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 September 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
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38-2766606 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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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 October 31, 2007: 256,028,800
PULTE HOMES, INC.
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PULTE HOMES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($000s omitted)
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September 30, |
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December 31, |
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2007 |
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2006 |
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(Unaudited) |
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(Note) |
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ASSETS |
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Cash and equivalents |
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$ |
101,786 |
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$ |
551,292 |
|
Unfunded settlements |
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44,967 |
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72,597 |
|
House and land inventory |
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8,130,891 |
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9,374,335 |
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Land held for sale |
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372,245 |
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465,823 |
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Land, not owned, under option agreements |
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31,739 |
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43,609 |
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Residential mortgage loans available-for-sale |
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337,941 |
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871,350 |
|
Investments in unconsolidated entities |
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152,557 |
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|
150,685 |
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Goodwill |
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40,068 |
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375,677 |
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Intangible assets, net |
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112,767 |
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|
118,954 |
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Other assets |
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905,287 |
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982,034 |
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Deferred income tax assets |
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|
702,206 |
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170,518 |
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$ |
10,932,454 |
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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
$210,448 and $280,329 in 2007 and 2006, respectively |
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$ |
560,904 |
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$ |
576,321 |
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Customer deposits |
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215,081 |
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200,478 |
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Accrued and other liabilities |
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1,050,618 |
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1,403,793 |
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Unsecured short-term borrowings |
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25,000 |
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Collateralized short-term debt, recourse solely to
applicable non-guarantor subsidiary assets |
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286,080 |
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814,707 |
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Income taxes |
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128,040 |
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66,267 |
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Senior notes |
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3,477,882 |
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3,537,947 |
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Total liabilities |
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5,743,605 |
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6,599,513 |
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Shareholders equity |
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5,188,849 |
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6,577,361 |
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$ |
10,932,454 |
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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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Nine Months Ended |
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September 30, |
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September 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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$ |
2,438,556 |
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$ |
3,513,776 |
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$ |
6,261,962 |
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$ |
9,746,583 |
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Financial services |
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32,743 |
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49,609 |
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99,686 |
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134,933 |
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Other non-operating |
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499 |
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574 |
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2,829 |
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3,986 |
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Total revenues |
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2,471,798 |
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3,563,959 |
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6,364,477 |
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9,885,502 |
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Expenses: |
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Homebuilding, principally cost of sales |
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3,485,540 |
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3,229,304 |
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8,204,260 |
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8,703,585 |
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Financial services |
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19,967 |
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28,528 |
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67,283 |
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81,304 |
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Other non-operating, net |
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8,629 |
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12,494 |
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28,302 |
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33,442 |
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Total expenses |
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3,514,136 |
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3,270,326 |
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8,299,845 |
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8,818,331 |
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Other income: |
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Gain on sale of equity investment |
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31,635 |
|
Equity income (loss) |
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|
(51,575 |
) |
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|
1,881 |
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|
(107,702 |
) |
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1,977 |
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Income (loss) from continuing operations before income
taxes |
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(1,093,913 |
) |
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295,514 |
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(2,043,070 |
) |
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1,100,783 |
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Income taxes (benefit) |
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(306,042 |
) |
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|
104,064 |
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(661,976 |
) |
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|
402,836 |
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Income (loss) from continuing operations |
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(787,871 |
) |
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191,450 |
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(1,381,094 |
) |
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697,947 |
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Loss from discontinued operations |
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(1,231 |
) |
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(2,064 |
) |
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Net income (loss) |
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$ |
(787,871 |
) |
|
$ |
190,219 |
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$ |
(1,381,094 |
) |
|
$ |
695,883 |
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Per share data: |
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Basic: |
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Income (loss) from continuing operations |
|
$ |
(3.12 |
) |
|
$ |
0.76 |
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|
$ |
(5.48 |
) |
|
$ |
2.76 |
|
Loss from discontinued operations |
|
|
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|
|
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|
|
|
|
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|
(0.01 |
) |
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Net income (loss) |
|
$ |
(3.12 |
) |
|
$ |
0.76 |
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|
$ |
(5.48 |
) |
|
$ |
2.76 |
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Assuming dilution: |
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Income (loss) from continuing operations |
|
$ |
(3.12 |
) |
|
$ |
0.74 |
|
|
$ |
(5.48 |
) |
|
$ |
2.70 |
|
Loss from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.01 |
) |
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|
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|
|
|
|
|
|
|
|
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|
|
|
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Net income (loss) |
|
$ |
(3.12 |
) |
|
$ |
0.74 |
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|
$ |
(5.48 |
) |
|
$ |
2.69 |
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Cash dividends declared |
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$ |
0.04 |
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$ |
0.04 |
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$ |
0.12 |
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$ |
0.12 |
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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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252,264 |
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|
251,287 |
|
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|
252,093 |
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|
252,521 |
|
Assuming dilution: |
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Effect of dilutive securities |
|
|
|
|
|
|
5,928 |
|
|
|
|
|
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|
6,432 |
|
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|
|
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|
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Adjusted weighted-average common shares
and effect of dilutive securities |
|
|
252,264 |
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|
|
257,215 |
|
|
|
252,093 |
|
|
|
258,953 |
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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 |
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Shareholders Equity,
December 31, 2006 |
|
$ |
2,553 |
|
|
$ |
1,284,687 |
|
|
$ |
(2,986 |
) |
|
$ |
5,293,107 |
|
|
$ |
6,577,361 |
|
Adoption of FASB Interpretation
No. 48 (FIN 48) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,354 |
) |
|
|
(31,354 |
) |
Stock option exercises |
|
|
5 |
|
|
|
5,875 |
|
|
|
|
|
|
|
|
|
|
|
5,880 |
|
Tax benefit from stock option
exercises and
restricted stock vesting |
|
|
|
|
|
|
2,997 |
|
|
|
|
|
|
|
|
|
|
|
2,997 |
|
Restricted stock awards |
|
|
3 |
|
|
|
(3 |
) |
|
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|
|
|
|
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|
|
|
|
|
Cash dividends declared $0.12 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,712 |
) |
|
|
(30,712 |
) |
Stock repurchases |
|
|
(2 |
) |
|
|
(780 |
) |
|
|
|
|
|
|
(4,443 |
) |
|
|
(5,225 |
) |
Stock-based compensation |
|
|
|
|
|
|
52,031 |
|
|
|
|
|
|
|
|
|
|
|
52,031 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,381,094 |
) |
|
|
(1,381,094 |
) |
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
(906 |
) |
|
|
|
|
|
|
(906 |
) |
Foreign currency translation
adjustments |
|
|
|
|
|
|
|
|
|
|
(129 |
) |
|
|
|
|
|
|
(129 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,382,129 |
) |
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
Shareholders Equity, September
30, 2007 |
|
$ |
2,559 |
|
|
$ |
1,344,807 |
|
|
$ |
(4,021 |
) |
|
$ |
3,845,504 |
|
|
$ |
5,188,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity,
December 31, 2005 |
|
$ |
2,570 |
|
|
$ |
1,209,148 |
|
|
$ |
(5,496 |
) |
|
$ |
4,751,120 |
|
|
$ |
5,957,342 |
|
Stock option exercises |
|
|
4 |
|
|
|
4,820 |
|
|
|
|
|
|
|
|
|
|
|
4,824 |
|
Tax benefit from stock option
exercises and
restricted stock vesting |
|
|
|
|
|
|
4,154 |
|
|
|
|
|
|
|
|
|
|
|
4,154 |
|
Restricted stock awards |
|
|
7 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared $0.12 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30,689 |
) |
|
|
(30,689 |
) |
Stock repurchases |
|
|
(35 |
) |
|
|
(17,239 |
) |
|
|
|
|
|
|
(102,222 |
) |
|
|
(119,496 |
) |
Stock-based compensation |
|
|
|
|
|
|
54,091 |
|
|
|
|
|
|
|
|
|
|
|
54,091 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695,883 |
|
|
|
695,883 |
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
(41 |
) |
|
|
|
|
|
|
(41 |
) |
Foreign currency translation
adjustments |
|
|
|
|
|
|
|
|
|
|
1,406 |
|
|
|
|
|
|
|
1,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
697,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity, September
30, 2006 |
|
$ |
2,546 |
|
|
$ |
1,254,967 |
|
|
$ |
(4,131 |
) |
|
$ |
5,314,092 |
|
|
$ |
6,567,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
5
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000s omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,381,094 |
) |
|
$ |
695,883 |
|
Adjustments to reconcile net income (loss) to net cash flows
provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Write-down of land and deposits and other related costs |
|
|
1,618,350 |
|
|
|
155,030 |
|
Goodwill impairments |
|
|
335,609 |
|
|
|
|
|
Gain on sale of equity investments |
|
|
|
|
|
|
(31,635 |
) |
Amortization and depreciation |
|
|
64,109 |
|
|
|
58,509 |
|
Stock-based compensation expense |
|
|
52,031 |
|
|
|
54,091 |
|
Deferred income taxes |
|
|
(523,137 |
) |
|
|
(27,113 |
) |
Equity loss (income) from unconsolidated entities |
|
|
107,702 |
|
|
|
(1,977 |
) |
Distributions of earnings from unconsolidated entities |
|
|
4,291 |
|
|
|
6,356 |
|
Other, net |
|
|
3,676 |
|
|
|
1,975 |
|
Increase (decrease) in cash due to: |
|
|
|
|
|
|
|
|
Inventories |
|
|
(300,184 |
) |
|
|
(2,348,001 |
) |
Residential mortgage loans available-for-sale |
|
|
533,409 |
|
|
|
459,334 |
|
Other assets |
|
|
30,504 |
|
|
|
54,173 |
|
Accounts payable, accrued and other liabilities |
|
|
(242,466 |
) |
|
|
(165,286 |
) |
Income taxes |
|
|
21,868 |
|
|
|
(178,048 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
324,668 |
|
|
|
(1,266,709 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Distributions from unconsolidated entities |
|
|
29,071 |
|
|
|
37,461 |
|
Investments in unconsolidated entities |
|
|
(155,606 |
) |
|
|
(53,046 |
) |
Investments in subsidiaries, net of cash acquired |
|
|
|
|
|
|
(65,779 |
) |
Proceeds from sale of equity investments |
|
|
|
|
|
|
49,216 |
|
Proceeds from sale of fixed assets |
|
|
9,685 |
|
|
|
6,949 |
|
Capital expenditures |
|
|
(54,395 |
) |
|
|
(78,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(171,245 |
) |
|
|
(103,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net repayments under Financial Services credit arrangements |
|
|
(528,627 |
) |
|
|
(359,155 |
) |
Net borrowings under revolving credit facility |
|
|
25,000 |
|
|
|
754,300 |
|
Proceeds from other borrowings |
|
|
|
|
|
|
210,040 |
|
Repayment of other borrowings |
|
|
(72,082 |
) |
|
|
|
|
Excess tax benefits from share-based awards |
|
|
2,997 |
|
|
|
2,671 |
|
Issuance of common stock |
|
|
5,880 |
|
|
|
4,824 |
|
Stock repurchases |
|
|
(5,225 |
) |
|
|
(119,496 |
) |
Dividends paid |
|
|
(30,712 |
) |
|
|
(30,689 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(602,769 |
) |
|
|
462,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and equivalents |
|
|
(160 |
) |
|
|
225 |
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
(449,506 |
) |
|
|
(907,635 |
) |
Cash and equivalents at beginning of period |
|
|
551,292 |
|
|
|
1,002,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
101,786 |
|
|
$ |
94,633 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow informationcash paid during
the period for: |
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized |
|
$ |
33,418 |
|
|
$ |
36,310 |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
7,441 |
|
|
$ |
597,854 |
|
|
|
|
|
|
|
|
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 nine months ended September 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.
Reclassification
Certain prior period amounts have been reclassified to conform to the current year
presentation.
Earnings per share
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 21,079,044 and 21,369,728 stock options and shares of
restricted stock for the three and nine months ended September 30, 2007, respectively, and
2,483,462 and 2,418,287 stock options and shares of restricted stock for the three and nine
months ended September 30, 2006, respectively. For the three and nine months ended September 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.
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. The Company also considers 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 nine months ended September 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 $615.9 million (related to 169 communities)
and $48.4 million (related to 27 communities) for the three months ended September 30, 2007 and
2006, respectively, and $1.3 billion (related to 283 communities) and $57.8 million (related to
30 communities) for the nine months ended September 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 September 30, 2007, the Company performed detailed
impairment calculations for 245 communities resulting in impairments for 169 communities. The
discount rate used in the Companys determination of fair value for these 169 communities ranged
from 8% to 18% with an aggregate average of 11%, and the remaining carrying value of such
communities totaled $822.4 million at September 30, 2007. These 169 communities included 33 of
its long-lived active adult communities as well as 60 communities for which impairments were
also recorded in prior periods. In the event that market conditions or the Companys operations
deteriorate in the future or the current difficult market conditions extend beyond its
expectations, additional impairments may be necessary 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 (continued) |
|
|
|
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
$80.5 million and $6.7 million for the three months ended September 30, 2007 and 2006,
respectively, and $132.8 million and $28.8 million for the nine months ended September 30,
2007 and 2006, respectively.
Write-off of deposits and other related costs
From time to time, the Company writes off certain deposits and other 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 incremental capital, and other factors. The Company wrote off deposits and
other related costs in the amount of $94.6 million and $32.6 million for the three months ended
September 30, 2007 and 2006, respectively, and $204.2 million and $68.5 million for the nine
months ended September 30, 2007 and 2006, respectively. The Company records these write-offs of
deposits and other related 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 of its 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 September 30, 2007 and December 31,
2006, the Company classified $31.7 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 $3.3 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 September 30,
2007 and December 31, 2006 had a total purchase price of $2.2 billion and $4.3 billion,
respectively. In connection with these agreements, the Company had refundable and non-refundable
deposits and other related costs of $244 million and $363.5 million, which were included in
other assets at September 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) |
|
|
|
Goodwill impairments |
Goodwill, which represents the cost of acquired companies in excess of the fair value of
the net assets at the acquisition date, was recorded in prior years in connection with various
acquisitions. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142,
the Company tests goodwill for potential impairment annually in the fourth quarter and between
annual tests if an event occurs or circumstances change that would more likely than not reduce
the fair value of a reporting unit below its carrying amount. Due to a significant deterioration
in market conditions, a continuation of significant impairments and land-related charges, and a
steep decline in the market price of the Companys common stock to a level significantly below
its book value, the Company performed a detailed evaluation of goodwill as of September 30,
2007.
Management evaluated the recoverability of goodwill by comparing the carrying value of the
Companys reporting units to their fair value. Fair value was determined based on discounted
future cash flows. These cash flows are significantly impacted by estimates related to current
market valuations, current and future economic conditions in each of its geographical markets,
and the Companys strategic plans within each of its markets. Due to uncertainties in the
estimation process and the significant volatility in demand for new housing, actual results
could differ significantly from such estimates. Additionally, future changes in any of these
factors could result in future impairments of the remaining goodwill.
The evaluation as of September 30, 2007 resulted in an impairment charge of $335.6 million
related to the following reportable segments ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
Balance at |
|
|
|
December 31, |
|
|
|
|
|
|
September 30, |
|
|
|
2006 |
|
|
Impairments |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
2,729 |
|
|
$ |
(2,729 |
) |
|
$ |
|
|
Southeast |
|
|
4,954 |
|
|
|
|
|
|
|
4,954 |
|
Florida |
|
|
34,414 |
|
|
|
|
|
|
|
34,414 |
|
Midwest |
|
|
18,316 |
|
|
|
(18,316 |
) |
|
|
|
|
Central |
|
|
4,493 |
|
|
|
(4,493 |
) |
|
|
|
|
Southwest |
|
|
218,966 |
|
|
|
(218,966 |
) |
|
|
|
|
California |
|
|
91,105 |
|
|
|
(91,105 |
) |
|
|
|
|
Financial Services |
|
|
700 |
|
|
|
|
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill |
|
$ |
375,677 |
|
|
$ |
(335,609 |
) |
|
$ |
40,068 |
|
|
|
|
|
|
|
|
|
|
|
10
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Restructuring |
In response to the challenging operating environment that continues to exist, the Company
initiated a restructuring plan during the second quarter of 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 related to the restructuring ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2007 |
|
|
September 30, 2007 |
|
Employee severance benefits |
|
$ |
769 |
|
|
$ |
32,193 |
|
Asset impairments |
|
|
5,206 |
|
|
|
8,708 |
|
Lease terminations and other exit costs |
|
|
1,913 |
|
|
|
6,131 |
|
|
|
|
|
|
|
|
|
|
$ |
7,888 |
|
|
$ |
47,032 |
|
|
|
|
|
|
|
|
Substantially all of these costs have been included in the Consolidated Statements of Operations
within Homebuilding expense. The Company expects to incur up to $50 million in total costs
related to this restructuring plan, of which approximately $40 million will be cash
expenditures. The majority of these cash expenditures 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 its reportable segments and are not material to any one
segment.
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):
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
Allowance for warranties at beginning of period |
|
$ |
117,259 |
|
|
$ |
112,297 |
|
Warranty reserves provided |
|
|
52,093 |
|
|
|
113,419 |
|
Payments and other adjustments |
|
|
(74,088 |
) |
|
|
(125,238 |
) |
|
|
|
|
|
|
|
Allowance for warranties at end of period |
|
$ |
95,264 |
|
|
$ |
100,478 |
|
|
|
|
|
|
|
|
Insurance
The Company has, and requires the majority of its subcontractors to have, general
liability, property, errors and omissions, workers compensation and other business insurance.
These insurance policies protect the Company against a portion of the risk of loss from claims,
subject to certain self-insured retentions, deductibles, and other coverage limits. Through its
captive insurance subsidiaries, the Company reserves for costs to cover its self-insured and deductible amounts, including any costs of claims and
lawsuits, under those policies based on an analysis of its historical claims, which includes an
estimate of claims incurred but not yet reported. The Company experienced net increases in
insurance-related expenses of $23.2 million and $63.2 million for the three and nine months
ended September 30, 2007, respectively, primarily due to the development of general liability
product claims.
11
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.
12
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Segment information
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 Homebuilding 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 September 30, 2007, the Company moved its Kansas City market from the Central to the Great
Lakes Area. The operating data by segment for the Central and Midwest 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, Kansas, Michigan, Minnesota, Missouri, Ohio |
|
|
|
Central:
|
|
Central Area includes the following state: |
|
|
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 its Homebuilding segments.
Operating earnings for the Financial Services segment is defined as revenues less costs
associated with its 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.
13
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Segment information (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data by Segment ($000s omitted) |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
325,691 |
|
|
$ |
434,050 |
|
|
$ |
722,581 |
|
|
$ |
1,179,211 |
|
Southeast |
|
|
298,466 |
|
|
|
290,755 |
|
|
|
826,733 |
|
|
|
814,419 |
|
Florida |
|
|
275,538 |
|
|
|
548,358 |
|
|
|
877,646 |
|
|
|
1,631,411 |
|
Midwest |
|
|
299,967 |
|
|
|
412,396 |
|
|
|
627,332 |
|
|
|
955,352 |
|
Central |
|
|
164,002 |
|
|
|
238,206 |
|
|
|
472,857 |
|
|
|
664,812 |
|
Southwest |
|
|
711,596 |
|
|
|
1,002,337 |
|
|
|
1,744,976 |
|
|
|
2,672,582 |
|
California |
|
|
363,296 |
|
|
|
587,674 |
|
|
|
989,837 |
|
|
|
1,828,796 |
|
Financial Services |
|
|
32,743 |
|
|
|
49,609 |
|
|
|
99,686 |
|
|
|
134,933 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues |
|
|
2,471,299 |
|
|
|
3,563,385 |
|
|
|
6,361,648 |
|
|
|
9,881,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and unallocated (a) |
|
|
499 |
|
|
|
574 |
|
|
|
2,829 |
|
|
|
3,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenues |
|
$ |
2,471,798 |
|
|
$ |
3,563,959 |
|
|
$ |
6,364,477 |
|
|
$ |
9,885,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
(24,343 |
) |
|
$ |
30,176 |
|
|
$ |
(124,876 |
) |
|
$ |
112,592 |
|
Southeast |
|
|
11,000 |
|
|
|
21,693 |
|
|
|
51,524 |
|
|
|
56,045 |
|
Florida |
|
|
(149,939 |
) |
|
|
105,594 |
|
|
|
(270,866 |
) |
|
|
351,866 |
|
Midwest |
|
|
(24,419 |
) |
|
|
(2,604 |
) |
|
|
(172,202 |
) |
|
|
(15,087 |
) |
Central |
|
|
(41,542 |
) |
|
|
3,156 |
|
|
|
(100,617 |
) |
|
|
19,019 |
|
Southwest |
|
|
(227,077 |
) |
|
|
193,388 |
|
|
|
(346,467 |
) |
|
|
505,237 |
|
California |
|
|
(178,341 |
) |
|
|
33,007 |
|
|
|
(415,237 |
) |
|
|
203,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services (b) |
|
|
12,896 |
|
|
|
21,377 |
|
|
|
32,659 |
|
|
|
85,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment income (loss) before income taxes |
|
|
(621,765 |
) |
|
|
405,787 |
|
|
|
(1,346,082 |
) |
|
|
1,318,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and unallocated (c) |
|
|
(472,148 |
) |
|
|
(110,273 |
) |
|
|
(696,988 |
) |
|
|
(217,758 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income (loss) from continuing operations
before income taxes (d) |
|
$ |
(1,093,913 |
) |
|
$ |
295,514 |
|
|
$ |
(2,043,070 |
) |
|
$ |
1,100,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $4.2 million and
$6.7 million for the three months ended September 30, 2007 and 2006, respectively, and $12.5
million and $16.8 million for the nine months ended September 30, 2007 and 2006, respectively.
Financial Services income before income taxes includes interest income of $5.4 million and $9.1
million for the three months ended September 30, 2007 and 2006, respectively, and $16.4 million
and $24.2 million for the nine months ended September 30, 2007 and 2006, respectively. |
|
(c) |
|
Corporate and unallocated includes amortization of capitalized interest (including
write-offs of capitalized interest related to land and community valuation adjustments) of $98.5
million and $242.6 million for the three and nine months ended September 30, 2007, respectively,
and $65.2 million and $162.3 million for the three and nine months ended September 30, 2006,
respectively, and goodwill impairments of $335.6 million for the three and nine months ended
September 30, 2007, 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 $260.2 million and $311.7 million for the three months ended September 30, 2007 and
2006, respectively, and $894.4 million and $924.7 million for the nine months ended September
30, 2007 and 2006, respectively. |
14
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 |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and community valuation adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
26,547 |
|
|
$ |
9,998 |
|
|
$ |
83,451 |
|
|
$ |
9,998 |
|
Southeast |
|
|
14,768 |
|
|
|
|
|
|
|
15,021 |
|
|
|
|
|
Florida |
|
|
104,777 |
|
|
|
1,025 |
|
|
|
207,276 |
|
|
|
1,025 |
|
Midwest |
|
|
32,598 |
|
|
|
15,772 |
|
|
|
158,594 |
|
|
|
25,150 |
|
Central |
|
|
36,646 |
|
|
|
2,504 |
|
|
|
87,931 |
|
|
|
2,504 |
|
Southwest |
|
|
187,924 |
|
|
|
1,012 |
|
|
|
302,676 |
|
|
|
1,012 |
|
California |
|
|
169,193 |
|
|
|
18,085 |
|
|
|
336,137 |
|
|
|
18,085 |
|
Corporate and unallocated (a) |
|
|
43,478 |
|
|
|
|
|
|
|
90,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total valuation adjustments |
|
$ |
615,931 |
|
|
$ |
48,396 |
|
|
$ |
1,281,382 |
|
|
$ |
57,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realizable value adjustments (NRV) land held for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
14,428 |
|
|
$ |
3,204 |
|
|
$ |
14,428 |
|
|
$ |
3,204 |
|
Southeast |
|
|
1,056 |
|
|
|
|
|
|
|
2,126 |
|
|
|
|
|
Florida |
|
|
10,666 |
|
|
|
|
|
|
|
21,019 |
|
|
|
|
|
Midwest |
|
|
11,032 |
|
|
|
|
|
|
|
11,032 |
|
|
|
5,660 |
|
Central |
|
|
5,483 |
|
|
|
3,309 |
|
|
|
9,505 |
|
|
|
4,574 |
|
Southwest |
|
|
35,702 |
|
|
|
|
|
|
|
63,161 |
|
|
|
15,125 |
|
California |
|
|
2,112 |
|
|
|
207 |
|
|
|
11,480 |
|
|
|
207 |
|
Corporate and unallocated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total NRV adjustments land held for sale |
|
$ |
80,479 |
|
|
$ |
6,720 |
|
|
$ |
132,751 |
|
|
$ |
28,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of deposits and other related costs (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
7,422 |
|
|
$ |
11,849 |
|
|
$ |
45,595 |
|
|
$ |
16,053 |
|
Southeast |
|
|
426 |
|
|
|
204 |
|
|
|
940 |
|
|
|
1,655 |
|
Florida |
|
|
36,875 |
|
|
|
6,191 |
|
|
|
46,714 |
|
|
|
7,521 |
|
Midwest |
|
|
894 |
|
|
|
7,714 |
|
|
|
7,873 |
|
|
|
16,369 |
|
Central |
|
|
11 |
|
|
|
575 |
|
|
|
903 |
|
|
|
1,713 |
|
Southwest |
|
|
25,770 |
|
|
|
3,613 |
|
|
|
60,085 |
|
|
|
12,806 |
|
California |
|
|
23,152 |
|
|
|
4,498 |
|
|
|
42,107 |
|
|
|
14,350 |
|
Corporate and unallocated |
|
|
|
|
|
|
(2,054 |
) |
|
|
|
|
|
|
(1,981 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total write-off of deposits and pre-acquisition costs |
|
$ |
94,550 |
|
|
$ |
32,590 |
|
|
$ |
204,217 |
|
|
$ |
68,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company also recorded impairments for its investments in unconsolidated joint ventures
totaling $51.1 million (relating to Southwest) and $105.2 million (of which $54.1 million was
in California) in the three and nine months ended September 30, 2007, respectively.
|
|
|
(a) |
|
Corporate and unallocated includes $43.5 million and $90.3 million of write-offs of
capitalized interest related to land and community valuation adjustments recorded during the
three and nine months ended September 30, 2007. |
|
(b) |
|
Includes settlements related to costs previously in dispute and considered non-recoverable. |
15
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 September 30, 2007: |
|
|
|
|
|
|
|
|
Northeast |
|
$ |
1,444,758 |
|
|
$ |
1,229,091 |
|
Southeast |
|
|
775,109 |
|
|
|
670,746 |
|
Florida |
|
|
1,408,030 |
|
|
|
1,124,926 |
|
Midwest |
|
|
725,750 |
|
|
|
677,858 |
|
Central |
|
|
478,889 |
|
|
|
404,429 |
|
Southwest |
|
|
2,753,282 |
|
|
|
2,497,641 |
|
California |
|
|
1,521,656 |
|
|
|
1,356,537 |
|
Financial Services |
|
|
398,218 |
|
|
|
|
|
|
|
|
|
|
|
|
Total segment |
|
|
9,505,692 |
|
|
|
7,961,228 |
|
Corporate and unallocated (a) |
|
|
1,426,762 |
|
|
|
169,663 |
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
10,932,454 |
|
|
$ |
8,130,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
950,656 |
|
|
|
880,450 |
|
Central |
|
|
651,925 |
|
|
|
536,353 |
|
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. |
3. Inventory
Major components of the Companys inventory are as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Homes under construction |
|
$ |
3,035,112 |
|
|
$ |
2,606,613 |
|
Land under development |
|
|
3,881,831 |
|
|
|
5,478,244 |
|
Land held for future development |
|
|
1,213,948 |
|
|
|
1,289,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
8,130,891 |
|
|
$ |
9,374,335 |
|
|
|
|
|
|
|
|
16
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 September 30, 2007 and December 31, 2006, aggregate outstanding debt of unconsolidated
joint ventures was $700.5 million and $935.9 million, respectively. At September 30, 2007 and
December 31, 2006, the Companys proportionate share of its joint venture debt was approximately
$185.9 million and $312.8 million, respectively. The Company provided limited recourse guarantees
for $176.6 million and $304.1 million of joint venture debt at September 30, 2007 and December 31,
2006, respectively. Accordingly, the Company may be responsible, 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 responsible unless a joint venture was unable to perform its
contractual borrowing obligations.
For the nine months ended September 30, 2007, the Company made additional capital
contributions totaling $155.6 million to fund the cash requirements of existing joint ventures
and received capital and earnings distributions totaling $33.4 million from existing joint
ventures. At September 30, 2007 and December 31, 2006, the Company had $152.6 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 accounted for primarily 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 nine months ended
September 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 nine months ended September 30, 2007. The Company had remaining
authorization to purchase $102.3 million of common stock at September 30, 2007.
Accumulated other comprehensive income (loss)
The accumulated balances related to each component of other comprehensive income (loss)
are as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Foreign currency translation adjustments: |
|
|
|
|
|
|
|
|
Mexico |
|
$ |
(445 |
) |
|
$ |
(316 |
) |
Fair value of derivatives, net of income
taxes
of $2,192 in 2007 and $1,637 in 2006 |
|
|
(3,576 |
) |
|
|
(2,670 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(4,021 |
) |
|
$ |
(2,986 |
) |
|
|
|
|
|
|
|
17
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Income Taxes
The Companys effective income tax rate for the three and nine months ended September 30,
2007 was 28% and 32.4%, respectively, compared with an effective tax rate of 35.2% and 36.6% in
the corresponding prior year periods. The effective tax rates during 2007 were lower than in the
prior year primarily due to the majority of the recorded goodwill impairment being
non-deductible for tax purposes. Excluding the goodwill impairment charge, the effective tax
rate would have been 37.3% for the nine months ended September 30, 2007.
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 nine
months ended September 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 totaling up to $1.125 billion. Borrowing availability is
reduced by the amount of letters of credit outstanding. The credit facility contains certain
financial covenants. The Company is required to not exceed a debt-to-total capitalization ratio
of 55%, and it is also required to meet a tangible net worth minimum each quarter. 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. Subsequently, Pulte Mortgage reduced the amount of capacity available under
its asset-backed commercial paper program in September 2007 from $400 million to $300 million
due to unfavorable changes in the asset-backed commercial paper market. Due to reduced
origination volume, the Company does not anticipate needing any additional capacity in the near
term.
18
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. |
|
Supplemental Guarantor information |
At September 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.
19
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. |
|
Supplemental Guarantor information (continued) |
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
|
|
|
$ |
49,088 |
|
|
$ |
52,698 |
|
|
$ |
|
|
|
$ |
101,786 |
|
Unfunded settlements |
|
|
|
|
|
|
48,283 |
|
|
|
(3,316 |
) |
|
|
|
|
|
|
44,967 |
|
House and land inventory |
|
|
|
|
|
|
8,120,690 |
|
|
|
10,201 |
|
|
|
|
|
|
|
8,130,891 |
|
Land held for sale |
|
|
|
|
|
|
372,245 |
|
|
|
|
|
|
|
|
|
|
|
372,245 |
|
Land, not owned, under option agreements |
|
|
|
|
|
|
31,739 |
|
|
|
|
|
|
|
|
|
|
|
31,739 |
|
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
337,941 |
|
|
|
|
|
|
|
337,941 |
|
Investments in unconsolidated entities |
|
|
1,448 |
|
|
|
138,202 |
|
|
|
12,907 |
|
|
|
|
|
|
|
152,557 |
|
Goodwill |
|
|
|
|
|
|
39,368 |
|
|
|
700 |
|
|
|
|
|
|
|
40,068 |
|
Intangible assets, net |
|
|
|
|
|
|
112,767 |
|
|
|
|
|
|
|
|
|
|
|
112,767 |
|
Other assets |
|
|
213,227 |
|
|
|
626,584 |
|
|
|
65,476 |
|
|
|
|
|
|
|
905,287 |
|
Deferred income tax assets |
|
|
684,662 |
|
|
|
356 |
|
|
|
17,188 |
|
|
|
|
|
|
|
702,206 |
|
Investment in subsidiaries |
|
|
9,068,430 |
|
|
|
80,682 |
|
|
|
6,414,408 |
|
|
|
(15,563,520 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,967,767 |
|
|
$ |
9,620,004 |
|
|
$ |
6,908,203 |
|
|
$ |
(15,563,520 |
) |
|
$ |
10,932,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other
liabilities |
|
$ |
135,562 |
|
|
$ |
1,363,973 |
|
|
$ |
327,068 |
|
|
$ |
|
|
|
$ |
1,826,603 |
|
Unsecured short-term borrowings |
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
Collateralized short-term debt, recourse
solely to applicable non-guarantor
subsidiary assets |
|
|
|
|
|
|
|
|
|
|
286,080 |
|
|
|
|
|
|
|
286,080 |
|
Income taxes |
|
|
128,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,040 |
|
Senior notes |
|
|
3,477,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,477,882 |
|
Advances (receivable) payable subsidiaries |
|
|
1,012,434 |
|
|
|
(853,936 |
) |
|
|
(158,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
4,778,918 |
|
|
|
510,037 |
|
|
|
454,650 |
|
|
|
|
|
|
|
5,743,605 |
|
Total shareholders equity |
|
|
5,188,849 |
|
|
|
9,109,967 |
|
|
|
6,453,553 |
|
|
|
(15,563,520 |
) |
|
|
5,188,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,967,767 |
|
|
$ |
9,620,004 |
|
|
$ |
6,908,203 |
|
|
$ |
(15,563,520 |
) |
|
$ |
10,932,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
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 September 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
2,438,556 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,438,556 |
|
Financial services |
|
|
|
|
|
|
5,679 |
|
|
|
27,064 |
|
|
|
|
|
|
|
32,743 |
|
Other non-operating |
|
|
3 |
|
|
|
37 |
|
|
|
459 |
|
|
|
|
|
|
|
499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
3 |
|
|
|
2,444,272 |
|
|
|
27,523 |
|
|
|
|
|
|
|
2,471,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
2,810,553 |
|
|
|
|
|
|
|
|
|
|
|
2,810,553 |
|
Selling, general and administrative and
other expense |
|
|
7,238 |
|
|
|
650,064 |
|
|
|
17,685 |
|
|
|
|
|
|
|
674,987 |
|
Financial Services, principally interest |
|
|
733 |
|
|
|
1,950 |
|
|
|
17,284 |
|
|
|
|
|
|
|
19,967 |
|
Other non-operating expenses, net |
|
|
22,882 |
|
|
|
(8,451 |
) |
|
|
(5,802 |
) |
|
|
|
|
|
|
8,629 |
|
Intercompany interest |
|
|
48,871 |
|
|
|
(48,871 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
79,724 |
|
|
|
3,405,245 |
|
|
|
29,167 |
|
|
|
|
|
|
|
3,514,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income (loss) |
|
|
|
|
|
|
(51,536 |
) |
|
|
(39 |
) |
|
|
|
|
|
|
(51,575 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
|
|
(79,721 |
) |
|
|
(1,012,509 |
) |
|
|
(1,683 |
) |
|
|
|
|
|
|
(1,093,913 |
) |
Income taxes (benefit) |
|
|
(19,238 |
) |
|
|
(286,712 |
) |
|
|
(92 |
) |
|
|
|
|
|
|
(306,042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
(loss) of subsidiaries |
|
|
(60,483 |
) |
|
|
(725,797 |
) |
|
|
(1,591 |
) |
|
|
|
|
|
|
(787,871 |
) |
Equity in income (loss) of subsidiaries |
|
|
(727,388 |
) |
|
|
6,054 |
|
|
|
(412,470 |
) |
|
|
1,133,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(787,871 |
) |
|
$ |
(719,743 |
) |
|
$ |
(414,061 |
) |
|
$ |
1,133,804 |
|
|
$ |
(787,871 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the nine months ended September 30, 2007
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
6,261,962 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
6,261,962 |
|
Financial services |
|
|
|
|
|
|
14,216 |
|
|
|
85,470 |
|
|
|
|
|
|
|
99,686 |
|
Other non-operating |
|
|
10 |
|
|
|
1,102 |
|
|
|
1,717 |
|
|
|
|
|
|
|
2,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
10 |
|
|
|
6,277,280 |
|
|
|
87,187 |
|
|
|
|
|
|
|
6,364,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
6,834,885 |
|
|
|
|
|
|
|
|
|
|
|
6,834,885 |
|
Selling, general and administrative and
other expense |
|
|
25,037 |
|
|
|
1,289,162 |
|
|
|
55,176 |
|
|
|
|
|
|
|
1,369,375 |
|
Financial Services, principally interest |
|
|
2,074 |
|
|
|
6,046 |
|
|
|
59,163 |
|
|
|
|
|
|
|
67,283 |
|
Other non-operating expenses, net |
|
|
66,969 |
|
|
|
(24,513 |
) |
|
|
(14,154 |
) |
|
|
|
|
|
|
28,302 |
|
Intercompany interest |
|
|
113,594 |
|
|
|
(113,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
207,674 |
|
|
|
7,991,986 |
|
|
|
100,185 |
|
|
|
|
|
|
|
8,299,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income (loss) |
|
|
|
|
|
|
(107,740 |
) |
|
|
38 |
|
|
|
|
|
|
|
(107,702 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
equity in income (loss) of subsidiaries |
|
|
(207,664 |
) |
|
|
(1,822,446 |
) |
|
|
(12,960 |
) |
|
|
|
|
|
|
(2,043,070 |
) |
Income taxes (benefit) |
|
|
(68,245 |
) |
|
|
(590,709 |
) |
|
|
(3,022 |
) |
|
|
|
|
|
|
(661,976 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
(loss) of subsidiaries |
|
|
(139,419 |
) |
|
|
(1,231,737 |
) |
|
|
(9,938 |
) |
|
|
|
|
|
|
(1,381,094 |
) |
Equity in income (loss) of subsidiaries |
|
|
(1,241,675 |
) |
|
|
16,130 |
|
|
|
(820,083 |
) |
|
|
2,045,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,381,094 |
) |
|
$ |
(1,215,607 |
) |
|
$ |
(830,021 |
) |
|
$ |
2,045,628 |
|
|
$ |
(1,381,094 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
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 September 30, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
3,513,776 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
3,513,776 |
|
Financial services |
|
|
|
|
|
|
7,599 |
|
|
|
42,010 |
|
|
|
|
|
|
|
49,609 |
|
Other non-operating |
|
|
258 |
|
|
|
68 |
|
|
|
248 |
|
|
|
|
|
|
|
574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
258 |
|
|
|
3,521,443 |
|
|
|
42,258 |
|
|
|
|
|
|
|
3,563,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
2,918,690 |
|
|
|
|
|
|
|
|
|
|
|
2,918,690 |
|
Selling, general and administrative and
other expense |
|
|
8,218 |
|
|
|
307,744 |
|
|
|
(5,348 |
) |
|
|
|
|
|
|
310,614 |
|
Financial Services, principally interest |
|
|
767 |
|
|
|
2,463 |
|
|
|
25,298 |
|
|
|
|
|
|
|
28,528 |
|
Other non-operating expenses, net |
|
|
26,019 |
|
|
|
(9,561 |
) |
|
|
(3,964 |
) |
|
|
|
|
|
|
12,494 |
|
Intercompany interest |
|
|
5,504 |
|
|
|
(5,504 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
40,508 |
|
|
|
3,213,832 |
|
|
|
15,986 |
|
|
|
|
|
|
|
3,270,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income |
|
|
|
|
|
|
1,625 |
|
|
|
256 |
|
|
|
|
|
|
|
1,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
(loss) of subsidiaries |
|
|
(40,250 |
) |
|
|
309,236 |
|
|
|
26,528 |
|
|
|
|
|
|
|
295,514 |
|
Income taxes (benefit) |
|
|
(14,379 |
) |
|
|
108,807 |
|
|
|
9,636 |
|
|
|
|
|
|
|
104,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income (loss) of subsidiaries |
|
|
(25,871 |
) |
|
|
200,429 |
|
|
|
16,892 |
|
|
|
|
|
|
|
191,450 |
|
Income (loss) from discontinued
operations |
|
|
189 |
|
|
|
|
|
|
|
(1,420 |
) |
|
|
|
|
|
|
(1,231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
(loss) of subsidiaries |
|
|
(25,682 |
) |
|
|
200,429 |
|
|
|
15,472 |
|
|
|
|
|
|
|
190,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
217,321 |
|
|
|
10,399 |
|
|
|
34,492 |
|
|
|
(262,212 |
) |
|
|
|
|
Discontinued operations |
|
|
(1,420 |
) |
|
|
|
|
|
|
|
|
|
|
1,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,901 |
|
|
|
10,399 |
|
|
|
34,492 |
|
|
|
(260,792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
190,219 |
|
|
$ |
210,828 |
|
|
$ |
49,964 |
|
|
$ |
(260,792 |
) |
|
$ |
190,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the nine months ended September 30, 2006
( $000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
9,746,583 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
9,746,583 |
|
Financial services |
|
|
|
|
|
|
20,280 |
|
|
|
114,653 |
|
|
|
|
|
|
|
134,933 |
|
Other non-operating |
|
|
334 |
|
|
|
2,016 |
|
|
|
1,636 |
|
|
|
|
|
|
|
3,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
334 |
|
|
|
9,768,879 |
|
|
|
116,289 |
|
|
|
|
|
|
|
9,885,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
7,806,302 |
|
|
|
|
|
|
|
|
|
|
|
7,806,302 |
|
Selling, general and administrative and
other expense |
|
|
24,335 |
|
|
|
880,081 |
|
|
|
(7,133 |
) |
|
|
|
|
|
|
897,283 |
|
Financial Services, principally interest |
|
|
2,287 |
|
|
|
7,113 |
|
|
|
71,904 |
|
|
|
|
|
|
|
81,304 |
|
Other non-operating expenses, net |
|
|
66,484 |
|
|
|
(24,823 |
) |
|
|
(8,219 |
) |
|
|
|
|
|
|
33,442 |
|
Intercompany interest |
|
|
85,811 |
|
|
|
(85,811 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
178,917 |
|
|
|
8,582,862 |
|
|
|
56,552 |
|
|
|
|
|
|
|
8,818,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of equity investment |
|
|
|
|
|
|
|
|
|
|
31,635 |
|
|
|
|
|
|
|
31,635 |
|
Equity income |
|
|
|
|
|
|
824 |
|
|
|
1,153 |
|
|
|
|
|
|
|
1,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
(loss) of subsidiaries |
|
|
(178,583 |
) |
|
|
1,186,841 |
|
|
|
92,525 |
|
|
|
|
|
|
|
1,100,783 |
|
Income taxes (benefit) |
|
|
(65,694 |
) |
|
|
434,434 |
|
|
|
34,096 |
|
|
|
|
|
|
|
402,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income (loss) of
subsidiaries |
|
|
(112,889 |
) |
|
|
752,407 |
|
|
|
58,429 |
|
|
|
|
|
|
|
697,947 |
|
Income (loss) from discontinued
operations |
|
|
189 |
|
|
|
|
|
|
|
(2,253 |
) |
|
|
|
|
|
|
(2,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
(loss) of subsidiaries |
|
|
(112,700 |
) |
|
|
752,407 |
|
|
|
56,176 |
|
|
|
|
|
|
|
695,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
810,836 |
|
|
|
46,226 |
|
|
|
229,628 |
|
|
|
(1,086,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
(2,253 |
) |
|
|
|
|
|
|
|
|
|
|
2,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
808,583 |
|
|
|
46,226 |
|
|
|
229,628 |
|
|
|
(1,084,437 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
695,883 |
|
|
$ |
798,633 |
|
|
$ |
285,804 |
|
|
$ |
(1,084,437 |
) |
|
$ |
695,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 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 |
|
$ |
(486,819 |
) |
|
$ |
213,712 |
|
|
$ |
597,775 |
|
|
$ |
|
|
|
$ |
324,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
26,024 |
|
|
|
3,047 |
|
|
|
|
|
|
|
29,071 |
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(155,606 |
) |
|
|
|
|
|
|
|
|
|
|
(155,606 |
) |
Dividends received from subsidiaries |
|
|
51 |
|
|
|
22,000 |
|
|
|
|
|
|
|
(22,051 |
) |
|
|
|
|
Investment in subsidiaries |
|
|
(113,030 |
) |
|
|
(1,558 |
) |
|
|
(53,829 |
) |
|
|
168,417 |
|
|
|
|
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
9,685 |
|
|
|
|
|
|
|
|
|
|
|
9,685 |
|
Capital expenditures |
|
|
|
|
|
|
(51,734 |
) |
|
|
(2,661 |
) |
|
|
|
|
|
|
(54,395 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
(112,979 |
) |
|
|
(151,189 |
) |
|
|
(53,443 |
) |
|
|
146,366 |
|
|
|
(171,245 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under Financial
Services credit arrangements |
|
|
|
|
|
|
|
|
|
|
(528,627 |
) |
|
|
|
|
|
|
(528,627 |
) |
Net borrowings under revolving credit
facility |
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
Repayment of other borrowings |
|
|
(61,188 |
) |
|
|
(10,894 |
) |
|
|
|
|
|
|
|
|
|
|
(72,082 |
) |
Capital contributions from parent |
|
|
|
|
|
|
87,030 |
|
|
|
81,387 |
|
|
|
(168,417 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
663,046 |
|
|
|
(407,828 |
) |
|
|
(255,218 |
) |
|
|
|
|
|
|
|
|
Excess tax benefits from share-based
awards |
|
|
2,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,997 |
|
Issuance of common stock |
|
|
5,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,880 |
|
Stock repurchases |
|
|
(5,225 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,225 |
) |
Dividends paid |
|
|
(30,712 |
) |
|
|
(51 |
) |
|
|
(22,000 |
) |
|
|
22,051 |
|
|
|
(30,712 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
599,798 |
|
|
|
(331,743 |
) |
|
|
(724,458 |
) |
|
|
(146,366 |
) |
|
|
(602,769 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
(160 |
) |
|
|
|
|
|
|
(160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
|
|
|
|
(269,220 |
) |
|
|
(180,286 |
) |
|
|
|
|
|
|
(449,506 |
) |
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
318,308 |
|
|
|
232,984 |
|
|
|
|
|
|
|
551,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
49,088 |
|
|
$ |
52,698 |
|
|
$ |
|
|
|
$ |
101,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
9. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the nine months ended September 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 |
|
|
(398,980 |
) |
|
|
(1,310,825 |
) |
|
|
443,096 |
|
|
|
|
|
|
|
(1,266,709 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
37,461 |
|
|
|
|
|
|
|
|
|
|
|
37,461 |
|
Investments in unconsolidated
entities |
|
|
|
|
|
|
(53,046 |
) |
|
|
|
|
|
|
|
|
|
|
(53,046 |
) |
Dividends received from subsidiaries |
|
|
4,784,311 |
|
|
|
65,000 |
|
|
|
1,036,436 |
|
|
|
(5,885,747 |
) |
|
|
|
|
Investments in subsidiaries |
|
|
(1,219,637 |
) |
|
|
(69,460 |
) |
|
|
(307,939 |
) |
|
|
1,531,257 |
|
|
|
(65,779 |
) |
Proceeds from sale of equity investment |
|
|
|
|
|
|
|
|
|
|
49,216 |
|
|
|
|
|
|
|
49,216 |
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
6,948 |
|
|
|
1 |
|
|
|
|
|
|
|
6,949 |
|
Capital expenditures |
|
|
|
|
|
|
(71,681 |
) |
|
|
(6,766 |
) |
|
|
|
|
|
|
(78,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
3,564,674 |
|
|
|
(84,778 |
) |
|
|
770,948 |
|
|
|
(4,354,490 |
) |
|
|
(103,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under Financial
Services credit arrangements |
|
|
|
|
|
|
|
|
|
|
(359,155 |
) |
|
|
|
|
|
|
(359,155 |
) |
Net borrowings under revolving credit
facility |
|
|
754,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
754,300 |
|
Proceeds from other borrowings |
|
|
150,000 |
|
|
|
60,040 |
|
|
|
|
|
|
|
|
|
|
|
210,040 |
|
Capital contributions from parent |
|
|
|
|
|
|
1,220,972 |
|
|
|
310,285 |
|
|
|
(1,531,257 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
(3,927,304 |
) |
|
|
4,109,355 |
|
|
|
(182,051 |
) |
|
|
|
|
|
|
|
|
Excess tax benefits from share-based
awards |
|
|
2,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,671 |
|
Issuance of common stock |
|
|
4,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,824 |
|
Stock repurchases |
|
|
(119,496 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(119,496 |
) |
Dividends paid |
|
|
(30,689 |
) |
|
|
(4,780,583 |
) |
|
|
(1,105,164 |
) |
|
|
5,885,747 |
|
|
|
(30,689 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
(3,165,694 |
) |
|
|
609,784 |
|
|
|
(1,336,085 |
) |
|
|
4,354,490 |
|
|
|
462,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and equivalents |
|
|
|
|
|
|
(785,819 |
) |
|
|
(121,816 |
) |
|
|
|
|
|
|
(907,635 |
) |
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
839,764 |
|
|
|
162,504 |
|
|
|
|
|
|
|
1,002,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
53,945 |
|
|
$ |
40,688 |
|
|
$ |
|
|
|
$ |
94,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of
Operations
Overview
During 2006 and 2007, the U.S. housing market has been 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. Industry conditions continued to
deteriorate, in certain markets significantly, in the three months ended September 30, 2007, with
rising foreclosure activity and significant reductions in pricing by both ourselves and our
competitors. 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 continues to become more
constrained. The combination of these homebuilding industry and related mortgage financing
developments resulted in significant decreases in our revenues and gross margins during the nine
months ended September 30, 2007 compared with the same period in the prior year. Additionally, we
incurred total land-related charges of $1.6 billion for the nine months ended September 30, 2007 as
well as impairments of our investments in unconsolidated joint ventures totaling $105.2 million and
goodwill impairments of $335.6 million.
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 expect these trends in our unit settlements
and pricing to continue and the majority of the markets we serve to remain challenging for the
remainder of 2007 and throughout 2008. We have adjusted our approach to land acquisition and
development and construction practices and continue to shorten our land pipeline, limit land
development expenditures, reduce production volumes, and balance home price and profitability with
sales pace. We are delaying planned land purchases and development spending 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 in the near term. 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 $47 million for the nine months ended
September 30, 2007. 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 may 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 fourth quarter 2007 earnings to be in the range of
break-even to $0.10 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.
28
Overview (continued)
The following is a summary of our operating results for the three and nine months ended
September 30, 2007 and 2006 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding operations |
|
$ |
(1,098,679 |
) |
|
$ |
286,057 |
|
|
$ |
(2,050,256 |
) |
|
$ |
1,044,462 |
|
Financial services operations |
|
|
12,896 |
|
|
|
21,377 |
|
|
|
32,659 |
|
|
|
85,777 |
|
Other non-operating |
|
|
(8,130 |
) |
|
|
(11,920 |
) |
|
|
(25,473 |
) |
|
|
(29,456 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) from continuing operations |
|
|
(1,093,913 |
) |
|
|
295,514 |
|
|
|
(2,043,070 |
) |
|
|
1,100,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes (benefit) |
|
|
(306,042 |
) |
|
|
104,064 |
|
|
|
(661,976 |
) |
|
|
402,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
(787,871 |
) |
|
|
191,450 |
|
|
|
(1,381,094 |
) |
|
|
697,947 |
|
Loss from discontinued operations |
|
|
|
|
|
|
(1,231 |
) |
|
|
|
|
|
|
(2,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(787,871 |
) |
|
$ |
190,219 |
|
|
$ |
(1,381,094 |
) |
|
|
695,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data assuming dilution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
$ |
(3.12 |
) |
|
$ |
0.74 |
|
|
$ |
(5.48 |
) |
|
$ |
2.70 |
|
Loss from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3.12 |
) |
|
$ |
0.74 |
|
|
$ |
(5.48 |
) |
|
$ |
2.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a comparison of pre-tax income for the three and nine months ended September 30,
2007 and 2006:
|
|
|
Homebuilding pre-tax loss was $1.1 billion and $2.1 billion for the three and nine months
ended September 30, 2007, respectively, compared with Homebuilding pre-tax income of $286.1
million and $1 billion, 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. In addition, for the three and nine months ended September
30, 2007, pre-tax loss was affected by restructuring charges of $7.9 million and $47 million,
respectively, land-related charges totaling $791 million and $1.6 billion, respectively,
impairments of our investments in unconsolidated joint ventures of $51.1 million and $105.2
million, respectively, and goodwill impairments of $335.6 million. Gross margins were
unfavorably impacted by lower selling prices and increased sales incentives. Land-related
charges for the three and nine months ended September 30, 2007 consisted of write-offs of
deposits and other related costs for land transactions we no longer plan to pursue ($94.6
million and $204.2 million, respectively), net realizable valuation adjustments related to
land positions sold or held for sale ($80.5 million and $132.8 million, respectively), and
impairments on land assets related to communities under development or to be developed in the
future ($615.9 million and $1.3 billion, respectively). |
|
|
|
|
Pre-tax income from our Financial Services business segment decreased 40% and 62% for the
three and nine months ended September 30, 2007, respectively, compared with the prior year
periods as the result of decreased loan originations due to significant decreases in the
number of homes closed. Pre-tax income for the nine months ended September 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 92.5%
and 91.1% for the three months ended September 30, 2007 and 2006, respectively, and 92.7% and
90.5% for the nine months ended September 30, 2007 and 2006, respectively. |
|
|
|
|
The decrease in non-operating expenses for the three and nine months ended September 30,
2007, compared with the same periods in the prior year was due primarily to a reduction in
incentive compensation. |
29
Homebuilding Operations Summary
The following table presents a summary of pre-tax income and unit information for our Homebuilding
operations for the three and nine months ended September 30, 2007 and 2006 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
Home sale revenue (settlements) |
|
$ |
2,407,762 |
|
|
$ |
3,498,499 |
|
|
$ |
6,098,869 |
|
|
$ |
9,692,293 |
|
Land sale revenue |
|
|
30,794 |
|
|
|
15,277 |
|
|
|
163,093 |
|
|
|
54,290 |
|
Home cost of sales (a) |
|
|
(2,700,512 |
) |
|
|
(2,899,981 |
) |
|
|
(6,549,864 |
) |
|
|
(7,733,989 |
) |
Land cost of sales (b) |
|
|
(110,041 |
) |
|
|
(18,709 |
) |
|
|
(285,021 |
) |
|
|
(72,313 |
) |
Selling, general and administrative expense |
|
|
(236,610 |
) |
|
|
(279,223 |
) |
|
|
(813,476 |
) |
|
|
(829,376 |
) |
Equity income (expense) (c) |
|
|
(51,695 |
) |
|
|
1,585 |
|
|
|
(107,958 |
) |
|
|
1,464 |
|
Other income (expense), net (d) |
|
|
(438,377 |
) |
|
|
(31,391 |
) |
|
|
(555,899 |
) |
|
|
(67,907 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income |
|
$ |
(1,098,679 |
) |
|
$ |
286,057 |
|
|
$ |
(2,050,256 |
) |
|
$ |
1,044,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit settlements |
|
|
7,468 |
|
|
|
10,440 |
|
|
|
18,826 |
|
|
|
28,921 |
|
Average selling price |
|
$ |
322 |
|
|
$ |
335 |
|
|
$ |
324 |
|
|
$ |
335 |
|
Net new orders units |
|
|
4,582 |
|
|
|
7,299 |
|
|
|
20,613 |
|
|
|
27,479 |
|
Net new orders dollars (e) |
|
$ |
1,267,000 |
|
|
$ |
2,396,000 |
|
|
$ |
6,606,000 |
|
|
$ |
9,200,000 |
|
Backlog at September 30: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units |
|
|
|
|
|
|
|
|
|
|
12,042 |
|
|
|
16,375 |
|
Dollars |
|
|
|
|
|
|
|
|
|
$ |
4,087,000 |
|
|
$ |
5,809,000 |
|
|
|
|
(a) |
|
Includes homebuilding interest expense, which represents the amortization of capitalized
interest. Home cost of sales also includes land and community valuation adjustments of $615.9
million and $48.4 million for the three months ended September 30, 2007 and 2006, respectively,
and $1.3 billion and $57.8 million for the nine months ended September 30, 2007 and 2006,
respectively. |
|
(b) |
|
Includes net realizable value adjustments for land held for sale of $80.5 million and
$6.7 million for the three months ended September 30, 2007 and 2006, respectively, and $132.8
million and $28.8 million for the nine months ended September 30, 2007 and 2006, respectively. |
|
(c) |
|
Includes impairments of our investments in unconsolidated joint ventures of $51.1
million and $105.2 million for the three and nine months ended September 30, 2007. |
|
(d) |
|
Includes the write-off of deposits and other related costs for land option contracts we no
longer plan to pursue of $94.6 million and $32.6 million for the three months ended September
30, 2007 and 2006, respectively, and $204.2 million and $68.5 million for the nine months ended
September 30, 2007 and 2006, respectively. Additionally, includes goodwill impairment charge of
$335.6 million for the three and nine months ended September 30, 2007. |
|
(e) |
|
Net new order dollars represent a composite of new order dollars combined with other
movements of the dollars in backlog related to cancellations and change orders. |
Home sale revenues for the three and nine months ended September 30, 2007 were lower than
those for the same periods in the prior year by $1.1 billion and $3.6 billion, or 31% and 37%,
respectively. The decrease in home sale revenues for the three and nine months ended September 30,
2007 compared with the prior year periods was attributable to 28% and 35% 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 12.2% for the three months
ended September 30, 2007, compared with a positive 17.1% for the same period in the prior year.
For the nine months ended September 30, 2007, Homebuilding gross profit margins were negative 7.4%
compared with a positive 20.2% for the same period in 2006. Homebuilding gross margins were
negatively impacted by $615.9 million and $1.3 billion of charges for the three and nine months
ended September 30, 2007 related to land and community valuation adjustments in 169 and 283
communities, respectively, compared with land and community valuation adjustments of $48.4 million
and $57.8 million, respectively, in the prior year periods. In addition, increased selling
incentives also impacted our operations.
30
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 September 30, 2007 had a negative margin contribution of $79.2 million,
compared with a negative margin contribution of $3.4 million for the same period in 2006. Gross
profits from land sales for the nine months ended September 30, 2007 had a negative margin
contribution of $121.9 million, compared with a negative margin contribution of $18 million for the
same period in 2006. The gross profit contributions from specific land sales transactions were
approximately $1.2 million and $10.8 million for the three and nine months ended September 30,
2007, respectively. These margin contributions were offset by $80.5 million and $132.8 million,
respectively, of net realizable value adjustments related to commercial and residential land held
for disposition. The three and nine months ended September 30, 2006 included negative net
realizable value adjustments of $6.7 million and $28.8 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 September 30, 2007, we had $372.2 million of land held for sale.
Selling, general and administrative expenses as a percentage of home settlement revenues was
9.8% for the three months ended September 30, 2007 compared with 8% for the same period in the
prior year. For the nine months ended September 30, 2007, selling, general and administrative
expenses as a percentage of home settlement revenues was 13.3% compared with 8.6% 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 $23.2 million and $63.2 million
for the three and nine months ended September 30, 2007, respectively, and employee severance
benefits of approximately $800 thousand and $32.2 million incurred for the three and nine months
ended September 30, 2007, respectively, in connection with the restructuring plan announced in
the second quarter of 2007.
Other income (expense), net includes the write-off of deposits and related costs resulting
from decisions not to pursue certain land acquisitions and options, which totaled $94.6 million and
$32.6 million for the three months ended September 30, 2007 and 2006, respectively, and $204.2
million and $68.5 million for the nine months ended September 30, 2007 and 2006, respectively. For
the three and nine months ended September 30, 2007, we also recorded $7.1 million and $14.8
million, respectively, of asset impairment and lease termination costs related to the restructuring
plan announced in the second quarter of 2007. Additionally, we recorded goodwill impairment
charges of $335.6 million during the three months ended September 30, 2007.
Unit settlements decreased 28% and 35% for the three and nine months ended September 30, 2007, respectively, to
7,468 units and 18,826 units compared with the same periods in 2006. The average selling price for
homes closed decreased 4% and 3% to $322,000 and $324,000, respectively, for the three and nine
months ended September 30, 2007 compared with the same periods in the prior year. For the three
and nine months ended September 30, 2007, unit net new orders decreased 37% and 25%, respectively,
to 4,582 and 20,613 units, compared with the same periods in 2006. Cancellation rates for the
three months ended September 30, 2007 and 2006 were 44% and 36%, respectively. 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 47% and 28%,
respectively, for the three and nine months ended September 30, 2007 compared with the same periods
in 2006. For the quarter ended September 30, 2007, we had 669 active selling communities, which
represents a 7% decrease from the same period in the prior year. Ending backlog, which represents
orders for homes that have not yet closed, was 12,042 units at September 30, 2007 with a dollar
value of $4.1 billion.
31
Homebuilding Operations Summary (continued)
At September 30, 2007 and December 31, 2006, our Homebuilding operations controlled
approximately 171,800 and 232,200 lots, respectively. Approximately 134,900 and 158,800 lots were
owned, and approximately 34,400 and 63,700 lots were under option agreements approved for purchase
at September 30, 2007 and December 31, 2006, respectively. In addition, there were approximately
2,500 and 9,700 lots under option agreements, pending approval, at September 30, 2007 and December
31, 2006, respectively. For the three and nine months ended September 30, 2007, we withdrew from
contracts for land purchases representing approximately 8,400 lots valued at $669.2 million and
approximately 39,100 lots valued at $2.1 billion, respectively.
The total purchase price related to approved land under option for use by our Homebuilding
operations at future dates approximated $2.1 billion at September 30, 2007. In addition, the total
purchase price related to land under option pending approval was valued at approximately $127.8
million at September 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 $247.3
million, of which $3.7 million is unconditionally refundable and $6.1 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 $33.8
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 Homebuilding 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 September 30, 2007, we moved our Kansas
City market from the Central to the Great Lakes Area. The operating data by segment for the
Central and Midwest 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, Kansas, Michigan, Minnesota, Missouri, Ohio |
|
|
|
Central: |
|
Central Area includes the following state: |
|
|
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. |
32
Homebuilding Segment Operations (continued)
The following table presents selected financial information for our homebuilding reporting
segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Home sale revenue (settlements) ($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
321,586 |
|
|
$ |
432,949 |
|
|
$ |
717,726 |
|
|
$ |
1,176,569 |
|
Southeast |
|
|
298,009 |
|
|
|
290,755 |
|
|
|
824,842 |
|
|
|
814,149 |
|
Florida |
|
|
273,999 |
|
|
|
548,358 |
|
|
|
803,076 |
|
|
|
1,630,851 |
|
Midwest |
|
|
299,967 |
|
|
|
406,794 |
|
|
|
623,535 |
|
|
|
947,702 |
|
Central |
|
|
153,158 |
|
|
|
236,589 |
|
|
|
438,214 |
|
|
|
632,522 |
|
Southwest |
|
|
697,897 |
|
|
|
999,450 |
|
|
|
1,701,970 |
|
|
|
2,667,978 |
|
California |
|
|
363,146 |
|
|
|
583,604 |
|
|
|
989,506 |
|
|
|
1,822,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,407,762 |
|
|
$ |
3,498,499 |
|
|
$ |
6,098,869 |
|
|
$ |
9,692,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes ($000s omitted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
$ |
(24,343 |
) |
|
$ |
30,176 |
|
|
$ |
(124,876 |
) |
|
$ |
112,592 |
|
Southeast |
|
|
11,000 |
|
|
|
21,693 |
|
|
|
51,524 |
|
|
|
56,045 |
|
Florida |
|
|
(149,939 |
) |
|
|
105,594 |
|
|
|
(270,866 |
) |
|
|
351,866 |
|
Midwest |
|
|
(24,419 |
) |
|
|
(2,604 |
) |
|
|
(172,202 |
) |
|
|
(15,087 |
) |
Central |
|
|
(41,542 |
) |
|
|
3,156 |
|
|
|
(100,617 |
) |
|
|
19,019 |
|
Southwest |
|
|
(227,077 |
) |
|
|
193,388 |
|
|
|
(346,467 |
) |
|
|
505,237 |
|
California |
|
|
(178,341 |
) |
|
|
33,007 |
|
|
|
(415,237 |
) |
|
|
203,092 |
|
Unallocated |
|
|
(464,018 |
) |
|
|
(98,353 |
) |
|
|
(671,515 |
) |
|
|
(188,302 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,098,679 |
) |
|
$ |
286,057 |
|
|
$ |
(2,050,256 |
) |
|
$ |
1,044,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit settlements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
729 |
|
|
|
900 |
|
|
|
1,633 |
|
|
|
2,435 |
|
Southeast |
|
|
1,019 |
|
|
|
1,024 |
|
|
|
2,798 |
|
|
|
3,028 |
|
Florida |
|
|
1,058 |
|
|
|
1,872 |
|
|
|
2,944 |
|
|
|
5,390 |
|
Midwest |
|
|
987 |
|
|
|
1,331 |
|
|
|
2,092 |
|
|
|
3,179 |
|
Central |
|
|
699 |
|
|
|
1,265 |
|
|
|
1,995 |
|
|
|
3,545 |
|
Southwest |
|
|
2,170 |
|
|
|
2,853 |
|
|
|
5,305 |
|
|
|
7,766 |
|
California |
|
|
806 |
|
|
|
1,195 |
|
|
|
2,059 |
|
|
|
3,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,468 |
|
|
|
10,440 |
|
|
|
18,826 |
|
|
|
28,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new orders units: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
440 |
|
|
|
672 |
|
|
|
2,000 |
|
|
|
2,190 |
|
Southeast |
|
|
883 |
|
|
|
821 |
|
|
|
2,907 |
|
|
|
3,917 |
|
Florida |
|
|
766 |
|
|
|
818 |
|
|
|
3,362 |
|
|
|
3,732 |
|
Midwest |
|
|
495 |
|
|
|
1,163 |
|
|
|
2,291 |
|
|
|
3,596 |
|
Central |
|
|
521 |
|
|
|
958 |
|
|
|
1,876 |
|
|
|
3,584 |
|
Southwest |
|
|
1,036 |
|
|
|
1,958 |
|
|
|
5,805 |
|
|
|
7,310 |
|
California |
|
|
441 |
|
|
|
909 |
|
|
|
2,372 |
|
|
|
3,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,582 |
|
|
|
7,299 |
|
|
|
20,613 |
|
|
|
27,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit backlog: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
|
|
|
|
|
|
|
|
1,284 |
|
|
|
1,348 |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
1,817 |
|
|
|
2,469 |
|
Florida |
|
|
|
|
|
|
|
|
|
|
1,630 |
|
|
|
2,427 |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
1,444 |
|
|
|
1,804 |
|
Central |
|
|
|
|
|
|
|
|
|
|
1,003 |
|
|
|
1,653 |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
3,371 |
|
|
|
4,803 |
|
California |
|
|
|
|
|
|
|
|
|
|
1,493 |
|
|
|
1,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,042 |
|
|
|
16,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
Homebuilding Segment Operations (continued)
|
|
|
|
|
|
|
|
|
|
|
As of |
|
As of |
|
|
September 30, 2007 |
|
December 31, 2006 |
|
|
|
|
|
|
|
|
|
Controlled Lots: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
|
|
17,469 |
|
|
|
27,524 |
|
Southeast |
|
|
18,867 |
|
|
|
23,332 |
|
Florida |
|
|
35,168 |
|
|
|
48,640 |
|
Midwest |
|
|
14,090 |
|
|
|
19,537 |
|
Central |
|
|
14,668 |
|
|
|
18,320 |
|
Southwest |
|
|
54,903 |
|
|
|
69,579 |
|
California |
|
|
16,615 |
|
|
|
25,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
171,780 |
|
|
|
232,223 |
|
|
|
|
|
|
|
|
|
|
Northeast:
During the third quarter of 2007, Northeast home sale revenues decreased 26% compared with the
prior year period due to a 19% decrease in unit settlements combined with an 8% decrease in the
average selling price. Revenue declines occurred in each market in Northeast. The loss before
income taxes was primarily attributable to this reduction in revenues combined with a significant
decline in gross margin and $48.4 million in impairments and land-related charges. These charges
resulted in impairments in 16 communities and a reduction of approximately 800 lots under control.
Northeast recorded impairments and land-related charges of $25.1 million in the prior year period.
Net new orders decreased 35% while the cancellation rate increased to 33% compared with 27% in the
prior year period. The number of active communities decreased slightly from the prior year
quarter.
For the nine months ended September 30, 2007, Northeast home sale revenues decreased 39%
compared with the prior year period due to a 33% 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 $143.5 million
in impairments and land-related charges, which resulted in a reduction of approximately 9,400 lots
under control. Northeast recorded impairments and land-related charges of $29.3 million in the
prior year period. Net new orders decreased 9% compared with the prior year period.
Southeast:
Our Southeast segment continued to contribute positively to operating results in both the
three and nine months ended September 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,
Georgia, and Charleston markets at various points during 2006 and 2007. Home sale revenues
increased slightly in the three months ended September 30, 2007 compared with the prior year period
as unit settlements were flat while the average selling price increased 3%. Income before income
taxes decreased compared with the prior year period due to land-related charges of $16.3 million
compared with $200 thousand in the prior year period. These charges resulted in impairments in 13
communities and a reduction of approximately 600 lots under control. Net new orders increased 8%
compared with the prior year period driven by a large increase in the number of active communities.
The cancellation rate decreased to 29% compared with 35% in the prior year period.
For the nine months ended September 30, 2007, Southeast home sale revenues increased 1%
compared with the prior year period as an 8% decrease in unit settlements was offset by a 10%
increase in the average selling price. Income before income taxes decreased compared with the
prior year period due to $18.1 million in impairments and land-related charges, which resulted in a
reduction of approximately 4,300 lots under control. Southeast recorded land-related charges of
$1.7 million in the prior year period. Net new orders declined by 26% 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.
34
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 and Southeast Florida.
During the third quarter of 2007, Florida home sale revenues decreased 50% compared with the prior
year period due to a 43% decrease in unit settlements combined with a 12% decrease in the average
selling price. Revenue declines occurred in every market. The loss before income taxes was
primarily attributable to this reduction in revenues combined with a significant decline in gross
margin and $152.3 million in impairments and land-related charges. These charges resulted in
impairments in 27 communities and a reduction of approximately 1,400 lots under control. Florida
recorded impairments and land-related charges of $7.2 million in the prior year period. Net new
orders declined by 6% due to the difficult market conditions and a continued high cancellation rate
of 37%, which was a reduction from a cancellation rate of 41% in the prior year period. However,
these factors were offset to some degree by an increase in the number of active communities from
the prior year quarter.
For the nine months ended September 30, 2007, Florida home sale revenues decreased 51%
compared with the prior year period due to a 45% 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 $275 million in
impairments and land-related charges, which resulted in a reduction of approximately 7,700 lots
under control. Florida recorded impairments and land-related charges of $8.5 million in the prior
year period. Net new orders declined by 10% due to the difficult market conditions.
Midwest:
Our Midwest segment continues to face difficult local economic conditions in all of its
markets. During the third quarter of 2007, Midwest home sale revenues decreased 26% compared with
the prior year period due to a 26% decrease in unit settlements. Average selling prices were flat.
Revenue declines occurred in every market. The increase in the loss before income taxes was
primarily attributable to the reduction in revenues and $44.5 million in impairments and
land-related charges. These charges resulted in impairments in 19 communities and a reduction of
approximately 300 lots under control. Midwest recorded impairments and land-related charges of
$23.5 million in the prior year period. Net new orders declined by 57% due to the difficult
market conditions and a significant increase in the cancellation rate to 36% compared with 18% in
the prior year period as well as the prior year period benefiting from the opening of a large
active adult community in our Illinois market. The number of active communities decreased
moderately compared with the prior year quarter.
For the nine months ended September 30, 2007, Midwest home sale revenues decreased 34%
compared with the prior year period due to a 34% decrease in unit settlements. Average selling
prices were flat. The increase in the loss before income taxes was primarily attributable to this
reduction in revenues and $177.5 million in impairments and land-related charges, which resulted in
a reduction of approximately 2,700 lots under control. Midwest recorded impairments and
land-related charges of $47.2 million in the prior year period. Net new orders declined by 36%
due to the difficult market conditions.
Central:
Home sale revenues for the Central segment decreased 35% during the third quarter of 2007
compared with the prior year period due to a 45% decrease in unit settlements, which partially
resulted from our strategy to reduce the active community count in Texas. This lower unit volume
was partially offset by a 17% 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 $42.1 million in impairments and
land-related charges. These charges resulted in impairments in nine communities. Central recorded
impairments and land-related charges of $6.4 million in the prior year period. Net new orders
declined by 46% due to the difficult market conditions, a significant reduction in the number of
active communities, and an increase in the cancellation rate to 38% compared with a cancellation
rate of 34% in the prior year period.
35
Homebuilding Segment Operations (continued)
Central (continued):
For the nine months ended September 30, 2007, Central home sale revenues decreased 31%
compared with the prior year period due to a 44% decrease in unit settlements. This lower unit
volume was partially offset by a 23% increase in average selling prices. The loss before income
taxes was primarily attributable to this reduction in revenues and $98.3 million in impairments and
land-related charges, which resulted in a reduction of approximately 800 lots under control.
Central recorded impairments and land-related charges of $8.8 million in the prior year period.
Net new orders declined by 48% due to the difficult market conditions.
Southwest:
Market conditions in our Arizona operations deteriorated markedly in the third quarter while
our Las Vegas, New Mexico, and Colorado markets remained challenged as well. Overall Southwest
home sale revenues decreased 30% compared with the prior year period due to a 24% decrease in unit
settlements combined with an 8% 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 $249.4 million in impairments and land-related charges, the majority of which
occurred in our Phoenix market. These charges resulted in impairments in 54 communities and a
reduction of approximately 1,900 lots under control. In addition, Southwests results include an
impairment of $51.1 million related to two unconsolidated joint ventures. Southwest recorded
impairments and land-related charges of $4.6 million in the prior year period. Net new orders
decreased by 47% due to the deterioration in market conditions and a cancellation rate of 56%
compared with 43% in the prior year period. The number of active communities decreased slightly
compared with the prior year quarter.
For the nine months ended September 30, 2007, Southwest home
sale revenues decreased 36% compared with the prior year period due to a 32% decrease in unit
settlements combined with a 7% 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 $425.9 million in impairments and land-related charges, which resulted in a
reduction of approximately 7,500 lots under control. In addition, Southwests results include an
impairment of $51.1 million related to two unconsolidated joint ventures. Southwest recorded
impairments and land-related charges of $28.9 million in the prior year period. Net new orders
declined by 21% due to the difficult market conditions.
California:
Our California operations have been impacted by significantly weakened demand for new homes,
affordability issues, and an excess supply of resale inventory in substantially all of our markets.
California home sale revenues decreased 38% during the third quarter of 2007 compared with the
prior year period due to a 33% decrease in unit settlements combined with an 8% 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 and $194.5 million in impairments and
land-related charges. These charges resulted in impairments in 31 communities and a reduction of
approximately 3,500 lots under control. California recorded impairments and land-related charges
of $22.8 million in the prior year period. Net new orders declined by 51% due to the difficult
market conditions, a significant reduction in the number of active communities, and a cancellation
rate of 61% compared with 39% in the prior year period.
For the nine months ended September 30, 2007, California home sale revenues decreased 46% compared
with the prior year period due to a 42% decrease in unit settlements combined with a 6% 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 $389.7 million in impairments
and land-related charges, which resulted in a reduction of approximately 6,700 lots under control.
Also included in Californias results is an impairment of $54.1 million for an unconsolidated joint
venture. California recorded impairments and land-related charges of $32.6 million in the prior
year period. Net new orders declined by 25% due to the difficult market conditions.
36
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 |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain from sale of mortgages |
|
$ |
18,651 |
|
|
$ |
28,126 |
|
|
$ |
58,787 |
|
|
$ |
76,944 |
|
Mortgage origination and servicing fees |
|
|
2,000 |
|
|
|
3,909 |
|
|
|
7,502 |
|
|
|
11,121 |
|
Interest income |
|
|
5,389 |
|
|
|
9,121 |
|
|
|
16,399 |
|
|
|
24,188 |
|
Title services |
|
|
5,679 |
|
|
|
7,599 |
|
|
|
14,216 |
|
|
|
20,280 |
|
Other revenues |
|
|
1,024 |
|
|
|
854 |
|
|
|
2,782 |
|
|
|
2,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Financial Services revenues |
|
|
32,743 |
|
|
|
49,609 |
|
|
|
99,686 |
|
|
|
134,933 |
|
Expenses |
|
|
(19,967 |
) |
|
|
(28,528 |
) |
|
|
(67,283 |
) |
|
|
(81,304 |
) |
Gain on sale of equity investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,635 |
|
Equity income |
|
|
120 |
|
|
|
296 |
|
|
|
256 |
|
|
|
513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
12,896 |
|
|
$ |
21,377 |
|
|
$ |
32,659 |
|
|
$ |
85,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total originations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
6,261 |
|
|
|
10,052 |
|
|
|
16,719 |
|
|
|
27,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
1,424,100 |
|
|
$ |
2,154,600 |
|
|
$ |
3,743,800 |
|
|
$ |
5,921,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originations for Pulte customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
6,235 |
|
|
|
10,016 |
|
|
|
16,614 |
|
|
|
27,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
1,418,700 |
|
|
$ |
2,143,900 |
|
|
$ |
3,722,300 |
|
|
$ |
5,889,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage origination unit volume decreased 38% and 40% while mortgage origination principal
volume decreased 34% and 37% for the three and nine months ended September 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 92.5% and 92.7% for the three and nine months ended September 30, 2007, respectively,
compared with 91.1% and 90.5%, 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
nine months ended September 30, 2007 and 2006.
During the three and nine months ended September 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 7% of total funded origination dollars and 6% of total funded
origination units for the three months ended September 30, 2007, compared with 26% and 21%,
respectively, in the prior year period. For the nine months ended September 30, 2007, ARMs
represented 10% of total funded origination dollars and 8% of total funded origination units
compared with 31% and 25%, respectively, in the prior year period. Interest-only mortgages, a type
of ARM, represented 71% of funded ARM origination dollars and 62% of funded ARM origination units
for the three months ended September 30, 2007, compared with 79% and 80%, respectively, in the
prior year period. For the nine months ended September 30, 2007, interest-only mortgages
represented 76% of funded ARM origination dollars and 74% of funded ARM origination units, compared
with 77% and 80% in the prior year period, respectively. Interest-only mortgages represented 5%
and 21% of total funded origination dollars for the three months ended September 30, 2007 and 2006,
respectively. For the nine months ended September 30, 2007 and 2006, interest-only mortgages
represented 8% and 24%, respectively, of total funded origination dollars.
Our customers average FICO score was 745 for both the three and nine months ended September
30, 2007. For both the three and nine months ended September 30, 2006, our customers average FICO
score was 744. Average Combined Loan-to-Value was 81% and 82% for the three months ended September
30, 2007 and 2006, respectively, and 82% for both the nine months ended September 30, 2007 and
2006, respectively. At September 30, 2007, our loan application backlog decreased to $2.5 billion
compared with $3.4 billion at September 30, 2006 due primarily to the lower backlog in our
Homebuilding operations.
37
Financial Services Operations (continued)
Based on principal dollars, approximately 4% of the loans we originated in the third quarter
of 2007 were considered sub-prime loans, which we define as first mortgages with FICO scores below
620. Approximately 11% of third 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
85% of third 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 September 30, 2007
was $12.9 million compared with $21.4 million for the prior year period. This decrease in pre-tax
income was primarily due to the decline in mortgage loans originated. For the nine months ended
September 30, 2007, pre-tax income of our Financial Services operations was $32.7 million compared
with $85.8 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 nine months ended September 30, 2006.
Excluding this gain, pre-tax income decreased significantly for the nine months ended September 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 funded product mix toward fixed rate and agency loans, which are more profitable for us.
For the three and nine months ended September 30, 2007, 20% and 22%, respectively, of total
origination dollars were from brokered loans, which are funded by third party lenders and are
therefore less profitable to us, compared with 20% and 21%, respectively, for both periods in the
prior year.
Interest income for the three and nine months ended September 30, 2007 was 41% and 32% 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 nine months ended September 30, 2007,
revenues from our title operations decreased 25% and 30%, respectively, compared with the prior
year periods due primarily to the significant reduction in home settlements. Expenses decreased
30% and 17% for the three and nine months ended September 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.
38
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 period to period
as these strategic initiatives evolve.
The following table presents other non-operating expenses for the three and nine months ended
September 30, 2007 and 2006 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest expense (income) |
|
$ |
268 |
|
|
$ |
1,338 |
|
|
$ |
(134 |
) |
|
$ |
(1,321 |
) |
Other expenses, net |
|
|
7,862 |
|
|
|
10,582 |
|
|
|
25,607 |
|
|
|
30,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
$ |
8,130 |
|
|
$ |
11,920 |
|
|
$ |
25,473 |
|
|
$ |
29,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 during
the second quarter of 2007.
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 nine months ended September 30, 2007 includes
$43.5 million and $90.3 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 |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest in inventory at beginning of period |
|
$ |
212,441 |
|
|
$ |
254,454 |
|
|
$ |
235,596 |
|
|
$ |
229,798 |
|
Interest capitalized |
|
|
61,179 |
|
|
|
71,064 |
|
|
|
182,404 |
|
|
|
192,788 |
|
Interest expensed |
|
|
(98,205 |
) |
|
|
(65,217 |
) |
|
|
(242,585 |
) |
|
|
(162,285 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest in inventory at end of period |
|
$ |
175,415 |
|
|
$ |
260,301 |
|
|
$ |
175,415 |
|
|
$ |
260,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest incurred * |
|
$ |
61,900 |
|
|
$ |
73,000 |
|
|
$ |
185,100 |
|
|
$ |
195,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
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 28% and 35.2% during the three months ended
September 30, 2007 and 2006, respectively, and 32.4% and 36.6% for the nine months ended September
30, 2007 and 2006, respectively. The effective tax rates during 2007 were lower than in the prior
year primarily due to the majority of the recorded goodwill impairment being non-deductible for tax
purposes. Excluding the goodwill impairment charge, the effective tax rate would have been 37.3%
for the nine months ended September 30, 2007.
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 continue to deteriorate or if the current difficult market conditions extend
beyond our expectations.
39
Liquidity and Capital Resources (continued)
At September 30, 2007, we had cash and equivalents of $101.8 million and $25 million of
borrowings and $470 million of letters of credit 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 $11.5 million. Sources of our working capital
include our cash and equivalents, our $1.86 billion committed unsecured revolving credit facility
and Pulte Mortgages $705 million committed credit arrangements.
Our debt-to-total capitalization ratio, excluding our collateralized debt, was 40.3% at
September 30, 2007, and 39.6% net of cash and equivalents.
We repurchased $61.2 million of our 4.875% senior notes due 2009 during the nine months ended
September 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 totaling up to $1.125 billion. Borrowing availability is reduced by the amount of letters
of credit outstanding. The credit facility contains certain financial covenants. We are required
to not exceed a debt-to-total capitalization ratio of 55%, and we are required to meet a tangible
net worth minimum each quarter. In the event of a default by the Company under these covenants,
our ability to access the credit facility may be negatively impacted. At September 30, 2007, our
debt-to-total capitalization ratio (as defined in the credit facility) was 42% while our tangible
net worth (as defined in the credit facility) was $5 billion compared with the required minimum of
$4.8 billion. In the event market conditions deteriorate in the future and result in additional
significant land-related charges, our tangible net worth may come close to or fall below the
required minimum. 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.
Given the continued weakness in new home sales and closings, Pulte Mortgage reduced the amount of
capacity available under its asset-backed commercial paper program in September from $400 million
to $300 million due to unfavorable changes in the asset-backed commercial paper market. Due to
reduced origination volume, Pulte Mortgage does not anticipate needing any additional capacity in
the near term. At September 30, 2007, Pulte Mortgage had committed credit arrangements of $705
million comprised of a $405 million bank revolving credit facility and the $300 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 September 30, 2007, Pulte Mortgage had
$286.1 million outstanding under its committed credit arrangements.
We have experienced downgrades in our credit ratings during 2007 by each of the major credit
rating agencies. While such downgrades do not directly impact our senior notes, they could
increase the cost of borrowing under our unsecured revolving credit facility and limit our ability
to obtain additional financing or refinancing on favorable terms. As a result of the most recent
downgrade, the lenders under Pulte Mortgages asset-backed commercial paper program have the right
at their discretion to require early repayment of outstanding balances or place other restrictions
on our ability to utilize the asset-backed commercial paper program. In the event of such an
occurrence, we have capacity through other sources to meet Pulte Mortgages anticipated financing
needs.
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. There were no repurchases under these programs during the nine months ended September 30,
2007. We had remaining authorization to purchase common stock aggregating $102.3 million at
September 30, 2007.
Our net cash provided by operating activities for the nine months ended September 30, 2007 was
$324.7 million, compared with net cash used in operating activities of $1.3 billion for the nine
months ended September 30, 2006. For the nine months ended September 30, 2007, we focused on
right-sizing our land and house inventory to better match current market conditions, as we invested
approximately $2 billion less in inventory compared with the same period in 2006. Cash flows were
also affected by a net loss incurred for the nine months ended September 30, 2007 compared with net
income earned for the same period in the prior year. Much of this net loss resulted from
significant write-downs of land and deposits and other related costs combined with impairments of
goodwill for the nine months ended September 30, 2007. Deferred income taxes and income taxes
payable changed as a result of the net loss recorded during the nine months ended September 30,
2007.
40
Liquidity and Capital Resources (continued)
Cash used in investing activities was $171.2 million for the nine months ended September 30,
2007, compared with $103.6 million for the nine months ended September 30, 2006. During the nine
months ended September 30, 2007, we made $155.6 million of capital contributions to, and received
$29.1 million in capital distributions from, our unconsolidated joint ventures. We also funded
$54.4 million in capital expenditures. During the nine months ended September 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 and funded approximately $78.4
million in capital expenditures. We made $53 million of capital contributions to, and received
$37.5 million in capital distributions from, our unconsolidated joint ventures for the nine months
ended September 30, 2006. Also, we received cash of $49.2 million for the sale of our investment
in Su Casita, a Mexico-based mortgage banking company.
Net cash used in financing activities totaled $602.8 million for the nine months ended
September 30, 2007, compared with net cash provided by financing activities of $462.5 million for
the nine months ended September 30, 2006. For the nine months ended September 30, 2007, repayments
under Financial Services credit arrangements were $528.6 million while repayments under other
borrowings were $72.1 million, including the repurchase of $61.2 million of our 4.875% senior notes
due 2009. We also had net borrowings of $25 million under our revolving credit facility for the
nine months ended September 30, 2007. Additionally, we expended $5.2 million related to shares
surrendered by employees for payment of minimum tax obligations upon the vesting of restricted
stock and paid $30.7 million in dividends for the nine months ended September 30, 2007. For the
nine months ended September 30, 2006, repayments under Financial Services credit arrangements were
$359.2 million. We had net borrowings of $754.3 million under our unsecured revolving credit
facility. We also received $210 million as proceeds from other borrowings, which included the
issuance of $150 million of senior notes and $60 million in net proceeds received by our
homebuilding markets for the nine months ended September 30, 2006. Additionally, we expended
$117.1 million for stock repurchases and $2.4 million related to shares surrendered by employees
for payment of minimum tax obligations upon the vesting of restricted stock and paid $30.7 million
in dividends for the nine months ended September 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 may also increase 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 September 30, 2007 and December 31, 2006, aggregate outstanding debt of unconsolidated
joint ventures was $700.5 million and $935.9 million, respectively. At September 30, 2007 and
December 31, 2006, our proportionate share of joint venture debt was approximately $185.9 million
and $312.8 million, respectively. We provided limited recourse guarantees for $176.6 million and
$304.1 million of joint venture debt at September
30, 2007 and December 31, 2006, respectively. Accordingly, we may be responsible, 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 responsible 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 September 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.
41
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative disclosure:
We are subject to interest rate risk on our rate-sensitive financing. 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 September 30, 2007, our principal
cash flows by scheduled maturity, weighted-average interest rates and estimated fair market values
for our long-term debt obligations ($000s omitted):
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As of September 30, 2007 for the |
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years ended December 31, |
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There- |
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Fair |
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2007 |
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2008 |
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2009 |
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2010 |
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2011 |
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after |
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Total |
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Value |
Fixed interest rate debt: |
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Senior notes |
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$ |
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$ |
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$ |
338,812 |
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$ |
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$ |
698,563 |
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$ |
2,450,000 |
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$ |
3,487,375 |
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$ |
3,004,985 |
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Average interest rate |
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4.88 |
% |
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7.95 |
% |
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6.24 |
% |
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6.45 |
% |
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Limited recourse |
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collateralized financing |
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$ |
557 |
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$ |
4,043 |
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$ |
4,147 |
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$ |
1,833 |
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$ |
935 |
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$ |
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$ |
11,515 |
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$ |
11,515 |
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Average interest rate |
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5.63 |
% |
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1.90 |
% |
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2.36 |
% |
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8.01 |
% |
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7.25 |
% |
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3.65 |
% |
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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 September 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 September 30,
2007.
There was no change in our internal control over financial reporting during the quarter ended
September 30, 2007 that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
42
PART II. OTHER INFORMATION
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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($000s omitted) |
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July 1, 2007 through July 31, 2007 |
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5,067 |
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$ |
21.93 |
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$ |
102,342 |
(1) |
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August 1, 2007 through August 31, 2007 |
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$ |
102,342 |
(1) |
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September 1, 2007 through September
30, 2007 |
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$ |
102,342 |
(1) |
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Total |
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5,067 |
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$ |
21.93 |
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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 July 2007, 5,067 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 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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Fourth Omnibus Amendment, dated as of August 13, 2007, by and among Pulte Funding, Inc. as the borrower
and as the buyer, Pulte Mortgage LLC, as a seller and the servicer, Atlantic Asset Securitization LLC, as an
issuer, La Fayette Asset Securitization LLC, as an issuer, Calyon New York Branch, as a bank, as a managing
agent and as the administrative agent, Lloyds TSB Bank PLC, as a bank, JPMorgan Chase Bank, National
Association, as a bank and as a managing agent, JS Siloed Trust, successor in interest to Jupiter Securitization
Company LLC, as an issuer, and LaSalle Bank National Association, as the collateral agent. |
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10(b)
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Fifth Omnibus Amendment, dated as of September 12, 2007, by and among Pulte Funding, Inc. as the
borrower and as the buyer, Pulte Mortgage LLC, as a seller and the servicer, Atlantic Asset Securitization
LLC, as an issuer, La Fayette Asset Securitization LLC, as an issuer, Calyon New York Branch, as a bank, as a
managing agent and as the administrative agent, Lloyds TSB Bank PLC, as a bank, JPMorgan Chase Bank,
National Association, as a bank and as a managing agent, JS Siloed Trust, successor in interest to Jupiter
Securitization
Company LLC, as an issuer, and LaSalle Bank National Association, as the collateral agent. |
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10(c)
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|
Sixth Omnibus Amendment, dated as of September 21, 2007, by and among Pulte Funding, Inc. as the
borrower and as the buyer, Pulte Mortgage LLC, as a seller and the servicer, Atlantic Asset Securitization
LLC, as an issuer, La Fayette Asset Securitization LLC, as an issuer, Calyon New York Branch, as a bank, as a
managing agent and as the administrative agent, Lloyds TSB Bank PLC, as a bank, JPMorgan Chase Bank,
National Association, as a bank and as a managing agent, JS Siloed Trust, successor in interest to Jupiter
Securitization
Company LLC, as an issuer, and LaSalle Bank National Association, as the collateral agent. |
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10(d)
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|
Seventh Omnibus Amendment, dated as of September 28, 2007, by and among Pulte Funding, Inc. as the
borrower and as the buyer, Pulte Mortgage LLC, as a seller and the servicer, Atlantic Asset Securitization
LLC, as an issuer, La Fayette Asset Securitization LLC, as an issuer, Calyon New York Branch, as a bank, as a
managing agent and as the administrative agent, Lloyds TSB Bank PLC, as a bank, JPMorgan Chase Bank,
National Association, as a bank and as a managing agent, JS Siloed Trust, successor in interest to Jupiter
Securitization Company LLC, as an issuer, and LaSalle Bank National Association, as the collateral agent. |
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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)
|
|
Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer |
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32
|
|
Certification Pursuant to 18 United States Code § 1350 and Rule 13a-14(b) under the Securities
Exchange Act of 1934 |
44
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
Chief Financial Officer
(Principal Financial Officer and duly authorized officer) |
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|
Date: November 7, 2007 |
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45