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 March 31, 2006
OR
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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):
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Large accelerated filer þ
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Accelerated filer o
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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 April 30, 2006: 256,599,768
1
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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March 31, |
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December 31, |
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2006 |
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2005 |
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(Unaudited) |
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(Note) |
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ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash and equivalents |
|
$ |
121,013 |
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$ |
1,002,268 |
|
Unfunded settlements |
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85,488 |
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|
156,663 |
|
House and land inventory |
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9,791,302 |
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8,756,093 |
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Land held for sale |
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313,958 |
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|
257,724 |
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Land, not owned, under option agreements |
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59,938 |
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|
76,671 |
|
Residential mortgage loans available-for-sale |
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|
521,577 |
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|
1,038,506 |
|
Investments in unconsolidated entities |
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|
246,479 |
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|
301,613 |
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Goodwill |
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375,937 |
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307,693 |
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Intangible assets, net |
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125,142 |
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127,204 |
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Other assets |
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1,062,182 |
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1,023,739 |
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Total assets |
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$ |
12,703,016 |
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$ |
13,048,174 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Liabilities: |
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Accounts payable, including book overdrafts of
$408,532 and $405,411 in 2006 and 2005, respectively |
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$ |
876,865 |
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$ |
789,399 |
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Customer deposits |
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420,699 |
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392,041 |
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Accrued and other liabilities |
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1,169,903 |
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1,402,620 |
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Unsecured short-term borrowings |
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24,500 |
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Collateralized short-term debt, recourse solely to
applicable non-guarantor subsidiary assets |
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447,022 |
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893,001 |
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Income taxes |
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165,770 |
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219,504 |
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Deferred income tax liability |
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28,051 |
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7,740 |
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Senior notes and unsubordinated notes |
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3,386,882 |
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3,386,527 |
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Total liabilities |
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6,519,692 |
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7,090,832 |
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Shareholders equity |
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6,183,324 |
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5,957,342 |
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$ |
12,703,016 |
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$ |
13,048,174 |
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Note: The condensed consolidated balance sheet at December 31, 2005, 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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For the Three Months Ended |
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March 31, |
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2006 |
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2005 |
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Revenues: |
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Homebuilding |
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$ |
2,914,752 |
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$ |
2,486,294 |
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Financial Services |
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44,857 |
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30,276 |
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Other non-operating |
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2,967 |
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1,248 |
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Total revenues |
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2,962,576 |
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2,517,818 |
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Expenses: |
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Homebuilding, principally cost of sales |
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2,538,385 |
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2,140,196 |
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Financial Services |
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27,240 |
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21,518 |
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Other non-operating, net |
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12,350 |
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24,004 |
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Total expenses |
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2,577,975 |
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2,185,718 |
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Other income: |
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Gain on sale of equity investment |
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31,635 |
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Equity income |
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1,308 |
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14,797 |
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Income from continuing operations before income taxes |
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417,544 |
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346,897 |
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Income taxes |
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154,899 |
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129,350 |
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Income from continuing operations |
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262,645 |
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217,547 |
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Income from discontinued operations |
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|
695 |
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|
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|
|
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Net income |
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$ |
262,645 |
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$ |
218,242 |
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Per share data: |
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Basic: |
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Income from continuing operations |
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$ |
1.04 |
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$ |
.85 |
|
Income from discontinued operations |
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income |
|
$ |
1.04 |
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|
$ |
.86 |
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|
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Assuming dilution: |
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Income from continuing operations |
|
$ |
1.01 |
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|
$ |
.83 |
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Income from discontinued operations |
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|
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Net income |
|
$ |
1.01 |
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$ |
.83 |
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Cash dividends declared |
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$ |
.04 |
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$ |
.025 |
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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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253,684 |
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|
254,868 |
|
Assuming dilution: |
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Effect of dilutive securities stock options and restricted stock
grants |
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|
7,054 |
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|
7,885 |
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|
|
|
|
|
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Adjusted weighted-average common shares
and effect of dilutive securities |
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|
260,738 |
|
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|
262,753 |
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|
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See accompanying Notes to Condensed Consolidated Financial Statements
4
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
($000s omitted)
(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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Unearned |
|
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Income |
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Retained |
|
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|
Stock |
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Capital |
|
|
Compensation |
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|
(Loss) |
|
|
Earnings |
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|
Total |
|
Shareholders Equity,
December 31, 2005 |
|
$ |
2,570 |
|
|
$ |
1,209,148 |
|
|
$ |
|
|
|
$ |
(5,496 |
) |
|
$ |
4,751,120 |
|
|
$ |
5,957,342 |
|
Stock option exercise, including tax benefit
of $2,958 |
|
|
2 |
|
|
|
5,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,286 |
|
Restricted stock award |
|
|
7 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cash dividends declared $.04 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,271 |
) |
|
|
(10,271 |
) |
Stock repurchases |
|
|
(13 |
) |
|
|
(6,135 |
) |
|
|
|
|
|
|
|
|
|
|
(43,552 |
) |
|
|
(49,700 |
) |
Stock-based compensation |
|
|
|
|
|
|
15,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,842 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,645 |
|
|
|
262,645 |
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
759 |
|
|
|
|
|
|
|
759 |
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,421 |
|
|
|
|
|
|
|
1,421 |
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity, March 31, 2006 |
|
$ |
2,566 |
|
|
$ |
1,224,132 |
|
|
$ |
|
|
|
$ |
(3,316 |
) |
|
$ |
4,959,942 |
|
|
$ |
6,183,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity,
December 31, 2004 |
|
$ |
2,558 |
|
|
$ |
1,114,739 |
|
|
$ |
(44 |
) |
|
$ |
(14,380 |
) |
|
$ |
3,419,401 |
|
|
$ |
4,522,274 |
|
Stock option exercise, including tax benefit
of $17,871 |
|
|
18 |
|
|
|
33,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,111 |
|
Restricted stock award |
|
|
8 |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock award amortization |
|
|
|
|
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
44 |
|
Cash dividends declared $.025 per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,418 |
) |
|
|
(6,418 |
) |
Stock repurchases |
|
|
(4 |
) |
|
|
(1,482 |
) |
|
|
|
|
|
|
|
|
|
|
(10,078 |
) |
|
|
(11,564 |
) |
Stock-based compensation |
|
|
|
|
|
|
12,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,481 |
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,242 |
|
|
|
218,242 |
|
Change in fair value of derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(51 |
) |
|
|
|
|
|
|
(51 |
) |
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,748 |
|
|
|
|
|
|
|
1,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity, March 31, 2005 |
|
$ |
2,580 |
|
|
$ |
1,158,823 |
|
|
$ |
|
|
|
$ |
(12,683 |
) |
|
$ |
3,621,147 |
|
|
$ |
4,769,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
5
PULTE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000s omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
262,645 |
|
|
$ |
218,242 |
|
Adjustments to reconcile net income to net cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Gain on sale of equity investment |
|
|
(31,635 |
) |
|
|
|
|
Amortization and depreciation |
|
|
18,363 |
|
|
|
13,733 |
|
Stock-based compensation expense |
|
|
15,842 |
|
|
|
12,525 |
|
Deferred income taxes |
|
|
18,915 |
|
|
|
47,557 |
|
Distributions in excess of (less than) earnings of affiliates |
|
|
864 |
|
|
|
(4,056 |
) |
Other, net |
|
|
1,193 |
|
|
|
700 |
|
Increase (decrease) in cash due to: |
|
|
|
|
|
|
|
|
Inventories |
|
|
(1,090,365 |
) |
|
|
(709,688 |
) |
Residential mortgage loans available-for-sale |
|
|
516,929 |
|
|
|
289,003 |
|
Other assets |
|
|
106,863 |
|
|
|
3,859 |
|
Accounts payable, accrued and other liabilities |
|
|
(165,372 |
) |
|
|
(46,943 |
) |
Income taxes |
|
|
(50,776 |
) |
|
|
(87,196 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(396,534 |
) |
|
|
(262,264 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Distributions from unconsolidated entities |
|
|
1,725 |
|
|
|
33,244 |
|
Investments in unconsolidated entities |
|
|
(13,507 |
) |
|
|
(83,978 |
) |
Investments in subsidiaries, net of cash acquired |
|
|
(65,779 |
) |
|
|
(14,962 |
) |
Proceeds from the sale of subsidiaries |
|
|
|
|
|
|
3,000 |
|
Proceeds from the sale of investments |
|
|
49,216 |
|
|
|
8,366 |
|
Proceeds from sale of fixed assets |
|
|
275 |
|
|
|
2,600 |
|
Capital expenditures |
|
|
(15,261 |
) |
|
|
(20,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(43,331 |
) |
|
|
(72,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
60,907 |
|
|
|
654,635 |
|
Repayment of borrowings |
|
|
(445,979 |
) |
|
|
(278,744 |
) |
Excess tax benefits from share-based awards |
|
|
1,396 |
|
|
|
|
|
Issuance of common stock |
|
|
2,328 |
|
|
|
15,240 |
|
Stock repurchases |
|
|
(49,700 |
) |
|
|
(11,564 |
) |
Dividends paid |
|
|
(10,271 |
) |
|
|
(6,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
(441,319 |
) |
|
|
373,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and equivalents |
|
|
(71 |
) |
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and equivalents |
|
|
(881,255 |
) |
|
|
38,534 |
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of period |
|
|
1,002,268 |
|
|
|
308,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
121,013 |
|
|
$ |
346,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized |
|
$ |
27,653 |
|
|
$ |
23,543 |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
185,401 |
|
|
$ |
170,194 |
|
|
|
|
|
|
|
|
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, Pulte International Corporation
(International) and other subsidiaries that are engaged in the homebuilding business. Pulte
Diversified Companies, Inc.s former thrift subsidiary, First Heights Holding Corp, LLC (First
Heights) is classified as a discontinued operation. The Company also has a mortgage banking
company, Pulte Mortgage LLC (Pulte Mortgage), which is a subsidiary of Pulte Home Corporation.
Certain amounts previously reported in the 2005
financial statements and notes thereto were reclassified to conform to the 2006 presentation.
The Mexico homebuilding operations, which were sold in December 2005, have been presented as
discontinued operations in the Companys Consolidated Statement of Operations. Additionally,
all share and per share amounts have been restated to retroactively reflect the Companys
two-for-one stock split effected September 1, 2005.
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 three months ended March 31,
2006 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2006. 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, 2005.
Land, not owned, under option agreements
In the ordinary course of business, the Company enters into land option agreements in order
to procure land for the construction of homes in the future. Pursuant to these land option
agreements, the Company will provide a deposit to the seller as consideration for the right to
purchase land at different times in the future, usually at predetermined prices. Under FASB
Interpretation No. 46, Consolidation of Variable Interest Entities, as amended by FIN 46-R
issued in December 2003 (collectively referred to as FIN 46), if the entity holding the land
under option is a variable interest entity, the Companys deposit represents a variable interest
in that entity. Creditors of the variable interest entities have no recourse against the
Company.
In applying the provisions of FIN 46, the Company evaluated all land option agreements and
determined that the Company was subject to a majority of the expected losses or entitled to
receive a majority of the expected residual returns under a limited number of these agreements.
As the primary beneficiary under these agreements, the Company is required to consolidate
variable interest entities at fair value. At March 31, 2006 and December 31, 2005, the Company
classified $59.9 million and $76.7 million, respectively, as land, not owned, under option
agreements on the balance sheet, representing the fair value of land under contract, including
deposits of $10.4 million and $13.4 million, respectively. The corresponding liability has been
classified within accounts payable, accrued and other liabilities on the balance sheet.
Land option agreements that did not require consolidation under FIN 46 at March 31, 2006
and December 31, 2005, had a total purchase price of $7.8 billion and $7.5 billion,
respectively. In connection with these agreements, the Company had deposits and advanced costs
of $442 million and $431.4 million, included in other assets at March 31, 2006 and December 31,
2005, respectively.
7
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Allowance for warranties |
Home purchasers are provided with warranties against certain building defects. The
specific terms and conditions of those warranties vary geographically. Most warranties cover
different aspects of the homes construction and operating systems for a period of up to ten
years. The Company estimates the costs to be incurred under these warranties and records a
liability for 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):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Allowance for warranties at beginning of period |
|
$ |
112,297 |
|
|
$ |
83,397 |
|
|
|
|
|
|
|
|
|
|
Warranty reserves provided |
|
|
33,578 |
|
|
|
24,700 |
|
Payments and other adjustments |
|
|
(40,483 |
) |
|
|
(27,651 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for warranties at end of period |
|
$ |
105,392 |
|
|
$ |
80,446 |
|
|
|
|
|
|
|
|
Stock-based compensation
The Company currently has several stock-based compensation plans for its employees
(Employee Plans) and nonemployee directors (the Director Plan). At March 31, 2006, the
Company had 31.5 million shares authorized for issuing various equity-based incentives including
stock options, stock appreciation rights and restricted stock, including 11.4 million shares
available for future grants.
Prior to January 1, 2006, the Company accounted for its stock-based awards under the fair
value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock Issued to Employees. The Company selected the prospective method of
adoption as permitted by SFAS No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure. Under the prospective method, the Company recognized compensation expense on an
accelerated basis over the vesting period based on the fair value provisions of SFAS No. 123.
Grants made prior to January 1, 2003 were accounted for under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. With the exception of certain variable stock option grants, no stock-based
employee compensation cost was reflected in net income for grants made prior to January 1, 2003,
as all options granted in those years had an exercise price equal to the market value of the
underlying common stock on the date of grant.
As of January 1, 2006, the Company adopted SFAS No. 123(R), Shared Based Payments, which
is a revision of SFAS No. 123 and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and amends SFAS Statement No. 95, Statement of Cash Flows. The Company adopted
SFAS 123(R) using the modified prospective method of transition. Accordingly, prior periods
have not been restated. The adoption of SFAS 123(R) was not significant and had no effect on
basic and diluted earnings per share for the three months ended March 31, 2006.
Prior to the adoption of SFAS No. 123(R), the Company presented all benefits of the tax
deductions resulting from the exercise of share-based compensation as operating cash flows in
its Statement of Cash Flows. SFAS 123(R) requires the benefits of tax deductions in excess of
the compensation cost recognized for those options (excess tax benefits) to be classified as
financing cash flows. For the three months ended March 31, 2006, the Company recognized $1.4
million of excess tax benefits as a financing cash inflow.
8
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
Stock-based compensation (continued) |
The following table illustrates the effect on net income and earnings per share if the
Company had applied the fair value recognition provisions of SFAS No. 123(R) to all stock based
employee compensation for the three months ended March 31, 2005:
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2005 |
|
Net income, as reported ($000s omitted) |
|
$ |
218,242 |
|
|
Add:
Stock-based employee compensation expense included in reported
net income, net of related tax effects ($000s omitted) |
|
|
5,195 |
|
|
|
|
|
|
Deduct: Total stock-based employee compensation expense determined
under fair value under
SFAS 123(R) based method for all awards,
net of related tax effects ($000s omitted) |
|
|
(5,323 |
) |
|
|
|
|
|
|
|
|
|
Pro forma net income ($000s omitted) |
|
$ |
218,114 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basicas reported |
|
$ |
0.86 |
|
|
|
|
|
Basicpro forma |
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
Dilutedas reported |
|
$ |
0.83 |
|
|
|
|
|
Dilutedpro forma |
|
$ |
0.83 |
|
|
|
|
|
The Company measures compensation cost for its stock options at fair value on the date of
grant and recognizes compensation cost on the graded vesting method over the vesting period,
generally four years. The graded vesting method provides for vesting of portions of the overall
awards at interim dates and results in greater expense in earlier years than the straight-line
method. The fair value of the Companys stock options is determined using the Black-Scholes
valuation model. The fair value of restricted stock is determined based on the number of shares
granted and the quoted price of the Companys common stock. Compensation expense related to the
Companys share-based awards is generally included in selling, general and administrative
expense within the Companys Consolidated Statements of Operations.
The Companys stock option participant agreements provide continued vesting for certain
retirement eligible employees who have achieved a predetermined level of service based on their
combined age and years of service. For awards granted prior to January 1, 2006, the Company
recognized the related compensation cost ratably over the nominal vesting period. For awards
granted after the adoption of SFAS No. 123(R), the Company now records related compensation cost
over the period through the date the employee first becomes eligible to retire and is no longer
required to provide services to earn the award.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average assumptions used for
grants made during the three months ended March 31, 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions |
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Expected life of options in years |
|
|
5 |
|
|
|
6 |
|
Expected stock price volatility |
|
|
34 |
% |
|
|
36 |
% |
Expected dividend yield |
|
|
0.4 |
% |
|
|
0.3 |
% |
Risk-free interest rate |
|
|
5.15 |
% |
|
|
4.2 |
% |
Fair value per option granted |
|
$ |
14.85 |
|
|
$ |
14.30 |
|
9
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Basis of presentation and significant accounting policies (continued)
Stock-based compensation (continued)
A summary of the status of the Companys stock options for the three months ended March
31, 2006 is presented below (000s omitted, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
Weighted-Average |
|
|
|
|
|
|
|
|
Per Share |
|
Remaining |
|
Aggregate |
|
|
Shares |
|
Exercise Price |
|
Contractual Term |
|
Intrinsic Value |
Outstanding, beginning of quarter |
|
|
16,850 |
|
|
$ |
19 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
33 |
|
|
|
39 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(163 |
) |
|
|
(14 |
) |
|
|
|
|
|
|
|
|
Forfeited |
|
|
(121 |
) |
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, end of quarter |
|
|
16,599 |
|
|
|
19 |
|
|
6.9 years |
|
$ |
321,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at
quarter-end |
|
|
9,779 |
|
|
$ |
12 |
|
|
5.7 years |
|
$ |
255,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In connection with stock option awards, the Company recognized compensation expense of $6.4
million and $8.4 million for the three months ended March 31, 2006 and 2005, respectively.
Total compensation cost related to nonvested awards not yet recognized was $50.7 million at
March 31, 2006. These costs will be expensed over a weighted average period of approximately
3.2 years. The aggregate intrinsic value of options exercised during the three months ended
March 31, 2006 and 2005 was $4 million and $45.6 million, respectively. The intrinsic value of
a stock option is the amount by which the market value of the underlying stock exceeds the
exercise price of the option.
A summary of the Companys restricted stock activity for the three months ended March 31,
2006, is presented below (000s omitted, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
|
|
|
|
|
Per Share |
|
|
|
|
|
|
Grant Date |
|
|
Shares |
|
Fair Value |
Nonvested, beginning of quarter |
|
|
3,023 |
|
|
$ |
31.44 |
|
Granted |
|
|
759 |
|
|
|
39.02 |
|
Vested |
|
|
(210 |
) |
|
|
15.14 |
|
Forfeited |
|
|
(69 |
) |
|
|
32.54 |
|
|
|
|
|
|
|
|
|
|
Nonvested, end of quarter |
|
|
3,503 |
|
|
|
34.04 |
|
|
|
|
|
|
|
|
|
|
In connection with restricted stock awards, of which a majority cliff vest at the end of
three years, the Company recognized compensation expense of $9.4 million and $4.1 million for
the three months ended March 31, 2006 and 2005, respectively. Total compensation cost related
to restricted stock awards not yet recognized was $87.1 million at March 31, 2006. These costs
will be expensed over a weighted average period of approximately 2.5 years.
10
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
1. |
|
Basis of presentation and significant accounting policies (continued) |
|
|
|
New accounting pronouncements |
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
Assets, 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. SFAS No. 156 is effective for
all separately recognized servicing assets and liabilities as of the beginning of an entitys
fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain
circumstances. Due to the short period of time the Companys servicing rights are held,
generally less than four months, the Company does not expect SFAS No. 156 will have a
significant impact on its 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, 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 does not
expect SFAS No. 155 will have a significant impact on its consolidated financial statements.
In December 2004, the FASB issued Staff Position 109-1, Application of FASB Statement No.
109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities
Provided by the American Jobs Creation Act of 2004 (FSP 109-1). The American Jobs Creation
Act, which was signed into law in October 2004, provides a 3% tax deduction on qualified
domestic production activities income for 2005 and 2006. When fully phased-in, the deduction
will be 9% of the lesser of qualified production activities income or taxable income. Based
on the guidance provided by FSP 109-1, this deduction was accounted for as a special deduction
under SFAS No. 109 and reduced tax expense. Tax benefits resulting from the new deduction have
resulted in a reduction in the Companys federal income tax rate.
11
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
The Companys operations are classified into two reportable segments, Homebuilding and
Financial Services.
The Companys Homebuilding segment is 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 the first-time, first and second move-up, and active adult
home buyers. The Companys Homebuilding segment is the aggregation of its related operating
segments.
The Companys Financial Services segment consists principally of mortgage banking and title
operations conducted through Pulte Mortgage and other Company subsidiaries.
12
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. |
|
Segment information (continued) |
|
|
|
|
|
|
|
|
|
|
|
Operating Data by Segment |
|
|
|
($000s omitted) |
|
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Revenues: |
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
2,914,752 |
|
|
$ |
2,486,294 |
|
Financial services |
|
|
44,857 |
|
|
|
30,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues |
|
|
2,959,609 |
|
|
|
2,516,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (a): |
|
|
|
|
|
|
|
|
Homebuilding |
|
|
2,247,109 |
|
|
|
1,877,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative: |
|
|
|
|
|
|
|
|
Homebuilding |
|
|
284,749 |
|
|
|
254,431 |
|
Financial services |
|
|
21,939 |
|
|
|
18,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment selling, general and administrative |
|
|
306,688 |
|
|
|
273,148 |
|
|
|
|
|
|
|
|
|
Interest: |
|
|
|
|
|
|
|
|
Financial services |
|
|
5,301 |
|
|
|
2,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net: |
|
|
|
|
|
|
|
|
Homebuilding |
|
|
6,527 |
|
|
|
8,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment costs and expenses |
|
|
2,565,625 |
|
|
|
2,161,714 |
|
|
|
|
|
|
|
|
Gain on sale of equity investment: |
|
|
|
|
|
|
|
|
Financial services |
|
|
31,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income: |
|
|
|
|
|
|
|
|
Homebuilding |
|
|
1,216 |
|
|
|
13,471 |
|
Financial services |
|
|
92 |
|
|
|
1,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity income |
|
|
1,308 |
|
|
|
14,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes: |
|
|
|
|
|
|
|
|
Homebuilding |
|
|
377,583 |
|
|
|
359,569 |
|
Financial services |
|
|
49,344 |
|
|
|
10,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment income before income taxes |
|
|
426,927 |
|
|
|
369,653 |
|
Other non-operating expenses, net (b) |
|
|
(9,383 |
) |
|
|
(22,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income taxes |
|
$ |
417,544 |
|
|
$ |
346,897 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Homebuilding interest expense, which represents the amortization of capitalized
interest, of $41.2 million and $30.5 million for the three months ended March 31, 2006 and
2005, respectively, is included as part of homebuilding cost of sales. |
|
(b) |
|
Other non-operating expenses, net consists of income and expenses related to
Corporate services provided to the Companys subsidiaries. |
13
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. |
|
Segment information (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
Homebuilding |
|
|
Services |
|
|
Total |
|
At March 31, 2006: |
|
|
|
|
|
|
|
|
|
|
|
|
Inventory |
|
$ |
9,791,302 |
|
|
$ |
|
|
|
$ |
9,791,302 |
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
12,009,309 |
|
|
|
588,860 |
|
|
|
12,598,169 |
|
Other non-operating |
|
|
|
|
|
|
|
|
|
|
104,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated assets |
|
|
|
|
|
|
|
|
|
$ |
12,703,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
Inventory |
|
$ |
8,756,093 |
|
|
$ |
|
|
|
$ |
8,756,093 |
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Segment |
|
|
11,757,925 |
|
|
|
1,052,578 |
|
|
|
12,810,503 |
|
Other non-operating |
|
|
|
|
|
|
|
|
|
|
237,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated assets |
|
|
|
|
|
|
|
|
|
$ |
13,048,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Major components of the Companys inventory were as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2005 |
|
Homes under construction |
|
$ |
3,750,029 |
|
|
|
3,136,708 |
|
Land under development |
|
|
5,465,241 |
|
|
|
4,844,913 |
|
Land held for future development |
|
|
576,032 |
|
|
|
774,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
9,791,302 |
|
|
$ |
8,756,093 |
|
|
|
|
|
|
|
|
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, 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 March 31, 2006 and December 31, 2005, aggregate outstanding debt of unconsolidated joint
ventures was $878.7 million and $882.2 million, respectively. At March 31, 2006 and December
31, 2005, the Companys proportionate share of its joint venture debt was approximately $294.9
million and $293.8 million, respectively, for which the Company provides limited recourse debt
guarantees of approximately $292.5 million and $288.2 million, respectively. Accordingly, the
Company may be liable, on a contingent basis, through limited guarantees with respect to a
portion of the secured land acquisition and development debt. However, the Company would not be
liable other than in instances of fraud, misrepresentation or other bad faith actions by the
Company, unless the joint venture was unable to perform its contractual borrowing obligations.
As of March 31, 2006, the Company does not anticipate the Company will incur any significant
costs under these guarantees.
For the three months ended March 31, 2006, the Company made additional capital
contributions to these joint ventures totaling approximately $13.5 million and received capital
and earnings distributions from these entities totaling approximately $3.9 million. At March
31, 2006 and December 31, 2005, the Company had approximately $246.5 million and $301.6 million,
respectively, invested in these joint ventures. These investments are included in the assets of
the Companys Homebuilding segment and are primarily accounted for under the equity method.
14
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
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 ($19.9 million after-tax) for
the three months ended March 31, 2006. During February 2005, 25% of the Companys investment in
the capital stock of Su Casita was redeemed for a pre-tax gain of approximately $620 thousand.
In January 2006, the Company exercised its option and acquired the remaining 50% interest
in an entity that supplies and installs basic building components and operating systems. The
Companys initial investment was made in January 2004 to secure a dedicated building supply
trade base for its construction activities in Arizona and Nevada. The aggregate stepped
purchase price exceeded the preliminary estimated fair value of the underlying assets acquired
and liabilities assumed by approximately $68 million, which was recorded as goodwill. The
Company accounted for its initial 50% investment under the equity method. Since January 2006,
the Company has consolidated this wholly-owned subsidiary in its financial statements.
In December 2005, the Company sold substantially all of its Mexico homebuilding operations.
For the three months ended March 31, 2005, the Mexico operations have been presented as
discontinued operations.
In January 2005, the Company sold all of its Argentina operations, as reflected in the
Companys consolidated statements of cash flows for the three months ended March 31, 2005. The
Argentina operations were presented as discontinued operations in 2004.
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), the Company has
repurchased a total of 7,372,300 shares for a total of $227.9 million. At March 31, 2006, the
Company had remaining authorization to purchase common stock aggregating $172.1 million.
Accumulated other comprehensive income (loss)
The accumulated balances related to each component of other comprehensive income (loss) are
as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2005 |
|
Foreign currency translation adjustments: |
|
|
|
|
|
|
|
|
Mexico |
|
$ |
(165 |
) |
|
$ |
(1,586 |
) |
Fair value of derivatives, net of income taxes
of $1,931 in 2006 and $2,397 in 2005 |
|
|
(3,151 |
) |
|
|
(3,910 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(3,316 |
) |
|
$ |
(5,496 |
) |
|
|
|
|
|
|
|
15
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. |
|
Supplemental Guarantor information |
At March 31, 2006, Pulte Homes, Inc. had the following outstanding senior note obligations:
(1) $400 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, and (10) $300 million, 6%, due 2035. 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, specifically 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.
16
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. |
|
Supplemental Guarantor information (continued) |
CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Consolidated |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Pulte Homes, Inc. |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
|
|
|
$ |
84,732 |
|
|
$ |
36,281 |
|
|
$ |
|
|
|
$ |
121,013 |
|
Unfunded settlements |
|
|
|
|
|
|
84,812 |
|
|
|
676 |
|
|
|
|
|
|
|
85,488 |
|
House and land inventory |
|
|
|
|
|
|
9,778,538 |
|
|
|
12,764 |
|
|
|
|
|
|
|
9,791,302 |
|
Land held for sale |
|
|
|
|
|
|
313,958 |
|
|
|
|
|
|
|
|
|
|
|
313,958 |
|
Land, not owned, under option
agreements |
|
|
|
|
|
|
59,938 |
|
|
|
|
|
|
|
|
|
|
|
59,938 |
|
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
521,577 |
|
|
|
|
|
|
|
521,577 |
|
Investments in unconsolidated entities |
|
|
1,448 |
|
|
|
226,005 |
|
|
|
19,026 |
|
|
|
|
|
|
|
246,479 |
|
Goodwill |
|
|
|
|
|
|
375,237 |
|
|
|
700 |
|
|
|
|
|
|
|
375,937 |
|
Intangible assets, net |
|
|
|
|
|
|
125,142 |
|
|
|
|
|
|
|
|
|
|
|
125,142 |
|
Other assets |
|
|
47,292 |
|
|
|
922,500 |
|
|
|
92,390 |
|
|
|
|
|
|
|
1,062,182 |
|
Investment in subsidiaries |
|
|
11,469,467 |
|
|
|
84,400 |
|
|
|
3,299,192 |
|
|
|
(14,853,059 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,518,207 |
|
|
$ |
12,055,262 |
|
|
$ |
3,982,606 |
|
|
$ |
(14,853,059 |
) |
|
$ |
12,703,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other
liabilities |
|
$ |
186,083 |
|
|
$ |
2,103,062 |
|
|
$ |
206,373 |
|
|
$ |
|
|
|
$ |
2,495,518 |
|
Unsecured short-term borrowings |
|
|
24,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,500 |
|
Collateralized short-term debt, recourse
solely to applicable non-guarantor
subsidiary assets |
|
|
|
|
|
|
|
|
|
|
447,022 |
|
|
|
|
|
|
|
447,022 |
|
Income taxes |
|
|
165,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,770 |
|
Senior notes and unsubordinated notes |
|
|
3,386,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,386,882 |
|
Advances (receivable)
payable subsidiaries |
|
|
1,571,648 |
|
|
|
(1,551,378 |
) |
|
|
(20,270 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
5,334,883 |
|
|
|
551,684 |
|
|
|
633,125 |
|
|
|
|
|
|
|
6,519,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
6,183,324 |
|
|
|
11,503,578 |
|
|
|
3,349,481 |
|
|
|
(14,853,059 |
) |
|
|
6,183,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,518,207 |
|
|
$ |
12,055,262 |
|
|
$ |
3,982,606 |
|
|
$ |
(14,853,059 |
) |
|
$ |
12,703,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. |
|
Supplemental Guarantor information (continued) |
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2005
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Consolidated |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Pulte Homes, Inc. |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
|
|
|
$ |
839,764 |
|
|
$ |
162,504 |
|
|
$ |
|
|
|
$ |
1,002,268 |
|
Unfunded settlements |
|
|
|
|
|
|
226,417 |
|
|
|
(69,754 |
) |
|
|
|
|
|
|
156,663 |
|
House and land inventory |
|
|
|
|
|
|
8,742,573 |
|
|
|
13,520 |
|
|
|
|
|
|
|
8,756,093 |
|
Land held for sale |
|
|
|
|
|
|
257,724 |
|
|
|
|
|
|
|
|
|
|
|
257,724 |
|
Land, not owned, under option agreements |
|
|
|
|
|
|
76,671 |
|
|
|
|
|
|
|
|
|
|
|
76,671 |
|
Residential mortgage loans available-for-
sale |
|
|
|
|
|
|
|
|
|
|
1,038,506 |
|
|
|
|
|
|
|
1,038,506 |
|
Investments in unconsolidated entities |
|
|
1,448 |
|
|
|
264,257 |
|
|
|
35,908 |
|
|
|
|
|
|
|
301,613 |
|
Goodwill |
|
|
|
|
|
|
306,993 |
|
|
|
700 |
|
|
|
|
|
|
|
307,693 |
|
Intangible assets, net |
|
|
|
|
|
|
127,204 |
|
|
|
|
|
|
|
|
|
|
|
127,204 |
|
Other assets |
|
|
41,873 |
|
|
|
870,238 |
|
|
|
111,628 |
|
|
|
|
|
|
|
1,023,739 |
|
Investment in subsidiaries |
|
|
11,154,107 |
|
|
|
88,972 |
|
|
|
3,142,458 |
|
|
|
(14,385,537 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,197,428 |
|
|
$ |
11,800,813 |
|
|
$ |
4,435,470 |
|
|
$ |
(14,385,537 |
) |
|
$ |
13,048,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other
liabilities |
|
$ |
190,640 |
|
|
$ |
2,161,257 |
|
|
$ |
239,903 |
|
|
$ |
|
|
|
$ |
2,591,800 |
|
Collateralized short-term debt, recourse
solely to applicable non-guarantor
subsidiary assets |
|
|
|
|
|
|
|
|
|
|
893,001 |
|
|
|
|
|
|
|
893,001 |
|
Income taxes |
|
|
219,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219,504 |
|
Senior notes and subordinated notes |
|
|
3,386,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,386,527 |
|
Advances (receivable) payable
subsidiaries |
|
|
1,443,415 |
|
|
|
(1,550,745 |
) |
|
|
107,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
5,240,086 |
|
|
|
610,512 |
|
|
|
1,240,234 |
|
|
|
|
|
|
|
7,090,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
5,957,342 |
|
|
|
11,190,301 |
|
|
|
3,195,236 |
|
|
|
(14,385,537 |
) |
|
|
5,957,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
11,197,428 |
|
|
$ |
11,800,813 |
|
|
$ |
4,435,470 |
|
|
$ |
(14,385,537 |
) |
|
$ |
13,048,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended March 31, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
2,914,752 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,914,752 |
|
Financial services |
|
|
|
|
|
|
5,855 |
|
|
|
39,002 |
|
|
|
|
|
|
|
44,857 |
|
Other non-operating |
|
|
39 |
|
|
|
1,990 |
|
|
|
938 |
|
|
|
|
|
|
|
2,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
39 |
|
|
|
2,922,597 |
|
|
|
39,940 |
|
|
|
|
|
|
|
2,962,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
2,247,109 |
|
|
|
|
|
|
|
|
|
|
|
2,247,109 |
|
Selling, general and administrative and
other expense |
|
|
7,773 |
|
|
|
285,022 |
|
|
|
(1,519 |
) |
|
|
|
|
|
|
291,276 |
|
Financial Services, principally interest |
|
|
759 |
|
|
|
2,344 |
|
|
|
24,137 |
|
|
|
|
|
|
|
27,240 |
|
Other non-operating expenses, net |
|
|
20,456 |
|
|
|
(6,815 |
) |
|
|
(1,291 |
) |
|
|
|
|
|
|
12,350 |
|
Intercompany interest |
|
|
39,684 |
|
|
|
(39,684 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
68,672 |
|
|
|
2,487,976 |
|
|
|
21,327 |
|
|
|
|
|
|
|
2,577,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of equity investment |
|
|
|
|
|
|
|
|
|
|
31,635 |
|
|
|
|
|
|
|
31,635 |
|
Equity income |
|
|
|
|
|
|
972 |
|
|
|
336 |
|
|
|
|
|
|
|
1,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries |
|
|
(68,633 |
) |
|
|
435,593 |
|
|
|
50,584 |
|
|
|
|
|
|
|
417,544 |
|
Income taxes (benefit) |
|
|
(26,525 |
) |
|
|
162,063 |
|
|
|
19,361 |
|
|
|
|
|
|
|
154,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income of subsidiaries |
|
|
(42,108 |
) |
|
|
273,530 |
|
|
|
31,223 |
|
|
|
|
|
|
|
262,645 |
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
304,753 |
|
|
|
28,868 |
|
|
|
96,838 |
|
|
|
(430,459 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
304,753 |
|
|
|
28,868 |
|
|
|
96,838 |
|
|
|
(430,459 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
262,645 |
|
|
$ |
302,398 |
|
|
$ |
128,061 |
|
|
$ |
(430,459 |
) |
|
$ |
262,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended March 31, 2005
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding |
|
$ |
|
|
|
$ |
2,486,294 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
2,486,294 |
|
Financial services |
|
|
|
|
|
|
5,739 |
|
|
|
24,537 |
|
|
|
|
|
|
|
30,276 |
|
Other non-operating |
|
|
58 |
|
|
|
1,057 |
|
|
|
133 |
|
|
|
|
|
|
|
1,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
58 |
|
|
|
2,493,090 |
|
|
|
24,670 |
|
|
|
|
|
|
|
2,517,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
1,877,227 |
|
|
|
|
|
|
|
|
|
|
|
1,877,227 |
|
Selling, general and administrative and
other expense |
|
|
4,183 |
|
|
|
257,980 |
|
|
|
806 |
|
|
|
|
|
|
|
262,969 |
|
Financial Services, principally interest |
|
|
1,297 |
|
|
|
1,934 |
|
|
|
18,287 |
|
|
|
|
|
|
|
21,518 |
|
Other non-operating expenses, net |
|
|
31,067 |
|
|
|
(4,916 |
) |
|
|
(2,147 |
) |
|
|
|
|
|
|
24,004 |
|
Intercompany interest |
|
|
42,790 |
|
|
|
(42,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
79,337 |
|
|
|
2,089,435 |
|
|
|
16,946 |
|
|
|
|
|
|
|
2,185,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income |
|
|
|
|
|
|
12,652 |
|
|
|
2,145 |
|
|
|
|
|
|
|
14,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes and equity in income
of subsidiaries |
|
|
(79,279 |
) |
|
|
416,307 |
|
|
|
9,869 |
|
|
|
|
|
|
|
346,897 |
|
Income taxes (benefit) |
|
|
(29,318 |
) |
|
|
154,533 |
|
|
|
4,135 |
|
|
|
|
|
|
|
129,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before equity in income of subsidiaries |
|
|
(49,961 |
) |
|
|
261,774 |
|
|
|
5,734 |
|
|
|
|
|
|
|
217,547 |
|
Income (loss) from discontinued
operations |
|
|
(64 |
) |
|
|
|
|
|
|
759 |
|
|
|
|
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before equity in income
of subsidiaries |
|
|
(50,025 |
) |
|
|
261,774 |
|
|
|
6,493 |
|
|
|
|
|
|
|
218,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income (loss) of subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
|
267,508 |
|
|
|
3,781 |
|
|
|
50,682 |
|
|
|
(321,971 |
) |
|
|
|
|
Discontinued operations |
|
|
759 |
|
|
|
|
|
|
|
|
|
|
|
(759 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
268,267 |
|
|
|
3,781 |
|
|
|
50,682 |
|
|
|
(322,730 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
218,242 |
|
|
$ |
265,555 |
|
|
$ |
57,175 |
|
|
$ |
(322,730 |
) |
|
$ |
218,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
262,645 |
|
|
$ |
302,398 |
|
|
$ |
128,061 |
|
|
$ |
(430,459 |
) |
|
$ |
262,645 |
|
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of subsidiaries |
|
|
(304,753 |
) |
|
|
(28,868 |
) |
|
|
(96,838 |
) |
|
|
430,459 |
|
|
|
|
|
Gain on sale of equity investments |
|
|
|
|
|
|
|
|
|
|
(31,635 |
) |
|
|
|
|
|
|
(31,635 |
) |
Amortization and depreciation |
|
|
|
|
|
|
16,325 |
|
|
|
2,038 |
|
|
|
|
|
|
|
18,363 |
|
Stock-based compensation expense |
|
|
15,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,842 |
|
Deferred income taxes |
|
|
22,247 |
|
|
|
|
|
|
|
(3,332 |
) |
|
|
|
|
|
|
18,915 |
|
Distributions in excess of (less than)
earnings of affiliates |
|
|
|
|
|
|
(880 |
) |
|
|
1,744 |
|
|
|
|
|
|
|
864 |
|
Other, net |
|
|
355 |
|
|
|
899 |
|
|
|
(61 |
) |
|
|
|
|
|
|
1,193 |
|
Increase (decrease) in cash due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory |
|
|
|
|
|
|
(1,091,120 |
) |
|
|
755 |
|
|
|
|
|
|
|
(1,090,365 |
) |
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
516,929 |
|
|
|
|
|
|
|
516,929 |
|
Other assets |
|
|
(5,419 |
) |
|
|
163,191 |
|
|
|
(50,909 |
) |
|
|
|
|
|
|
106,863 |
|
Accounts payable, accrued
and other liabilities |
|
|
(27,157 |
) |
|
|
(106,297 |
) |
|
|
(31,918 |
) |
|
|
|
|
|
|
(165,372 |
) |
Income taxes |
|
|
(235,193 |
) |
|
|
162,064 |
|
|
|
22,353 |
|
|
|
|
|
|
|
(50,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities |
|
|
(271,433 |
) |
|
|
(582,288 |
) |
|
|
457,187 |
|
|
|
|
|
|
|
(396,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
1,725 |
|
|
|
|
|
|
|
|
|
|
|
1,725 |
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(13,507 |
) |
|
|
|
|
|
|
|
|
|
|
(13,507 |
) |
Dividends received from subsidiaries |
|
|
|
|
|
|
37,000 |
|
|
|
6,028 |
|
|
|
(43,028 |
) |
|
|
|
|
Investment in subsidiaries |
|
|
(19,820 |
) |
|
|
(68,104 |
) |
|
|
|
|
|
|
22,145 |
|
|
|
(65,779 |
) |
Proceeds from sales of investments |
|
|
|
|
|
|
|
|
|
|
49,216 |
|
|
|
|
|
|
|
49,216 |
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
274 |
|
|
|
1 |
|
|
|
|
|
|
|
275 |
|
Capital expenditures |
|
|
|
|
|
|
(13,008 |
) |
|
|
(2,253 |
) |
|
|
|
|
|
|
(15,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
(19,820 |
) |
|
|
(55,620 |
) |
|
|
52,992 |
|
|
|
(20,883 |
) |
|
|
(43,331 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the three months ended March 31, 2006
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
24,500 |
|
|
|
36,407 |
|
|
|
|
|
|
|
|
|
|
|
60,907 |
|
Repayment of borrowings |
|
|
|
|
|
|
|
|
|
|
(445,979 |
) |
|
|
|
|
|
|
(445,979 |
) |
Capital contributions from parent |
|
|
|
|
|
|
19,807 |
|
|
|
2,338 |
|
|
|
(22,145 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
323,000 |
|
|
|
(173,338 |
) |
|
|
(149,662 |
) |
|
|
|
|
|
|
|
|
Excess tax benefits from share-based
awards |
|
|
1,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,396 |
|
Issuance of common stock |
|
|
2,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,328 |
|
Common stock repurchases |
|
|
(49,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,700 |
) |
Dividends paid |
|
|
(10,271 |
) |
|
|
|
|
|
|
(43,028 |
) |
|
|
43,028 |
|
|
|
(10,271 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
291,253 |
|
|
|
(117,124 |
) |
|
|
(636,331 |
) |
|
|
20,883 |
|
|
|
(441,319 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
(71 |
) |
|
|
|
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and
equivalents |
|
|
|
|
|
|
(755,032 |
) |
|
|
(126,223 |
) |
|
|
|
|
|
|
(881,255 |
) |
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
839,764 |
|
|
|
162,504 |
|
|
|
|
|
|
|
1,002,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
84,732 |
|
|
$ |
36,281 |
|
|
$ |
|
|
|
$ |
121,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2005
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
218,242 |
|
|
$ |
265,555 |
|
|
$ |
57,175 |
|
|
$ |
(322,730 |
) |
|
$ |
218,242 |
|
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in income of subsidiaries |
|
|
(268,267 |
) |
|
|
(3,781 |
) |
|
|
(50,682 |
) |
|
|
322,730 |
|
|
|
|
|
Amortization and depreciation |
|
|
|
|
|
|
11,516 |
|
|
|
2,217 |
|
|
|
|
|
|
|
13,733 |
|
Stock-based compensation expense |
|
|
12,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,525 |
|
Deferred income taxes |
|
|
49,332 |
|
|
|
(3 |
) |
|
|
(1,772 |
) |
|
|
|
|
|
|
47,557 |
|
Distributions in excess of (less than)
earnings of affiliates |
|
|
|
|
|
|
(2,293 |
) |
|
|
(1,763 |
) |
|
|
|
|
|
|
(4,056 |
) |
Other, net |
|
|
348 |
|
|
|
120 |
|
|
|
232 |
|
|
|
|
|
|
|
700 |
|
Increase (decrease) in cash due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
(710,665 |
) |
|
|
977 |
|
|
|
|
|
|
|
(709,688 |
) |
Residential mortgage loans
available-for-sale |
|
|
|
|
|
|
|
|
|
|
289,003 |
|
|
|
|
|
|
|
289,003 |
|
Other assets |
|
|
(12,198 |
) |
|
|
7,058 |
|
|
|
8,999 |
|
|
|
|
|
|
|
3,859 |
|
Accounts payable, accrued
and other liabilities |
|
|
(12,346 |
) |
|
|
(25,540 |
) |
|
|
(9,057 |
) |
|
|
|
|
|
|
(46,943 |
) |
Income taxes |
|
|
(247,639 |
) |
|
|
154,536 |
|
|
|
5,907 |
|
|
|
|
|
|
|
(87,196 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities |
|
|
(260,003 |
) |
|
|
(303,497 |
) |
|
|
301,236 |
|
|
|
|
|
|
|
(262,264 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from unconsolidated
entities |
|
|
|
|
|
|
33,029 |
|
|
|
215 |
|
|
|
|
|
|
|
33,244 |
|
Investments in unconsolidated entities |
|
|
|
|
|
|
(83,978 |
) |
|
|
|
|
|
|
|
|
|
|
(83,978 |
) |
Dividends received from subsidiaries |
|
|
1,362 |
|
|
|
13,000 |
|
|
|
|
|
|
|
(14,362 |
) |
|
|
|
|
Investment in subsidiaries |
|
|
(28,274 |
) |
|
|
(535 |
) |
|
|
13,312 |
|
|
|
535 |
|
|
|
(14,962 |
) |
Proceeds from sales of subsidiaries |
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
3,000 |
|
Proceeds from sales of investments |
|
|
|
|
|
|
|
|
|
|
8,366 |
|
|
|
|
|
|
|
8,366 |
|
Proceeds from sale of fixed assets |
|
|
|
|
|
|
2,600 |
|
|
|
|
|
|
|
|
|
|
|
2,600 |
|
Capital expenditures |
|
|
|
|
|
|
(17,805 |
) |
|
|
(2,883 |
) |
|
|
|
|
|
|
(20,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
|
(26,912 |
) |
|
|
(53,689 |
) |
|
|
22,010 |
|
|
|
(13,827 |
) |
|
|
(72,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
PULTE HOMES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
7. Supplemental Guarantor information (continued)
CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
For the three months ended March 31, 2005
($000s omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
Consolidated |
|
|
|
Pulte |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
Pulte |
|
|
|
Homes, Inc. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Homes, Inc. |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
648,557 |
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
|
654,635 |
|
Repayment of borrowings |
|
|
|
|
|
|
|
|
|
|
(278,744 |
) |
|
|
|
|
|
|
(278,744 |
) |
Capital contributions from parent |
|
|
|
|
|
|
|
|
|
|
535 |
|
|
|
(535 |
) |
|
|
|
|
Advances (to) from affiliates |
|
|
(358,900 |
) |
|
|
489,226 |
|
|
|
(130,326 |
) |
|
|
|
|
|
|
|
|
Issuance of common stock |
|
|
15,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,240 |
|
Common stock repurchases |
|
|
(11,564 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,564 |
) |
Dividends paid |
|
|
(6,418 |
) |
|
|
(1,362 |
) |
|
|
(13,000 |
) |
|
|
14,362 |
|
|
|
(6,418 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
286,915 |
|
|
|
493,942 |
|
|
|
(421,535 |
) |
|
|
13,827 |
|
|
|
373,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and equivalents |
|
|
|
|
|
|
|
|
|
|
67 |
|
|
|
|
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and
equivalents |
|
|
|
|
|
|
136,756 |
|
|
|
(98,222 |
) |
|
|
|
|
|
|
38,534 |
|
Cash and equivalents at beginning of
period |
|
|
|
|
|
|
185,375 |
|
|
|
122,743 |
|
|
|
|
|
|
|
308,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
$ |
|
|
|
$ |
322,131 |
|
|
$ |
24,521 |
|
|
$ |
|
|
|
$ |
346,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations
Overview
A summary of our operating results by business segment for the three months ended March 31,
2006 and 2005 is as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Pre-tax income (loss): |
|
|
|
|
|
|
|
|
Homebuilding operations |
|
$ |
377,583 |
|
|
$ |
359,569 |
|
Financial services operations |
|
|
49,344 |
|
|
|
10,084 |
|
Other non-operating |
|
|
(9,383 |
) |
|
|
(22,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income from continuing operations |
|
|
417,544 |
|
|
|
346,897 |
|
Income taxes |
|
|
154,899 |
|
|
|
129,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
262,645 |
|
|
|
217,547 |
|
Income from discontinued operations |
|
|
|
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
262,645 |
|
|
$ |
218,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data assuming dilution: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
1.01 |
|
|
$ |
.83 |
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1.01 |
|
|
$ |
.83 |
|
|
|
|
|
|
|
|
|
|
A comparison of pre-tax income for the three months ended March 31, 2006 and 2005 is as follows: |
|
|
|
Geographic and product mix shifts, average unit selling price increases and benefits from the ongoing initiatives to simplify processes and leverage construction costs throughout the operations contributed to increases in pre-tax income of our homebuilding business segment. Pre-tax income from homebuilding operations increased 5% for the three months ended March 31, 2006, compared with the same period in the prior year. |
|
|
|
Homebuilding settlement revenues increased 17% to $2.9 billion compared with the same period in the prior year. Higher revenues for the first quarter of 2006 were the result of a 7% increase in closings to 8,602 homes, combined with a 9% increase in the average home selling price to $336,000 compared with the first quarter of 2005. |
|
|
|
Backlog dollars increased 9% to $7.1 billion (19,940 units) at March 31, 2006 compared with $6.5 billion (19,964 units) at March 31, 2005. |
|
|
|
Pre-tax income of our financial services business segment increased $39.3 million for the three months ended March 31, 2006, compared with the prior year period. We recognized a one-time gain of $31.6 million from the sale of our investment in Su Casita, a Mexican mortgage banking company. Additionally, the quarter benefited from a product mix shift to more profitable loans and a more favorable interest rate environment to sell loans, compared with the same quarter in 2005. |
|
|
|
The decrease in non-operating expenses for the three months
ended March 31, 2006, compared with the same period in the prior
year, was due primarily to an increase in the amount of interest
capitalized into homebuilding inventory. |
25
Homebuilding Operations
The Homebuilding operations represent our core business. Homebuilding offers a broad product line
to meet the needs of the first-time, first and second move-up, and active adult homebuyers. We
conduct our operations in 53 markets, located throughout 27 states, presented geographically as
follows:
|
|
|
|
|
|
|
Northeast:
|
|
Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Virginia |
|
|
|
|
|
|
|
Southeast:
|
|
Florida, Georgia, North Carolina, South Carolina, Tennessee |
|
|
|
|
|
|
|
Midwest:
|
|
Illinois, Indiana, Kansas, Michigan, Missouri, Minnesota, Ohio |
|
|
|
|
|
|
|
Central:
|
|
Colorado, New Mexico, Texas |
|
|
|
|
|
|
|
West:
|
|
Arizona, California, Nevada |
Certain operating data relating to our homebuilding operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Homebuilding settlement revenues ($000s omitted) |
|
$ |
2,888,834 |
|
|
$ |
2,462,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit settlements: |
|
|
|
|
|
|
|
|
Northeast |
|
|
716 |
|
|
|
538 |
|
Southeast |
|
|
2,504 |
|
|
|
2,331 |
|
Midwest |
|
|
804 |
|
|
|
901 |
|
Central |
|
|
1,430 |
|
|
|
926 |
|
West |
|
|
3,148 |
|
|
|
3,323 |
|
|
|
|
|
|
|
|
|
|
|
8,602 |
|
|
|
8,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new
orders units: |
|
|
|
|
|
|
|
|
Northeast |
|
|
728 |
|
|
|
1,028 |
|
Southeast |
|
|
3,375 |
|
|
|
3,717 |
|
Midwest |
|
|
1,320 |
|
|
|
1,519 |
|
Central |
|
|
1,728 |
|
|
|
1,620 |
|
West |
|
|
3,574 |
|
|
|
4,183 |
|
|
|
|
|
|
|
|
|
|
|
10,725 |
|
|
|
12,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net new
orders dollars ($000s omitted) |
|
$ |
3,683,000 |
|
|
$ |
3,833,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit backlog: |
|
|
|
|
|
|
|
|
Northeast |
|
|
1,605 |
|
|
|
1,973 |
|
Southeast |
|
|
6,536 |
|
|
|
6,691 |
|
Midwest |
|
|
1,903 |
|
|
|
1,895 |
|
Central |
|
|
2,515 |
|
|
|
1,771 |
|
West |
|
|
7,381 |
|
|
|
7,634 |
|
|
|
|
|
|
|
|
|
|
|
19,940 |
|
|
|
19,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog at
March 31 dollars ($000s omitted) |
|
$ |
7,096,000 |
|
|
$ |
6,525,000 |
|
|
|
|
|
|
|
|
26
Homebuilding Operations (continued)
Unit settlements increased 7% for the three months ended March 31, 2006, to 8,602 units, over
the same period in 2005. The average selling price for homes closed increased 9% to $336,000 for
the three months ended March 31, 2006 compared with the same period in 2005. Changes in average
selling price reflect a number of factors, including changes in market selling prices and the mix
of product closed during each period. For the three months ended March 31, 2006, unit net new
orders decreased 11% to 10,725 units, compared with the same period in 2005. Net new orders were
impacted by the closeout of several large, established communities, where the replacement
communities are still in the early phases of development. In addition, rising home prices, higher
interest rates, and increased resale home inventories have affected demand for new homes.
Cancellation rates for the quarter were approximately 21%, compared with 16% for the same period in
2005. The dollar value of net new orders decreased 4% for the three months ended March 31, 2006,
compared with the same period in 2005, as selling prices remained stable or increased in many of
our markets. For the quarter ended March 31, 2006, we had 692 active selling communities, an
increase of 8% from the same period in the prior year. Ending backlog, which represents orders for
homes that have not yet closed, was 19,940 units at March 31, 2006. The dollar value of backlog
was up 9% to $7.1 billion.
The following table presents markets that represent 10% or more of unit net new orders, unit
settlements, and settlement revenues for the three months ended March 31, 2006 and 2005:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2006 |
|
2005 |
Unit net new orders: |
|
|
|
|
|
|
|
|
Phoenix |
|
|
* |
|
|
|
13 |
% |
Las Vegas |
|
|
10 |
% |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Unit settlements: |
|
|
|
|
|
|
|
|
Phoenix |
|
|
* |
|
|
|
16 |
% |
Las Vegas |
|
|
12 |
% |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Settlement revenues: |
|
|
|
|
|
|
|
|
Phoenix |
|
|
* |
|
|
|
14 |
% |
Las Vegas |
|
|
13 |
% |
|
|
11 |
% |
|
|
|
* |
|
Represents less than 10%. |
The following table presents states that represent 10% or more of unit settlements and
settlement revenues for the three months ended March 31, 2006 and 2005:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2006 |
|
2005 |
Unit settlements : |
|
|
|
|
|
|
|
|
Arizona |
|
|
10 |
% |
|
|
18 |
% |
California |
|
|
13 |
% |
|
|
14 |
% |
Florida |
|
|
19 |
% |
|
|
20 |
% |
Nevada |
|
|
13 |
% |
|
|
* |
|
Texas |
|
|
13 |
% |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Settlement revenues: |
|
|
|
|
|
|
|
|
Arizona |
|
|
10 |
% |
|
|
16 |
% |
California |
|
|
21 |
% |
|
|
23 |
% |
Florida |
|
|
17 |
% |
|
|
16 |
% |
Nevada |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
* |
|
Represents less than 10%. |
27
Homebuilding Operations (continued)
At March 31, 2006 and December 31, 2005, our Homebuilding operations controlled approximately
356,900 and 362,600 lots, respectively. Approximately 180,900 and 173,800 lots were owned, and
approximately 127,000 and 133,400 lots were under option agreements approved for purchase at March
31, 2006 and December 31, 2005, respectively. In addition, there were approximately 49,000 and
55,400 lots under option agreements, pending approval, at March 31, 2006 and December 31, 2005,
respectively. We believe that the strength of our land supply, and our entitlement expertise,
will enable us to continue opening new communities during the course of 2006 and beyond.
The total purchase price related to approved land under option for use by our Homebuilding
operations at future dates approximated $6.1 billion at March 31, 2006. In addition, total
purchase price related to land under option pending approval was valued at $1.8 billion at March
31, 2006. Land option agreements, which may be cancelled at our discretion, may extend over
several years and are secured by deposits and advanced costs totaling $452.4 million, which are
generally non-refundable.
The following table presents a summary of pre-tax income for our Homebuilding operations for
the three months ended March 31, 2006 and 2005 ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Home sale revenue (settlements) |
|
$ |
2,888,834 |
|
|
$ |
2,462,109 |
|
Land sale revenue |
|
|
25,918 |
|
|
|
24,185 |
|
Home cost of sales (a) |
|
|
(2,225,966 |
) |
|
|
(1,856,468 |
) |
Land cost of sales |
|
|
(21,143 |
) |
|
|
(20,759 |
) |
Selling, general and administrative expense |
|
|
(284,749 |
) |
|
|
(254,431 |
) |
Equity income |
|
|
1,216 |
|
|
|
13,471 |
|
Other income (expense), net |
|
|
(6,527 |
) |
|
|
(8,538 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income |
|
$ |
377,583 |
|
|
$ |
359,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price |
|
$ |
336 |
|
|
$ |
307 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Homebuilding interest expense, which represents the amortization of
capitalized interest, of $41.2 million for the three months ended March 31, 2006 and $30.5
million for the three months ended March 31, 2005, has been included as part of homebuilding
cost of sales. |
Homebuilding gross profit margins from home settlements decreased to 22.9% for the three
months ended March 31, 2006, compared with 24.6% for the same period in the prior year. This
decrease is primarily attributable to the closeout of communities that contributed higher margins
replaced by new communities that are contributing lower margins which is a result of a shift in
product mix offerings, increased costs associated with the purchase of land and land development,
and increases in materials and labor in house costs. The decrease in homebuilding gross profit
margins was partially offset by 50 basis points related to our January 2006 acquisition of the
remaining 50% interest in an entity that supplies and installs basic building components and
operating systems. During 2005, income from this entity was recorded as equity income and had no
impact on homebuilding gross profit margins.
We consider land acquisition and entitlement among our core competencies. We acquire land
primarily for the construction of our homes for sale to homebuyers. 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 March 31, 2006 were $4.8 million, compared with $3.4 million
for the three months ended March 31, 2005. 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 March 31, 2006, we had
$314 million of land held for sale.
Selling, general and administrative expenses as a percentage of home settlement revenues
declined to 9.9% for the three months ended March 31, 2006 compared with 10.3% for the same period
in the prior year. This
improvement can be attributed to increased selling prices, our internal initiatives focused on
controlling costs, and better overhead leverage from increased volume compared with the prior year
period.
28
Homebuilding Operations (continued)
The decrease in equity income of $12.3 million for the three months ended March 31, 2006
compared with the same period in the prior year, is the result of our acquisition of the remaining
50% interest in an entity that supplies and installs basic building components and operating
systems. As a result of this acquisition we own 100% of this entity, which is consolidated in our
financial statements. For the quarter ended March 31, 2005, earnings from this investment were
recorded in equity income.
Financial Services Operations
We conduct our financial services business, which includes mortgage and title operations,
through Pulte Mortgage and other subsidiaries. Pre-tax income of our financial services operations
for the three months ended March 31, 2006 was $49.3 million compared with $10.1 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 ($19.9 million after-tax) for the three months ended March 31, 2006.
For the three months ended March 31, 2005, Su Casita contributed pre-tax income from operations of
$700 thousand. During February 2005, 25% of our investment in the capital stock of Su Casita was
redeemed for a pre-tax gain of approximately $620 thousand.
Loan originations for the three months ended March 31, 2006 increased 7% to 8,091 mortgages
compared with the prior year period.
The following table presents mortgage origination data for our Financial Services operations:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Total originations: |
|
|
|
|
|
|
|
|
Loans |
|
|
8,091 |
|
|
|
7,592 |
|
|
|
|
|
|
|
|
Principal ($000s omitted) |
|
$ |
1,744,200 |
|
|
$ |
1,489,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originations for Pulte customers: |
|
|
|
|
|
|
|
|
Loans |
|
|
8,060 |
|
|
|
7,215 |
|
|
|
|
|
|
|
|
Principal ($000s omitted) |
|
$ |
1,736,500 |
|
|
$ |
1,427,900 |
|
|
|
|
|
|
|
|
Capture rates for the quarter ended March 31, 2006 were comparable with the same quarter in
the prior year at approximately 89%. Mortgage origination unit and principal volume for the three
months ended March 31, 2006 increased 7% and 17%, respectively, over the same period in 2005. The
growth is attributable to volume increases experienced in our homebuilding business and an increase
in the average loan size. Our Homebuilding customers continue to account for nearly all of our
total loan production, representing almost 100% of total Pulte Mortgage unit production for the
three months ended March 31, 2006, compared with 95% for the same period in 2005. At March 31,
2006, loan application backlog decreased to $4.1 billion compared with $4.4 billion at March 31,
2005.
Adjustable rate mortgages (ARMs), which generally have a lower profit per loan than fixed rate
products, represented 35% of total funded origination dollars and 28% of total funded origination
units for the three months ended March 31, 2006, compared with 52% and 47% in the prior year
period, respectively. Interest only mortgages, a component of ARMs, represented 77% of ARMs
origination dollars and 80% of ARMs origination units for the three months ended March 31, 2006,
compared with 68% and 72% in the prior year period, respectively.
Excluding the gain related to the sale of Su Casita, pre-tax income increased $7.7
million for the quarter ended March 31, 2006 compared with the prior year quarter, due to an
increase in origination volume and a shift in product mix to more profitable loans.
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.
29
Other non-operating
Other
non-operating expenses are incurred for financing, developing and
implementing strategic initiatives centered on new business development and operating
efficiencies, and providing the necessary administrative support associated with being a publicly
traded entity listed on the New York Stock Exchange. Accordingly, these results will vary from
year to year as these strategic initiatives evolve.
The following table presents a summary of other non-operating expenses ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Net interest expense (income) |
|
$ |
(1,090 |
) |
|
$ |
13,747 |
|
Other corporate expenses, net |
|
|
10,473 |
|
|
|
9,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
$ |
9,383 |
|
|
$ |
22,756 |
|
|
|
|
|
|
|
|
We recognized $1.1 million of net interest income for the three months ended March 31, 2006,
compared with $13.7 million of net interest expense for the same period in the prior year. This is
a result of an increase of the amount of interest capitalized into homebuilding inventory along
with increased interest income of approximately $1.7 million. Other corporate expenses increased
$1.5 million for the three months ended March 31, 2006, compared with the same period in the prior
year, due to increased compensation-related expenses.
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 in homebuilding inventory increased due to increased amounts of interest
capitalized into homebuilding inventory, based on our homebuilding inventory and debt levels, and
is consistent with the growth of the Company. Information related to Corporate interest
capitalized into homebuilding inventory is as follows ($000s omitted):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2006 |
|
|
2005 |
|
Interest in inventory at beginning of period |
|
$ |
229,798 |
|
|
$ |
223,591 |
|
Interest capitalized |
|
|
56,624 |
|
|
|
40,664 |
|
Interest expensed |
|
|
(41,169 |
) |
|
|
(30,544 |
) |
|
|
|
|
|
|
|
Interest in inventory at end of period |
|
$ |
245,253 |
|
|
$ |
233,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest incurred * |
|
$ |
56,834 |
|
|
$ |
55,659 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Interest incurred includes interest on our senior debt,
short-term borrowings, and other financing arrangements and
excludes interest incurred by our financial services operations. |
30
Liquidity and Capital Resources
We finance our homebuilding land acquisitions, development and construction activities from
internally generated funds and existing credit agreements.
At March 31, 2006, we had cash and equivalents of $121 million and $3.4 billion of senior and
unsubordinated notes outstanding. Other financing included limited recourse collateralized
financing totaling $17.1 million. Sources of our working capital include our cash and equivalents,
our $1.66 billion committed unsecured revolving credit facility and Pulte Mortgages $940 million
committed credit arrangements.
Our debt-to-total capitalization, excluding our collateralized debt, was approximately 35.6%
at March 31, 2006, and approximately 34.7% net of cash and equivalents. We routinely monitor
current operational requirements and financial market conditions to evaluate the use of available
financing sources, including securities offerings.
Our unsecured revolving credit facility includes an uncommitted accordion feature, under which
the credit facility may be increased to $2.25 billion. We have the capacity to issue letters of
credit up to $1.125 billion. Borrowing availability is reduced by the amount of letters of credit
outstanding. The credit facility contains restrictive covenants, the most restrictive of which
requires us not to exceed a debt-to-total capitalization ratio of 60% as defined in the agreement.
At March 31, 2006 we had $24.5 million outstanding under this facility.
Pulte Mortgage provides mortgage financing for many of our home sales and uses its own funds
and borrowings made available pursuant to various committed and uncommitted credit arrangements.
At March 31, 2006, Pulte Mortgage had committed credit arrangements of $940 million comprised of a
$390 million bank revolving credit facility and a $550 million asset-backed commercial paper
program. At March 31, 2006, Pulte Mortgage had $447 million outstanding under its committed credit
arrangements.
Pursuant to the two $100 million stock repurchase programs authorized by our Board of
Directors in October 2002 and 2005, and the $200 million stock repurchase authorization in February
2006 (for a total stock repurchase authorization of $400 million), the Company has repurchased a
total of 7,372,300 shares for a total of $227.9 million. At March 31, 2006, the Company had
remaining authorization to purchase common stock aggregating $172.1 million.
Our income tax liability and related effective tax rate are affected by a number of factors.
In 2006, our effective tax rate was 37.1% compared to 37.3% for the three months ended March 31,
2005. We anticipate that our effective tax rate for the remainder of 2006 will be approximately
37.2%.
Our net cash used in operating activities for the three months ended March 31, 2006 was $396.5
million, compared with $262.3 million for the three months ended March 31, 2005. Net income for
both years was offset primarily by significant investments in land necessary to support the
continued growth of the business.
Cash used in investing activities was $43.3 million for the three months ended March 31, 2006,
compared with $72.4 million for the three months ended March 31, 2005. During the three months
ended March 31, 2006, we invested approximately $65.8 million, net of cash acquired, to purchase
the remaining 50% of an entity that installs basic building components and operating systems. In
addition, we received cash of $49.2 million for the sale of our investment in Su Casita, a
Mexico-based mortgage banking company. Also, we made $13.5 million of capital contributions to and
received $1.7 million in capital distributions from our unconsolidated joint ventures for the three
months ended March 31, 2006. Further, we incurred approximately $15.3 million in capital
expenditures to support the growth of our business.
Net cash used in financing activities totaled $441.3 million for the three months ended March
31, 2006, compared with net cash provided by financing activities of $373.1 million for the three
months ended March 31, 2005. Proceeds from borrowings for the three months ended March 31, 2006
totaled $60.9 million and was comprised of $24.5 million for our unsecured revolving credit
facility and additional net debt incurred by our homebuilding markets. For the three months ended
March 31, 2006, the net decrease in Pulte Mortgages credit arrangements was approximately $446
million. Additionally, we incurred $49.7 million for stock repurchases and paid $10.3 million in
dividends.
31
Inflation
We, and the homebuilding industry in general, may be adversely affected during periods of high
inflation because of higher land and construction costs. Inflation also increases our financing,
labor and material costs. In addition, higher mortgage interest rates significantly affect the
affordability of permanent mortgage financing to prospective homebuyers. We attempt to pass to our
customers any increases in our costs through increased sales prices. To date, inflation has not
had a material adverse effect on our results of operations. However, there is no assurance that
inflation will not have a material adverse impact on our future results of operations.
New Accounting Pronouncements
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, 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. SFAS No. 156 is effective for all separately recognized
servicing assets and liabilities as of the beginning of an entitys fiscal year that begins after
September 15, 2006, with earlier adoption permitted in certain circumstances. Due to the short
period of time our servicing rights are held, generally less than four months, we do not expect
SFAS No. 156 will have a significant impact on our 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, 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. We do not expect SFAS No. 155 will have a significant
impact on our consolidated financial statements.
In December 2004, the FASB issued Staff Position 109-1, Application of FASB Statement No. 109,
Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by
the American Jobs Creation Act of 2004 (FSP 109-1). The American Jobs Creation Act, which was
signed into law in October 2004, provides a 3% tax deduction on qualified domestic production
activities income for 2005 and 2006. When fully phased-in, the deduction will be 9% of the lesser
of qualified production activities income or taxable income. Based on the guidance provided by
FSP 109-1, this deduction was accounted for as a special deduction under SFAS No. 109 and reduced
tax expense. Tax benefits resulting from the new deduction have resulted in a reduction in our
federal income tax rate.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates
during the three months ended March 31, 2006 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, 2005.
32
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative disclosure:
We are subject to interest rate risk on our rate-sensitive financing to the extent long-term
rates decline. The following table sets forth, as of March 31, 2006, our rate-sensitive financing
obligations, principal cash flows by scheduled maturity, weighted-average interest rates and
estimated fair market values ($000s omitted).
|
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As of March 31, 2006 for the |
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years ended December 31, |
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|
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|
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There- |
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Fair |
|
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2006 |
|
|
2007 |
|
|
2008 |
|
|
2009 |
|
|
2010 |
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|
after |
|
|
Total |
|
|
Value |
|
Rate sensitive liabilities: |
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|
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|
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Fixed interest rate debt: |
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|
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|
|
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|
|
|
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|
|
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|
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|
|
|
|
|
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|
|
|
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Senior notes |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
400,000 |
|
|
$ |
|
|
|
$ |
2,998,563 |
|
|
$ |
3,398,563 |
|
|
$ |
3,346,132 |
|
Average interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.88 |
% |
|
|
|
|
|
|
6.58 |
% |
|
|
6.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited recourse
collateralized financing |
|
$ |
4,800 |
|
|
$ |
5,842 |
|
|
$ |
2,273 |
|
|
$ |
3,265 |
|
|
$ |
933 |
|
|
$ |
|
|
|
$ |
17,113 |
|
|
$ |
17,113 |
|
Average interest rate |
|
|
1.80 |
% |
|
|
1.89 |
% |
|
|
1.79 |
% |
|
|
1.00 |
% |
|
|
8.75 |
% |
|
|
|
|
|
|
2.06 |
% |
|
|
|
|
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, 2005.
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, 2005 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 March 31, 2006. 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, in all material respects, to
ensure that information required to be disclosed in the reports we file and submit under the
Exchange Act is recorded, processed, summarized and reported as and when required.
There was no change in our internal control over financial reporting during the
quarter ended March 31, 2006 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
33
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) |
|
|
value of shares |
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|
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Total number of |
|
|
that may yet be |
|
|
|
(a) |
|
|
(b) |
|
|
shares purchased |
|
|
purchased under |
|
|
|
Total Number |
|
|
Average |
|
|
as part of publicly |
|
|
the plans or |
|
|
|
of shares |
|
|
price paid |
|
|
announced plans |
|
|
programs |
|
|
|
purchased |
|
|
per share |
|
|
or programs |
|
|
($000s omitted) |
|
January 1,
2006 through January 31, 2006 |
|
|
18,510 |
(2) |
|
$ |
39.97 |
|
|
|
|
|
|
$ |
195,550 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1, 2006 through February 28, 2006 |
|
|
673,700 |
(2) |
|
$ |
37.92 |
|
|
|
632,500 |
|
|
$ |
195,550 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1, 2006 through March 31, 2006 |
|
|
619,000 |
|
|
$ |
37.82 |
|
|
|
619,000 |
|
|
$ |
172,140 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,311,210 |
|
|
$ |
37.90 |
|
|
|
1,251,500 |
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
(1) |
|
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), the Company has
repurchased a total of 7,372,300 shares for a total of $227.9 million. |
|
(2) |
|
During January and February 2006, 59,710 shares were surrendered by employees for payment of taxes related to
vesting of restricted stock, and were not repurchased as part of our
publicly announced stock repurchase programs. |
34
Item 6. Exhibits
(a) Exhibits
Exhibit Number and Description
|
|
|
3(a)
|
|
Certificate of Amendment to the
Articles of Incorporation of Pulte Homes, Inc. (Dated May 16,
2005) |
|
|
|
10(a)
|
|
Pulte Homes, Inc. Long Term Compensation Deferral Plan (As Amended and Restated Effective
January 1, 2004) |
|
|
|
10(b)
|
|
Pulte Homes, Inc. Income Deferral Plan (As Amended and Restated Effective January 1, 2004) |
|
|
|
10(c)
|
|
Pulte Homes, Inc. Deferred Compensation Plan For Non-Employee Directors (Effective as of
January 1, 2005) |
|
|
|
31(a)
|
|
Rule 13a-14(a) Certification by Richard J. Dugas, Jr., President and Chief Executive Officer |
|
|
|
31(b)
|
|
Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer |
|
|
|
32
|
|
Certification Pursuant to 18 United States Code § 1350 and Rule 13a-14(b) of the Securities
Exchange Act of 1934 |
35
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
Roger A. Cregg
|
|
|
|
|
Executive Vice President and |
|
|
|
|
Chief Financial Officer |
|
|
|
|
(Principal Financial Officer and duly |
|
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|
|
authorized officer) |
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|
Date: May 5, 2006 |
|
|
36
Exhibit Index
|
|
|
Exhibit No. |
|
Description |
3(a)
|
|
Certificate of Amendment to the
Articles of Incorporation of Pulte Homes, Inc. (Dated May 16, 2005)
|
|
10(a)
|
|
Pulte Homes, Inc. Long Term Compensation Deferral Plan (As Amended and Restated Effective
January 1, 2004) |
|
|
|
10(b)
|
|
Pulte Homes, Inc. Income Deferral Plan (As Amended and Restated Effective January 1, 2004) |
|
|
|
10(c)
|
|
Pulte Homes, Inc. Deferred Compensation Plan For Non-Employee Directors (Effective as of
January 1, 2005) |
|
|
|
31(a)
|
|
Rule 13a-14(a) Certification by Richard J. Dugas, Jr., President and Chief Executive Officer |
|
|
|
31(b)
|
|
Rule 13a-14(a) Certification by Roger A. Cregg, Executive Vice President and Chief Financial Officer |
|
|
|
32
|
|
Certification Pursuant to 18 United States Code § 1350 and Rule 13a-14(b) of the Securities
Exchange Act of 1934 |