e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2007
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-9804
PULTE HOMES, INC.
(Exact name of registrant as specified in its charter)
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MICHIGAN
(State or other jurisdiction of
incorporation or organization)
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38-2766606
(I.R.S. Employer
Identification No.) |
100 Bloomfield Hills Parkway, Suite 300
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code (248) 647-2750
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 þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). YES o NO þ
Number of shares of common stock outstanding as of July 31, 2007: 255,905,882
PULTE HOMES, INC.
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PULTE HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000s omitted)
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June 30, |
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December 31, |
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2007 |
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2006 |
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(Unaudited) |
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(Note) |
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ASSETS |
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Cash and equivalents |
|
$ |
74,652 |
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$ |
551,292 |
|
Unfunded settlements |
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37,170 |
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72,597 |
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House and land inventory |
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9,088,899 |
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9,374,335 |
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Land held for sale |
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389,582 |
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465,823 |
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Land, not owned, under option agreements |
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34,848 |
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43,609 |
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Residential mortgage loans available-for-sale |
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380,555 |
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871,350 |
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Investments in unconsolidated entities |
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165,217 |
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150,685 |
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Goodwill |
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375,677 |
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375,677 |
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Intangible assets, net |
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114,829 |
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118,954 |
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Other assets |
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850,010 |
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982,034 |
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Deferred income tax assets |
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440,209 |
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170,518 |
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$ |
11,951,648 |
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$ |
13,176,874 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Liabilities: |
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Accounts payable, including book overdrafts of
$230,181 and $280,329 in 2007 and 2006, respectively |
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$ |
609,803 |
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$ |
576,321 |
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Customer deposits |
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272,576 |
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200,478 |
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Accrued and other liabilities |
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1,114,973 |
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1,403,793 |
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Unsecured short-term borrowings |
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173,000 |
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Collateralized short-term debt, recourse solely to applicable
non-guarantor subsidiary assets |
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333,071 |
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814,707 |
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Income taxes |
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524 |
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66,267 |
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Senior notes |
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3,477,534 |
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3,537,947 |
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Total liabilities |
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5,981,481 |
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6,599,513 |
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Shareholders equity |
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5,970,167 |
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6,577,361 |
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$ |
11,951,648 |
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$ |
13,176,874 |
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Note: The condensed consolidated balance sheet at December 31, 2006, has been derived from the
audited financial statements at that date but does not include all of the information and
footnotes required by accounting principles generally accepted in the United States for complete
financial statements.
See accompanying Notes to Condensed Consolidated Financial Statements.
3
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(000s omitted, except per share data)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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Revenues: |
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Homebuilding |
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$ |
1,993,498 |
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$ |
3,318,055 |
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$ |
3,823,406 |
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$ |
6,232,807 |
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Financial services |
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27,362 |
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40,467 |
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66,943 |
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85,324 |
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Other non-operating |
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386 |
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445 |
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2,330 |
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3,412 |
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Total revenues |
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2,021,246 |
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3,358,967 |
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3,892,679 |
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6,321,543 |
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Expenses: |
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Homebuilding, principally cost of sales |
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2,741,446 |
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2,935,896 |
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4,718,720 |
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5,474,281 |
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Financial Services |
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20,886 |
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25,536 |
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47,316 |
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52,776 |
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Other non-operating, net |
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10,372 |
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8,598 |
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19,673 |
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20,948 |
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Total expenses |
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2,772,704 |
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2,970,030 |
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4,785,709 |
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5,548,005 |
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Other income: |
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Gain on sale of equity investment |
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31,635 |
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Equity income (loss) |
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(55,151 |
) |
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(1,212 |
) |
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(56,127 |
) |
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96 |
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|
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|
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|
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Income (loss) from continuing operations
before income taxes |
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(806,609 |
) |
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387,725 |
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(949,157 |
) |
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805,269 |
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Income taxes (benefit) |
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(299,058 |
) |
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143,873 |
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(355,934 |
) |
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298,772 |
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Income (loss) from continuing operations |
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(507,551 |
) |
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243,852 |
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(593,223 |
) |
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506,497 |
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Loss from discontinued operations |
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(833 |
) |
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(833 |
) |
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Net income (loss) |
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$ |
(507,551 |
) |
|
$ |
243,019 |
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$ |
(593,223 |
) |
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$ |
505,664 |
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Per share data: |
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Basic: |
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Income (loss) from continuing operations |
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$ |
(2.01 |
) |
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$ |
.97 |
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$ |
(2.35 |
) |
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$ |
2.00 |
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Loss from discontinued operations |
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Net income (loss) |
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$ |
(2.01 |
) |
|
$ |
.96 |
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$ |
(2.35 |
) |
|
$ |
2.00 |
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Assuming dilution: |
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Income (loss) from continuing operations |
|
$ |
(2.01 |
) |
|
$ |
.94 |
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$ |
(2.35 |
) |
|
$ |
1.95 |
|
Loss from discontinued operations |
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Net income (loss) |
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$ |
(2.01 |
) |
|
$ |
.94 |
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$ |
(2.35 |
) |
|
$ |
1.95 |
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Cash dividends declared |
|
$ |
.04 |
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$ |
.04 |
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$ |
.08 |
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$ |
.08 |
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Number of shares used in calculation: |
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Basic: |
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Weighted-average common shares
outstanding
|
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|
252,093 |
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|
|
252,618 |
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|
252,006 |
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|
253,148 |
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Assuming dilution: |
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Effect of dilutive securities stock options and
restricted stock grants |
|
|
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6,329 |
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|
6,704 |
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Adjusted weighted-average common shares
and effect of dilutive securities |
|
|
252,093 |
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|
|
258,947 |
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|
|
252,006 |
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|
|
259,852 |
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See accompanying Notes to Condensed Consolidated Financial Statements.
4
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
($000s omitted, except per share data)
(Unaudited)
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Accumulated |
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Other |
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Additional |
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Comprehensive |
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Common |
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Paid-in |
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Income |
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Retained |
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Stock |
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Capital |
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(Loss) |
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Earnings |
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Total |
|
Shareholders Equity,
December 31, 2006 |
|
$ |
2,553 |
|
|
$ |
1,284,687 |
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|
$ |
(2,986 |
) |
|
$ |
5,293,107 |
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|
$ |
6,577,361 |
|
Adoption of FASB Interpretation
No. 48 (FIN 48) |
|
|
|
|
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|
|
|
|
|
|
|
|
(31,354 |
) |
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|
(31,354 |
) |
Stock option exercises |
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|
4 |
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|
|
5,616 |
|
|
|
|
|
|
|
|
|
|
|
5,620 |
|
Tax benefit from stock option exercises and
restricted stock vesting |
|
|
|
|
|
|
3,414 |
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|
|
|
|
|
|
|
|
|
|
3,414 |
|
Restricted stock awards |
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|
3 |
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|
(3 |
) |
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Cash
dividends declared - $.08 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,474 |
) |
|
|
(20,474 |
) |
Stock repurchases |
|
|
(1 |
) |
|
|
(754 |
) |
|
|
|
|
|
|
(4,358 |
) |
|
|
(5,113 |
) |
Stock-based compensation |
|
|
|
|
|
|
34,590 |
|
|
|
|
|
|
|
|
|
|
|
34,590 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(593,223 |
) |
|
|
(593,223 |
) |
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
(803 |
) |
|
|
|
|
|
|
(803 |
) |
Foreign currency translation
adjustments |
|
|
|
|
|
|
|
|
|
|
149 |
|
|
|
|
|
|
|
149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(593,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity, June 30, 2007 |
|
$ |
2,559 |
|
|
$ |
1,327,550 |
|
|
$ |
(3,640 |
) |
|
$ |
4,643,698 |
|
|
$ |
5,970,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity,
December 31, 2005 |
|
$ |
2,570 |
|
|
$ |
1,209,148 |
|
|
$ |
(5,496 |
) |
|
$ |
4,751,120 |
|
|
$ |
5,957,342 |
|
Stock option exercises |
|
|
2 |
|
|
|
3,450 |
|
|
|
|
|
|
|
|
|
|
|
3,452 |
|
Tax benefit from stock option exercises and
restricted stock vesting |
|
|
|
|
|
|
3,333 |
|
|
|
|
|
|
|
|
|
|
|
3,333 |
|
Restricted stock awards |
|
|
7 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared - $.08 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,494) ( |
|
|
|
20,494 |
) |
Stock repurchases |
|
|
(29 |
) |
|
|
(13,841 |
) |
|
|
|
|
|
|
(85,744 |
) |
|
|
(99,614 |
) |
Stock-based compensation |
|
|
|
|
|
|
33,476 |
|
|
|
|
|
|
|
|
|
|
|
33,476 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
505,664 |
|
|
|
505,664 |
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
226 |
|
|
|
|
|
|
|
226 |
|
Foreign currency translation
adjustments |
|
|
|
|
|
|
|
|
|
|
1,225 |
|
|
|
|
|
|
|
1,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
507,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity, June 30, 2006 |
|
$ |
2,550 |
|
|
$ |
1,235,559 |
|
|
$ |
(4,045 |
) |
|
$ |
5,150,546 |
|
|
$ |
6,384,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
5
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000s omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For The Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(593,223 |
) |
|
$ |
505,664 |
|
Adjustments to reconcile net income (loss) to net cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Write-down of land and deposits and pre-acquisition costs |
|
|
827,390 |
|
|
|
67,326 |
|
Gain on sale of equity investment |
|
|
|
|
|
|
(31,635 |
) |
Amortization and depreciation |
|
|
43,273 |
|
|
|
37,987 |
|
Stock-based compensation expense |
|
|
34,590 |
|
|
|
33,476 |
|
Deferred income taxes |
|
|
(261,139 |
) |
|
|
(55 |
) |
Equity loss (income) from unconsolidated entities |
|
|
56,127 |
|
|
|
(96 |
) |
Distributions of earnings from unconsolidated entities |
|
|
4,161 |
|
|
|
5,312 |
|
Other, net |
|
|
4,645 |
|
|
|
1,490 |
|
Increase (decrease) in cash due to: |
|
|
|
|
|
|
|
|
Inventories |
|
|
(519,760 |
) |
|
|
(2,104,010 |
) |
Residential mortgage loans available-for-sale |
|
|
490,795 |
|
|
|
516,998 |
|
Other assets |
|
|
161,571 |
|
|
|
112,491 |
|
Accounts payable, accrued and other liabilities |
|
|
(135,552 |
) |
|
|
(63,955 |
) |
Income taxes |
|
|
(105,649 |
) |
|
|
(134,451 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
7,229 |
|
|
|
(1,053,458 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Distributions from unconsolidated entities |
|
|
28,838 |
|
|
|
31,336 |
|
Investments in unconsolidated entities |
|
|
(94,968 |
) |
|
|
(20,744 |
) |
Investments in subsidiaries, net of cash acquired |
|
|
|
|
|
|
(65,779 |
) |
Proceeds from the sale of equity investments |
|
|
|
|
|
|
49,216 |
|
Proceeds from the sale of fixed assets |
|
|
5,167 |
|
|
|
534 |
|
Capital expenditures |
|
|
(32,608 |
) |
|
|
(54,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(93,571 |
) |
|
|
(59,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net repayments under Financial Services credit arrangements |
|
|
(481,636 |
) |
|
|
(415,973 |
) |
Net borrowings under revolving credit facility |
|
|
173,000 |
|
|
|
614,500 |
|
Proceeds from other borrowings |
|
|
|
|
|
|
150,000 |
|
Repayment of other borrowings |
|
|
(64,973 |
) |
|
|
(17,519 |
) |
Excess tax benefits from share-based awards |
|
|
3,414 |
|
|
|
1,794 |
|
Issuance of common stock |
|
|
5,620 |
|
|
|
3,452 |
|
Stock repurchases |
|
|
(5,113 |
) |
|
|
(99,614 |
) |
Dividends paid |
|
|
(20,474 |
) |
|
|
(20,494 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(390,162 |
) |
|
|
216,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and equivalents |
|
|
(136 |
) |
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
(476,640 |
) |
|
|
(897,809 |
) |
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of period |
|
|
551,292 |
|
|
|
1,002,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
74,652 |
|
|
$ |
104,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized |
|
$ |
8,420 |
|
|
$ |
6,257 |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
7,211 |
|
|
$ |
432,183 |
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
6
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies |
|
|
|
Basis of presentation |
The consolidated financial statements include the accounts of Pulte Homes, Inc. and all of
its direct and indirect subsidiaries (the Company) and variable interest entities in which the
Company is deemed to be the primary beneficiary. The direct subsidiaries of Pulte Homes, Inc.
include Pulte Diversified Companies, Inc., Del Webb Corporation (Del Webb) and other
subsidiaries that are engaged in the homebuilding business. Pulte Diversified Companies, Inc.s
operating subsidiaries include Pulte Home Corporation and other subsidiaries that are engaged in
the homebuilding business. The Company also has a mortgage banking company, Pulte Mortgage LLC
(Pulte Mortgage), which is a subsidiary of Pulte Home Corporation.
The accompanying unaudited condensed consolidated financial statements have been prepared
in accordance with United States generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by United States
generally accepted accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended June 30, 2007
are not necessarily indicative of the results that may be expected for the year ending December
31, 2007. These financial statements should be read in conjunction with the Companys
consolidated financial statements and footnotes thereto included in the Companys annual report
on Form 10-K for the year ended December 31, 2006.
Basic earnings per share is computed by dividing income available to common shareholders
(the numerator) by the weighted-average number of common shares, adjusted for non-vested
shares of restricted stock (the denominator) for the period. Computing diluted earnings per
share is similar to computing basic earnings per share, except that the denominator is increased
to include the dilutive effects of options and non-vested shares of restricted stock. Any
options that have an exercise price greater than the average market price are considered to be
anti-dilutive, and are excluded from the diluted earnings per share calculation. The
calculation of diluted earnings per share excludes 21,202,516 and 21,515,070 stock options and
shares of restricted stock for the three and six months ended June 30, 2007, respectively, and
2,454,200 and 2,414,200 stock options and shares of restricted stock for the three and six
months ended June 30, 2006, respectively. For the three and six months ended June 30, 2007, all
stock options and non-vested restricted stock were excluded from the calculation as they were
anti-dilutive due to the net loss recorded during the period.
In response to the challenging operating environment that continues to exist, the Company
initiated a restructuring plan during the three months ended June 30, 2007 designed to reduce
ongoing overhead costs and improve operating efficiencies. The restructuring includes the
closure of selected divisional offices, the disposal of related property and equipment, and a
reduction in the Companys workforce of approximately 1,700 employees. Included below is a
summary of charges incurred and expected to be incurred related to the restructuring ($000s
omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expected to |
|
|
|
Incurred to Date |
|
|
be Incurred |
|
Employee severance benefits |
|
$ |
31,424 |
|
|
$ |
32,000 to $35,000 |
|
Asset impairments |
|
|
4,515 |
|
|
|
5,000 to 8,000 |
|
Lease terminations and other exit costs |
|
|
3,204 |
|
|
|
5,000 to 7,000 |
|
|
|
|
|
|
|
|
|
|
$ |
39,143 |
|
|
$ |
42,000 to $50,000 |
|
|
|
|
|
|
|
|
Substantially all of these costs have been included in the Consolidated Statements of
Operations within Homebuilding expense. We expect to incur $33 million to $40 million of cash
expenditures related to the restructuring plan, the majority of which relate to employee
severance benefits and will be incurred during 2007. The remaining cash expenditures will be
incurred over the remaining terms of the affected office leases,
some of which continue through 2014. The restructuring costs relate to each of our reportable
segments and are not material to any one segment.
7
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Land Valuation Adjustments and Write-Offs
Impairment of long-lived assets |
In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long Lived Assets (SFAS No. 144), the Company records valuation
adjustments on land inventory and related communities under development when events and
circumstances indicate that they may be impaired and when the cash flows estimated to be
generated by those assets are less than their carrying amounts. Such indicators include gross
margin or sales paces significantly below expectations, construction costs or land development
costs significantly in excess of budgeted amounts, significant delays or changes in the planned
development for the community, and other known qualitative factors. For communities that are
not yet active, a significant additional consideration includes an evaluation of the regulatory
environment related to the probability, timing, and cost of obtaining necessary approvals from
local municipalities and any potential concessions that may be necessary in order to obtain such
approvals. We also consider potential changes to the product offerings in a community and any
alternative strategies for the land, such as the sale of the land either in whole or in parcels.
The weakened market conditions that arose during 2006 have persisted into 2007 and resulted in
lower than expected net new orders, revenues, and gross margins and higher than expected
cancellation rates during the six months ended June 30, 2007. As a result, a portion of the
Companys land inventory and communities under development demonstrated potential impairment
indicators and were accordingly tested for impairment. As required by SFAS No. 144, the Company
compared the expected undiscounted cash flows for these communities to their carrying value.
For those communities whose carrying values exceeded the expected undiscounted cash flows, the
Company calculated the fair value of the community. Impairment charges are required to be
recorded if the fair value of the communitys inventory is less than its carrying amount. The
Company determined the fair value of the communitys inventory using a discounted cash flow
model. These estimated cash flows are significantly impacted by estimates related to expected
average selling prices and sale incentives, expected sales paces and cancellation rates,
expected land development construction timelines, and anticipated land development,
construction, and overhead costs. Such estimates must be made for each individual community and
may vary significantly between communities. Due to uncertainties in the estimation process, the
significant volatility in demand for new housing, and the long life cycles of many communities,
actual results could differ significantly from such estimates. The Companys determination of fair
value also requires discounting the estimated cash flows at a rate commensurate with the
inherent risks associated with the assets and related estimated cash flow streams. The discount
rate used in determining each communitys fair value depends on the stage of development of the
community and other specific factors that increase or decrease the inherent risks associated
with the communitys cash flow streams. For example, communities that are entitled and near
completion will generally require a lower discount rate than communities that are not entitled
and consist of multiple phases spanning several years of development and construction activity.
The Company recorded valuation adjustments of $603.1 million (related to 139 communities)
and $9.3 million (related to three communities) for the three months ended June 30, 2007 and
2006, respectively, and $665.5 million (related to 174 communities) and $9.4 million (related to
three communities) for the six months ended June 30, 2007 and 2006, respectively, to reduce the
carrying value of the impaired assets to their estimated fair value. The Company recorded these
valuation adjustments in its Consolidated Statements of Operations within Homebuilding expense.
For the three months ended June 30, 2007, the Company performed detailed impairment calculations
for 212 communities resulting in impairments for 139 communities. The discount rate used in the
Companys determination of fair value for these 139 communities ranged from 10% to 19% with an
aggregate average of 12%, and the remaining carrying value of such communities totaled $695.8
million at June 30, 2007. These 139 communities included 30 of our long-lived active adult
communities as well as 39 communities for which impairments were also recorded in prior periods.
In the event that market conditions or our operations deteriorate in the future or the current
difficult market conditions extend beyond our expectations, additional impairments may be
experienced in the future.
8
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Land Valuation Adjustments and Write-Offs
|
|
|
|
Net realizable value adjustments land held for sale |
In accordance with SFAS No. 144, the Company values long-lived assets held for sale at the
lower of carrying amount or fair value less cost to sell. The Company records these net
realizable value adjustments in its Consolidated Statements of Operations within Homebuilding
expense. The Company recognized net realizable valuation adjustments to land held for sale of
$34 million and $22 million for the three months ended June 30, 2007 and 2006, respectively, and
$52.3 million and $22.1 million for the six months ended June 30, 2007 and 2006, respectively.
|
|
Write-off of deposits and pre-acquisition costs |
From time to time, the Company writes off certain deposits and pre-acquisition costs
related to land option contracts the Company no longer plans to pursue. Such decisions take
into consideration changes in national and local market conditions, the willingness of land
sellers to modify terms of the related purchase agreement, the timing of required land
takedowns, the availability and best use of necessary capital, and other factors. The Company
wrote off deposits and pre-acquisition costs in the amount of $58.2 million and $30.8 million
for the three months ended June 30, 2007 and 2006, respectively, and $109.7 million and $35.9
million for the six months ended June 30, 2007 and 2006, respectively. The Company records
these write-offs of deposits and pre-acquisition costs for land option contracts the Company no
longer plans to pursue in its Consolidated Statements of Operations within Homebuilding expense.
|
|
Land, not owned, under option agreements |
In the ordinary course of business, the Company enters into land option agreements in order
to procure land for the construction of homes in the future. Pursuant to these land option
agreements, the Company will provide a deposit to the seller as consideration for the right to
purchase land at different times in the future, usually at predetermined prices. Under FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, as amended by FIN 46-R
issued in December 2003 (collectively referred to as FIN 46), if the entity holding the land
under option is a variable interest entity, the Companys deposit represents a variable interest
in that entity. Creditors of the variable interest entities have no recourse against the
Company.
In applying the provisions of FIN 46, the Company evaluated all land option agreements and
determined that the Company was subject to a majority of the expected losses or entitled to
receive a majority of the expected residual returns under a limited number of these agreements.
As the primary beneficiary under these agreements, the Company is required to consolidate
variable interest entities at fair value. At June 30, 2007 and December 31, 2006, the Company
classified $34.8 million and $43.6 million, respectively, as land, not owned, under option
agreements on the balance sheet, representing the fair value of land under contract, including
deposits of $3.9 million and $6 million, respectively. The corresponding liability has been
classified within accrued and other liabilities on the balance sheet.
Land option agreements that did not require consolidation under FIN 46 at June 30,
2007 and December 31, 2006, had a total purchase price of $2.9 billion and $4.3 billion,
respectively. In connection with these agreements, the Company had refundable and
non-refundable deposits and pre-acquisition costs of $312.3 million and $363.5 million which
were included in other assets at June 30, 2007 and December 31, 2006, respectively.
9
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Allowance for warranties |
Home purchasers are provided with warranties against certain building defects. The
specific terms and conditions of those warranties vary geographically. Most warranties cover
different aspects of the homes construction and operating systems for a period of up to ten
years. The Company estimates the costs to be incurred under these warranties and records a
liability in the amount of such costs at the time product revenue is recognized. Factors that
affect the Companys warranty liability include the number of homes sold, historical and
anticipated rates of warranty claims, and cost per claim. The Company periodically assesses the
adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
Changes to the Companys allowance for warranties are as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
Allowance for warranties at beginning of period |
|
$ |
117,259 |
|
|
$ |
112,297 |
|
Warranty reserves provided |
|
|
35,311 |
|
|
|
73,152 |
|
Payments and other adjustments |
|
|
(50,997 |
) |
|
|
(82,440 |
) |
|
|
|
|
|
|
|
|
Allowance for warranties at end of period |
|
$ |
101,573 |
|
|
$ |
103,009 |
|
|
|
|
|
|
|
|
We have, and require the majority of our subcontractors to have, general liability,
property, errors and omissions, workers compensation and other business insurance. These
insurance policies protect us against a portion of the risk of loss from claims, subject to
certain self-insured retentions, deductibles, and other coverage limits. Through our captive
insurance subsidiaries, we reserve for costs to cover our self-insured and deductible amounts,
including any costs of claims and lawsuits, under those policies based on an analysis of our
historical claims, which include an estimate of claims incurred but not yet reported. We
experienced net increases in insurance-related expenses of $30.3 million and $40 million for the
three and six months ended June 30, 2007, respectively, primarily due to the development of
several large general liability product claims.
10
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
New accounting pronouncements |
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities Including an amendment of FASB Statement No. 115 (SFAS No. 159),
which permits entities to measure various financial instruments and certain other items at fair
value at specified election dates. The election must be made at initial recognition of the
financial instrument, and any unrealized gains or losses must be reported at each reporting
date. SFAS No. 159 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Early adoption of the
statement is allowed provided that an entity also elects to apply the provisions of SFAS No. 157
(as subsequently presented). The Company is currently reviewing the potential impact of SFAS
No. 159 on its consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157),
which defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Company is currently reviewing the potential
impact of SFAS No. 157 on its consolidated financial statements.
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets
(SFAS No. 156), which provides an approach to simplify efforts to obtain hedge-like (offset)
accounting. This new Statement amends SFAS No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, with respect to the accounting for
separately recognized servicing assets and servicing liabilities. The Company adopted SFAS No.
156 effective January 1, 2007. As the Company sells its servicing rights monthly on a flow
basis through fixed price servicing sales contracts, the adoption of SFAS No. 156 did not have a
significant impact on the Companys consolidated financial statements.
The FASB has revised its guidance on SFAS No. 133 Implementation Issues as of March 2006.
Several Implementation Issues were revised to reflect the issuance of SFAS No. 155, Accounting
for Certain Hybrid Financial Instruments an Amendment of FASB Statements No. 133 and 140
(SFAS No. 155), in February 2006. SFAS No. 155 allows any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, to be carried at fair value in
its entirety, with changes in fair value recognized in earnings. In addition, SFAS No. 155
requires that beneficial interests in securitized financial assets be analyzed to determine
whether they are freestanding derivatives or contain an embedded derivative. SFAS No. 155 also
eliminates a prior restriction on the types of passive derivatives that a qualifying special
purpose entity is permitted to hold. SFAS No. 155 is applicable to new or modified financial
instruments in fiscal years beginning after September 15, 2006, though the provisions related to
fair value accounting for hybrid financial instruments can also be applied to existing
instruments. The Company adopted SFAS No. 155 effective January 1, 2007. The effect of
adoption was not significant.
11
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The Companys Homebuilding operating segments are engaged in the acquisition and
development of land primarily for residential purposes within the continental United States and
the construction of housing on such land targeted for first-time, first and second move-up, and
active adult home buyers.
The Company has determined that its operating segments are its Areas, which are aggregated
into seven reportable segments based on similarities in the economic and geographic
characteristics of the Companys homebuilding operations. During the three months ended June
30, 2007, the Company merged its Rocky Mountain Area with its Nevada Area to form the Mountain
West Area. The operating data by segment for the Central and Southwest reportable segments have
been reclassified to reflect this change. Accordingly, the Companys reportable Homebuilding
segments are as follows:
|
|
|
Northeast: |
|
Northeast Area includes the following states: |
|
|
Connecticut, Delaware, Maryland, Massachusetts, New Jersey, |
|
|
New York, Pennsylvania, Virginia |
|
|
|
Southeast: |
|
Southeast Area includes the following states: |
|
|
Georgia, North Carolina, South Carolina, Tennessee |
|
|
|
Florida: |
|
Florida Area includes the following state: |
|
|
Florida |
|
|
|
Midwest: |
|
Great Lakes Area includes the following states: |
|
|
Illinois, Indiana, Michigan, Minnesota, Ohio |
|
|
|
Central: |
|
Central Area includes the following states: |
|
|
Kansas, Missouri, Texas |
|
|
|
Southwest: |
|
Mountain West and Southwest Areas include the following states: |
|
|
Arizona, Colorado, Nevada, New Mexico |
|
|
|
*California: |
|
Northern California and Southern California Areas include the following state: |
|
|
California |
*The Companys homebuilding operations located in Reno, Nevada are reported in the
California segment, while its remaining Nevada homebuilding operations are reported in the
Southwest segment.
The Company also has one reportable segment for its Financial Services operations which
consists principally of mortgage banking and title operations conducted through Pulte Mortgage
and other Company subsidiaries. The Companys Financial Services segment operates generally in
the same markets as the Companys Homebuilding segments.
Evaluation of segment performance is based on operating earnings from continuing operations
before provision for income taxes which, for the homebuilding operations, is defined as home
sales (settlements) and land sale revenues less home cost of sales, land cost of sales and
certain selling, general and administrative and other expenses, plus equity income from
unconsolidated entities, which are incurred by or allocated to our Homebuilding segments.
Operating earnings for the Financial Services segment is defined as revenues less costs
associated with our mortgage operations and certain selling, general and administrative expenses
incurred by or allocated to the financial services segment.
Each reportable segment follows the same accounting policies described in Note 1 Summary
of Significant Accounting Policies to the consolidated financial statements in the Companys
2006 Annual Report on Form 10-K.
12
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Segment information (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data by Segment ($000's omitted) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
233,218 |
|
|
$ |
391,373 |
|
|
$ |
396,890 |
|
|
$ |
745,161 |
|
Southeast |
|
|
298,952 |
|
|
|
299,201 |
|
|
|
528,267 |
|
|
|
523,664 |
|
Florida |
|
|
299,811 |
|
|
|
577,178 |
|
|
|
602,108 |
|
|
|
1,083,053 |
|
Midwest |
|
|
175,002 |
|
|
|
275,003 |
|
|
|
311,230 |
|
|
|
504,466 |
|
Central |
|
|
147,910 |
|
|
|
245,542 |
|
|
|
324,990 |
|
|
|
465,096 |
|
Southwest |
|
|
527,794 |
|
|
|
928,028 |
|
|
|
1,033,380 |
|
|
|
1,670,245 |
|
California |
|
|
310,811 |
|
|
|
601,730 |
|
|
|
626,541 |
|
|
|
1,241,122 |
|
Financial Services |
|
|
27,362 |
|
|
|
40,467 |
|
|
|
66,943 |
|
|
|
85,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues |
|
|
2,020,860 |
|
|
|
3,358,522 |
|
|
|
3,890,349 |
|
|
|
6,318,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and unallocated (a) |
|
|
386 |
|
|
|
445 |
|
|
|
2,330 |
|
|
|
3,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenues |
|
$ |
2,021,246 |
|
|
$ |
3,358,967 |
|
|
$ |
3,892,679 |
|
|
$ |
6,321,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
(67,609 |
) |
|
$ |
46,733 |
|
|
$ |
(100,533 |
) |
|
$ |
82,416 |
|
Southeast |
|
|
26,616 |
|
|
|
22,477 |
|
|
|
40,524 |
|
|
|
34,352 |
|
Florida |
|
|
(122,388 |
) |
|
|
132,062 |
|
|
|
(120,927 |
) |
|
|
246,272 |
|
Midwest |
|
|
(106,835 |
) |
|
|
(7,265 |
) |
|
|
(127,874 |
) |
|
|
(7,747 |
) |
Central |
|
|
(52,631 |
) |
|
|
4,124 |
|
|
|
(78,984 |
) |
|
|
11,127 |
|
Southwest |
|
|
(102,012 |
) |
|
|
166,954 |
|
|
|
(119,390 |
) |
|
|
311,849 |
|
California |
|
|
(229,952 |
) |
|
|
72,837 |
|
|
|
(236,896 |
) |
|
|
170,085 |
|
Financial Services (b) |
|
|
6,568 |
|
|
|
15,056 |
|
|
|
19,763 |
|
|
|
64,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment income (loss) before income taxes |
|
|
(648,243 |
) |
|
|
452,978 |
|
|
|
(724,317 |
) |
|
|
912,754 |
|
Corporate and unallocated (c) |
|
|
(158,366 |
) |
|
|
(65,253 |
) |
|
|
(224,840 |
) |
|
|
(107,485 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income (loss) from continuing
operations before income taxes (d) |
|
$ |
(806,609 |
) |
|
$ |
387,725 |
|
|
$ |
(949,157 |
) |
|
$ |
805,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Corporate and unallocated includes interest income earned from short-term investments
of cash and equivalents. |
|
(b) |
|
Financial Services income before income taxes includes interest expense of $3.6
million and $4.8 million for the three months ended June 30, 2007 and 2006, respectively,
and $8.2 million and $10.1 million for the six months ended June 30, 2007 and 2006,
respectively. Financial Services income before income taxes includes interest income of
$4.8 million and $7.1 million for the three months ended June 30, 2007 and 2006,
respectively, and $11 million and $15.1 million for the six months ended June 30, 2007 and
2006, respectively. |
|
(c) |
|
Corporate and unallocated includes amortization of capitalized interest of $96.4
million and $55.9 million for the three months ended June 30, 2007 and 2006, respectively,
and $144.4 million and $97.1 million for the six months ended June 30, 2007 and 2006,
respectively, and shared services that benefit all operating segments, the costs of which
are not allocated to the operating segments reported above. |
|
(d) |
|
Consolidated income (loss) before income taxes includes selling, general and
administrative expenses of $322.5 million and $295.8 million for the three months ended
June 30, 2007 and 2006, respectively, and $634.2 million and $613 million for the six
months ended June 30, 2007 and 2006, respectively. |
13
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Segment information (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Adjustments and Write-Offs by Segment ($000s omitted) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Land and community valuation adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
56,904 |
|
|
$ |
|
|
|
$ |
56,904 |
|
|
$ |
|
|
Southeast |
|
|
253 |
|
|
|
|
|
|
|
253 |
|
|
|
|
|
Florida |
|
|
100,134 |
|
|
|
|
|
|
|
102,499 |
|
|
|
|
|
Midwest |
|
|
96,944 |
|
|
|
8,014 |
|
|
|
109,187 |
|
|
|
8,072 |
|
Central |
|
|
42,559 |
|
|
|
1,306 |
|
|
|
68,094 |
|
|
|
1,306 |
|
Southwest |
|
|
105,308 |
|
|
|
|
|
|
|
114,752 |
|
|
|
|
|
California |
|
|
159,158 |
|
|
|
|
|
|
|
166,944 |
|
|
|
|
|
Corporate and unallocated (a) |
|
|
41,818 |
|
|
|
|
|
|
|
46,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total valuation adjustments |
|
$ |
603,078 |
|
|
$ |
9,320 |
|
|
$ |
665,451 |
|
|
$ |
9,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realizable value adjustments (NRV) land held for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Southeast |
|
|
1,070 |
|
|
|
|
|
|
|
1,070 |
|
|
|
|
|
Florida |
|
|
|
|
|
|
10,353 |
|
|
|
|
|
|
|
10,353 |
|
Midwest |
|
|
|
|
|
|
5,660 |
|
|
|
|
|
|
|
5,660 |
|
Central |
|
|
3,750 |
|
|
|
1,253 |
|
|
|
4,022 |
|
|
|
1,265 |
|
Southwest |
|
|
9,459 |
|
|
|
15,125 |
|
|
|
27,459 |
|
|
|
15,125 |
|
California |
|
|
9,368 |
|
|
|
|
|
|
|
9,368 |
|
|
|
|
|
Corporate and unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total NRV adjustments land held for sale |
|
$ |
34,000 |
|
|
$ |
22,038 |
|
|
$ |
52,272 |
|
|
$ |
22,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of deposits and pre-acquisition costs (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
14,892 |
|
|
|
3,474 |
|
|
|
38,173 |
|
|
|
4,205 |
|
Southeast |
|
|
302 |
|
|
|
1,400 |
|
|
|
514 |
|
|
|
1,451 |
|
Florida |
|
|
10,041 |
|
|
|
1,123 |
|
|
|
9,839 |
|
|
|
1,330 |
|
Midwest |
|
|
2,596 |
|
|
|
6,047 |
|
|
|
6,978 |
|
|
|
8,465 |
|
Central |
|
|
892 |
|
|
|
1,245 |
|
|
|
892 |
|
|
|
1,329 |
|
Southwest |
|
|
16,169 |
|
|
|
8,729 |
|
|
|
34,316 |
|
|
|
9,193 |
|
California |
|
|
13,284 |
|
|
|
9,162 |
|
|
|
18,955 |
|
|
|
9,851 |
|
Corporate and unallocated |
|
|
|
|
|
|
(370 |
) |
|
|
|
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total write-off of deposits and pre-acquisition costs |
|
$ |
58,176 |
|
|
$ |
30,810 |
|
|
$ |
109,667 |
|
|
$ |
35,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company also recorded an impairment of $54.1 million in the California reporting segment
related to an investment in an unconsolidated joint venture.
|
|
|
(a) |
|
Corporate and unallocated includes $41.8 million and $46.8 million of write-offs of
capitalized interest related to land and community valuation adjustments recorded during
the three and six months ended June 30, 2007, respectively. |
|
(b) |
|
Includes settlements related to costs previously in dispute and considered
non-recoverable. |
14
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. |
|
Segment information (continued) |
|
|
|
Total assets and inventory by reportable segment are as follows ($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Inventory |
|
As of June 30, 2007: |
|
|
|
|
|
|
|
|
Northeast |
|
$ |
1,540,915 |
|
|
$ |
1,267,126 |
|
Southeast |
|
|
786,278 |
|
|
|
687,420 |
|
Florida |
|
|
1,598,783 |
|
|
|
1,337,213 |
|
Midwest |
|
|
785,527 |
|
|
|
750,899 |
|
Central |
|
|
576,232 |
|
|
|
487,247 |
|
Southwest |
|
|
3,099,019 |
|
|
|
2,743,846 |
|
California |
|
|
1,771,066 |
|
|
|
1,608,189 |
|
Financial Services |
|
|
440,924 |
|
|
|
|
|
|
|
|
|
|
|
|
Total segment |
|
|
10,598,744 |
|
|
|
8,881,940 |
|
Corporate and unallocated (a) |
|
|
1,352,904 |
|
|
|
206,959 |
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
11,951,648 |
|
|
$ |
9,088,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006: |
|
|
|
|
|
|
|
|
Northeast |
|
$ |
1,530,238 |
|
|
$ |
1,167,454 |
|
Southeast |
|
|
734,001 |
|
|
|
640,199 |
|
Florida |
|
|
1,742,839 |
|
|
|
1,464,691 |
|
Midwest |
|
|
902,833 |
|
|
|
842,714 |
|
Central |
|
|
699,748 |
|
|
|
574,089 |
|
Southwest |
|
|
3,100,927 |
|
|
|
2,691,505 |
|
California |
|
|
1,953,240 |
|
|
|
1,761,000 |
|
Financial Services |
|
|
951,206 |
|
|
|
|
|
|
|
|
|
|
|
|
Total segment |
|
|
11,615,032 |
|
|
|
9,141,652 |
|
Corporate and unallocated (a) |
|
|
1,561,842 |
|
|
|
232,683 |
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
13,176,874 |
|
|
$ |
9,374,335 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Corporate and unallocated primarily includes cash and equivalents; goodwill and
intangibles; land, not owned, under option agreements; capitalized interest; and other
corporate items that are not allocated to the operating segments. |
|
|
|
Major components of the Companys inventory are as follows ($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Homes under construction |
|
$ |
3,234,237 |
|
|
$ |
2,606,613 |
|
Land under development |
|
|
4,412,097 |
|
|
|
5,478,244 |
|
Land held for future development |
|
|
1,442,565 |
|
|
|
1,289,478 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
9,088,899 |
|
|
$ |
9,374,335 |
|
|
|
|
|
|
|
|
15
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Investments in unconsolidated entities
The Company participates in a number of joint ventures with independent third parties.
Many of these joint ventures purchase, develop and/or sell land and homes in the United States
and Puerto Rico. If additional capital infusions are required and approved (or are necessary as
a result of the limited recourse financing guarantees discussed below), the Company would need
to contribute its pro rata portion of those capital needs in order not to dilute its ownership
in the joint ventures.
At June 30, 2007 and December 31, 2006, aggregate outstanding debt of unconsolidated joint
ventures was $793 million and $935.9 million, respectively. At June 30, 2007 and December 31,
2006, the Companys proportionate share of its joint venture debt was approximately $235.4
million and $312.8 million, respectively. The Company provided limited recourse guarantees for
$226.3 million and $304.1 million of joint venture debt at June 30, 2007 and December 31, 2006,
respectively. Accordingly, the Company may be liable, on a contingent basis, through limited
guarantees with respect to a portion of the secured land acquisition and development debt.
However, the Company would not be liable unless a joint venture was unable to perform its
contractual borrowing obligations.
For the six months ended June 30, 2007, the Company made additional capital contributions
to fund the cash requirements of existing joint ventures totaling approximately $95 million and
received capital and earnings distributions from existing joint ventures totaling approximately
$33 million. At June 30, 2007 and December 31, 2006, the Company had approximately $165.2
million and $150.7 million, respectively, invested in these joint ventures. These investments
are included in the assets of the Companys Homebuilding segments and are primarily accounted
for under the equity method.
5. Acquisitions and divestitures
In February 2006, Pulte Mortgage sold its investment in Hipotecaria Su Casita (Su
Casita), a Mexico-based mortgage banking company. Remaining shareholders of Su Casita, who
exercised their right of first refusal to acquire the shares, purchased Pulte Mortgages 16.7%
interest for net proceeds of approximately $49.2 million. As a result of this transaction, the
Company recognized a pre-tax gain of approximately $31.6 million for the six months ended June
30, 2006.
6. Shareholders equity
Pursuant to the two $100 million stock repurchase programs authorized by the Board of
Directors in October 2002 and 2005 and the $200 million stock repurchase authorization in
February 2006 (for a total stock repurchase authorization of $400 million), the Company has
repurchased a total of 9,688,900 shares for a total of $297.7 million, though there were no
repurchases under these programs during the six months ended June 30, 2007. The Company had
remaining authorization to purchase $102.3 million of common stock at June 30, 2007.
Accumulated other comprehensive income (loss)
The accumulated balances related to each component of other comprehensive income (loss) are
as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Foreign currency translation adjustments: |
|
|
|
|
|
|
|
|
Mexico |
|
$ |
(167 |
) |
|
$ |
(316 |
) |
Fair value of derivatives, net of income taxes
of $2,124 in 2007 and $1,637 in 2006 |
|
|
(3,473 |
) |
|
|
(2,670 |
) |
|
|
|
|
|
|
|
|
|
$ |
(3,640 |
) |
|
$ |
(2,986 |
) |
|
|
|
|
|
|
|
16
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Income Taxes
The Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes (FIN 48), effective January 1, 2007. FIN 48 creates a single model
to address accounting for uncertainty in tax positions and clarifies accounting for income taxes
by prescribing a minimum recognition threshold a tax position is required to meet before being
recognized in the financial statements. FIN 48 also provides guidance on de-recognition,
measurement, classification, interest and penalties, accounting in interim periods, disclosure
and transition.
The January 1, 2007 adoption of FIN 48 resulted in a $31.4 million increase in income tax
liabilities and a corresponding charge to beginning retained earnings.
As of adoption, the Company had $86.7 million of gross unrecognized tax benefits, all of
which, if recognized, would affect the effective tax rate. Additionally, the Company had $24.5
million of accrued interest and $13.3 million of accrued penalties as of January 1, 2007.
Effective in 2007, the Company recognizes interest and penalties related to unrecognized
tax benefits in income tax expense. Interest related to unrecognized tax benefits was
previously included in interest expense.
The Company is currently under examination by various taxing jurisdictions and anticipates
finalizing the examinations with certain jurisdictions within the next twelve months. The final
outcome of these examinations is not yet determinable. The statute of limitations for the
Companys major tax jurisdictions remains open for examination for tax years 1998-2006.
8. Debt and Other Financing Arrangements
The Company repurchased $61.2 million of its 4.875% senior notes due 2009 during the three
months ended June 30, 2007. These repurchases resulted in a net gain of approximately $500
thousand which is included in the Consolidated Statements of Operations within Other
non-operating, net expenses.
On June 29, 2007, the Company amended its unsecured revolving credit facility, decreasing
the borrowing availability from $2.01 billion to $1.86 billion and extending the maturity date
from October 2010 to June 2012. Under the terms of the credit facility, the Company has the
capacity to issue letters of credit up to $1.125 billion. Borrowing availability is reduced by
the amount of letters of credit outstanding. The credit facility contains certain restrictive
covenants, the most restrictive of which requires the Company not to exceed a debt-to-total
capitalization ratio of 55%. The credit facility no longer contains an interest coverage ratio
covenant that could create an event of default for the Company, but if the interest coverage
ratio (as defined in the credit facility) is less than 2 to 1, LIBOR margin and letter of credit
pricing under the credit facility increases in increments ranging from 0.125% to 0.375%. The
credit facilitys uncommitted accordion feature remains unchanged at $2.25 billion.
Pulte Mortgage reduced the amount of capacity available under its asset-backed commercial
paper program from $550 million to $400 million effective June 1, 2007 as permitted by its
existing agreement as the Company does not anticipate needing such capacity during 2007.
17
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information
At June 30, 2007, Pulte Homes, Inc. had the following outstanding senior note obligations:
(1) $339 million, 4.875% due 2009, (2) $200 million, 8.125%, due 2011, (3) $499 million, 7.875%,
due 2011, (4) $300 million, 6.25%, due 2013, (5) $500 million, 5.25%, due 2014, (6) $350
million, 5.2%, due 2015, (7) $150 million, 7.625%, due 2017, (8) $300 million, 7.875%, due 2032,
(9) $400 million, 6.375%, due 2033, (10) $300 million, 6%, due 2035, and (11) $150 million,
7.375%, due 2046. Such obligations to pay principal, premium (if any), and interest are
guaranteed jointly and severally on a senior basis by Pulte Homes, Inc.s 100%-owned
Homebuilding subsidiaries (collectively, the Guarantors). Such guarantees are full and
unconditional.
Supplemental consolidating financial information of the Company, including such information
for the Guarantors, is presented below. Investments in subsidiaries are presented using the
equity method of accounting. Separate financial statements of the Guarantors are not provided
as the consolidating financial information contained herein provides a more meaningful
disclosure to allow investors to determine the nature of the assets held by, and the operations
of, the combined groups.
18
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
|
|
|
$ |
25,383 |
|
|
$ |
49,269 |
|
|
$ |
|
|
|
$ |
74,652 |
|
Unfunded settlements |
|
|
|
|
|
|
40,566 |
|
|
|
(3,396 |
) |
|
|
|
|
|
|
37,170 |
|
House and land inventory |
|
|
|
|
|
|
9,078,697 |
|
|
|
10,202 |
|
|
|
|
|
|
|
9,088,899 |
|
Land held for sale |
|
|
|
|
|
|
389,582 |
|
|
|
|
|
|
|
|
|
|
|
389,582 |
|
Land, not owned, under option agreements |
|
|
|
|
|
|
34,848 |
|
|
|
|
|
|
|
|
|
|
|
34,848 |
|
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
380,555 |
|
|
|
|
|
|
|
380,555 |
|
Investments in unconsolidated entities |
|
|
1,448 |
|
|
|
150,812 |
|
|
|
12,957 |
|
|
|
|
|
|
|
165,217 |
|
Goodwill |
|
|
|
|
|
|
374,977 |
|
|
|
700 |
|
|
|
|
|
|
|
375,677 |
|
Intangible assets, net |
|
|
|
|
|
|
114,829 |
|
|
|
|
|
|
|
|
|
|
|
114,829 |
|
Other assets |
|
|
45,143 |
|
|
|
727,997 |
|
|
|
76,870 |
|
|
|
|
|
|
|
850,010 |
|
Deferred income tax assets |
|
|
423,626 |
|
|
|
372 |
|
|
|
16,211 |
|
|
|
|
|
|
|
440,209 |
|
Investment in subsidiaries |
|
|
9,720,191 |
|
|
|
80,195 |
|
|
|
6,776,926 |
|
|
|
(16,577,312 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,190,408 |
|
|
$ |
11,018,258 |
|
|
$ |
7,320,294 |
|
|
$ |
(16,577,312 |
) |
|
$ |
11,951,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other
liabilities |
|
$ |
158,957 |
|
|
$ |
1,528,341 |
|
|
$ |
310,054 |
|
|
$ |
|
|
|
$ |
1,997,352 |
|
Unsecured short-term borrowings |
|
|
173,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,000 |
|
Collateralized short-term debt, recourse
solely to applicable non-guarantor
subsidiary assets |
|
|
|
|
|
|
|
|
|
|
333,071 |
|
|
|
|
|
|
|
333,071 |
|
Income taxes |
|
|
524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
524 |
|
Senior notes |
|
|
3,477,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,477,534 |
|
Advances (receivable) payable subsidiaries |
|
|
410,226 |
|
|
|
(263,825 |
) |
|
|
(146,401 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,220,241 |
|
|
|
1,264,516 |
|
|
|
496,724 |
|
|
|
|
|
|
|
5,981,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
5,970,167 |
|
|
|
9,753,742 |
|
|
|
6,823,570 |
|
|
|
(16,577,312 |
) |
|
|
5,970,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,190,408 |
|
|
$ |
11,018,258 |
|
|
$ |
7,320,294 |
|
|
$ |
(16,577,312 |
) |
|
$ |
11,951,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
|
|
|
$ |
318,309 |
|
|
$ |
232,983 |
|
|
$ |
|
|
|
$ |
551,292 |
|
Unfunded settlements |
|
|
|
|
|
|
68,757 |
|
|
|
3,840 |
|
|
|
|
|
|
|
72,597 |
|
House and land inventory |
|
|
|
|
|
|
9,363,933 |
|
|
|
10,402 |
|
|
|
|
|
|
|
9,374,335 |
|
Land held for sale |
|
|
|
|
|
|
465,823 |
|
|
|
|
|
|
|
|
|
|
|
465,823 |
|
Land, not owned, under option agreements |
|
|
|
|
|
|
43,609 |
|
|
|
|
|
|
|
|
|
|
|
43,609 |
|
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
871,350 |
|
|
|
|
|
|
|
871,350 |
|
Investments in unconsolidated entities |
|
|
1,448 |
|
|
|
133,195 |
|
|
|
16,042 |
|
|
|
|
|
|
|
150,685 |
|
Goodwill |
|
|
|
|
|
|
374,977 |
|
|
|
700 |
|
|
|
|
|
|
|
375,677 |
|
Intangible assets, net |
|
|
|
|
|
|
118,954 |
|
|
|
|
|
|
|
|
|
|
|
118,954 |
|
Other assets |
|
|
46,490 |
|
|
|
814,136 |
|
|
|
121,408 |
|
|
|
|
|
|
|
982,034 |
|
Deferred income tax assets |
|
|
155,178 |
|
|
|
65 |
|
|
|
15,275 |
|
|
|
|
|
|
|
170,518 |
|
Investment in subsidiaries |
|
|
10,198,353 |
|
|
|
85,444 |
|
|
|
7,159,877 |
|
|
|
(17,443,674 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,401,469 |
|
|
$ |
11,787,202 |
|
|
$ |
8,431,877 |
|
|
$ |
(17,443,674 |
) |
|
$ |
13,176,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other
liabilities |
|
$ |
178,687 |
|
|
$ |
1,692,037 |
|
|
$ |
309,868 |
|
|
$ |
|
|
|
$ |
2,180,592 |
|
Collateralized short-term debt, recourse
solely to applicable non-guarantor
subsidiary assets |
|
|
|
|
|
|
|
|
|
|
814,707 |
|
|
|
|
|
|
|
814,707 |
|
Income taxes |
|
|
66,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,267 |
|
Senior notes |
|
|
3,537,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,537,947 |
|
Advances (receivable) payable subsidiaries |
|
|
41,207 |
|
|
|
(144,645 |
) |
|
|
103,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,824,108 |
|
|
|
1,547,392 |
|
|
|
1,228,013 |
|
|
|
|
|
|
|
6,599,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
6,577,361 |
|
|
|
10,239,810 |
|
|
|
7,203,864 |
|
|
|
(17,443,674 |
) |
|
|
6,577,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,401,469 |
|
|
$ |
11,787,202 |
|
|
$ |
8,431,877 |
|
|
$ |
(17,443,674 |
) |
|
$ |
13,176,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
1,993,498 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,993,498 |
|
Financial services |
|
|
|
|
|
|
3,903 |
|
|
|
23,459 |
|
|
|
|
|
|
|
27,362 |
|
Other non-operating |
|
|
|
|
|
|
47 |
|
|
|
339 |
|
|
|
|
|
|
|
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
|
|
|
|
1,997,448 |
|
|
|
23,798 |
|
|
|
|
|
|
|
2,021,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
2,373,499 |
|
|
|
|
|
|
|
|
|
|
|
2,373,499 |
|
Selling, general and administrative and
other expense |
|
|
8,744 |
|
|
|
329,278 |
|
|
|
29,925 |
|
|
|
|
|
|
|
367,947 |
|
Financial Services, principally interest |
|
|
584 |
|
|
|
2,005 |
|
|
|
18,297 |
|
|
|
|
|
|
|
20,886 |
|
Other non-operating expenses, net |
|
|
22,266 |
|
|
|
(7,123 |
) |
|
|
(4,771 |
) |
|
|
|
|
|
|
10,372 |
|
Intercompany interest |
|
|
32,379 |
|
|
|
(32,379 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
63,973 |
|
|
|
2,665,280 |
|
|
|
43,451 |
|
|
|
|
|
|
|
2,772,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income (loss) |
|
|
|
|
|
|
(55,152 |
) |
|
|
1 |
|
|
|
|
|
|
|
(55,151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
equity in income of subsidiaries |
|
|
(63,973 |
) |
|
|
(722,984 |
) |
|
|
(19,652 |
) |
|
|
|
|
|
|
(806,609 |
) |
Income taxes (benefit) |
|
|
(23,436 |
) |
|
|
(269,148 |
) |
|
|
(6,474 |
) |
|
|
|
|
|
|
(299,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
of subsidiaries |
|
|
(40,537 |
) |
|
|
(453,836 |
) |
|
|
(13,178 |
) |
|
|
|
|
|
|
(507,551 |
) |
Equity in income (loss) of subsidiaries |
|
|
(467,014 |
) |
|
|
3,143 |
|
|
|
(356,595 |
) |
|
|
820,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(507,551 |
) |
|
$ |
(450,693 |
) |
|
$ |
(369,773 |
) |
|
$ |
820,466 |
|
|
$ |
(507,551 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
3,823,406 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,823,406 |
|
Financial services |
|
|
|
|
|
|
8,537 |
|
|
|
58,406 |
|
|
|
|
|
|
|
66,943 |
|
Other non-operating |
|
|
7 |
|
|
|
1,065 |
|
|
|
1,258 |
|
|
|
|
|
|
|
2,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
7 |
|
|
|
3,833,008 |
|
|
|
59,664 |
|
|
|
|
|
|
|
3,892,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
4,024,332 |
|
|
|
|
|
|
|
|
|
|
|
4,024,332 |
|
Selling, general and administrative and
other expense |
|
|
17,799 |
|
|
|
639,098 |
|
|
|
37,491 |
|
|
|
|
|
|
|
694,388 |
|
Financial Services, principally interest |
|
|
1,341 |
|
|
|
4,096 |
|
|
|
41,879 |
|
|
|
|
|
|
|
47,316 |
|
Other non-operating expenses, net |
|
|
44,087 |
|
|
|
(16,062 |
) |
|
|
(8,352 |
) |
|
|
|
|
|
|
19,673 |
|
Intercompany interest |
|
|
64,723 |
|
|
|
(64,723 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
127,950 |
|
|
|
4,586,741 |
|
|
|
71,018 |
|
|
|
|
|
|
|
4,785,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income (loss) |
|
|
|
|
|
|
(56,204 |
) |
|
|
77 |
|
|
|
|
|
|
|
(56,127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
equity in income of subsidiaries |
|
|
(127,943 |
) |
|
|
(809,937 |
) |
|
|
(11,277 |
) |
|
|
|
|
|
|
(949,157 |
) |
Income taxes (benefit) |
|
|
(49,007 |
) |
|
|
(303,997 |
) |
|
|
(2,930 |
) |
|
|
|
|
|
|
(355,934 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
of subsidiaries |
|
|
(78,936 |
) |
|
|
(505,940 |
) |
|
|
(8,347 |
) |
|
|
|
|
|
|
(593,223 |
) |
Equity in income (loss) of subsidiaries |
|
|
(514,287 |
) |
|
|
10,076 |
|
|
|
(407,613 |
) |
|
|
911,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(593,223 |
) |
|
$ |
(495,864 |
) |
|
$ |
(415,960 |
) |
|
$ |
911,824 |
|
|
$ |
(593,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June 30, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
3,318,055 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,318,055 |
|
Financial services |
|
|
|
|
|
|
6,826 |
|
|
|
33,641 |
|
|
|
|
|
|
|
40,467 |
|
Other non-operating |
|
|
37 |
|
|
|
(42 |
) |
|
|
450 |
|
|
|
|
|
|
|
445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
37 |
|
|
|
3,324,839 |
|
|
|
34,091 |
|
|
|
|
|
|
|
3,358,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
2,640,503 |
|
|
|
|
|
|
|
|
|
|
|
2,640,503 |
|
Selling, general and administrative and
other expense |
|
|
8,344 |
|
|
|
287,315 |
|
|
|
(266 |
) |
|
|
|
|
|
|
295,393 |
|
Financial Services, principally interest |
|
|
761 |
|
|
|
2,306 |
|
|
|
22,469 |
|
|
|
|
|
|
|
25,536 |
|
Other non-operating expenses, net |
|
|
20,009 |
|
|
|
(8,447 |
) |
|
|
(2,964 |
) |
|
|
|
|
|
|
8,598 |
|
Intercompany interest |
|
|
40,623 |
|
|
|
(40,623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
69,737 |
|
|
|
2,881,054 |
|
|
|
19,239 |
|
|
|
|
|
|
|
2,970,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income (loss) |
|
|
|
|
|
|
(1,773 |
) |
|
|
561 |
|
|
|
|
|
|
|
(1,212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries |
|
|
(69,700 |
) |
|
|
442,012 |
|
|
|
15,413 |
|
|
|
|
|
|
|
387,725 |
|
Income taxes (benefit) |
|
|
(24,790 |
) |
|
|
163,564 |
|
|
|
5,099 |
|
|
|
|
|
|
|
143,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income of subsidiaries |
|
|
(44,910 |
) |
|
|
278,448 |
|
|
|
10,314 |
|
|
|
|
|
|
|
243,852 |
|
Income (loss) from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income of
subsidiaries |
|
|
(44,910 |
) |
|
|
278,448 |
|
|
|
9,481 |
|
|
|
|
|
|
|
243,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
288,762 |
|
|
|
6,959 |
|
|
|
98,298 |
|
|
|
(394,019 |
) |
|
|
|
|
Discontinued operations |
|
|
(833 |
) |
|
|
|
|
|
|
|
|
|
|
833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,929 |
|
|
|
6,959 |
|
|
|
98,298 |
|
|
|
(393,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
243,019 |
|
|
$ |
285,407 |
|
|
$ |
107,779 |
|
|
$ |
(393,186 |
) |
|
$ |
243,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the six months ended June 30, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
6,232,807 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
6,232,807 |
|
Financial services |
|
|
|
|
|
|
12,681 |
|
|
|
72,643 |
|
|
|
|
|
|
|
85,324 |
|
Other non-operating |
|
|
76 |
|
|
|
1,948 |
|
|
|
1,388 |
|
|
|
|
|
|
|
3,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
76 |
|
|
|
6,247,436 |
|
|
|
74,031 |
|
|
|
|
|
|
|
6,321,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
4,887,612 |
|
|
|
|
|
|
|
|
|
|
|
4,887,612 |
|
Selling, general and administrative and
other expense |
|
|
16,117 |
|
|
|
572,337 |
|
|
|
(1,785 |
) |
|
|
|
|
|
|
586,669 |
|
Financial Services, principally interest |
|
|
1,520 |
|
|
|
4,650 |
|
|
|
46,606 |
|
|
|
|
|
|
|
52,776 |
|
Other non-operating expenses, net |
|
|
40,465 |
|
|
|
(15,262 |
) |
|
|
(4,255 |
) |
|
|
|
|
|
|
20,948 |
|
Intercompany interest |
|
|
80,307 |
|
|
|
(80,307 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
138,409 |
|
|
|
5,369,030 |
|
|
|
40,566 |
|
|
|
|
|
|
|
5,548,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of equity investment |
|
|
|
|
|
|
|
|
|
|
31,635 |
|
|
|
|
|
|
|
31,635 |
|
Equity income (loss) |
|
|
|
|
|
|
(801 |
) |
|
|
897 |
|
|
|
|
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries |
|
|
(138,333 |
) |
|
|
877,605 |
|
|
|
65,997 |
|
|
|
|
|
|
|
805,269 |
|
Income taxes (benefit) |
|
|
(51,315 |
) |
|
|
325,627 |
|
|
|
24,460 |
|
|
|
|
|
|
|
298,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income of subsidiaries |
|
|
(87,018 |
) |
|
|
551,978 |
|
|
|
41,537 |
|
|
|
|
|
|
|
506,497 |
|
Income (loss) from discontinued
operations |
|
|
|
|
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income of
subsidiaries |
|
|
(87,018 |
) |
|
|
551,978 |
|
|
|
40,704 |
|
|
|
|
|
|
|
505,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
593,515 |
|
|
|
35,827 |
|
|
|
195,136 |
|
|
|
(824,478 |
) |
|
|
|
|
Discontinued operations |
|
|
(833 |
) |
|
|
|
|
|
|
|
|
|
|
833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
592,682 |
|
|
|
35,827 |
|
|
|
195,136 |
|
|
|
(823,645 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
505,664 |
|
|
$ |
587,805 |
|
|
$ |
235,840 |
|
|
$ |
(823,645 |
) |
|
$ |
505,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Net cash provided by (used in) operating
activities |
|
$ |
(151,749 |
) |
|
$ |
(370,030 |
) |
|
$ |
529,008 |
|
|
$ |
|
|
|
$ |
7,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
25,791 |
|
|
|
3,047 |
|
|
|
|
|
|
|
28,838 |
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(94,968 |
) |
|
|
|
|
|
|
|
|
|
|
(94,968 |
) |
Dividends received from subsidiaries |
|
|
51 |
|
|
|
16,000 |
|
|
|
|
|
|
|
(16,051 |
) |
|
|
|
|
Investment in subsidiaries |
|
|
(36,958 |
) |
|
|
(1,045 |
) |
|
|
|
|
|
|
38,003 |
|
|
|
|
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
5,166 |
|
|
|
1 |
|
|
|
|
|
|
|
5,167 |
|
Capital expenditures |
|
|
|
|
|
|
(30,762 |
) |
|
|
(1,846 |
) |
|
|
|
|
|
|
(32,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
(36,907 |
) |
|
|
(79,818 |
) |
|
|
1,202 |
|
|
|
21,952 |
|
|
|
(93,571 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under Financial
Services credit arrangements |
|
|
|
|
|
|
|
|
|
|
(481,636 |
) |
|
|
|
|
|
|
(481,636 |
) |
Net borrowings under revolving credit
facility |
|
|
173,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,000 |
|
Repayment of other borrowings |
|
|
(61,188 |
) |
|
|
(3,785 |
) |
|
|
|
|
|
|
|
|
|
|
(64,973 |
) |
Capital contributions from parent |
|
|
|
|
|
|
10,958 |
|
|
|
27,045 |
|
|
|
(38,003 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
93,397 |
|
|
|
149,800 |
|
|
|
(243,197 |
) |
|
|
|
|
|
|
|
|
Excess tax benefits from share-based
awards |
|
|
3,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,414 |
|
Issuance of common stock |
|
|
5,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,620 |
|
Stock repurchases |
|
|
(5,113 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,113 |
) |
Dividends paid |
|
|
(20,474 |
) |
|
|
(51 |
) |
|
|
(16,000 |
) |
|
|
16,051 |
|
|
|
(20,474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
188,656 |
|
|
|
156,922 |
|
|
|
(713,788 |
) |
|
|
(21,952 |
) |
|
|
(390,162 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
(136 |
) |
|
|
|
|
|
|
(136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
|
|
|
|
(292,926 |
) |
|
|
(183,714 |
) |
|
|
|
|
|
|
(476,640 |
) |
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
318,309 |
|
|
|
232,983 |
|
|
|
|
|
|
|
551,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
25,383 |
|
|
$ |
49,269 |
|
|
$ |
|
|
|
$ |
74,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the six months ended June 30, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Net cash provided by (used in) operating
activities |
|
$ |
(359,198 |
) |
|
$ |
(1,163,978 |
) |
|
$ |
469,718 |
|
|
$ |
|
|
|
$ |
(1,053,458 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
31,336 |
|
|
|
|
|
|
|
|
|
|
|
31,336 |
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(20,744 |
) |
|
|
|
|
|
|
|
|
|
|
(20,744 |
) |
Dividends received from subsidiaries |
|
|
|
|
|
|
51,000 |
|
|
|
28 |
|
|
|
(51,028 |
) |
|
|
|
|
Investment in subsidiaries |
|
|
(247,066 |
) |
|
|
(68,739 |
) |
|
|
(224,303 |
) |
|
|
474,329 |
|
|
|
(65,779 |
) |
Proceeds from the sale of investments |
|
|
|
|
|
|
|
|
|
|
49,216 |
|
|
|
|
|
|
|
49,216 |
|
Proceeds from the sale of fixed assets |
|
|
|
|
|
|
533 |
|
|
|
1 |
|
|
|
|
|
|
|
534 |
|
Capital expenditures |
|
|
|
|
|
|
(50,069 |
) |
|
|
(4,324 |
) |
|
|
|
|
|
|
(54,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
(247,066 |
) |
|
|
(56,683 |
) |
|
|
(179,382 |
) |
|
|
423,301 |
|
|
|
(59,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under Financial
Services credit arrangements |
|
|
|
|
|
|
|
|
|
|
(415,973 |
) |
|
|
|
|
|
|
(415,973 |
) |
Net borrowings under revolving
credit facility |
|
|
614,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
614,500 |
|
Proceeds from other borrowings |
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
Repayment of other borrowings |
|
|
|
|
|
|
(17,519 |
) |
|
|
|
|
|
|
|
|
|
|
(17,519 |
) |
Capital contributions from parent |
|
|
|
|
|
|
246,828 |
|
|
|
227,501 |
|
|
|
(474,329 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
(43,374 |
) |
|
|
216,745 |
|
|
|
(173,371 |
) |
|
|
|
|
|
|
|
|
Excess tax benefits from share-based
awards |
|
|
1,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,794 |
|
Issuance of common stock |
|
|
3,452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,452 |
|
Stock repurchases |
|
|
(99,614 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(99,614 |
) |
Dividends paid |
|
|
(20,494 |
) |
|
|
|
|
|
|
(51,028 |
) |
|
|
51,028 |
|
|
|
(20,494 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
606,264 |
|
|
|
446,054 |
|
|
|
(412,871 |
) |
|
|
(423,301 |
) |
|
|
216,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
(667 |
) |
|
|
|
|
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
|
|
|
|
(774,607 |
) |
|
|
(123,202 |
) |
|
|
|
|
|
|
(897,809 |
) |
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
839,764 |
|
|
|
162,504 |
|
|
|
|
|
|
|
1,002,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
65,157 |
|
|
$ |
39,302 |
|
|
$ |
|
|
|
$ |
104,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of
Operations
Overview
During 2006 and 2007, the U.S. housing market was impacted by a lack of consumer confidence,
decreased housing affordability, increased interest rates, and large supplies of resale and new
home inventories and related pricing pressures. These conditions continued to deteriorate in the
three months ended June 30, 2007. The result has been weakened demand for new homes, slower
sales, higher cancellation rates, and increased price discounts and other sales incentives to
attract homebuyers. Additionally, the availability of certain mortgage financing products became
more constrained starting in February 2007 when the mortgage industry began to more closely
scrutinize sub-prime, Alt-A, and other non-prime mortgage products. The combination of these
homebuilding industry and related mortgage financing developments resulted in significant
decreases in our revenues and gross margins during the first half of 2007 compared with the same
period in the prior year. Additionally, we incurred total land-related charges of $881.5 million
during the six months ended June 30, 2007, of which $749.4 million were incurred in the second
quarter. These charges result from the write-off of deposit and pre-acquisition costs related to
land transactions we no longer plan to pursue ($109.7 million through June 30, 2007), net
realizable valuation adjustments related to land positions sold or held for sale ($52.3 million
through June 30, 2007), impairments on land assets related to communities under development or to
be developed in the future ($665.5 million through June 30, 2007), and an impairment of our
investment in an unconsolidated joint venture ($54.1 million through June 30, 2007).
We continue to operate our business with the expectation that difficult market conditions
will continue to impact us for at least the near term. We have adjusted our approach to land
acquisition and construction practices and continue to shorten our land pipeline, reduce
production volumes, and balance home price and profitability with sales pace. We are delaying
planned land purchases and renegotiating land prices and have significantly reduced our total
number of controlled lots owned and under option. Additionally, we are significantly reducing the
number of speculative homes put into production. While we will continue to purchase select land
positions where it makes strategic and economic sense to do so, we currently anticipate minimal
investment in new land parcels this year. We have also closely evaluated and made reductions in
selling, general and administrative expenses. During the second quarter of 2007, we announced a
restructuring plan designed to reduce costs and improve ongoing operating efficiencies, which
resulted in related charges of approximately $39.1 million during the quarter. Given the
persistence of these difficult market conditions, improving the efficiency of our selling, general
and administrative expenses will continue to be a significant area of focus. We believe that
these measures will help to strengthen our market position and allow us to take advantage of
opportunities that will develop in the future.
Given the continued weakness in new home sales and closings, visibility as to future earnings
performance is limited. At this time, we estimate our third quarter 2007 earnings to be in the
range of $0.10 to $0.20 per diluted share, exclusive of any additional impairments or other
land-related charges. Our outlook is tempered with caution, as conditions in many of the markets
we serve across the United States have become increasingly challenging in recent months. Our
evaluation for land-related charges recorded to date assumed our best estimates of cash flows for
the communities tested. If conditions in the homebuilding industry worsen in the future or if our
strategy related to certain communities changes, we may be required to evaluate our assets,
including additional projects, for additional impairments or write-downs, which could result in
additional charges that might be significant.
27
Overview (continued)
The following is a summary of our operating results for the three and six months ended June
30, 2007 and 2006 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding operations |
|
$ |
(803,191 |
) |
|
$ |
380,822 |
|
|
$ |
(951,577 |
) |
|
$ |
758,405 |
|
Financial Services operations |
|
|
6,568 |
|
|
|
15,056 |
|
|
|
19,763 |
|
|
|
64,400 |
|
Other non-operating |
|
|
(9,986 |
) |
|
|
(8,153 |
) |
|
|
(17,343 |
) |
|
|
(17,536 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before
income taxes |
|
|
(806,609 |
) |
|
|
387,725 |
|
|
|
(949,157 |
) |
|
|
805,269 |
|
Income taxes (benefit) |
|
|
(299,058 |
) |
|
|
143,873 |
|
|
|
(355,934 |
) |
|
|
298,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(507,551 |
) |
|
|
243,852 |
|
|
|
(593,223 |
) |
|
|
506,497 |
|
Loss from discontinued operations |
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
(833 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(507,551 |
) |
|
$ |
243,019 |
|
|
$ |
(593,223 |
) |
|
$ |
505,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data assuming dilution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(2.01 |
) |
|
$ |
.94 |
|
|
$ |
(2.35 |
) |
|
$ |
1.95 |
|
Loss from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(2.01 |
) |
|
$ |
.94 |
|
|
$ |
(2.35 |
) |
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a comparison of pre-tax income for the three and six months ended June 30,
2007 and 2006:
|
|
|
Homebuilding pre-tax loss was $803.2 million and $951.6 million for the three and six
months ended June 30, 2007, respectively, compared with Homebuilding pre-tax income of
$380.8 million and $758.4 million, respectively, for the same periods in the prior year.
The pre-tax loss experienced by our Homebuilding operations resulted from lower settlement
revenues combined with lower gross margins, restructuring charges of $39.1 million, and
land-related charges totaling $749.4 million and $881.5 million for the three and six months
ended June 30, 2007, respectively. Gross margins were unfavorably impacted by lower selling
prices and increased sales incentives. Land-related charges for the three and six months
ended June 30, 2007 consisted of write-offs of deposit and pre-acquisition costs related to
land transactions we no longer plan to pursue ($58.2 million and $109.7 million,
respectively), net realizable valuation adjustments related to land positions sold or held
for sale ($34 million and $52.3 million, respectively), impairments on land assets related
to communities under development or to be developed in the future ($603.1 million and $665.5
million, respectively), and an impairment of our investment in an unconsolidated joint
venture ($54.1 million). |
|
|
|
|
Pre-tax income from our Financial Services business segment decreased 56% and 69% for the
three and six months ended June 30, 2007, respectively, compared with the prior year
periods. Pre-tax income for the six months ended June 30, 2006 includes a one-time gain of
$31.6 million related to the sale of our investment in Su Casita, a Mexican mortgage banking
company, during the first quarter of 2006. Capture rates were 92.6% and 91.0% for the three
months ended June 30, 2007 and 2006, respectively, and 92.8% and 90.2% for the six months
ended June 30, 2007 and 2006, respectively. |
|
|
|
|
The increase in non-operating expenses for the three months ended June 30, 2007, compared
with the same period in the prior year was due primarily to a reduction in net interest
income partially offset by a decrease in incentive compensation. The decrease in
non-operating expenses for the six months ended June 30, 2007, compared with the same period
in the prior year was due primarily to a decrease in incentive compensation. |
28
Homebuilding Operations Summary
The following table presents a summary of pre-tax income (loss) and unit information for our
Homebuilding operations for the three and six months ended June 30, 2007 and 2006 ($000s
omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Home sale revenue (settlements) |
|
$ |
1,901,825 |
|
|
$ |
3,304,960 |
|
|
$ |
3,691,107 |
|
|
$ |
6,193,794 |
|
Land sale revenue |
|
|
91,673 |
|
|
|
13,095 |
|
|
|
132,299 |
|
|
|
39,013 |
|
Home cost of sales (a) |
|
|
(2,254,881 |
) |
|
|
(2,608,042 |
) |
|
|
(3,849,352 |
) |
|
|
(4,834,008 |
) |
Land cost of sales (b) |
|
|
(118,618 |
) |
|
|
(32,461 |
) |
|
|
(174,980 |
) |
|
|
(53,604 |
) |
Selling, general and administrative
expense |
|
|
(295,213 |
) |
|
|
(265,404 |
) |
|
|
(576,866 |
) |
|
|
(550,153 |
) |
Equity income (expense) (c) |
|
|
(55,243 |
) |
|
|
(1,337 |
) |
|
|
(56,263 |
) |
|
|
(121 |
) |
Other income (expense), net (d) |
|
|
(72,734 |
) |
|
|
(29,989 |
) |
|
|
(117,522 |
) |
|
|
(36,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income |
|
$ |
(803,191 |
) |
|
$ |
380,822 |
|
|
$ |
(951,577 |
) |
|
$ |
758,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit settlements |
|
|
5,938 |
|
|
|
9,879 |
|
|
|
11,358 |
|
|
|
18,481 |
|
Average selling price |
|
$ |
320 |
|
|
$ |
335 |
|
|
$ |
325 |
|
|
$ |
335 |
|
Net new orders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units |
|
|
7,532 |
|
|
|
9,455 |
|
|
|
16,031 |
|
|
|
20,180 |
|
Dollars |
|
$ |
2,427,000 |
|
|
$ |
3,121,000 |
|
|
$ |
5,339,000 |
|
|
$ |
6,804,000 |
|
Backlog at June 30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units |
|
|
|
|
|
|
|
|
|
|
14,928 |
|
|
|
19,516 |
|
Dollars |
|
|
|
|
|
|
|
|
|
$ |
5,227,000 |
|
|
$ |
6,911,000 |
|
|
|
|
(a) |
|
Includes homebuilding interest expense, which represents the amortization of
capitalized interest. Home cost of sales also includes land and community valuation
adjustments of $603.1 million and $9.3 million for the three months ended June 30, 2007
and 2006, respectively, and $665.5 million and $9.4 million for the six months ended June
30, 2007 and 2006, respectively. |
|
(b) |
|
Includes net realizable value adjustments for land held for sale of $34 million and
$22 million for the three months ended June 30, 2007 and 2006, respectively, and $52.3 and
$22.1 million for the six months ended June 30, 2007 and 2006, respectively. |
|
(c) |
|
Includes land and community valuation adjustments for one of our unconsolidated joint
ventures of $54.1 million for the three and six months ended June 30, 2007. |
|
(d) |
|
Includes the write-off of deposits and pre-acquisition costs for land option contracts
we no longer plan to pursue of $58.2 million and $30.8 million for the three months ended
June 30, 2007 and 2006, respectively, and $109.7 million and $35.9 million for the six
months ended June 30, 2007 and 2006, respectively. |
Home sale revenues for the three and six months ended June 30, 2007 were lower than
those for the prior years by $1.4 billion and $2.5 billion, or 42% and 40%, respectively. The
decrease in home sale revenues for the three and six months ended June 30, 2007 compared with the
prior year periods was attributable to 40% and 39% decreases, respectively, in the number of homes
closed combined with 4% and 3% decreases, respectively, in the average selling price. The
decreases in average selling price reflect a combination of factors, including changes in product
mix and geographic mix of homes closed during the period as well as lower market selling prices.
The average selling price decreased in the majority of our Homebuilding segments in both periods
compared with the prior year.
Homebuilding gross profit margins from home settlements were negative 18.6% for the three
months ended June 30, 2007, compared with a positive 21.1% for the same period in the prior year.
For the six months ended June 30, 2007, Homebuilding gross profit margins were negative 4.3%
compared with a positive 22.0% for the same period in 2006. Homebuilding gross margins were
negatively impacted by $603.1 million and $665.5 million of charges for the three and six months
ended June 30, 2007 related to land and community impairments in 139 and
174 communities, respectively, compared with land and community impairments of $9.3 million and
$9.4 million, respectively, in the prior year periods. In addition, increased selling incentives
also impacted our operations.
29
Homebuilding Operations Summary (continued)
We acquire land primarily for the construction of our homes for sale to homebuyers. We
select locations for development of homebuilding communities after completing extensive market
research, enabling us to match the location and product offering with our targeted consumer group.
Where we develop land, we engage directly in many phases of the development process, including
land and site planning, obtaining environmental and other regulatory approvals, as well as
constructing roads, sewers, water and drainage facilities, and other amenities. We will often
sell select parcels of land within or adjacent to our communities to retail and commercial
establishments. On occasion, we also will sell lots within our communities to other homebuilders.
Gross profits from land sales for the three months ended June 30, 2007 had a negative margin
contribution of $26.9 million, compared with a negative margin contribution of $19.4 million for
the same period in 2006. Gross profits from land sales for the six months ended June 30, 2007 had
a negative margin contribution of $42.7 million, compared with a negative margin contribution of
$14.6 million for the same period in 2006. The gross profit contributions from specific land
sales transactions were approximately $7.1 million and $9.6 million for the three and six months
ended June 30, 2007, respectively. These margin contributions were offset by $34 million and
$52.3 million of net realizable value adjustments related to commercial and residential land held
for disposition. The three and six months ended June 30, 2006 included negative net realizable
value adjustments of $22 million and $22.1 million, respectively. Revenues and their related
gains/losses may vary significantly between periods, depending on the timing of land sales. We
continue to evaluate our existing land positions to ensure the most effective use of capital. As
of June 30, 2007, we had $389.6 million of land held for sale.
Selling, general and administrative expenses as a percentage of home settlement revenues was
15.5% for the three months ended June 30, 2007 compared with 8.0% for the same period in the prior
year. For the six months ended June 30, 2007, selling, general and administrative expenses as a
percentage of home settlement revenues was 15.6% compared with 8.9% in the prior year. These
increases are attributable primarily to reduced overhead leverage as a result of the significant
decrease in revenues, lower absorption into inventory of overhead costs due to lower construction
volume, net increases in insurance-related expenses of $30.3 million and $40 million for the three
and six months ended June 30, 2007, respectively, and employee severance benefits of approximately
$31 million incurred in connection with the restructuring plan announced in the second quarter of
2007.
Other income (expense), net, includes the write-off of deposits and pre-acquisition costs
resulting from decisions not to pursue certain land acquisitions and options, which totaled $58.2
million and $30.8 million for the three months ended June 30, 2007 and 2006, respectively, and
$109.7 million and $35.9 million for the six months ended June 30, 2007 and 2006, respectively.
For the three months ended June 30, 2007, the Company also recorded $7.7 million of asset
impairment and lease termination costs related to the restructuring plan announced in the second
quarter of 2007.
Unit settlements decreased 40% and 39% for the three and six months ended June 30, 2007,
respectively, to 5,938 units and 11,358 units compared with the same periods in 2006. The average
selling price for homes closed decreased 4% and 3% to $320,000 and $325,000, respectively, for the
three and six months ended June 30, 2007 compared with the same periods in the prior year. For
the three and six months ended June 30, 2007, unit net new orders decreased 20% and 21%,
respectively, to 7,532 and 16,031 units, compared with the same periods in 2006. Cancellation
rates for the three months ended both June 30, 2007 and 2006 were 28%. Most markets have
experienced a substantial increase in resale and new home inventory, and this, combined with
declining consumer confidence, decreased housing affordability, increased interest rates,
difficulties experienced by customers in selling their existing homes, and the more restrictive
mortgage financing market, has resulted in higher cancellation rates and reduced net new orders
during 2007 compared with 2006. The dollar value of net new orders decreased 22% for both the
three and six months ended June 30, 2007, compared with the same periods in 2006. For the quarter
ended June 30, 2007, we had 702 active selling communities, which is comparable with the same
period in the prior year. Ending backlog, which represents orders for homes that have not yet
closed, was 14,928 units at June 30, 2007 with a dollar value of $5.2 billion.
At June 30, 2007 and December 31, 2006, our Homebuilding operations controlled approximately
191,700 and 232,200 lots, respectively. Approximately 146,000 and 158,800 lots were owned, and
approximately 42,500 and 63,700 lots were under option agreements approved for purchase at June
30, 2007 and December 31, 2006,
respectively. In addition, there were approximately 3,200 and 9,700 lots under option agreements,
pending approval, at June 30, 2007 and December 31, 2006, respectively. For the three and six
months ended June 30, 2007, we withdrew from contracts for land purchases representing
approximately 20,000 lots valued at $768 million and approximately 30,700 lots valued at $1.4
billion, respectively.
30
Homebuilding Operations Summary (continued)
The total purchase price related to approved land under option for use by our Homebuilding
operations at future dates approximated $2.8 billion at June 30, 2007. In addition, the total
purchase price related to land under option pending approval was valued at approximately $147.5
million at June 30, 2007. Land option agreements, which may be cancelled at our discretion, may
extend over several years and are secured by deposits and pre-acquisition costs totaling $316.2
million, of which $4 million is unconditionally refundable and $6.5 million is related to deposits
that our Homebuilding operations have made in regards to lots optioned from an unconsolidated
joint venture in which we have an equity interest. This balance excludes $58.9 million of
contingent payment obligations which may or may not become actual obligations of the Company
dependent upon the occurrence of specified future events.
Homebuilding Segment Operations
Homebuilding operations represent our core business. Homebuilding offers a broad product
line to meet the needs of first-time, first and second move-up, and active adult homebuyers. We
have determined our operating segments to be our Areas, which are aggregated into seven reportable
segments based on similarities in the economic and geographic characteristics of our homebuilding
operations. During the three months ended June 30, 2007, we merged our Rocky Mountain Area with
our Nevada Area to form the Mountain West Area. The operating data by segment for the Central and
Southwest reportable segments have been reclassified to reflect this change. We conduct our
operations in 51 markets, located throughout 26 states, and have presented our reportable
Homebuilding segments as follows:
|
|
|
Northeast:
|
|
Northeast Area includes the following states: |
|
|
Connecticut, Delaware, Maryland, Massachusetts, New Jersey, |
|
|
New York, Pennsylvania, Virginia |
|
|
|
Southeast:
|
|
Southeast Area includes the following states: |
|
|
Georgia, North Carolina, South Carolina, Tennessee |
|
|
|
Florida:
|
|
Florida Area includes the following state: |
|
|
Florida |
|
|
|
Midwest:
|
|
Great Lakes Area includes the following states: |
|
|
Illinois, Indiana, Michigan, Minnesota, Ohio |
|
|
|
Central:
|
|
Central Area includes the following states: |
|
|
Kansas, Missouri, Texas |
|
|
|
Southwest:
|
|
Mountain West and Southwest Areas include the following states: |
|
|
Arizona, Colorado, Nevada, New Mexico |
|
|
|
*California:
|
|
Northern California and Southern California Areas include the following state: |
|
|
California |
|
|
|
* |
|
Our homebuilding operations located in Reno, Nevada are reported in the California segment, while
our remaining Nevada homebuilding operations are reported in the Southwest segment. |
31
Homebuilding Segment Operations (continued)
The following table presents selected financial information for our Homebuilding reporting segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Home sale revenue (settlements)
($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
233,018 |
|
|
$ |
389,832 |
|
|
$ |
396,140 |
|
|
$ |
743,620 |
|
Southeast |
|
|
298,752 |
|
|
|
298,931 |
|
|
|
526,833 |
|
|
|
523,394 |
|
Florida |
|
|
236,707 |
|
|
|
577,178 |
|
|
|
529,077 |
|
|
|
1,082,493 |
|
Midwest |
|
|
175,002 |
|
|
|
274,255 |
|
|
|
310,275 |
|
|
|
502,418 |
|
Central |
|
|
136,237 |
|
|
|
238,927 |
|
|
|
298,349 |
|
|
|
434,423 |
|
Southwest |
|
|
511,397 |
|
|
|
926,310 |
|
|
|
1,004,073 |
|
|
|
1,668,528 |
|
California |
|
|
310,712 |
|
|
|
599,527 |
|
|
|
626,360 |
|
|
|
1,238,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,901,825 |
|
|
$ |
3,304,960 |
|
|
$ |
3,691,107 |
|
|
$ |
6,193,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes ($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
(67,609 |
) |
|
$ |
46,733 |
|
|
$ |
(100,533 |
) |
|
$ |
82,416 |
|
Southeast |
|
|
26,616 |
|
|
|
22,477 |
|
|
|
40,524 |
|
|
|
34,352 |
|
Florida |
|
|
(122,388 |
) |
|
|
132,062 |
|
|
|
(120,927 |
) |
|
|
246,272 |
|
Midwest |
|
|
(106,835 |
) |
|
|
(7,265 |
) |
|
|
(127,874 |
) |
|
|
(7,747 |
) |
Central |
|
|
(52,631 |
) |
|
|
4,124 |
|
|
|
(78,984 |
) |
|
|
11,127 |
|
Southwest |
|
|
(102,012 |
) |
|
|
166,954 |
|
|
|
(119,390 |
) |
|
|
311,849 |
|
California |
|
|
(229,952 |
) |
|
|
72,837 |
|
|
|
(236,896 |
) |
|
|
170,085 |
|
Unallocated |
|
|
(148,380 |
) |
|
|
(57,100 |
) |
|
|
(207,497 |
) |
|
|
(89,949 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(803,191 |
) |
|
$ |
380,822 |
|
|
$ |
(951,577 |
) |
|
$ |
758,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit settlements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
533 |
|
|
|
819 |
|
|
|
904 |
|
|
|
1,535 |
|
Southeast |
|
|
1,024 |
|
|
|
1,129 |
|
|
|
1,779 |
|
|
|
2,004 |
|
Florida |
|
|
859 |
|
|
|
1,889 |
|
|
|
1,886 |
|
|
|
3,518 |
|
Midwest |
|
|
594 |
|
|
|
917 |
|
|
|
1,040 |
|
|
|
1,666 |
|
Central |
|
|
631 |
|
|
|
1,327 |
|
|
|
1,361 |
|
|
|
2,462 |
|
Southwest |
|
|
1,636 |
|
|
|
2,656 |
|
|
|
3,135 |
|
|
|
4,913 |
|
California |
|
|
661 |
|
|
|
1,142 |
|
|
|
1,253 |
|
|
|
2,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,938 |
|
|
|
9,879 |
|
|
|
11,358 |
|
|
|
18,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new orders units: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
856 |
|
|
|
790 |
|
|
|
1,560 |
|
|
|
1,518 |
|
Southeast |
|
|
1,018 |
|
|
|
1,523 |
|
|
|
2,024 |
|
|
|
3,096 |
|
Florida |
|
|
1,074 |
|
|
|
1,112 |
|
|
|
2,596 |
|
|
|
2,914 |
|
Midwest |
|
|
895 |
|
|
|
1,020 |
|
|
|
1,654 |
|
|
|
2,231 |
|
Central |
|
|
808 |
|
|
|
1,433 |
|
|
|
1,497 |
|
|
|
2,828 |
|
Southwest |
|
|
2,106 |
|
|
|
2,627 |
|
|
|
4,769 |
|
|
|
5,352 |
|
California |
|
|
775 |
|
|
|
950 |
|
|
|
1,931 |
|
|
|
2,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,532 |
|
|
|
9,455 |
|
|
|
16,031 |
|
|
|
20,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit backlog: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
|
|
|
|
|
|
|
|
1,573 |
|
|
|
1,576 |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
1,953 |
|
|
|
2,672 |
|
Florida |
|
|
|
|
|
|
|
|
|
|
1,922 |
|
|
|
3,481 |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
1,813 |
|
|
|
1,848 |
|
Central |
|
|
|
|
|
|
|
|
|
|
1,304 |
|
|
|
2,084 |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
4,505 |
|
|
|
5,698 |
|
California |
|
|
|
|
|
|
|
|
|
|
1,858 |
|
|
|
2,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,928 |
|
|
|
19,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Homebuilding Segment Operations (continued)
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
|
|
June 30, 2007 |
|
December 31, 2006 |
Controlled Lots: |
|
|
|
|
|
|
|
|
Northeast |
|
|
18,585 |
|
|
|
27,524 |
|
Southeast |
|
|
20,376 |
|
|
|
23,332 |
|
Florida |
|
|
40,308 |
|
|
|
48,640 |
|
Midwest |
|
|
14,866 |
|
|
|
18,436 |
|
Central |
|
|
17,303 |
|
|
|
19,421 |
|
Southwest |
|
|
59,248 |
|
|
|
69,579 |
|
California |
|
|
20,977 |
|
|
|
25,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
191,663 |
|
|
|
232,223 |
|
|
|
|
|
|
|
|
|
|
Northeast:
During the second quarter of 2007, Northeast home sale revenues decreased 40% compared with
the prior year period due to a 35% decrease in unit settlements combined with an 8% decrease in
the average selling price. Revenue declines occurred in each market in the Northeast. The loss
before income taxes was primarily attributable to this reduction in revenues combined with a
significant decline in gross margin and $56.9 million of land impairment charges related to 12
communities. There were no impairments in the prior year period. Northeast also wrote off $14.9
million of deposits and pre-acquisition costs ($3.5 million in the prior year period) associated
with land transactions we no longer plan to pursue in Maryland and Pennsylvania, resulting in a
reduction of approximately 2,200 controlled lots. Net new orders increased 8% due largely to a
successful sales promotion near the end of the quarter which also helped the cancellation rate
improve slightly to 16% compared with 17% in the prior year period. The number of active
communities decreased slightly from the prior year quarter.
For the six months ended June 30, 2007, Northeast home sale revenues decreased 47% compared
with the prior year period due to a 41% decrease in unit settlements combined with a 10% decrease
in the average selling price. The loss before income taxes was primarily attributable to this
reduction in revenues combined with a significant decline in gross margin and $56.9 million of
land impairment charges related to 12 communities. There were no significant impairments in the
prior year period. Northeast also wrote off $38.2 million of deposits and pre-acquisition costs
($4.2 million in the prior year period) associated with land transactions we no longer plan to
pursue in Maryland and Pennsylvania, resulting in a reduction of approximately 8,700 controlled
lots. Net new orders increased 3% due largely to a successful sales promotion near the end of the
second quarter of 2007.
Southeast:
Our Southeast segment contributed positively to operating results in both the three and six
months ended June 30, 2007 due to strength in local demographic factors and a continued shift in
our product mix toward higher price point customers, especially in regards to active adult buyers
as large active adult communities were opened in our Charlotte, Raleigh, and Georgia markets at
various points during 2006. Home sale revenues were flat compared with the prior year period due
to a 9% decrease in unit settlements offset by a 10% increase in the average selling price,
primarily in our Georgia and Charlotte markets. Income before income taxes increased 18% compared
with the prior year period due primarily to a small increase in gross margins. There were no
significant impairments or land-related charges in the second quarter of either 2007 or 2006,
though we did decide in the second quarter of 2007 to no longer pursue land transactions
consisting of approximately 3,000 lots. Net new orders declined by 33% compared with the prior
year period partially due to the prior year period including new orders from the successful
openings of our large active adult communities in our Charlotte, Raleigh, and Georgia markets.
The cancellation rate increased to 27% compared with 19% in the prior year period, primarily due
to the significant reduction in gross new orders. The number of active communities increased
slightly from the prior year quarter.
For the six months ended June 30, 2007, Southeast home sale revenues increased 1% compared
with the prior year period due to an 11% decrease in unit settlements combined with a 13% increase
in the average selling price. Income before income taxes increased 18% compared with the prior
year period due primarily to a small increase in gross margins. There were no significant
impairments or land-related charges in either the six months ended June 30, 2007 or 2006, though
we did decide in 2007 to no longer pursue land transactions consisting of approximately 3,700
lots. Net new orders declined by 35% compared with the prior year period partially due to the
prior year
period including new orders from the successful openings of our large active adult communities in
our Charlotte, Raleigh, and Georgia markets.
33
Homebuilding Segment Operations (continued)
Florida:
Our Florida segment continues to be challenged due to the combination of a significant
decrease in demand combined with high levels of new and existing home inventories, especially in
the southern portion of the state, including our markets in Fort Myers, Sarasota, and Southeast
Florida. During the second quarter of 2007, Florida home sale revenues decreased 59% compared
with the prior year period due to a 55% decrease in unit settlements combined with a 10% decrease
in the average selling price. Revenue declines occurred in substantially every market in part due
to the size and strength of the backlog in Florida at the beginning of 2006 compared with 2007.
The loss before income taxes was primarily attributable to this reduction in revenues combined
with a significant decline in gross margin and $100.1 million in impairments in 23 communities.
Florida also recorded $10.4 million in valuation adjustments related to land held for sale and
wrote off $10 million of deposits and pre-acquisition costs associated with land transactions we
no longer plan to pursue, resulting in a reduction of approximately 6,300 lots under control,
primarily in Tampa. There were no significant impairments or land-related charges in the prior
year period. Net new orders declined by 3% due to the difficult market conditions and a continued
high cancellation rate of 26%, which was a reduction from a cancellation rate of 31% in the prior
year period. The number of active communities increased moderately from the prior year quarter.
For the six months ended June 30, 2007, Florida home sale revenues decreased 51% compared
with the prior year period due to a 46% decrease in unit settlements combined with a 9% decrease
in the average selling price. The loss before income taxes was primarily attributable to this
reduction in revenues combined with a significant decline in gross margin and $102.5 million in
impairments in 26 communities. Florida also recorded $10.4 million in valuation adjustments
related to land held for sale and wrote off $9.8 million of deposits and pre-acquisition costs
associated with land transactions we no longer plan to pursue, resulting in a reduction of
approximately 6,300 lots under control, primarily in Tampa. There were no significant impairments
or land-related charges in the prior year period. Net new orders declined by 11% due to the
difficult market conditions.
Midwest:
Our Midwest segment continues to face difficult local economic conditions in all of its
markets. During the second quarter of 2007, Midwest home sale revenues decreased 36% compared
with the prior year period due to a 35% decrease in unit settlements. Average selling prices were
flat. The increase in the loss before income taxes was primarily attributable to the reduction in
revenues, a moderate decline in gross margin, $96.9 million of impairments in 40 communities
throughout the segment, and $2.6 million of write-offs of deposits and pre-acquisition costs,
which resulted in a reduction of approximately 500 controlled lots, primarily in Illinois and
Michigan. Midwest recorded impairments and land-related charges of $19.7 million in the prior
year period. Net new orders declined by 12% due to the difficult market conditions while the
cancellation rate increased slightly to 19% compared with 18% in the prior year period. The
number of active communities decreased slightly compared with the prior year quarter.
For the six months ended June 30, 2007, Midwest home sale revenues decreased 38% compared
with the prior year period due to a 38% decrease in unit settlements. Average selling prices were
flat. The loss before income taxes was primarily attributable to this reduction in revenues
combined with a decline in gross margin and $109.2 million in impairments in 44 communities.
Midwest also wrote off $7.0 million of deposits and pre-acquisition costs associated with land
transactions we no longer plan to pursue, resulting in a reduction of approximately 2,400
controlled lots throughout the Midwest. Impairments and land-related charges totaled $22.2
million in the prior year period. Net new orders declined by 26% due to the difficult market
conditions.
Central:
Home sale revenues for the Central segment decreased 43% during the second quarter of 2007
compared with the prior year period due to a 52% decrease in unit settlements. This lower unit
volume was partially offset by a 20% increase in average selling prices. The increase in average
selling prices occurred primarily in our Dallas, Houston, and San Antonio markets and reflects a
change in community mix toward higher average selling price communities. The loss before income
taxes was primarily attributable to the reduction in revenues and $42.6 million of impairments in
11 communities located primarily in Dallas and San Antonio. Central also recorded $3.8 million of
net realizable value adjustments on land held for sale and wrote off $900 thousand of deposits and
pre-acquisition costs, which resulted in a reduction of approximately 400 controlled lots in Dallas
and Austin. Central recorded impairments and land-related charges of $3.8 million in the prior
year period. Net new orders declined by 44% due to the difficult market conditions and an
increased cancellation rate of 28% compared with a cancellation rate of 26% in the prior year
period. The number of active communities decreased significantly compared with the prior year
quarter.
34
Homebuilding Segment Operations (continued)
Central (continued):
For the six months ended June 30, 2007, Central home sale revenues decreased 31% compared
with the prior year period due to a 45% decrease in unit settlements. This lower unit volume was
partially offset by a 24% increase in average selling prices. The loss before income taxes was
primarily attributable to this reduction in revenues and $68.1 million in impairments in 30
communities. Central also recorded $4 million of net realizable value adjustments on land held
for sale and wrote off $900 thousand of deposits and pre-acquisition costs, which resulted in a
reduction of approximately 800 controlled lots, primarily in Dallas. Central recorded impairments
and land-related charges of $3.9 million in the prior year period. Net new orders declined by 47%
due to the difficult market conditions.
Southwest:
Market conditions in our Southwest segment remain very competitive. During the second
quarter of 2007, Southwest home sale revenues decreased 45% compared with the prior year period
due to a 38% decrease in unit settlements combined with a 10% decrease in the average selling
price. The loss before income taxes was primarily attributable to the reduction in revenues
combined with a significant decline in gross margin and $105.3 million in impairments in 23
communities. The largest portion of these impairments was recorded in Las Vegas, though there
were also significant impairments recorded in Phoenix and Denver. Southwest also recorded $9.5
million of net realizable value adjustments on land held for sale and wrote off $16.2 million of
deposits and pre-acquisition costs, which resulted in a reduction of approximately 4,900
controlled lots in Phoenix. Southwest recorded land-related charges of $23.9 million in the prior
year period. Net new orders decreased by 20% due to a sharp decline in net new orders in Las
Vegas. The cancellation rate improved slightly to 32% compared with 34% in the prior year period.
The number of active communities decreased slightly compared with the prior year quarter.
For the six months ended June 30, 2007, Southwest home sale revenues decreased 40% compared
with the prior year period due to a 36% decrease in unit settlements combined with a 6% decrease
in average selling prices. The loss before income taxes was primarily attributable to this
decrease in revenues combined with a significant decline in gross margin and $114.8 million in
impairments in 26 communities. Southwest also recorded $27.5 million of net realizable value
adjustments on land held for sale and wrote off $34.3 million of deposits and pre-acquisition
costs, which resulted in a reduction of approximately 5,600 controlled lots, substantially all of
which were in Las Vegas and Phoenix. Southwest recorded impairments and land-related charges of
$24.3 million in the prior year period. Net new orders declined by 11% due to the difficult
market conditions, though they were aided by the opening of a large community in Tucson in the
first quarter of 2007.
California:
Our California operations have been impacted by significantly weakened demand for new homes,
affordability issues, and an excess supply of resale inventory, especially in Sacramento, Bay
Area, North Inland Empire, and the Coastal market in Southern California. California home sale
revenues decreased 48% during the second quarter of 2007 compared with the prior year period due
to a 42% decrease in unit settlements combined with a 10% decrease in the average selling price.
The loss before income taxes was primarily attributable to the decrease in revenues as well as a
significant decline in gross margin. California recorded $159.2 million of impairments in 27
communities, $9.4 million of net realizable value adjustments on land held for sale, and $13.3
million of write-offs relating to deposits and pre-acquisition costs associated with land
transactions we no longer plan to pursue, resulting in a reduction of approximately 2,800
controlled lots, primarily in the Bay Area. In addition, Californias results include an
impairment of $54.1 million for an unconsolidated joint venture. California recorded land-related
charges of $9.2 million in the prior year period. Net new orders declined by 18% due to the
difficult market conditions. The cancellation rate essentially remained flat at 40% compared with
39% in the prior year period. The number of active communities was flat with the prior year
period.
For the six months ended June 30, 2007, California home sale revenues decreased 49% compared
with the prior year period due to a 47% decrease in unit settlements combined with a 4% decrease
in average selling prices. The loss before income taxes was primarily attributable to this
reduction in revenues combined with a significant decline in gross margin and $166.9 million in
impairments in 33 communities. California recorded $9.4 million of
net realizable value adjustments on land held for sale and wrote off $19 million of deposits and
pre-acquisition costs, which resulted in a reduction of approximately 3,200 controlled lots
located primarily in the Bay Area. Also included in Californias results is an impairment of
$54.1 million for an unconsolidated joint venture. California recorded land-related charges of
$9.9 million in the prior year period. Net new orders declined by 14% due to the difficult market
conditions.
35
Financial Services Operations
We conduct our Financial Services business, which includes mortgage and title operations,
through Pulte Mortgage and other subsidiaries. The following table presents selected financial
information for our Financial Services operations ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Net gain from sale of mortgages |
|
$ |
15,310 |
|
|
$ |
22,314 |
|
|
$ |
40,136 |
|
|
$ |
48,818 |
|
Mortgage origination and servicing fees |
|
|
2,518 |
|
|
|
3,500 |
|
|
|
5,502 |
|
|
|
7,212 |
|
Interest income |
|
|
4,775 |
|
|
|
7,066 |
|
|
|
11,010 |
|
|
|
15,067 |
|
Title services |
|
|
3,903 |
|
|
|
6,826 |
|
|
|
8,537 |
|
|
|
12,681 |
|
Other revenues |
|
|
856 |
|
|
|
761 |
|
|
|
1,758 |
|
|
|
1,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financial Services revenues |
|
|
27,362 |
|
|
|
40,467 |
|
|
|
66,943 |
|
|
|
85,324 |
|
Expenses |
|
|
(20,886 |
) |
|
|
(25,536 |
) |
|
|
(47,316 |
) |
|
|
(52,776 |
) |
Gain on sale of equity investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,635 |
|
Equity income |
|
|
92 |
|
|
|
125 |
|
|
|
136 |
|
|
|
217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
6,568 |
|
|
$ |
15,056 |
|
|
$ |
19,763 |
|
|
$ |
64,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total originations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
5,300 |
|
|
|
9,498 |
|
|
|
10,458 |
|
|
|
17,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
1,176,700 |
|
|
$ |
2,022,600 |
|
|
$ |
2,319,700 |
|
|
$ |
3,766,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originations for Pulte customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
5,257 |
|
|
|
9,442 |
|
|
|
10,379 |
|
|
|
17,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
1,166,500 |
|
|
$ |
2,008,900 |
|
|
$ |
2,303,700 |
|
|
$ |
3,745,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage origination unit volume decreased 44% and 41% while mortgage origination principal
volume decreased 42% and 38% for the three and six months ended June 30, 2007, respectively,
compared with the same periods in the prior year. The decrease in unit volume is attributable to
lower home settlements in 2007 compared with 2006, partially offset by an increase in the capture
rates to 92.6% and 92.8% for the three and six months ended June 30, 2007, respectively, compared
with 91% and 90.2%, respectively, in the same periods in the prior year. Our capture rate
represents loan originations from our Homebuilding business as a percent of total loan
opportunities, excluding cash settlements, from our Homebuilding business. The decrease in
mortgage origination principal volume resulted from the reduced settlement volume partially offset
by a slight increase in the average loan size. Our Homebuilding customers continue to account for
substantially all loan production, representing nearly 100% of unit production for the three and
six months ended June 30, 2007 and 2006.
During the three and six months ended June 30, 2007, there was a shift away from adjustable
rate mortgages (ARMs), which generally have a lower profit per loan than fixed rate products. ARMs
represented 10% of total funded origination dollars and 7% of total funded origination units for
the three months ended June 30, 2007, compared with 33% and 26%, respectively, in the prior year
period. For the six months ended June 30, 2007, ARMs represented 12% of total funded origination
dollars and 9% of total funded origination units compared with 34% and 27%, respectively, in the
prior year period. Interest-only mortgages, a type of ARM, represented 74% of funded ARM
origination dollars and 77% of funded ARM origination units for the three months ended June 30,
2007, compared with 76% and 80%, respectively, in the prior year period. For the six months ended
June 30, 2007, interest-only mortgages represented 78% of funded ARM origination dollars and 79% of
funded ARM origination units, compared with 77% and 80% in the prior year period, respectively.
Interest-only mortgages represented 7% and 25% of total funded origination dollars for the three
months ended June 30, 2007 and 2006, respectively. For the six months ended June 30, 2007 and
2006, interest-only mortgages represented 10% and 26%, respectively, of total funded origination
dollars.
Our customers average FICO scores for the three months ended June 30, 2007 and 2006 were 746
and 743, respectively, and 745 and 743 for the six months ended June 30, 2007 and 2006,
respectively. Average Combined Loan-to-Value was 82% for both the three months ended June 30, 2007
and 2006 and 83% and 82% for the six months ended June 30, 2007 and 2006, respectively. At June
30, 2007, our loan application backlog decreased to
$3.2 billion compared with $4.1 billion at June 30, 2006 due primarily to the lower backlog in our
Homebuilding operations.
36
Financial Services Operations (continued)
Based on principal dollars, approximately 4% of the loans we originated in the second quarter
of 2007 were considered sub-prime loans, which we define as first mortgages with FICO scores below
620. Approximately 16% of second quarter 2007 originations were considered Alt-A loans, which we
define as non-full documentation first mortgages with FICO scores of 620 or higher. The remaining
80% of second quarter 2007 originations were prime loans, which we define as full documentation
first mortgages with FICO scores of 620 or higher. Because we sell our loans monthly on a flow
basis and retain only limited risk for sold loans for a short period of time, we believe that our
Financial Services operations do not have any material direct risks related to sub-prime and Alt-A
loans. However, the availability of certain mortgage financing products has become more
constrained in 2007 as the mortgage industry is now more closely scrutinizing sub-prime, Alt-A, and
other non-conforming mortgage products. These developments have had and may continue to have a
material adverse effect on the overall demand for new housing and thereby on the results of
operations of both our Homebuilding and Financial Services businesses.
Pre-tax income of our Financial Services operations for the three months ended June 30, 2007
was $6.6 million compared with $15.1 million for the prior year period. This decrease in pre-tax
income was primarily due to the decline in mortgage loans originated. For the six months ended
June 30, 2007, pre-tax income of our Financial Services operations was $19.8 compared with $64.4
million for the prior year period. During February 2006, we sold our investment in Su Casita, a
Mexico-based mortgage banking company. As a result of this transaction, we recognized a pre-tax
gain of approximately $31.6 million for the six months ended June 30, 2006. Excluding this gain,
pre-tax income decreased significantly for the six months ended June 30, 2007 compared with the
same period in the prior year due to the decrease in mortgage loan originations. This decrease was
partially offset by a slight increase in average loan size and the shift in product mix toward more
profitable loans, including an increased mix of fixed rate and agency loans. For the three and six
months ended June 30, 2007, 21% and 23%, respectively, of total origination dollars were from
brokered loans, which are less profitable to us, compared with 21% for both periods in the prior
year.
Interest income for the three and six months ended June 30, 2007 was 32% and 27% lower than
the prior year periods, respectively, primarily due to the significant decrease in volume offset
slightly by an improved loan yield. For the three and six months ended June 30, 2007, revenues
from our title operations decreased 43% and 33%, respectively, compared with the prior year periods
due primarily to the significant reduction in home settlements. Expenses decreased 18% and 10% for
the three and six months ended June 30, 2007, respectively, due to the decrease in volume offset by
slightly higher operating expenses and loan loss reserves.
We hedge portions of our forecasted cash flow from sales of closed mortgage loans with
derivative financial instruments to minimize the impact of changes in interest rates. We do not
use derivative financial instruments for trading purposes.
37
Other Non-Operating
Other non-operating expenses consist of income and expenses related to corporate services
provided to our subsidiaries. These expenses are incurred for financing, developing and
implementing strategic initiatives centered on new business development and operating
efficiencies, and providing the necessary administrative support associated with being a
publicly-traded entity listed on the New York Stock Exchange. Accordingly, these results will
vary from year to year as these strategic initiatives evolve.
The following table presents other non-operating expenses for the three and six months ended June
30, 2007 and 2006 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Net interest expense (income) |
|
$ |
552 |
|
|
$ |
(1,569 |
) |
|
$ |
(402 |
) |
|
|
(2,659 |
) |
Other expenses, net |
|
|
9,434 |
|
|
|
9,722 |
|
|
|
17,745 |
|
|
|
20,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
$ |
9,986 |
|
|
$ |
8,153 |
|
|
$ |
17,343 |
|
|
$ |
17,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in other expenses, net is due primarily to reduced incentive compensation
resulting from reduced profitability and a $500 thousand gain on the repurchase of outstanding
debt.
Interest capitalized into homebuilding inventory is charged to home cost of sales based on
the cyclical timing of our unit settlements over a period that approximates the average life cycle
of our communities. Interest expense for the three and six months ended June 30, 2007 includes
$41.8 million and $46.8 million, respectively, of capitalized interest related to inventory
impairments. Information related to interest capitalized into homebuilding inventory is as
follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Interest in inventory at beginning of period |
|
$ |
247,998 |
|
|
$ |
245,253 |
|
|
$ |
235,596 |
|
|
$ |
229,798 |
|
Interest capitalized |
|
|
60,865 |
|
|
|
65,100 |
|
|
|
121,225 |
|
|
|
121,724 |
|
Interest expensed |
|
|
(96,422 |
) |
|
|
(55,899 |
) |
|
|
(144,380 |
) |
|
|
(97,068 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest in inventory at end of period |
|
$ |
212,441 |
|
|
$ |
254,454 |
|
|
$ |
212,441 |
|
|
$ |
254,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest incurred * |
|
$ |
61,803 |
|
|
$ |
66,984 |
|
|
$ |
123,153 |
|
|
$ |
125,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Interest incurred includes interest on our senior debt,
short-term borrowings, and other financing arrangements and
excludes interest incurred by our financial services operations. |
Income Taxes
Our income tax liability and related effective tax rate are affected by a number of factors.
Income taxes were provided at an effective tax rate of 37.1% during the three months ended both
June 30, 2007 and 2006 and 37.5% and 37.1% for the six months ended June 30, 2007 and 2006,
respectively. The increase in the effective tax rate resulted primarily from the adoption of FASB
Interpretation No. 48 (FIN 48) and a change in the overall state tax rate associated with the
geographical mix of income and certain other tax matters.
Liquidity and Capital Resources
We finance our homebuilding land acquisitions, development and construction activities by
using internally-generated funds and existing credit arrangements. We routinely monitor current
operational requirements and financial market conditions to evaluate the use of available
financing sources, including securities offerings. Based on our current financial condition and
credit relationships, we believe that our operations and borrowing resources will provide for our
current and long-term capital requirements. However, we continue to evaluate the impact of
market conditions on our liquidity and may determine that modifications are necessary if market
conditions deteriorate or if the current difficult market conditions extend beyond our
expectations.
38
Liquidity and Capital Resources (continued)
At June 30, 2007, we had cash and equivalents of $74.7 million and borrowings of $173 million
outstanding under our unsecured revolving credit facility. We also had $3.5 billion of senior
notes outstanding. Other financing included limited recourse land-collateralized financing
totaling $19.1 million. Sources of our working capital include our cash and equivalents, our
$1.86 billion committed unsecured revolving credit facility and Pulte Mortgages $805 million
committed credit arrangements.
Our debt-to-total capitalization ratio, excluding our collateralized debt, was approximately 37.9% at June 30, 2007, and approximately 37.5% net of cash and
equivalents.
We repurchased $61.2 million of our 4.875% senior notes due 2009 during the three months ended
June 30, 2007. These repurchases resulted in a net gain of $500 thousand, which is included in our
Consolidated Statements of Operations within Other non-operating, net expenses.
On June 29, 2007, we amended our unsecured revolving credit facility, decreasing the borrowing
availability from $2.01 billion to $1.86 billion and extending the maturity date from October 2010
to June 2012. Under the terms of the credit facility, we have the capacity to issue letters of
credit up to $1.125 billion. Borrowing availability is reduced by the amount of letters of credit
outstanding. The credit facility contains certain restrictive covenants, the most restrictive of
which requires that we not exceed a debt-to-total capitalization ratio of 55%. The credit facility
no longer contains an interest coverage ratio covenant that could create an event of default for
us, but if the interest coverage ratio (as defined in the credit facility) is less than 2 to 1,
LIBOR margin and letter of credit pricing under the credit facility increases in increments ranging
from 0.125% to 0.375%. The credit facilitys uncommitted accordion feature remains unchanged at
$2.25 billion.
Pulte Mortgage provides mortgage financing for many of our home sales and uses its own
funds and borrowings made available pursuant to various committed and uncommitted credit
arrangements. At June 30, 2007, Pulte Mortgage had committed credit arrangements of $805 million
comprised of a $405 million bank revolving credit facility and a $400 million asset-backed
commercial paper program. The credit agreements require Pulte Mortgage to maintain a consolidated
tangible net worth of at least the higher of $50 million or eighty-five percent of the average
month-end tangible net worth of the preceding calendar year ($52.6 million for 2007) and restricts
funded debt to 15 times tangible net worth. At June 30, 2007, Pulte Mortgage had $333.1 million
outstanding under its committed credit arrangements.
Pursuant to the two $100 million stock repurchase programs authorized by our Board of
Directors in October 2002 and 2005, and the $200 million stock repurchase authorization in
February 2006 (for a total stock repurchase authorization of $400 million), we have repurchased a
total of 9,688,900 shares for a total of $297.7 million though there were no repurchases under
these programs during the six months ended June 30, 2007. We had remaining authorization to
purchase common stock aggregating $102.3 million at June 30, 2007.
Our net cash provided by operating activities for the six months ended June 30, 2007 was $7.2
million, compared with net cash used in operating activities of $1.1 billion for the six months
ended June 30, 2006. For the six months ended June 30, 2007, we focused on right-sizing our land
and house inventory to better match current market conditions, as we invested approximately $1.6
billion less in inventory compared with the same period in 2006. Cash flows were also affected by
a net loss incurred for the six months ended June 30, 2007 compared with net income incurred for
the same period in the prior year. We also incurred significant write-downs of land and deposits
and pre-acquisition costs in the six months ended June 30, 2007. Deferred income taxes and income
taxes payable changed as a result of the net loss recorded during the six months ended June 30,
2007.
Cash used in investing activities was $93.6 million for the six months ended June 30, 2007,
compared with $59.8 million for the six months ended June 30, 2006. During the six months ended
June 30, 2007, we made $95 million of capital contributions to, and received $28.8 million in
capital distributions from, our unconsolidated joint ventures. We also funded $32.6 million in
capital expenditures. During the six months ended June 30, 2006, we invested approximately $65.8
million, net of cash acquired, to purchase the remaining 50% of an entity that installs basic
building components and operating systems. In addition, we received cash of $49.2 million for the
sale of our investment in Su Casita, a Mexico-based mortgage banking company. Also, we made $20.7
million of capital
contributions to and received $31.3 million in capital distributions from our unconsolidated joint
ventures for the six months ended June 30, 2006. Further, we funded approximately $54.4 million
in capital expenditures.
39
Liquidity and Capital Resources (continued)
Net cash used in financing activities totaled $390.2 million for the six months ended June
30, 2007, compared with $216.1 million for the six months ended June 30, 2006. For the six months
ended June 30, 2007, repayments under Financial Services credit arrangements were $481.6 million
while repayments under other borrowings were $65 million, including the repurchase of $61.2
million of our 4.875% senior notes due 2009. We also had net borrowings of $173 million under our
revolving credit facility for the six months ended June 30, 2007. Additionally, we expended $5.1
million related to shares surrendered by employees for payment of minimum tax obligations upon the
vesting of restricted stock and paid $20.5 million in dividends for the six months ended June 30,
2007. For the six months ended June 30, 2006, repayments under Financial Services credit
arrangements were $416 million while repayments under other borrowings were $17.5 million. We
had net borrowings of $614.5 million under our unsecured revolving credit facility and issued $150
million of senior notes for the six months ended June 30, 2006. Additionally, we expended $97.3
million for stock repurchases, $2.3 million related to shares surrendered by employees for payment
of minimum tax obligations upon the vesting of restricted stock and paid $20.5 million in
dividends for the six months ended June 30, 2006.
Inflation
We, and the homebuilding industry in general, may be adversely affected during periods of
high inflation because of higher land and construction costs. Inflation also increases our
financing, labor and material costs. In addition, higher mortgage interest rates significantly
affect the affordability of permanent mortgage financing to prospective homebuyers. We attempt to
pass to our customers any increases in our costs through increased sales prices.
Off-Balance Sheet Arrangements
At June 30, 2007 and December 31, 2006, aggregate outstanding debt of unconsolidated joint
ventures was $793 million and $935.9 million, respectively. At June 30, 2007 and December 31,
2006, our proportionate share of joint venture debt was approximately $235.4 million and $312.8
million, respectively. We provided limited recourse guarantees for
$226.3 million and $304.1
million of joint venture debt at June 30, 2007 and December 31, 2006, respectively. Accordingly,
we may be liable, on a contingent basis, through limited guarantees with respect to a portion of
the secured land acquisition and development debt. However, we would not be liable, unless a
joint venture was unable to perform its contractual borrowing obligations.
If additional capital infusions are required and approved by our unconsolidated joint
ventures (or required by the limited recourse financing guarantees discussed above), we would have
to contribute our pro rata portion of those capital needs in order not to dilute our ownership in
the joint ventures.
New Accounting Pronouncements
See Note 1 to the Condensed Consolidated Financial Statements included elsewhere in this Form
10-Q.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates
during the three months ended June 30, 2007 compared with those disclosed in Item 7, Managements
Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual
Report on Form 10-K for the year ended December 31, 2006.
40
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative disclosure:
We are subject to interest rate risk on our rate-sensitive financing to the extent long-term
rates decline. For fixed-rate debt, changes in interest rates generally affect the fair market
value of the debt instrument but not our earnings or cash flows. The following table sets forth,
as of June 30, 2007, our principal cash flows by scheduled maturity, weighted-average interest
rates and estimated fair market values for our long-term debt obligations ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2007 for the |
|
|
years ended December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There- |
|
|
|
|
|
Fair |
|
|
2007 |
|
2008 |
|
2009 |
|
2010 |
|
2011 |
|
after |
|
Total |
|
Value |
Fixed interest rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes |
|
$ |
|
|
|
$ |
|
|
|
$ |
338,812 |
|
|
$ |
|
|
|
$ |
698,563 |
|
|
$ |
2,450,000 |
|
|
$ |
3,487,375 |
|
|
$ |
3,349,243 |
|
Average interest rate |
|
|
|
|
|
|
|
|
|
|
4.88 |
% |
|
|
|
|
|
|
7.95 |
% |
|
|
6.24 |
% |
|
|
6.45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited recourse
collateralized financing |
|
$ |
923 |
|
|
$ |
4,043 |
|
|
$ |
11,453 |
|
|
$ |
1,833 |
|
|
$ |
853 |
|
|
$ |
|
|
|
$ |
19,105 |
|
|
$ |
19,105 |
|
Average interest rate |
|
|
5.49 |
% |
|
|
1.90 |
% |
|
|
.87 |
% |
|
|
8.27 |
% |
|
|
7.25 |
% |
|
|
|
|
|
|
2.31 |
% |
|
|
|
|
Qualitative disclosure:
There has been no material change to the qualitative disclosure found in Item 7A.,
Quantitative and Qualitative Disclosures about Market Risk, of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2006.
Special Notes Concerning Forward-Looking Statements
As a cautionary note, except for the historical information contained herein, certain matters
discussed in Item 2., Managements Discussion and Analysis of Financial Condition and Results of
Operations and Item 3., Quantitative and Qualitative Disclosures About Market Risk, are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the forward-looking
statements. Such factors include, among other things, (1) general economic and business
conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative
stability of debt and equity markets; (4) competition; (5) the availability and cost of land and
other raw materials used in our homebuilding operations; (6) the availability and cost of
insurance covering risks associated with our business; (7) shortages and the cost of labor; (8)
weather related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10)
governmental regulation, including the interpretation of tax, labor and environmental laws; (11)
changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist
acts and other acts of war; and (14) other factors over which we have little or no control. See
our Annual Report on Form 10-K for the year ended December 31, 2006 and our other public filings
with the Securities and Exchange Commission for a further discussion of these and other risks and
uncertainties applicable to our business. We undertake no duty to update any forward-looking
statement whether as a result of new information, future events or changes in our expectations.
Item 4. Controls and Procedures
Management, including our President & Chief Executive Officer and Executive Vice President &
Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of June 30, 2007. Based upon, and as of the date of that evaluation,
our President & Chief Executive Officer and Executive Vice President & Chief Financial Officer
concluded that the disclosure controls and procedures were effective as of June 30, 2007.
There was no change in our internal control over financial reporting during the quarter ended
June 30, 2007
that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
41
PART II. OTHER INFORMATION
Item 1A. Risk Factors
The following is a discussion of the material changes in our risk factors as previously disclosed
in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2006 as supplemented
by our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007:
If the market value of our land and homes drops significantly, our profits could decrease.
The market value of land, building lots and housing inventories can fluctuate significantly as
a result of changing market conditions and the measures we employ to manage inventory risk may not
be adequate to insulate our operations from a severe drop in inventory values. We acquire land for
expansion into new markets and for replacement of land inventory and expansion within our current
markets. If housing demand decreases below what we anticipated when we acquired our inventory, we
may not be able to make profits similar to what we have made in the past, we may experience less
than anticipated profits and/or we may not be able to recover our costs when we sell and build
homes. When market conditions are such that land values are not appreciating, option arrangements
previously entered into may become less desirable, at which time we may elect to forego deposits
and pre-acquisition costs and terminate the agreement. In the face of adverse market conditions,
we may have substantial inventory carrying costs, we may have to write-down our inventory to its
fair value, and/or we may have to sell land or homes at a loss.
As a result of the changing market conditions in the homebuilding industry which occurred
during 2006 and 2007, our land inventories and communities under development demonstrated
impairment indicators which were evaluated for potential impairment. Consequently, we incurred
total land-related charges of $881.5 million during the six months ended June 30, 2007, of which
$749.4 million were incurred in the second quarter of 2007. These charges result from the
write-off of deposit and pre-acquisition costs related to land transactions we no longer plan to
pursue ($109.7 million through June 30, 2007), net realizable valuation adjustments related to
land positions sold or held for sale ($52.3 million through June 30, 2007), impairments on land
assets related to communities under development or to be developed in the future ($665.5 million
through June 30, 2007), and an impairment of our investment in an unconsolidated joint venture
($54.1 million through June 30, 2007). It is possible that the estimated cash flows from these
projects may change and could result in a future need to record additional valuation or net
realizable adjustments. Additionally, if conditions in the homebuilding industry worsen in the
future or if our strategy related to certain communities changes, we may be required to evaluate
our assets, including additional projects, for additional impairments or write-downs, which could
result in additional charges that might be significant.
42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (1)
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(d) |
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Approximate dollar |
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(c) |
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value of shares |
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Total number of |
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that may yet be |
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(a) |
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(b) |
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shares purchased |
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purchased under |
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Total Number |
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Average |
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as part of publicly |
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the plans or |
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of shares |
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price paid |
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announced plans |
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programs |
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purchased (2) |
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per share (2) |
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or programs |
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($000s omitted) |
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April 1, 2007 through April 30, 2007 |
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$ |
102,342 |
(1) |
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May 1, 2007 through May 31, 2007 |
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$ |
102,342 |
(1) |
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June 1, 2007 through June 30, 2007 |
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13,424 |
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$ |
26.07 |
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$ |
102,342 |
(1) |
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Total |
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13,424 |
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$ |
26.07 |
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(1) |
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Pursuant to the two $100 million stock repurchase programs authorized and announced by our
Board of Directors in October 2002 and 2005 and the $200 million stock repurchase authorized and
announced in February 2006 (for a total stock repurchase authorization of $400 million), the
Company has repurchased a total of 9,688,900 shares for a total of $297.7 million. There are no
expiration dates for the programs. |
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(2) |
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During June 2007, 13,424 shares were surrendered by employees for payment of minimum tax
obligations upon the vesting of restricted stock, and were not repurchased as part of our publicly
announced stock repurchase programs. |
43
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of Shareholders was held on May 10, 2007. The following matters were
considered and acted upon, with the results indicated below.
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Shares |
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Shares |
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Voted For |
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Withheld |
Election of Directors - |
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William J. Pulte |
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189,903,167 |
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43,608,803 |
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Richard J. Dugas, Jr. |
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189,986,895 |
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43,525,075 |
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David N. McCammon |
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178,517,518 |
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54,994,452 |
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Francis J. Sehn |
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189,532,959 |
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43,979,011 |
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The following directors have terms of office that will expire in 2008 or 2009 and accordingly,
were not up for election at our Annual Meeting of Shareholders held on May 10, 2007:
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2008 |
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2009 |
D. Kent Anderson |
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Debra J. Kelly-Ennis |
John J. Shea |
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Bernard W. Reznicek |
William B. Smith |
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Alan E. Schwartz |
Brian P. Anderson |
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Patrick J. OLeary |
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For |
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Against |
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Abstaining |
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Non-Votes |
To ratify the appointment of
Ernst & Young LLP. |
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229,194,951 |
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3,247,658 |
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1,069,361 |
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0 |
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A shareholder proposal requesting
the election of directors by a majority,
rather than a plurality, vote. |
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99,848,516 |
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110,982,190 |
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1,334,389 |
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21,346,875 |
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A shareholder proposal requesting
the declassification of the Board
of Directors. |
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128,947,539 |
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81,500,088 |
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1,717,468 |
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21,346,875 |
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A shareholder proposal requesting
the formation of a Majority Vote
Shareholder Committee. |
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46,763,180 |
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162,233,550 |
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3,168,365 |
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21,346,875 |
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A shareholder proposal regarding
the use of performance-based options. |
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94,488,435 |
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116,292,118 |
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1,384,542 |
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21,346,875 |
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44
Item 6. Exhibits
Exhibit Number and Description
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3(a)
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Articles of Incorporation, as amended, of Pulte Homes, Inc. (Incorporated by reference to
Exhibit 3.1 of our Registration Statement on Form S-4, Registration No. 333-62518) |
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3(b)
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Certificate of Amendment to the Articles of Incorporation of Pulte Homes, Inc. (Dated May 16,
2005) (Incorporated by reference to Exhibit 3(a) of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006) |
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3(c)
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By-laws, as amended, of Pulte Homes, Inc. (Incorporated by reference to Exhibit 3.1 of our
Current Report on Form 8-K dated September 15, 2004) |
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4(a)
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Any instrument with respect to long-term debt, where the securities authorized thereunder do
not exceed 10% of the total assets of Pulte Homes, Inc. and its subsidiaries, has not been
filed; these instruments relate to (a) long-term senior and subordinated debt of the Company
issued pursuant to supplements to the indenture filed as Exhibit 4(a) to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, which supplements have also
been filed with the SEC as exhibits to various Company registration statements or to reports
incorporated by reference in such registration statements and (b) other long-term debt of the
Company. The Company agrees to furnish a copy of such instruments to the SEC upon request. |
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10(a)
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Third Amended and Restated Credit Agreement dated June 20, 2007 (Incorporated by reference
to Exhibit 10(a) of our Current Report on Form 8-K dated July 3, 2007) |
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31(a)
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Rule 13a-14(a) Certification by Richard J. Dugas, Jr., President and Chief Executive Officer |
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31(b)
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Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer |
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32
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Certification Pursuant to 18 United States Code § 1350 and Rule 13a-14(b) under the
Securities Exchange Act of 1934 |
45
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 thereunto duly authorized.
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PULTE HOMES, INC.
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/s/ Roger A. Cregg |
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Roger A. Cregg |
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Executive Vice President and |
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Chief Financial Officer |
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(Principal Financial Officer and duly authorized officer) |
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Date: August 8, 2007 |
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46