number of risks. In particular, the combined
companies may experience attrition among management and personnel. The
integration process could also disrupt the activities of our respective
businesses. The combination of the two companies will require, among other
things, coordination of management, administrative and other functions. Failure
to overcome these challenges or any other problems encountered in connection
with the acquisition of Hancock could cause our financial condition, results of
operations and competitive position to decline.
We may not achieve the anticipated benefits from the acquisition.
We believe that the acquisition will enhance our market position in
Arizona and expand our housing offerings. Our integration plan for the Hancock
acquisition assumes certain
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synergies and other benefits. We cannot assure you that unforeseen factors will
not offset the intended benefits of the acquisition in whole or in part.
Our substantial level of indebtedness could adversely affect our
financial condition.
We will have substantial indebtedness after our note offering if it is
consummated. As of March 31, 2001, on a pro forma basis, we would have had
$191.2 million of indebtedness. In addition, subject to restrictions in the
indenture for the notes we are offering and our credit facilities, we may incur
additional indebtedness. The high level of our indebtedness could have important
consequences, including: limitations on our ability to obtain additional
financing; the requirement that we use a substantial portion of our cash flow
from operations to pay interest and principal on the notes and other
indebtedness; our operating with a higher level of indebtedness than some of our
competitors, which may put us at a competitive disadvantage; and our increased
vulnerability to economic downturns and adverse developments in our business.
We expect to obtain the money to pay our expenses and to pay the
principal and interest on the notes, our credit facilities and other debt from
cash flow from our operations. Our ability to meet our expenses thus depends on
our future performance, which will be affected by financial, business, economic
and other factors referenced above. We will not be able to control many of these
factors, such as economic conditions in the markets where we operate and
pressure from competitors. If we do not have enough money, we may be required to
refinance all or part of our existing debt, including the notes, sell assets or
borrow more money. We cannot guarantee that we will be able to do so on terms
acceptable to us, if at all. In addition, the terms of existing or future debt
agreements, including our credit facilities and the indenture, may restrict us
from pursuing any of these alternatives.
The indenture for the notes we are offering and our credit facilities
impose significant operating and financial restrictions, which may prevent us
from capitalizing on business opportunities and taking some corporate actions.
The indenture for the notes will and our credit facilities do impose
significant operating and financial restrictions on us. These restrictions will
limit the ability of us and our subsidiaries, among other things, to: incur
additional indebtedness or liens; pay dividends or make other distributions;
repurchase our stock; make investments; sell assets; enter into agreements
restricting our subsidiaries' ability to pay dividends; enter into transactions
with affiliates; and consolidate, merge or sell all or substantially all of our
assets.
In addition, we will be required to maintain specified financial
ratios. We cannot assure you that these covenants will not adversely affect our
ability to finance our future operations or capital needs or to pursue available
business opportunities. A breach of any of these covenants or our inability to
maintain the required financial ratios could result in a default in respect of
the related indebtedness. If a default occurs, the relevant lenders could elect
to declare the indebtedness, together with accrued interest and other fees, to
be immediately due and payable and, with respect to our existing credit
facilities, proceed against any collateral securing that indebtedness.
Special Note: The senior notes have not been registered under the
Securities Act of 1933 or any applicable state securities laws and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements. This Current Report does not
constitute an offer to sell or the solicitation of an offer to buy the notes or
any other securities.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MERITAGE CORPORATION
Date: May 11, 2001 /s/ Larry W. Seay
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Larry W. Seay
Vice President of Finance and
Chief Financial Officer
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